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Lessons From the Heart of American Business
By Gerald Greenwald and Charles Madigan

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 Lessons From the Heart of American Business

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Lessons From the Heart of American Business
By Gerald Greenwald and Charles Madigan
ISBN: 0446525448
Genre: Business & Money

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Chapter Excerpt from: Lessons From the Heart of American Business , by Gerald Greenwald and Charles Madigan

One

Have the Courage to
Admit You Don't Know

I don't understand airplanes and how they fly.

That probably sounds unusual coming from an executive who ran a huge airline. But I am amazed whenever I see one of United's 747s taking off. How could that much weight possibly climb so gracefully into the sky?

I don't understand computers, either.

They are plastic boxes full of mystery to me.

I could never build one, don't have the foggiest notion of what is inside of one, and, I must reluctantly admit, I am a novice at using one, although I am determined now to learn.

I never understood cars, either, at least not in the way that real car people understand cars.

You get in, turn on the engine, and drive away. That must sound like quite a confession coming from a veteran of Ford Motor Co. and then Chrysler Corp.

I have always believed it is important for an executive to understand how much he doesn't know. It's arrogant to think you know everything, and a little dangerous. It's better to recognize what you need to learn.

This is the story of my continuing education, an experience that began long before the day I walked into Ford in 1957, and, I would hope, will continue, now that I have said my formal farewells to the folks at United Airlines.

From a business perspective, at one level it's all about good and bad bosses, the ones I have had and what they taught me about my own leadership skills and how to use them. And on another level, the story is about people who worked hard, sometimes achieving goals that seemed impossible.

At some points, it's going to seem more like a wonderful romp than a formal process. But that is how my career went for me. It was a long extension of experiences that ran all the way from the silly to the splendid, sometimes both at the same time.

I am the product of all of the places I have been, and to understand what that means, you need a road map. And for me, like most people, one has to start at the beginning.

I joined Ford Motor Co. fresh out of Princeton in 1957, back when cars had fins, no one ever thought the rest of the world would have much of an impact on the car business in America, and the thought of making $425 a month was magnetically attractive to a new grad from St. Louis.

It was a young man's game, and I was ready for whatever Ford presented. For three years, I was overseer of financial controls for Ford Latin America companies. At the Ford division of Ford North America, financial analysis was my specialty, but the job description didn't begin to cover the responsibilities I took on.

Research and development expenses, the aftermarket parts business, advertising and promotion, and labor relations were all part of that job. Then I served for two years as executive assistant to the product engineer who was responsible for compact car design. That was my baptism in the design and production of cars, an experience that brought me close to the heart of Ford's real mission.

In 1967, I was sent to Brazil to consider buying the Willys car company. After helping to negotiate the purchase from Kaiser and Renault in France, I was sent to S?o Paulo to be the controller. That was a challenging job that carried me deep into a different culture. We merged Willys and the smaller Ford of Brazil and developed a strong export program, all during a period of high inflation, a lesson that would prove invaluable later in my career.

I moved back to the United States in 1970 to become controller of Ford North American Truck Operations. It was a healthy time for Ford trucks, and for me, too. Our market share increased 20 percent and our profits increased by 80 percent.

I suppose it was wanderlust, and the siren call of a chance to run my own company, that carried me to France for Ford in 1972. The company had purchased Richier S.A., which made just about every machine involved in the construction business and had perfected the tower cranes that are so common on construction sites all over the world today.

It was a tough job full of unusual demands, not the least of which involved functioning as an executive in the French language, because there were few people at Richier who spoke English. I put strong financial controls in place inside a company that was bleeding money and helped slim Richier down. This job involved a complicated mix of responsibilities that carried me into government affairs, bank relations, French union negotiations, and worldwide distribution.

I moved to London to become director of all nonautomotive operations for Ford of Europe in 1974. That was another one of those titles that was just too small to describe the job. I ran power plants, constructed and managed housing for Ford workers, negotiated contracts, and even directed the renovation of a classic London guest house for Ford executives.

I was responsible for truck fleets, telecommunications systems, security services, land acquisitions, and ten thousand cars for company workers. I found a way to cut costs in that mammoth operation by 25 percent annually without damaging company operations.

