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The Ultimate Car Guy
Bob Lutz, BS 61, MBA 62, revs up creativity in the auto industry
Bob Lutz, BS 61, MBA 62, was sick and tired of hearing about the Prius. “Toyota was the most technologically advanced, the company that cares about the environment.” Lutz says, recalling the mood when he was vice chairman of General Motors. “It was like a bunch of saints were running the Toyota company.”
So Lutz started asking himself what his next act would be if he were leading his rival, Toyota. His conclusion: an all-electric vehicle run on a lithium-ion battery. And that’s what Lutz pushed GM to develop—and pushed and pushed, until he stopped getting no for an answer.
“I wanted to head Toyota off at the pass,” says Lutz, describing the genesis of the Chevy Volt. “As it happened, the Prius was a one-time stroke of innovation and genius out of Toyota. They never did anything like that before, and it’s highly probable they won’t do it again.”
The Volt, meanwhile, has hardly been the only stroke of innovation for the famously outspoken Lutz. Though Lutz considers the Volt his “crowning achievement,” he successfully drove innovation and creativity at four different major automakers during his 47-year career. His accomplishments also include overseeing development of America’s best-selling car in the early- and mid-1990s (Ford Taurus) and the most powerful and most expensive American car (Dodge Viper).
In recognition of his long track record of successfully steering innovation in the automobile industry, Lutz has been selected to receive the Haas School’s 2011 Leading Through Innovation Award. The annual award celebrates Haas alumni who embody the school’s emphasis on innovative leadership.
Electrifying the Team
Lutz, recently rehired by GM as a consultant and adviser, has grabbed headlines all year with his new book, Car Guys vs. Bean Counters. In his book, Lutz describes his return to GM as vice chairman of product development in 2001 after launching his career with the automaker in 1963.
Lutz returned to a radically different company, one mired by a culture of bureaucracy and mediocrity. The result was a lackluster lineup of boring cars, or what Lutz called “a horror show.”
A former Marine pilot, Lutz jumped in to change the culture and re-energize the design troops. He distributed ten “Strongly Held Beliefs.” which began, “Happy, contented employees, and an environment where nobody argues or disagrees, and everyone compromises because the other person has goals, are usually not the culture that produces great shareholder value.”
To generate more lively debate, he handed out stickers that said “Sez Who?” To improve product quality, he held meetings every Friday with engineers to analyze vehicles at each step in the pipeline for crooked seams, clunky knobs, and gaps between parts.
Lutz then challenged the company’s Design group to develop a new concept car four short months before an international auto show.
“The effect on the Design group was electrifying,” he recalls in his book. “They were being granted the freedom to create the world’s most desirable, affordable sports roadster, with no list of hundreds of ‘requirements’ to hog-tie them.” The car, the Solstice, nabbed “Best Concept” at the show.
Taking Aim at the MBA
Another key ingredient to fostering innovation, says Lutz, is a razor-sharp focus on the customer. And that’s where he takes issue with MBAs and business schools, which he slams in his book for focusing too much on math and a scientific approach to optimizing the business structure.
“I find the really successful companies have this burning passion to please the customer,” Lutz says. But “I have never heard of a course or seen a case where the problem is we just aren’t doing well enough on our product development. Business schools are teaching techniques as opposed to overarching business.”
So what does he think about his time at Cal? “I feel I got an optimal business education out of UC Berkeley,” Lutz says. The tendency to question the status quo was definitely in the air when he was a student. And thanks to Berkeley’s multidisciplinary approach, Lutz says, he took courses in engineering and psychology that “served me incredibly well when I got out into the real world.”
Despite his b-school criticisms, Lutz says he is a believer in leadership education—teaching the do’s and don’ts of good leadership and behavior to spur people to follow a leader.
“If you are teaching leadership, the innovation part follows automatically,” he explains. “If a person merely leads the organization along the path it’s already on, she becomes an administrator of the status quo but not a leader. The definition of a good leader is a change agent: Leaders drive change.”