Here's What Happened When Legendary Car Guy Bob Lutz First Met Legendary Chrysler CEO Lee Iacocca

Lee iacoccaAPLee Iacocca speaking in Jan. 1984.

Excerpted from Icons and Idiots: Straight Talk on Leadership by Bob Lutz, in agreement with Portfolio, an imprint of Penguin Random House. Copyright (c) Bob Lutz, 2013. The paperback edition published 2014.

Lee Iacocca had been trying to get me to join him at Chrys­ler for several years when, in 1986, disappointed with what appeared to be a bleak career future at Ford, I became in­terested, and we began talking in earnest.

A deal was soon struck, and I politely exited Ford, con­scious as always in my career of the value of a gracious departure with no hard feelings.

I arrived at Chrysler eager to set about my tasks as executive vice president, Trucks (which at that point were almost nonexistent at Chrysler), International Operations (likewise), and Diversified Prod­ucts (typical of the era, the company’s own in-house suppli­ers and component plants).

In my inaugural meeting in Lee’s office, his perfor­mance was, in many ways, typical. He was effusive, enthusiastic, expressing his opinions with a firmness that left no doubt in the listener’s mind that these were facts that could not be questioned.

“You picked a good time to leave Ford, lemme tell ya! Those potato cars (Taurus and Sable) they’re coming out with are gonna bomb. We put a couple in a product clinic against our own upcoming Dodge Dynasty and Chrysler Fifth Avenue (elongated versions of the K-car, equally boxy, with “Greek temple” grilles, stand-up hood ornaments, pad­ded vinyl roofs, and every dated styling cliche that was driving American buyers to imports), and we killed ’em. Our average score was 7.5 on a 10-point scale. Theirs was a 5.0. It’s gonna be the flop of the century. I hope you didn’t have anything to do with it.”

I knew the story behind the averages. The new Chrysler products were scored around 7.5 by the vast majority of respondents. In words, that means, “OK, not awful, but not my first choice, most likely.” That kind of score, in the modern world, is the kiss of death, because nobody settles for the second choice unless it is made into a deal you can’t refuse through costly rebates.

Average incentives of $US3,000/ car is what it took to move the ugly monsters off the lots. The Taurus, on the other hand, was sharply polarising. Like the first new Dodge Ram pickup in 1994, it triggered a love/hate dichotomy: half the respondents hated it with a passion and assigned it a score of 1 or 2. The other half was stunned in a positive sense and couldn’t believe that a U.S. company was launching a car of such modern, import-like appearance.

Bob lutzAP/Pat Crowe IIGeneral Motors vice chairman Bob Lutz, left, and chief financial officer Fritz Henderson

They overwhelmingly voted 9 and 10. The mis­leading average, of course, was 5. But in today’s highly com­petitive market, “blending in” with 7.5 doesn’t work. It doesn’t matter how many 1s and 2s you have: the success of the product comes from the enthusiasts who can’t wait to buy it. Thus, Taurus/Sable went on to become America’s best-selling car, free of incentives, selling for years at a ca­dence of over 400,000 annually. Chrysler’s Dynasty, Fifth Avenue, and, later, Imperial, despite massive rebates (one of lacocca’s earlier marketing inventions: “Buy a car. Get a check!”), never really broached the 200,000 level.

But in my inaugural meeting, Lee was expounding upon Ford’s colossal error.

He was, figuratively, rubbing his hands with glee. I wondered: Should I burst his bubble? Should I tell him the bad news the research portended? Would I alienate my new CEO by giving him a market re­search education he didn’t ask for? Wouldn’t it just be wiser to shut up and move on?

My failure to do just that was typi­cal of the almost teacher/pupil, father/son, love/hate cli­mate that was to mark our rocky relationship. He clearly didn’t like the news, didn’t like my smart-arse attitude, and, not having had much practice, didn’t like an underling tell­ing him he was wrong. There would be many instances in our relationship when the same situation was repeated, sometimes very unwisely on my part, in meetings.

It’s strange. I find it hard to comprehend a leader who feels threatened by subordinates who offer an honest opinion, who aren’t (dangerous) yes-men, who will steer the boss in the right direction.
But one of the little-known aspects about Lee Iacocca is that beneath the commanding stage presence, the brilliant performances on TV, the boldness of his public statements, there was a side that was vulnerable and insecure.
Quite possibly, this stemmed from being born in that locale known as “Humble Origins,” in this case, the steel­ making Allentown, Pennsylvania.Lee’s father and mother were both Italian immigrants. Through hard work and a good sense of entrepreneurism, Nicola Iacocca became the owner of a successful hot dog stand, famous throughout Allentown as “Yacco’s Hot Dogs.”

What Lido Anthony Iacocca lacked in parental gentility, he more than compensated for in work ethic and intelligence.

He graduated from Allentown High School in 1942 and from Lehigh University four years later in 1946, with a degree in industrial engineering.

Following a graduation with highest honours, Lee won a fellowship to Princeton University where he concentrated on the curious duo of politics and plastics. Joining Ford soon thereafter, his rise through the ranks was spectacular. In a sea of conforming, cautious, quantitative colleagues, Lee was fast, courageous, opinionated, and mostly right. (He wasn’t in Engineering very long: he may have had a degree, but his knowledge of what actually goes inside a car or what it takes to produce one always seemed alarmingly rudimentary.)

Lee was a born marketing guy, a huckster, a promoter, a supreme salesman, a man who could have run successfully for almost any political office. His talent knew almost no bounds. While his “car guy” gut feel failed to evolve in the late 1980s and early 1990s (he was convinced that Americans would always love vinyl roofS, Greek-temple grilles, opera windows with little gold stripes, and fake wire wheel covers), he was nearly infallible when those design trends ruled.

Ford iacoccaAP/Preston StroupFord Motor Company Board Chairman Henry Ford II, right, calls for order at beginning of his firms stockholders meeting, Thursday, May 8, 1975, Dearborn, Mich. At left is Lee Iacocca, Ford president, with T.M. Mecke, Jr., vice president public relations, looking over Fords shoulder. In this meeting, Ford told the some 1,800 stockholders things were looking better for the world economy in general and the Ford Motor Co. in particular.

So why the insecurity, the worry, and the mild case of “imposter syndrome”? It had much to do with the Ford fam­ily and the culture of Iacocca’s senior colleagues at Ford. Henry Ford II, grandson of the founder, was born to wealth. He was partially educated in France, spoke the language reasonably well, and was perfectly at ease with the key so­cial, industrial, and political figures in Europe.
He wore expensive custom-tailored clothes, but they were often ca­sually rumpled, as if to say, “What does it matter? They’re the best money can buy. If they wrinkle, well …” His ties were always silk, with small understated patterns, in the Eu­ropean manner. Henry Ford II was immensely powerful, yet the power was never projected deliberately. “HF2,” as he was known, would never have used the phrase “Do you know who I am?” regardless of the circumstance. He just quietly assumed that people knew.

Mr. Ford moved and spoke gracefully, at medium speed, and was painfully polite, even deferential, with subordi­nates. His lifestyle was not dissimilar to that of a very old, wealthy European family. In short, Henry Ford II was as close as the United States, with our so-called classless soci­ety, will ever get to a genuine aristocrat.

Gentle, genteel, urbane, casually expecting the best in wine, food, clothing, and accommodation (but never complaining when things weren’t quite up to par), he stood in sharp contrast to Ia­cocca.

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