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Iacocca: an autobiography.

Have you ever wondered why the Geneens and Iacoccas collect $800,000 or $900,00 in salary, profitable stock options and lavish retirement pensions, and enjoy into the bargain such pleasant perks as limousines, private airplanes and gourmet meals in executive dining rooms while you, in dispiriting contrast, earn a small fraction of their compensation and travel economy class on your vacations? Could it be that early in life you gave the wrong answer to Bernie Cornfeld's challenging question, Do you sincerely want to be rich?

Turn with me for guidance to the confessions and counsel of two eminent tycoons. In the eighteen years 1959 to 1977, during which Harold Geneen headed International Telephone and Telegraph, annual sales ballooned from $766 million to $16.7 billion. For fifty-eight successive quarters I.T.T. earnings increased, yielding annual growth rates of more than 10 percent. Geneen was the archetypal conglomerateur. Worried at the outset of his "reign" (his word) that 85 percent of I.T.T.'s activities were outside the United States, mostly in Europe, and were concentrated in telephone systems, he set out to diversify and to bring the American share of sales and profits to 50 percent. Before he was finished, geneen had, in the words of his admiring collaborator, "bought, merged with, or absorbed some 350 different businesses in eighty countries, and fashioned them into 250 different profit centers." At one time or another while he was president, I.T.T. baked bread, sold insurance, trained secretaries, built houses, rented cars, made small loans to consumers and patriotically assisted the Central Intelligence Agency in the destabilization of the Allende regime in Chile. At its peak, I.T.T. ranked number nine on Fortune's list of 500 industrials.

How did a poor boy who got his accounting degree in night school scramble to the topmost branch on the tallest tree in the corporate forest? You might find the answer disappointing. Bromides helped. Here is a garland of the maxims that guided Geneen: "Management must manage"; "Leadership cannot really be taught. It can only be learned"; "You can know a person by the kind of desk he keeps"; "You cannot run a business, or anything else, on a theory"; "In the business world, everyone is paid in two coins: cash and experience. Take the experience first; the cash will come later"; and finally, "The drudgery of the numbers will make you free."

Ah, numbers and facts. Like Gradgrind and Sergeant Friday, Geneen holds to the faith that "there is no word in the English language that more strongly conveys the intent of incontrovertibility, i.e., 'final and reliable reality,' than the word 'fact.'" Geneen was famous for meeting his top managers one week a month for sessions, he recalls happily, that often convened at 10 A.M. and could terminate at midnight or thereafter. When, late in one of these marathons, Geneen asked what a successful I.T.T. executive's most important quality was, a voice in his captive audience was heard to reply, "Insomnia."

Although Geneen tells the story, he doesn't sympathize with his subordinate's attitude: "I often told colleagues that business was as much fun as golf, tennis, sailing, dancing, or almost anything else you might want to name. . . . Business could be a great adventure, a lot of fun, something to look forward to every day." The best part of our hero's day began at 5 P.M., when silence descended on the executive suite and he could settle down to six or seven hours of uninterrupted report reading and number analysis. There is a Mrs. Geneen, but only as an offstage presence who is informed that once again her spouse will not be home for dinner. Harold does play golf and tennis, but he consoles himself that he can pick up useful business information along the way. Although he or his collaborator from time to time recall that an occasional woman joins the executive fraternity, the tone is almost relentlessly masculine. Business is a man's game.

As Geneen concedes, his style of managing and acquiring by the numbers sometimes falters, but he draws no large inferences from his 1968 Rayonier fiasco. After the most careful analysis, Geneen authorized construction of a $120 million processing plant to convert wood into cellulose on the edge of a Canadian forest. Although "Rayonier's plans were checked and rechecked," no one had actually looked at the trees. They were too small, alas, to pay for transporting and processing. Loss to I.T.T., Rayonier's parent: $320 million. How many similar surprises I.T.T. encountered, Geneen does not say.

These days I.T.T. is just another conglomerate. Its earnings are not exceptional. It has spun off many of Geneen's acquisitions. Even in his glory days, critics suspected the veteran accountant of manipulating his beloved numbers to generate his string of ever higher profits. His is a story singularly empty of any achievement other than endless effort to make a large corporation even larger and its authoritarian master still richer. Geneen on the record doesn't much care what he makes or sells so long as target rates of return are met or exceeded. The best reason for acquiring Continental Baking was its highly profitable junk food, Twinkies. Geneen refused to gamble on computers because they were too risky to suit his taste. No yearning for technological breakthrough, no aspiration to improve the American diet or environment diverted Geneen from his pursuit of higher profits. This is a sad book.