In 1976, I was named president of Ford of Venezuela, an automotive subsidiary with sales of $600 million, 150 dealers, four hundred suppliers, and two assembly plants. Over three years, sales and markets doubled for Ford, employment tripled to five thousand, and profits increased tenfold.

I was on the Ford fast track, having done very well at all of my assignments.

That was when I returned a phone call that some people thought I should have ignored.

Lee Iacocca.

He had been chased out of Ford because of his success and aggressiveness and now headed the troubled Chrysler Corp. Returning that call changed my career, my address, and my life, all at the same time.

Working for Lee was like playing basketball with Michael Jordan. He was that good. Iacocca's presence allowed everybody on his team to play at a higher level. I think he invented his own management style, unlike anything anyone had ever attempted.

I call it "managing by speechwriting," and it was a scary process for anyone who wasn't aware of what Iacocca was doing.

Being Iacocca's speechwriter was probably the worst job at Chrysler, or at least the hardest. I have seen Lee throw speeches back at his writers right up until the point Iacocca climbed into the limo to head off to deliver the address. That wasn't because he was a bad guy. The marketing people were his best editors, because they understood where he was going along the managing by speechwriting course.

He was not a natural at speech making, but everyone thought he was. There is an important lesson about diligence in that. I watched him build his skills even as he was building Chrysler, thinking out loud about everything from finance to auto design.

He would watch, talk, listen, and most important of all, ask questions. And with every answer, he learned something new.

Lee told me once that he had learned his own lesson about priorities many years before we worked together at Chrysler.

He had asked one of his many Ford mentors for more people because he said he was overworked. His boss told him to write up a list of priorities. A month later, Lee and the boss reviewed the list. Most of his priorities had not been completed. The boss told Iacocca he didn't need more people, he just needed to proceed with the unfinished business on his list of priorities.

Lee had a downside, of course. He was just too powerful at meetings. He would overwhelm people with his own thoughts, his own process of managing by speechwriting. That was a valuable lesson for me, because I learned the importance of talking less and listening more. Putting people at ease is more than a courtesy for a CEO. It's the only way to get people to tell you the truth.

I joined Chrysler as corporate controller in 1979. It was my job to bring some financial control to a company that was going down in flames. My biggest job at Chrysler was to lobby in Washington, Canada, and five state capitals for the loan guarantees that would save the company, even as I helped Chrysler develop its business and build a plan for financial survival.

I was in charge of twenty-two task forces that covered everything from improving cash flow to obtaining financial support from four hundred banks around the world. At the same time, I coordinated negotiations aimed at winning concessions from the United Auto Workers and the Canadian Auto Workers. I was also in charge of day-to-day relations with the federal Loan Guarantee Board in Washington.

I became vice chairman of Chrysler in 1981 and took on responsibility for day-to-day operations of the $20 billion corporation. During this time, we paid off federal loan guarantees of $1.5 billion seven years before they were due, and that provided $300 million in profit to the federal government.

We also launched the Chrysler K-car and developed the minivan.

From 1985 to 1988, I was chairman of Chrysler Motors, a job that carried responsibility for all Chrysler North American automotive operations. During that time, Chrysler Motors reached peak earnings and cash flow, acquired American Motors, and had a five-year capital spending plan of $14 billion.

By 1989, I had become one-half of the two-person office of the chairman at Chrysler. Lee was the other, "bigger" half.

I shared full responsibility for operations of the company. I was directly responsible for Acustar, a $4 billion auto components business with 25,000 employees, and for Chrysler Financial Corp., a $40 billion financial services operation with 10,000 employees and four hundred offices. Chrysler Technologies, with its Gulfstream jet system, and defense contractor Electronic Systems, Inc., were also part of my watch.

I was also in charge of Chrysler International, which had sales of 100,000 vehicles annually and key partnerships with Mitsubishi and other companies in China, Italy, and Austria.

Even with all those responsibilities and all that success, it was clear to me it was time to move once again. It seemed as though Iacocca would remain chairman of Chrysler for eternity.

I had achieved what I could achieve at Chrysler.

