Bob Lutz on Erasing GM's 'Reputational Deficit'
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Bob Lutz on Erasing GM's 'Reputational Deficit'
http://adage.com/article?article_id=136953
I love the "brilliantly executed mediocrity" line 
I look back at my 95 Firebird build quality and can totally agree.
DETROIT (AdAge.com) -- General Motors Corp.'s potential tagline in bankruptcy: "GM. Yes, we can."
That was the joking suggestion of the automaker's outspoken vice chairman, Bob Lutz, who stressed several times today in a talk with reporters at the Automotive Press Association that a final decision has not been made about whether to file for Chapter 11. He would not speculate on whether the company would go through "the cleansing fire of a restructuring. In a matter of days, we will find out which way it goes."
But the veteran industry executive, who is scheduled to retire from GM at the end of the year, said if the automaker does have to file, "we will come out of this rid of a lot of historic legacy costs that have been dragging us down for the last 20 years or so." He added that GM's current ratio of retirees to active workers is 10-to-1, and the company has paid out $103 billion in health-care benefits in the past 15 years. "That is a charge our foreign competitors simply don't have," Mr. Lutz said.
The Obama administration's auto task force has taken some criticism for what some observers see as meddling in the affairs of Chrysler and GM, as the panel works with the two automakers to get through these treacherous times. But Mr. Lutz said he is thrilled that Detroit has an ear in Washington and hopes some form of the panel is made permanent. He said the government doesn't want to run the two companies; rather, it's in the government's best interest for both automakers to be successful in the future so taxpayers can be repaid.
'Brilliantly executed mediocrity'
The outspoken Mr. Lutz poked fun at GM products of the '70s, '80s and '90s as "brilliantly executed mediocrity," adding that he hopes his legacy as product czar is "the whole organization understands there's no such thing as good enough when it comes to product."
He told the APA that GM has made progress in the past decade improving buyer consideration for its eight brands. Yet that clearly isn't enough. GM came out on top in its own research of more recent unbranded models shown to consumers against competitors' unmarked vehicles. But Mr. Lutz said once people learned the car they liked most was a Buick and their least favorite was a Toyota, they switched their votes. "You can't change that overnight," he said. "What you can change is product." He cited "the sheer number of awards we've won" from third parties for product excellence as recognition that GM has made great progress in the past nine years.
While GM has erased product and fuel-economy deficits, Mr. Lutz said, the toughest challenge is erasing the "reputational deficit. How do you change people's minds? We don't have the answer." He said it may take several generations of new products before people get the message.
Moving the metal
When asked by Advertising Age how well GM's Total Confidence customer-assurance program was moving the metal, Mr. Lutz said sales have been ahead of projections in the past few days. "I think Total Confidence can work, but I would say our initial advertising on it was a little too intellectual. 'Reinventing the ownership experience' doesn't exactly convey the message that we will guarantee your [car] payments."
The "new" GM, Mr. Lutz said, "will be smaller and leaner, but it will be a powerhouse." He added, "The minute we're out, we'd make a strong communication effort about how strong GM is," before making the quip about the "Yes, we can" tagline.
GM is working with two of its Interpublic Group of Cos.' roster shops, McCann Erickson, Birmingham, Mich., (Saab and corporate) and Deutsch, Los Angeles, (Saturn) on a confidence-building ad campaign to reassure Americans the company's vehicle warranties will be honored, a spokeswoman told Advertising Age. That effort will be similar to Chrysler's "Look what we're building" ads after it filed for Chapter 11.
That was the joking suggestion of the automaker's outspoken vice chairman, Bob Lutz, who stressed several times today in a talk with reporters at the Automotive Press Association that a final decision has not been made about whether to file for Chapter 11. He would not speculate on whether the company would go through "the cleansing fire of a restructuring. In a matter of days, we will find out which way it goes."
But the veteran industry executive, who is scheduled to retire from GM at the end of the year, said if the automaker does have to file, "we will come out of this rid of a lot of historic legacy costs that have been dragging us down for the last 20 years or so." He added that GM's current ratio of retirees to active workers is 10-to-1, and the company has paid out $103 billion in health-care benefits in the past 15 years. "That is a charge our foreign competitors simply don't have," Mr. Lutz said.
The Obama administration's auto task force has taken some criticism for what some observers see as meddling in the affairs of Chrysler and GM, as the panel works with the two automakers to get through these treacherous times. But Mr. Lutz said he is thrilled that Detroit has an ear in Washington and hopes some form of the panel is made permanent. He said the government doesn't want to run the two companies; rather, it's in the government's best interest for both automakers to be successful in the future so taxpayers can be repaid.