Lee Iacocca has become so famous, most of all through his TV commercials for Chrysler, that earlier this year he had the gratifying opportunity to deny that he was considered for the Democratic Vice-Presidential nomination. As he says, when he was a rich Ford auto executive he was a Republican. In the course of rescuing Chrysler with Carter Administration loan guarantees, he became a Democrat. Moral: Put your political bets on the folks who help you. Certainly as autobiographies by celebrities go, this is an unusually candid book. By his account, Iacocca propelled himself upward in the Ford Motor Company, where he worked for thirty-two years, by hard work a la Geneen but also by brashness and utter confidence in his own judgment. Unlike Geneen, who only went for the sure things, Iacocca staked his future at Ford and some hundreds of millions of corporate dollars on the youth-oriented Mustang. At Chrysler he bet the corporation on the success of a new line of front-wheel-drive K-cars. Geneen notwithstanding, Iacocca is proof that a person of pronounced entrepreneurial temperament can cut through corporate bureaucracies to make quick and risky decisions.

The most fascinating pages recall Iacocca's rise and fall at Ford. Henry Ford 2d treated his Lee as a protege, a tyrant's pet, until he became jealous of his favorite's success and the increasing attention paid him by the media. Ford brooked no rivals. Moreover, he was a mean drunk who in one evening might imbibe three bottles of Lafite Rothschild at $120 a bottle. Oh, to be rich! In the rages that accompanied those bouts, Ford was a man to be avoided. By 1975, he had turned against his pushy subordinate enough to order a complete audit of Iacocca's expense account and personal finances. Although nothing damaging was discovered, Ford was not appeased. In 1978 he abruptly fired the man, whom, as he subsequently explained, he had never liked.

Iacocca was devastated and infuriated, although not angry enough to accept a telephone invitation to sponsor punishment, presumably by the mafia, of the man who had attacked his family honor. All he had to do was call a certain number and Ford's arms and legs would have been expeditiously broken. Why did he endure years of Ford's caprice and persecution, as well as signs of his master's anti-Italian and antiblack prejudices? His answer is honest:

I was . . . greedy. I enjoyed being president. I liked having the president's perks, the special parking place, the private bathroom, the white-coated waiters. . . . And i found it almost impossible to walk away from an annual income of $970,000. Could you or I?

Iacocca did not brood long. Two weeks after his confrontation with Ford, Chrysler sought his services as a potential savior. He took over as president with the understanding that he would become chief executive officer within a year. He discovered a mess. Information was unavailable. The corporation operated as a collection of independent duchies. The manufacturing people set production quotas without consulting their marketing colleagues. Cars rusted in Chrysler lots. Research and development were starved. In his first three years at the helm, Iacocca fired thirty-two of Chrysler's thirty-five vice presidents, nearly one a month. Hit hardest of the Big Three by the 1979 OPEC oil shock, Chrysler would go broke without Federal aid, Iacocca soon realized. He tells well the tale of his incessant Washington lobbying. He is still angry at Walter Wriston, The Wall Street Journal and other opponents of Federal assistance. He notes with relish that sanctimonious bakers who cried free enterprise forever now quietly accept bailouts from the Federal Reserve and the F.D.I.C. He takes understandable pride in Chrysler's financial health and in its ability to repay Federal loans years ahead of schedule.

He has reflected on his experience at Chrysler and reached the conclusion that the corporate leaders' blind animus against government is foolish. To meet the Japanese challenge, he now says, the United States needs some sort of industrial policy. He scatters opinions everywhere. Air bags are a Naderite obsession, expensive and unreliable. The "national leadership consists of too many lawyers and not enough people from business. I'd like to see a system where we brought in twenty top managers to run the business side of the country and maybe even paid them $1 million a year, tax-free." His experience with United Automobile Workers president Douglas Fraser as a member of Chrysler's board of directors convinced him that it is useful to enlist the services of an occasional labor leader. He and Fraser got the U.A.W. to see reason on wage concessions in 1980. And he continues to believe, even though he again heads a rich corporation, that the Democrats will do better by both people and corporations than the Republicans.

Iacocca is one of those rare adults who is capable of changing his mind. This is not to say he has become a bleeding heart liberal. He does not, for example, advocate comprehensive health protection as the solution to the rising cost of employee medical benefits. Unlike his onetime Ford boss Robert McNamara, he is perfectly happy to produce cars that please hot rodders and yuppies. McNamara, a square type, favored functional vehicles devoid of romance. Iacocca is abrasive, impatient and demanding. But the juices of humanity course through his veins. He celebrates his parents, his wife and his two daughters as unashamedly as does Mario Cuomo.

As a guide to success, he is little more help than Geneen. The two agree on the merits of hard work and careful homework. Iacocca also believes in innovation, research and development and risk taking, as Geneen does not. In the end, luck and personality probably make the difference between success and failure. An evening with Iacocca might be entertaining. Only a masochist would willingly spend time with Geneen, at least without a substantial fee.

If, by the way, you have been wondering about Geneen's desk test for executives, wonder no more. Geneen distrusts clean-desk types. They have delegated all their work to someone else and don't understand what is going on around them. Go for the man with the messy desk.
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Author:Lekachman, Robert
Publication:The Nation
Article Type:Book Review
Date:Nov 17, 1984
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