An intriguing prospect presented itself in June 1990.

I became chairman and chief executive officer of United Employees Acquisition Corp. My job was to direct the employee buyout of United Airlines. The pilot, machinist, and flight attendant union chiefs had asked me to lead the buyout and later become the CEO of what was to be an employee-owned airline. I was intrigued by the promise of employee ownership and the changes it could bring to the world of business. We created a complicated, but effective, financial plan to buying in the $4 billion necessary for the buyout. Then the Persian Gulf War killed the financing plans.

I shifted in 1991 to Dillon Read & Co. as a managing director, where I sought acquisitions in the $100 million to $500 million range for the firm's buyout fund. I also did some advisory work, which, for the most part, I did not like.

I recall sitting with some other bankers at a meeting with Kmart chairman Joseph Antonini. We were giving him advice. It amounted to unloading everything that wasn't directly connected to Kmart's core business. I found myself sweating. It is unusual for a marathon runner to sit and sweat at a meeting. I realized at that point that I was sweating because I had absolutely no idea what I should be saying about retail sales at Kmart. It wasn't my field. I was bad at selling an idea I knew nothing about. That feeling of dishonesty made me sweat.

There was one part of my Dillon Read experience that I liked a lot. We would identify small companies that needed help to grow. I recall watching one of them grow from $80 million a year in business to $800 million a year. That part of investment banking was so compelling for me that now in retirement I am a partner with two others in an investment fund aimed at helping companies grow.

There was another shift a year later, this time to Olympia & York Developments, Ltd., as president and deputy chief executive officer in the midst of the company's liquidity crisis. We were trying to restructure $19 billion in debt with about one hundred creditors around the world to restore the company to financial health, a prospect, I quickly learned, that was doomed from the start.

After O&Y, I spent a year in what amounted to a fascinating part-time job, working on the turnaround of Tatra, the Czech Republic truck company. It was a two-year contract that required about eight weeks of my time each year, but it gave me a close look at the difficulties of making the transition from state control to market competition after the collapse of communism.

Communism had damaged the Czech Republic so deeply over four decades that Tatra simply didn't know how to compete.

In 1994, the United Airlines deal we all thought had died proved to the world that it was only resting. I had dined at that banquet before, and I was still hungry for the United job. For years, I had longed for a company of my own, a company I could lead, and this was my chance.

I became chairman and chief executive officer of United and held that job until my retirement a year ago. It was the largest employee-majority-owned company in the United States, and we set out to make it the biggest and best airline in the world.

That's quite a road map.

United fell on some hard times in the wake of my departure as its pilots and management struggled to reach a new labor contract. Thousands of flights were canceled and many of its customers became angry. I can't change that, but I remain convinced that employee ownership will prove its value over time. United's employees will solve their problems and shift their focus where it belongs, back to the customers.

From looking at my record, you might conclude: "This guy just can't seem to hold a job." But there is another way to look at it: "This guy just can't pass up a challenge."

The important part about my work record is what it represents, what I learned along the way.

As I reflected on my life's work when I was preparing this book, it struck me that I learned as much about business hiking up the sides of mountains as I learned sitting in board meetings or consulting, sometimes conspiring, with my co-workers.

There is a simple clarity to mountain climbing that I think relates directly to what happens at the office every day.

There is the mountain. Prepare yourself and go climb it. You face something that seems overwhelming, then you measure it carefully, put your team together, attack it diligently, and succeed.

But before mapping out a strategy, I always knew that I had to do my homework. That meant educating myself on all sorts of topics.

The truth is, I was never afraid to admit that I just didn't have the foggiest notion of how something worked, or why it didn't work. It was better for me to find someone who knew, and open myself to the knowledge they had to offer.

Where did that lead?

Well, I knew nothing about airplanes, but I knew where to go at United Airlines to find out exactly what it was that put a 747 into the air. Now I know how many people it carries, how much fuel it uses, and where it fits into the grand design of our route and fleet plan, and how it can take anybody just about anyplace in the world. I was never shy about asking about any of that.

