Got Guts?
An interview with Bob Lutz, the former vice-chairman of Chrysler. Lutz describes common mistakes companies make when designing new products and explains what it takes to be a great leader.
Published March 1999
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Former Chrysler vice-chairman--and celebrated maverick--Bob Lutz has decidedly strong opinions about what it takes to run a company. And bureaucracy is not on his list
Lee Iacocca's turnaround of a near-bankrupt Chrysler in the early 1980s has become the stuff of business legend, but auto-industry insiders tend to speak more glowingly of Chrysler's second turnaround, which took place in the 1990s. Between 1989, when the company was again in danger of going under, and 1996, when it was about to become the most profitable carmaker in the United States, the company's products morphed from blandness to buzz-making flair. With cars like the funky Neon; the sleek LH sedans; the classy, second-generation versions of the Caravan and Jeep Cherokee; and most emblematically, the ultra-high-performance Viper; Chrysler got the American public talking with unabashed excitement about its vehicles for the first time in decades.
Though Robert Eaton succeeded Iacocca as Chrysler's chairman and CEO in 1992, it is Robert Lutz who, as vice-chairman and president, is largely credited with the company's revitalization. A former marine fighter pilot who graduated from college at the age of 30, the Swiss-born Lutz did stints with General Motors, BMW, and Ford before joining Chrysler, in 1986. It was at Chrysler that his offbeat, outspoken (he was opinionated enough to earn Iacocca's ire and lose his expected successorship), and seemingly contradictory management style crystallized into the deceptively simple and straightforward philosophy that Lutz outlines in his recent book, Guts: The Seven Laws of Business That Made Chrysler the World's Hottest Car Company (John Wiley & Sons, 1998).
Though Lutz, 67, has been a big-company guy for most of his career--he retired from Chrysler last summer, only to take over the top slot at $3-billion car-battery manufacturer Exide in December--much of his success has come from cultivating entrepreneurial attitudes within a large-company environment. More recently, he's had a chance to play a direct entrepreneurial role as a "company adviser" to Eller Industries, a start-up motorcycle manufacturer trying to revive the famed (but legally disputed) Indian brand name.
Inc. contributor David H. Freedman spoke with Lutz at his massive estate in Ann Arbor, Mich., which Lutz shares with his wife, Denise (a helicopter pilot), five dogs, and a museum-quality vintage-car and -motorcycle collection. Lutz seems to have structured his life around motion: the interview began with a blurred-landscape, neck-snapping ride in Lutz's growling Dodge Ram pickup ("It's had a few modifications made to it," he explained, unnecessarily) and ended with Lutz pulling down the runway of a nearby airfield in his Mach 0.8 Czech Aero L-39 "Albatros" jet-fighter trainer.
Inc.: What's the greatest mistake companies make when developing new products?
Lutz: They focus on perfect quality over exciting design. Excellent quality in products and services has become almost universal. In the old days you could buy a bad car or truck. Now it's almost impossible to find one that's truly of poor quality. There are so many excellent brands and models out there that unless you do something with design to make your product stand out, it will simply go unnoticed. Even relatively minor differences in the way it looks and how it's appointed can assume a large magnitude.
Take the last generation of the Cadillac Seville [from General Motors]. It wasn't a perfect design, but the car had a lot of character. It had a powerful, hulking, athletic presence on the road. Even in Europe, people were buying that car. Then GM decided to take out everything that was controversial about it--the puffiness, the narrow "greenhouse" [the windowed area, sharply sloping inward toward the roof], the heavy "C" pillar in the back [between the back side window and the rear window]. The new Seville is technologically a vastly superior automobile; it's one of the world's great luxury cars. But it's sanitized. Nobody notices it anymore. It looks like an Acura TL or a Lexus 400 or a medium-sized Mercedes or the last generation of the BMW 5 series. It's been given the universal luxury-car look, and that simply won't work anymore.
Inc.: But can't a design stand out in a way that turns people off?
Lutz: Yes, and that's OK. When I was at Ford in the mid 1980s, I was responsible for the development of the Merkur XR4Ti, which was really the first good European high-performance car available in the U.S. at a reasonable price. It had a double-bladed rear spoiler, and the British press at the time called the car "over the top." Yeah, sure, absolutely, it was. Later on Ford replaced the spoiler with a single-bladed one, and the car lost all its uniqueness and character. The purpose of a product like that is to make you love it or hate it. Same with the Plymouth Prowler. If you don't like it, then please don't buy it, because we didn't make it for you.
