Martian's Daughter: A Memoir

by Whitman, Marina von Neumann

  He was also thrown off course by men with powerful personalities and overweening ambition, men he admired and had worked hard to bring into the GM fold. He was surprised and furious to discover that he couldn't control them, leading to several high-profile disasters. One such miscalculation was the arrangement he made with Horst-Dieter Esch, the hotshot chief executive of the German firm IBH, which purchased one of GM's subsidiary businesses. Although GM's lawyers had warned him that the proposed relationship might be illegal in Germany, Smith was “too quick to structure transactions to accommodate Esch, IBH's flamboyant founder and chairman…Esch ran his company the way Roger would like to run his, out of his vest pocket.”26 Ultimately, Esch was sent to prison for fraud, and Smith dared to set foot in Germany only after GM attorneys checked with a German prosecutor's office to make sure that their chairman wouldn't be arrested.27

  Another misjudgment was the general counsel that Roger brought to GM in 1983. Elmer Johnson was a tall, handsome, silver-haired lawyer noted not only for his legal triumphs but also for his ruthlessness in business. Roger wooed this man with a larger-than-life reputation with the promise of a rapidly expanding role in the company and a chance at the gold ring of CEO. His responsibilities were broadened several times during the next few years. In 1987, he not only was made an executive vice president and a member of the Board of Directors but was named by Smith as one of four contenders to succeed him as CEO.

  Soon after that, relations began to sour. Instead of showing up regularly at the many policy committee meetings in which senior executives were expected to participate, Elmer sat alone in his office, writing long, thoughtful memos on how the company's operations could be improved. The coup de grâce was a twenty-five-page document in which he severely criticized the management of one of the two major car groups into which the company's automotive operations had been divided during the wrenching reorganization of 1984, gave detailed suggestions about how the group should be revamped, and suggested that he be put in charge of the group to implement those recommendations.

  Many of his substantive suggestions later proved to be on the money. But they earned the enmity of Roger Smith, who didn't appreciate being told how to do his job. Despite the promises with which he had lured Elmer to GM, he soon had no intention of giving this man, seen as a troublemaker, one of the company's top operating positions. His response to the memos was icy silence, and Johnson felt himself being squeezed out of Smith's inner circle. Frustrated, he resigned in mid-1988 to return to his law practice and later wrote a book criticizing America's dependence on automobiles.

  The most explosive incident that arose from Roger's failure to understand human nature was his disastrous relationship with Ross Perot, the charismatic founder and CEO of EDS. General Motors bought the data-processing company in 1985 after a complex negotiation, led by Elmer Johnson, that resembled a mating dance as much as a business transaction.

  Roger's attraction to EDS derived partly from his belief that the firm could bring order to GM's inefficient, crazy-quilt, data-processing and business systems. But his hot pursuit also owed a great deal to his admiration for Perot himself, and his hope that some of the EDS founder's scrappy, shoot-from-the-hip decision-making style could be transferred to GM's slow-moving bureaucratic culture. For this reason, Smith promised Perot unprecedented independence within the larger company. It was agreed that EDS would operate as a separate profit center, with a separate class of stock (Class E), whose stock-market value would hang on its performance. Perot also became a member of GM's Board of Directors.

  It wasn't long before what had been conceived as a marriage made in heaven moved toward a divorce carried out in a hell of resentment and confusion inside GM and a storm of unfavorable publicity outside. Almost immediately, Perot began a barrage of public criticism of the way GM ran every aspect of its automotive business, refused to allow GM access to EDS's books, and publicly spoke out against the acquisition of Hughes Aircraft. In a famous put-down of the GM culture published in Business Week, he chortled, “The first EDSer to see a snake kills it. At GM, the first thing you do is organize a committee on snakes. Then you bring in a consultant who knows a lot about snakes. Third thing you do is talk about it for a year.”28

  By the end of 1986, Perot had resigned from the GM board, and GM had bought back all his shares of GM and EDS (Class E) stock for seven hundred million dollars in a departure also negotiated by Elmer Johnson. The company was widely accused of using “greenmail”—excessive payment as a bribe—to get rid of Perot, and, although EDS's market-capitalization of twenty-seven billion dollars when it was spun off a decade later was of enormous financial benefit to GM, the episode was an extremely painful one for the company's morale inside and its reputation outside.

  This pain was due not only to Perot's shenanigans but also to the internal discomfiture created by the failed integration of EDS into GM. The other members of Smith's leadership team were resentful that they hadn't been consulted about the EDS acquisition, and the chief financial officer, whom Smith had put in charge of the operation, was oblivious to the human fallout from such a wrenching change. Company managers rapidly came to the conclusion that EDS's pricing was ripping off its parent company. Data-processing employees at GM were deeply shaken and hurt by their forcible transfer to EDS and the substitution of its much riskier compensation structure for GM's secure pay and benefits. Everyone was taken aback by the gun-toting security guards who controlled access to EDS's secretive Detroit headquarters. Roger Smith, a whiz at mathematics and finance, had once again failed to take an accurate measure of human nature.