'Brilliantly executed mediocrity'
The outspoken Mr. Lutz poked fun at GM products of the '70s, '80s and '90s as "brilliantly executed mediocrity," adding that he hopes his legacy as product czar is "the whole organization understands there's no such thing as good enough when it comes to product."
He told the APA that GM has made progress in the past decade improving buyer consideration for its eight brands. Yet that clearly isn't enough. GM came out on top in its own research of more recent unbranded models shown to consumers against competitors' unmarked vehicles. But Mr. Lutz said once people learned the car they liked most was a Buick and their least favorite was a Toyota, they switched their votes. "You can't change that overnight," he said. "What you can change is product." He cited "the sheer number of awards we've won" from third parties for product excellence as recognition that GM has made great progress in the past nine years.
While GM has erased product and fuel-economy deficits, Mr. Lutz said, the toughest challenge is erasing the "reputational deficit. How do you change people's minds? We don't have the answer." He said it may take several generations of new products before people get the message.
Moving the metal
When asked by Advertising Age how well GM's Total Confidence customer-assurance program was moving the metal, Mr. Lutz said sales have been ahead of projections in the past few days. "I think Total Confidence can work, but I would say our initial advertising on it was a little too intellectual. 'Reinventing the ownership experience' doesn't exactly convey the message that we will guarantee your [car] payments."
The "new" GM, Mr. Lutz said, "will be smaller and leaner, but it will be a powerhouse." He added, "The minute we're out, we'd make a strong communication effort about how strong GM is," before making the quip about the "Yes, we can" tagline.
GM is working with two of its Interpublic Group of Cos.' roster shops, McCann Erickson, Birmingham, Mich., (Saab and corporate) and Deutsch, Los Angeles, (Saturn) on a confidence-building ad campaign to reassure Americans the company's vehicle warranties will be honored, a spokeswoman told Advertising Age. That effort will be similar to Chrysler's "Look what we're building" ads after it filed for Chapter 11.
I look back at my 95 Firebird build quality and can totally agree.
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Joined: Oct 2004
Posts: 1,296
From: Beaumont, TX
It's not just 'Reputational Deficit' product & corp. wise, but dealer 'Reputational Deficit'. Many people have problems with GM dealerships w/ shady sales practices, poor customer service, etc. You don't hear people complain about Lexus dealerships.
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Joined: Nov 2000
Posts: 2,712
From: Ontario
I personally don't think GM's mediocre products were that brilliantly executed. They were pretty much mediocre all around.
GM talks a lot about the legacy costs as being a competitive disadvantage against their foreign rivals, as if it was totally beyond their control and just a fact of life. Bullsh|t; it's a financial / management failing. When GM made the labour agreements to pay for retiree benefits, they have accountants to determine exactly what that should cost over the life of the employee. And when they close a plant, they take a charge against earnings to pay for the employees who are no longer active. If they failed to properly estimate how much to sock away, or how big of a charge to take, or just plain failed to sock away enough, well, that's a management mistake.
GM talks a lot about the legacy costs as being a competitive disadvantage against their foreign rivals, as if it was totally beyond their control and just a fact of life. Bullsh|t; it's a financial / management failing. When GM made the labour agreements to pay for retiree benefits, they have accountants to determine exactly what that should cost over the life of the employee. And when they close a plant, they take a charge against earnings to pay for the employees who are no longer active. If they failed to properly estimate how much to sock away, or how big of a charge to take, or just plain failed to sock away enough, well, that's a management mistake.
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Joined: Aug 2002
Posts: 3,650
From: Indianapolis, IN
I would argue that Toyota's entire lineup has traditionally been "brilliantly executed mediocrity"... Well built, yes, but mediocre in style, performance, driving satisfaction, etc. And lately the quality part has dipped too (and I find their interior fit/finish to be no better than most modern cars). Toyota, not Lexus, that is.
But anyway, I fount this to be the most compelling part (aside from Lutz thinking or pretending to think that the gov't doesn't want to be involved in the auto biz...
):
Unreal.
But anyway, I fount this to be the most compelling part (aside from Lutz thinking or pretending to think that the gov't doesn't want to be involved in the auto biz...