Even though I knew nothing about the workings of computers, I knew exactly where they fit in the world of business, how they could bring efficiency, speed, and better service to our customers, how they could help us cope with the unyielding demands of change.

I know where computers fit into the profit picture of companies, what technology can accomplish and what it cannot accomplish. I can tell right away when someone who knows everything about computers doesn't understand anything about how they fit in a business.

I know that because I asked.

Early on during my years at Chrysler, I took on information technology as one of my responsibilities. It wasn't something I knew a lot about at the time, so I went to Chrysler's IT team and I asked them to tell me who knew more about information technology than anyone else. They came up with a list of four people, and I reached out and invited them to discuss information technology issues with the Chrysler team. I sat in on the meetings. I watched Chrysler's people learning lessons from the best in the field, and I learned right along with them.

Not knowing anything about cars at Ford was of great value.

My quest to find out carried me into the company of engineers, mechanics, drivers, and designers who knew everything there was to know about automobiles and how to get them from the design board into the hands of customers.

You can collect knowledge in unexpected places.

Beyond what I had learned in high school civics and college, I didn't know much about Washington.

All of that changes when your mission is to convince a reluctant federal government that it is in the nation's interest to help save one of its most important companies, not with handouts or grants, but by creating some conditions that would allow the company to survive.

I had a marvelous education as part of the struggle to save Chrysler. I got to see government function from the inside, to know how political decisions were made and what impact they were likely to have on my company.

I was not educated in the world of high finance, but I found out about it from people who were.

The Chrysler experience amounted to a crash course in banking and finance at every level, from the U.S. Department of the Treasury to the last little bank that found itself at the center trying to decide whether Chrysler's loan guarantees would be finally approved and the company saved.

Fortunately, I have never been much of a know-it-all or I doubt I would have succeeded at any of these jobs.

If I had to label myself now at the other end of my career, I think the tag would say, "The Man Who Finds Out."

That has been my operating standard since the late 1950s.

That is what this book is all about, a career-long quest to fill in my own gaps. Knowing you have gaps is a big asset for any modern executive. People are always willing to help fill them.

I have seen plenty of folks who were convinced they had all of the answers and felt quite secure about slamming the door on knowledge and experience. That is one modern management style. I don't think it works very well, because it doesn't recognize that business has become so complicated that one mind simply can't take it all in.

Some executives brag about their golf games. I can brag about why I don't have a golf game to brag about.

My wife and I tried to learn golf in Brazil, where we were living at the time. We weren't all that interested anyway, but my attraction to the game declined even more when one of my Brazilian friends warned me never to search for missing golf balls in the rough, because there are dangerous snakes and spiders in there.

We dropped golf.

I won't have much to say about golf, then.

Mystical curses, however, I can talk about.

I was the target of a voodoo curse in Brazil, where a spider fatally bit my dog and the tile came crashing off the kitchen wall in the middle of the night.

A person with less experience might ascribe those incidents to the nature of Brazilian spiders and bad construction work. But the local interpretation was a lot more interesting and definitely made for better dinner stories.

And what does a Jewish executive say about dining in an exclusive German club in Buenos Aires with the descendants of Germans who were trapped in South America midway through World War II?

Where does sharing beer with Henry Ford II and an old fisherman one hot afternoon on a tiny isolated island in the Caribbean fit into a business history?

Sometimes, it felt as though I were cast in the role of the lead actor in a movie.

I have camped in the jungle, climbed magnificent mountains, and slept in an igloo in the Arctic with the sled dogs howling outside. One of my neighbors was kidnapped by terrorists, and somehow that led me to ponder whether it would be proper to make sandwiches for my bodyguard.

I went on a picnic in the wilds once with some South American cowboys, big, tough men who were tickled at the fact that we had brought along one of those crank-up record players so they could listen to dance music.

None of it happened in my office, but all of it was related to my work. I got to be an executive and an adventurer, too, a great privilege and an unusual combination in modern business.

I started out in a business world that was very narrowly defined by the economics and realities of mid-century America. I am finishing my formal career in a world in which boundaries are melting away and all the old assumptions about business are facing radical revision.

If I were reading this book, I would have one big question.

