Have MBA Bean-Counters Destroyed American Business?

On Sunday I happened to tune in to Bob Brinker's Moneytalk radio show when former GM vice chairman and car guy extraordinaire, Bob Lutz, was on promoting his new book: Car Guys vs. Bean Counters: The Battle for the Soul of American Business.

Lutz's premise is fascinating and timely. He says product guys with vision and passion for delivering outstanding customer experience - rather than soulless, number crunching MBAs - should manage American companies.

He uses 40+ years of personal auto industry experience to make his argument and suggests that the premise is valid in any business. While I do think the guy's got a point, I'm having a tough time buying the whole argument, at least the way Lutz presents it.

For one thing, if bean-counters were indeed running the show in the auto industry, they had to be the most incompetent bean-counters I've ever heard of, cutting all sorts of crazy labor deals and essentially handing over the company's future and profitability to the UAW.

Of course, U.S. automakers did make uninspired, unreliable, and just plain crappy cars for a long time, but I'm not sure who's to blame for that. Lutz's arguments sound suspiciously like someone making excuses and laying blame for a decade or two of mismanagement on the other guy - whoever that is - while positioning himself as the savior who came along and set things straight.

For example, Lutz suggests that U.S. automakers missed the hybrid boom because the technology was expensive and their boards wouldn't buy into a program with crappy ROI or return on investment. He said Toyota didn't have that problem because it's family owned.

I'm sorry, but I think that's a huge pile of BS. Sure, American boards are far more focused on short-term profits than their Japanese counterparts, but still, if you know your Japanese competitors are doing it, and Lutz and company surely knew, doesn't that mean you've got to do it or you'll get clobbered in the market by better technology that provides higher performance vs. gas mileage?

The truth is that the Japanese invested in hybrid technology because they had the vision and foresight to know that it was the future. If American car companies were overly focused on profits, that's because they were hemorrhaging red ink because of their labor deals. Moreover, dumping the whole fiasco on the board of directors is ridiculous. What, the CEO and executive staff don't run auto companies?

Beyond the interview, various book reviewers point out that the book has all sorts of similar examples where Lutz sees the past through his own subjective prism.

For example, his accounting of GM's involvement in the NUMMI joint venture with Toyota fails to recognize it as a huge blunder by GM management that gave Toyota a beachhead in North America that the fledgling company ultimately used to unseat GM as the world's biggest automaker.

Meanwhile, GM completely botched the opportunity to learn Toyota's world-class quality and manufacturing know-how, how to cost-effectively make quality vehicles, and how to avoid going bankrupt.

Again, the bean counters I know would have jumped on the opportunity. I suspect there was more than a little NIH (not invented here) component to that fiasco, particularly on the development and manufacturing or car guy side of GM, to use Lutz's term.

Frankly, the whole thing comes across as naïve, whiny excuses and finger-pointing in place of accountability for huge mistakes and short-term let's just kick the can down the road thinking. In my opinion, that's a far bigger problem in American business than suggesting that, if a passionate visionary like Steve Jobs or Bob Lutz ran every company, all would be well in corporate America.

With all due respect to Mr. Lutz, much like the cars his companies used to make, I'm just not buying it.

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