Business Brains

Disruptor | Bob Lutz, former vice-chairman of General Motors

Disruptor | Bob Lutz, former vice-chairman of General Motors

Posting in Finance

Bob Lutz's advice to current car executives? "Get the design right because people buy with their eyes."

It's a shame Chrysler can’t do this, thought Bob Lutz one afternoon while driving his AC Cobra. For all of his love of the vehicle's V-8 engine, 150 mph top end and smooth lines, Lutz had a problem. Lutz, at the time, was the vice chairman of Chrysler; the AC Cobra was a Ford.

"Then I thought, 'Wait a minute. Why can't we?'" Lutz recalled over the phone from his home in Michigan.

Chrysler, when Lutz joined it in the mid-'80s, was far from a sports car manufacturer. The company had just traversed a punishing financial crisis that left it severely weakened. "The talk in the industry was that Chrysler laid off all of their engineers -- they didn't have any technology left," Lutz said. Rarely dissuaded, Lutz asked Chrysler designers to see if they could do something similar to the AC Cobra with Chrysler’s next-generation V-10 truck engine inside.

"At first, I didn't like the sketches," Lutz said. "The longer I looked at the sketches, the better I liked it."

When the new car debuted at the North American International Auto Show in 1989, it electrified the room. Publications like Automotive.com and Edmunds would go on to call the Viper "a powerful icon" and the "ultimate babe magnet." John Heilig of AutoChannel.com said it "was a car I fell in love with the instant I saw it on the auto show floor."

"With one fell swoop, we showed what was to be the most powerful American car ever, the fastest American car ever, the most expensive American car ever," Lutz said. The vehicle was, of course, the Dodge Viper.

From Pilot Seat to C-Suite

Lutz's unconventional thinking started early. Growing up in New York and Switzerland, Lutz had little interest in following his father into banking. Instead, he aspired to become an automobile race driver, a marine fighter pilot and an automobile executive. He accomplished all three before the age of 40.

After graduating from a particularly rigorous high school in Switzerland (his teacher would go on to become the president of the country), Lutz enlisted in the U.S. Marine Corps where he rose to the rank of captain, logging more than 1,300 hours in single-seat, single-jet aircraft as a jet-attack aviator.

"Back then, I would say it was almost traditional that people of the sort of upper income brackets, which my parents were, would send their sons to be officers in one of the services," Lutz said.

Concurrent to his military service, Lutz enrolled in the University of California, Berkeley, earning both a bachelor's degree in production management and a master's degree in marketing. In 1963, his enthusiasm for the automobile industry untamed, Lutz began a 47-year career that would encompass time at GM, Ford, Chrysler and BMW. There are few automobile executives today who can compete with the breadth and depth of his experience.

Having worked with some of the legends of the car industry, from Lee Iacocca to Henry Ford Jr. to Eberhard Von Kuenheim, he learned a thing or two about leadership: the good, the bad and -- we'll say -- the minivan. He recounts these lessons in his latest book Icons and Idiots: Straight Talk on Leadership. The book, out this month, offers a candid insight into both American manufacturing and, more strikingly, management.

Business Fundamentals

To Lutz, business is pretty straightforward: make a better product, do it for the lowest cost and employ the fewest necessary resources to maintain an outstanding product. Unfortunately, Lutz said, companies sometimes lose sight of this formula.

"People just keep wandering away from the basic simplicity of business and layer over all kinds of consultant-driven programs, creating stuff that is unnecessary," he said.

Consultant-driven programs arrive in a variety of forms, said Lutz, who has encountered many in his career.

"Consultants are on a different kick every 10 years or so," Lutz said. First it was "long-term planning." Then came "total quality management." By the '90s, the catchphrase was "teamwork." Soon, Lutz recalled, wall signs dotted the walls of Chrysler with motivational phrases like, "There is no such thing as a dumb idea," "Listen to everybody with respect" and "Everyone's opinion has the same value."

"This is egalitarian nonsense," Lutz said. "Corporations are not supposed to be a noble social experiment where everybody gets along with everybody else."

Particularly in an era of employee perks like half-day Fridays (Mattel), on-site fitness centers (Campbell's Soup) and free catered lunches (DreamWorks Animation), Lutz's focus on the bottom line appears strikingly bold, if not realpolitik. "It is not the goal of a company to improve society or to create a model of a beautiful society within the company," he explained. "It's the goal of the company to make money for its shareholders."

Reinventing Behind the Wheel

While difficult to stomach at times, Lutz's candor is thrilling on the subject of American manufacturing, even after helping to lead GM out of bankruptcy.

"Now, I'm happy to say that manufacturing is coming back. People once again are making things in the U.S. We found out that when we set our minds to it, we can produce articles in the United States that are as good a quality as anywhere else, and we can do it at the same costs as anywhere else," Lutz said.

His advice for current automobile executives is all about design. "In the old days, you sometimes had to pick between a car that looked beautiful but the brand had a so-so reputation for reliability. So you were maybe taking a risk buying a beautiful object. Now, you don't take the risk anymore. Go ahead, buy the one that looks best to you," he said.

Manufacturers who understand this, Hyundai for example, are seeing their fortunes flourish. "Their sales are off the chart," said Lutz of the Korean manufacturer. "It's transformation through design."

Just as he did at Chrysler with the Viper, Lutz is taking aesthetics to heart. Recently, Lutz joined forces with industrialist Gilbert Villarreal to launch VL Automotive. The Auburn Hills, Mich.-based company, which recently bid to buy the troubled hybrid manufacturer Fisker, debuted the VL Destino at the 2013 Detroit Auto Show. Described by Engadget as "a bespoke four-door supercar," the 639-hp Destino combines the LS9 engine of the Chevy Corvette ZR1 with the body of the Fisker Karma hybrid. The composite, like something out of "Blade Runner," reminds even a casual car fan that when it comes to American engineering, anything is possible -- even the future.

From Bob Lutz, the original car guy, it'd be difficult to expect anything less.

Correction: The article initially stated that the Dodge Viper debuted at the Detroit Auto Show in 1998. The first prototype of the Dodge Viper was first displayed at the North American International Auto Show in 1989.

Claire Lambrecht

Contributing Writer

Claire Lambrecht has written for the New York Times, Slate, Salon, The Nation, and CBS MoneyWatch. Previously, she taught English as a Teach for America Corps Member and Fulbright English Teaching Assistant. She holds degrees from Cornell University, the University of Hawaii, and the Arthur M. Carter Journalism Institute at New York University. Follow her on Twitter. Disclosure