"Is Bob Lutz the right guy to run GM Marketing?" is the question headlined on Advertising Age. I'm sure you know I think the answer is a resounding "NO."
I'll never forget a few months when Mr. Lutz, being interviewed for a national magazine, said the Tesla sports car and the company that developed it was a joke. He said it wasn't a real car, nor was Tesla a real car company. He said the leadership at Tesla didn't know what it meant to be a professional auto company, and to be professional auto executives. He was condescending and rude as to the future of Tesla.
Let's see, Tesla has made a 100% electric car, sold 100% of its output, has investors that aren't the federal government, has never been bankrupt and has never asked for a bailout to stay in business. Meanwhile, the former vice-chairman of GM was a stanch critic of the electric car, saying it would never meet the driving needs of the American public, and fully supported GM killing its electric car program. While he was a leader at GM, the company couldn't even keep 100% of its capacity in operation, much less sell 100% of the output, the company begged the federal government for money to keep it in operation when private investors would no longer invest, and then wiped out the equity holders entirely – and over 80% of the value of bondholders, by leading the company into bankruptcy.
Mr. Lutz was an executive at GM. But that doesn't make him a good executive. In fact, given the performance of GM since 1975 (nearly 35 years) it might be more of a disqualifier than a qualifier. Why would anyone want to hire an executive who stayed in one industry for over 40 years, during which the companies he worked for lost share, saw their margins decline, led in no new technology categories, was perennially late introducing new products, saw their costs spiral out of control, had the lowest job satisfaction in the industry by its employees, had some of the lower quality scores among consumers in the industry and and eventually had to declare bankruptcy?
America loves to glorify, make heroes even, of business executives. Usually of large companies. But few of these executives actually made a significant positive impact on their companies, employees, investors or suppliers. Executives rise because they are very good at supporting the Success Formula, not because they produce significantly better results. As long as the manager turned director turned V.P. keeps reinforcing the Success Formula, in fact many mistakes can be overlooked. Especially if the executive's style is similar to the top brass at the company (same school, same degrees, same geographic origin, same religion, same politics, same views.) What gets an executive promoted at GM (and most large companies) is simply not results. It is consistent reinforcement of a Success Formula, burnishing and amplifying it, even in the face of deterioriating results. Like Mr. Lutz.
There is no popular election of executives. In this case, perhaps there should be. Given how disgusted most people are with GM, I doubt many people would vote to keep the original management in place. And I doubt fewer still would vote to place a 77 year old executive who was part of the long term industry decline and recent failure in a top position. And even fewer would say that a 77 year old is prepared to take on marketing leadership in a world where traditional advertising has declining value, and the best companies are creatively using all kinds of internet marketing programs. Not just because of his age – but because he's never developed the remotest skill to do the work. Many 30 year olds could explain in deep detail how to get viral campaigns working – while all Mr. Lutz could say is he's seen a YouTube! video and read a blog or two. And he gets to manage the 4th largest ad budget in the USA? Isn't that how GM got into this mess – having people in top jobs who were out of step with current market realities?
Businesses exist to put resources to effective use. We measure that effectiveness with cash flow and profits. We ask that the leaders who borrow money from investors (equity and debt) return that principle with a positive rate of return. And we ask that the executives honor their commitments to the employees and vendors. In the case of GM, the executives eliminated the investments made by investors, reneged on the employee commitments and left vendors holding the bag on long-term contracts the company will no longer honor. Even old customers can no longer hold the company accountable for its defective products. By all measures, these leaders failed. And yet someone thinks it's a good idea to keep the same people running this company?
GM needs new leadership. Leadership willing to Disrupt old Lock-ins and use White Space to develop a new Success Formula. Asking Mr. Lutz to be the head of marketing is not a Disruption. It is an action specifically intended to remain Locked-in to the old Success Formula and maintain the re-invention gap between GM and the marketplace. With this kind of decision making, GM will find itself back in bankruptcy court a lot faster than any of the experts even think.
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