):
He told the APA that GM has made progress in the past decade improving buyer consideration for its eight brands. Yet that clearly isn't enough. GM came out on top in its own research of more recent unbranded models shown to consumers against competitors' unmarked vehicles. But Mr. Lutz said once people learned the car they liked most was a Buick and their least favorite was a Toyota, they switched their votes. "You can't change that overnight," he said. "What you can change is product." He cited "the sheer number of awards we've won" from third parties for product excellence as recognition that GM has made great progress in the past nine years.
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Joined: Dec 2002
Posts: 1,505
From: Charleston, WV
Its a shame he is retiring at the end of the year. The last month or so he has done a great job promoting the brand and upcoming cars. You dont see other manufacturers with Vice Presidents on the Dave Letterman promoting their cars (the Tesla doesn't count...) I think this is a great idea. They need to keep him on just to do that!
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Joined: Jan 2009
Posts: 429
I would much prefer to see Lutz leading GM out of a organized bankruptcy than the cluster f*ck we have going on now. I've said it before and I'll say it again, it took GM 25 years of putting out "mediocre" products before the public finally caught on and abandoned them. It's not like the Japanese just showed up on the shore with a glowing reputation. They pounded away and pounded away and earned their reputation. As we've seen at least in Toyota, it's difficult to backup 100% of your reputation. However, Toyota could learn something from GM, and that is if you address the issues when they start to appear as opposed to resting on your laurels, you should be able to avoid the pitfalls that the domestics found themselves in. It appears that by the time GM figured out how to compete and make cars that people really wanted, along with a tripping up from Toyota, that they're done for and now it will take even longer for them to shed their reputation.
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Joined: Mar 2001
Posts: 3,376
From: Sarasota FL
Without a doubt the Big 3 all have a huge reputational deficit. I've fought it for the 9 years I've been selling cars.
Just because your neighbor's '87 K Car blew a transmission at 55k miles doesn't mean your new 300 will do the same thing, Mr. Customer
And if I hear one more time "well, a Toyota or Honda will go to 200-300k EASY with no repairs needed," I will puke on said customer. I just took in a '96 Accord with 130k miles that needs over $3,000 worth of work just to pass for a sticker. Hey, its old. I get it. But a lot of people don't!
Just because your neighbor's '87 K Car blew a transmission at 55k miles doesn't mean your new 300 will do the same thing, Mr. Customer
And if I hear one more time "well, a Toyota or Honda will go to 200-300k EASY with no repairs needed," I will puke on said customer. I just took in a '96 Accord with 130k miles that needs over $3,000 worth of work just to pass for a sticker. Hey, its old. I get it. But a lot of people don't!
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Joined: Apr 2000
Posts: 3,748
From: New England
I personally don't think GM's mediocre products were that brilliantly executed. They were pretty much mediocre all around.
GM talks a lot about the legacy costs as being a competitive disadvantage against their foreign rivals, as if it was totally beyond their control and just a fact of life. Bullsh|t; it's a financial / management failing. When GM made the labour agreements to pay for retiree benefits, they have accountants to determine exactly what that should cost over the life of the employee. And when they close a plant, they take a charge against earnings to pay for the employees who are no longer active. If they failed to properly estimate how much to sock away, or how big of a charge to take, or just plain failed to sock away enough, well, that's a management mistake.
GM talks a lot about the legacy costs as being a competitive disadvantage against their foreign rivals, as if it was totally beyond their control and just a fact of life. Bullsh|t; it's a financial / management failing. When GM made the labour agreements to pay for retiree benefits, they have accountants to determine exactly what that should cost over the life of the employee. And when they close a plant, they take a charge against earnings to pay for the employees who are no longer active. If they failed to properly estimate how much to sock away, or how big of a charge to take, or just plain failed to sock away enough, well, that's a management mistake.
Registered User
Joined: Apr 2000
Posts: 3,748
From: New England
Without a doubt the Big 3 all have a huge reputational deficit. I've fought it for the 9 years I've been selling cars.
Just because your neighbor's '87 K Car blew a transmission at 55k miles doesn't mean your new 300 will do the same thing, Mr. Customer
And if I hear one more time "well, a Toyota or Honda will go to 200-300k EASY with no repairs needed," I will puke on said customer. I just took in a '96 Accord with 130k miles that needs over $3,000 worth of work just to pass for a sticker. Hey, its old. I get it. But a lot of people don't!