If I don't know how to do any of this stuff, how did I get to the top of so many different corporations? The cynic's conclusion would be that you don't need much going for you to run a business.

Wrong!

Of course it might have been better if I had taken a different course early in life, perhaps studying engineering and getting comfortable with computers as I worked my way up in my career. But I believe I was able to compensate for this abundant lack of technical skill by using a set of talents that are of great value to anyone who plans to run a company.

I am not afraid of work.

Bless my father for giving that to me. He started his business life when he was fourteen, and was proud of it.

These days in business, there are many views about what process, what strategy, a CEO might put into place to improve his situation. I have reached a surprising conclusion about that: It's still just about hard work, and it always has been.

An executive can put any idea he wants in place and it won't go anywhere unless he understands his primary mission is to get the people all around him to embrace that notion: It's all about hard work. Sometimes, people will lose sleep, miss meals, miss birthdays, miss just about everything, all in the interest of reaching a goal.

A CEO's obligation is to create the condition that encourages that kind of work, recognizing all the time that business, cut down to its most simple definition, is all about getting people to work well together to sell a product or a service.

I wrote my own career study a little over a year ago as I was preparing to leave United Airlines, and every time I look at it I reach the same conclusion.

My story is a collection of the success stories of other folks, the people I turned to for advice and counsel over the years. You take away great value from that kind of experience, not only the knowledge, but the pleasure of getting to know people who do their jobs well.

My experience carried me from the command and control style that was so dominant in business after World War II to the era of empowerment, individual responsibility, and creativity that is emerging as a new century begins.

What worked for me will work for managers in the twenty-first century, too. Keep an open mind. Learn how to ask the right questions. Surround yourself with people who know, befriend them, and recognize the value of what they have to offer.

My roots go back to Eastern Europe, Poland, and Ukraine, to Jewish communities that disappeared during World War II. The names of those places are still on the map, Lida and Shepetovka, but the people are long since gone, most of them victims of the Holocaust.

I know that is a common sadness for American Jews, that sense that their roots were clipped off and destroyed somewhere between 1939 and 1945. So my story starts where so many American business stories start, right here at home in the United States.

I was born in 1935 and raised in St. Louis, where my father, who had arrived in the U.S. from Ukraine at age fifteen, was in the wholesale chicken business. He bought the chickens from farmers and then sold them to retail stores. I went to a wonderful public school and lived the mid-century American teenager's life, full of good buddies and girlfriends, heartbreaks, hamburgers, and sports. There was never a lot of money around, so I earned my own. Because I studied hard, got good grades, and was good at sports, I had some impressive options when the time came for college.

I chose Princeton, although I had no idea what I wanted to be. I might have been a doctor. I might have been a diplomat. I might have been a labor leader. All of those fields were attractive to me, but mostly, I was experimenting, searching for something that felt right.

I had a lot of jobs at Princeton. I was a pro at setting dining hall tables. My specialty was the left-handed fork. My friends and I had worked out a system in which each worker had a specialty and the tables were set with a regimentation and efficiency that would have impressed even the British army, with the placement of that fork being my job. Nine students cleaned and set a dining hall for 250 in twenty-four minutes flat!

For a time, I felt a little out of place, the Jewish kid from St. Louis public school surrounded by a lot of academic prep school heavyweights, some of whom came from lots of old money. But I eventually met my crew, track jocks mostly, like me, and found my way of fitting in.

Starting my junior year, I was in Princeton's Woodrow Wilson School of Public and International Affairs and later graduated from Princeton with honors.

My friends and family were surprised when I announced I would be going to work for Ford Motor in 1957. Because of Ford's background, particularly old Henry Ford's blatant anti-Semitism, the family worried whether it would be the right place for me. But I always thought prejudice was the other person's problem, and anyway, what could have been more promising than a $425 a month job in the Edsel division?

I thought it a princely sum at the time, and a job with a lot of opportunities.

The Edsel didn't last, but I did.

Excerpted from Lessons From the Heart of American Business , by Gerald Greenwald and Charles Madigan . Copyright (c) 2001 by Gerald Greenwald. Reprinted by permission of Little, Brown and Company, New York, NY. All rights reserved.

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