Just because your neighbor's '87 K Car blew a transmission at 55k miles doesn't mean your new 300 will do the same thing, Mr. Customer
And if I hear one more time "well, a Toyota or Honda will go to 200-300k EASY with no repairs needed," I will puke on said customer. I just took in a '96 Accord with 130k miles that needs over $3,000 worth of work just to pass for a sticker. Hey, its old. I get it. But a lot of people don't!
sums it up here
"GM came out on top in its own research of more recent unbranded models shown to consumers against competitors' unmarked vehicles. But Mr. Lutz said once people learned the car they liked most was a Buick and their least favorite was a Toyota, they switched their votes. "
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Joined: Aug 2002
Posts: 3,650
From: Indianapolis, IN
I personally don't think GM's mediocre products were that brilliantly executed. They were pretty much mediocre all around.
GM talks a lot about the legacy costs as being a competitive disadvantage against their foreign rivals, as if it was totally beyond their control and just a fact of life. Bullsh|t; it's a financial / management failing. When GM made the labour agreements to pay for retiree benefits, they have accountants to determine exactly what that should cost over the life of the employee. And when they close a plant, they take a charge against earnings to pay for the employees who are no longer active. If they failed to properly estimate how much to sock away, or how big of a charge to take, or just plain failed to sock away enough, well, that's a management mistake.
GM talks a lot about the legacy costs as being a competitive disadvantage against their foreign rivals, as if it was totally beyond their control and just a fact of life. Bullsh|t; it's a financial / management failing. When GM made the labour agreements to pay for retiree benefits, they have accountants to determine exactly what that should cost over the life of the employee. And when they close a plant, they take a charge against earnings to pay for the employees who are no longer active. If they failed to properly estimate how much to sock away, or how big of a charge to take, or just plain failed to sock away enough, well, that's a management mistake.
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Joined: Jun 2004
Posts: 2,977
From: SeVa
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Joined: Dec 2002
Posts: 1,505
From: Charleston, WV
GREAT NEWS!! Just saw this over at GMI.....
http://www.gminsidenews.com/forums/f...rt-time-79940/
Source: Special Automotive News email alert
Lutz says he will continue to advise GM part-time
Automotive News: May 29, 2009 - 3:49 pm ET
DETROIT -- General Motors Vice Chairman Bob Lutz says he expects to continue as a part-time adviser to GM after retiring at year's end.
Lutz, 77, is serving as a senior adviser for the remainder of the year, focusing on product development and design. He made his comments before a speech Thursday in Detroit.
Lutz says he will continue to advise GM part-time
Automotive News: May 29, 2009 - 3:49 pm ET
DETROIT -- General Motors Vice Chairman Bob Lutz says he expects to continue as a part-time adviser to GM after retiring at year's end.
Lutz, 77, is serving as a senior adviser for the remainder of the year, focusing on product development and design. He made his comments before a speech Thursday in Detroit.
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Joined: Nov 2000
Posts: 2,712
From: Ontario
All well and good (nothing like a little hindsight / armchair quarterbacking of decisions made decades ago), but not all of that was predictable nor in their control. I'm sure the actuaries / math guys didn't quite foresee the huge increase in health care costs... Clearly there were management miscues along the way, but it isn't like there weren't some smart people at the company all those years. Some stuff could have been handled better, but I'm sure some of it was quite beyond what was expected.
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Joined: Mar 2001
Posts: 954
From: Shelton, WA
So.....it's the customer's fault that GM/Ford/Chrysler have had the problems they've had......are you serious? Haven't you ever heard the saying "The customer is always right."?While what you're saying is entirely true, that doesn't make the customer "wrong". Just because a guy bought a new Ford truck that spent more time in the shop than on the road back in the '70s won't buy another Ford product again, doesn't make him "wrong". How can you blame a person for having a "Fool me once, shame on you. Fool me twice, shame on me." mentality?
GM/Ford/Chrysler only have this "reputational deficit" because they've earned it, and they're not going to get very far fixing it by trying to change the customer.
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Joined: Mar 2007
Posts: 1,173
So.....it's the customer's fault that GM/Ford/Chrysler have had the problems they've had......are you serious? Haven't you ever heard the saying "The customer is always right."?While what you're saying is entirely true, that doesn't make the customer "wrong". Just because a guy bought a new Ford truck that spent more time in the shop than on the road back in the '70s won't buy another Ford product again, doesn't make him "wrong". How can you blame a person for having a "Fool me once, shame on you. Fool me twice, shame on me." mentality?
GM/Ford/Chrysler only have this "reputational deficit" because they've earned it, and they're not going to get very far fixing it by trying to change the customer.