  Even today, twenty years after Roger Smith's retirement and several years after his death, I feel a twinge of disloyalty in my description of his failings. Roger was unfailingly supportive of my career at GM and, for a man widely reputed to resent criticism, was surprisingly open to whatever candid evaluations I offered of a proposed decision or action. Bob O'Connell, the financially creative and blatantly ambitious chief financial officer who was being touted as one of the possible successors to Smith, cautioned me that being “so rough” with the chairman could be a career buster. Like my father, I put a high value on being close to the center of power, but, also like him, I never shrank from “telling truth to power.” I knew I had won this gamble the day Roger called me into his office and said, “I have good news and bad news. The good news is that I'm offering you a promotion; the bad news is that you'll have to move to Detroit.”

  10

  We'll Push ’Em Back into the Sea

  For a second time, I sat opposite Roger Smith, trying not to let astonishment show on my face. The first time had been across a wooden picnic table in the California sunshine, when he asked, out of the blue and as if it were the most natural thing in the world, if I would consider becoming a vice president and chief economist at GM. This time it was across the broad mahogany desk that set the stiffly formal, top-executive tone of his fourteenth-floor office in Detroit's GM Building. I was enjoying the challenges of the job Roger had offered at that earlier meeting and had never thought past it, certainly not in terms of moving beyond the responsibilities grounded in my economics background into an entirely new world of general management.

  The promotion Roger dangled before me was a significant step up, to vice president and group executive for Public Affairs, a group of four staffs, each with its own vice president. Not only did it send a strong signal that I had performed well so far in my foray into the corporate world, but it would also make me the highest-ranking female in the US automobile industry, a notoriously male preserve at the time. More important, it would give me the chance to influence GM's relationships with some of its increasingly important stakeholders: its headquarters and plant communities; national, state, and local governments; environmentalists; and, at least indirectly through public relations, actual and potential customers.

  Roger Smith presented me with this opportunity on a Friday; he told me to think about it over the weekend and l
et him know my decision on Monday. When I broached the subject with Bob, I immediately started to dither and whine about uprooting the household once again, moving us from our Princeton home to an unfamiliar part of the world—Greater Detroit—about which we'd heard only depressing tales, and sticking him with yet another commute to Pittsburgh. Bob interrupted me in midsentence. “Look,” he said, “the kids and I can adapt to any choice you make, but the one thing we can't handle is having you spread your guilt all over us.” During the decades since, I have passed that piece of wisdom along to several woman friends agonizing over similar career-family decisions, and every one of them found it as invaluable and reassuring as I had.

  Bob did have one nonnegotiable demand, though; we had to live in a community with a university and a good research library. That eliminated the elegant suburbs of Birmingham and Bloomfield Hills, the usual choices of high-level GM executives. It didn't take us long to agree that the natural place for us would be Ann Arbor, some thirty-five miles west of Detroit and home of the University of Michigan. After some intensive house-hunting we found a handsome red brick colonial in a neighborhood not far from the university, ablaze with flowering trees and blooming plants in the brief but lovely Michigan spring. Because I care about the touches generally found in older homes—plaster borders on ceilings, hardwood floors—I had always said that any house we bought had to be at least as old as I was. This one just made it; we had both started life in 1935.

  We were totally unprepared for Ann Arbor's midwestern hospitality; within twenty-four hours of the moving truck's departure neighbors appeared on our doorstep with casseroles or bottles of wine, and we quickly began to develop a circle of friends that has grown steadily during the years since. Thus began our love affair with Ann Arbor, which has lasted well beyond my retirement from General Motors and in total contradiction to our long-standing expectation that we would retire either to Bob's hometown, Cambridge, or mine, Princeton.

  Although I had been working for GM for six years, and had spent quite a bit of time in Detroit for meetings, I was still in for a new set of culture shocks. Living outside the usual GM orbit was regarded as a bit peculiar. When I told Roger Smith where we would be living, he only remarked, “You'll be driving into the sun both ways, east in the morning and west in the evening.” But I could tell that he was surprised and mildly disapproving. And when a public relations executive asked me which country club I would like to join, I mentioned the rather modest tennis and swimming club down the street from our new home. A few days later the man came back, puzzled and embarrassed, to report that there was no way he could move us to the head of the queue. We would just have to wait our turn, a situation that would never have arisen if we had settled in a proper GM community.

  The biggest ripple caused by my arrival on the fourteenth floor, in addition to my gender, was my choice of a secretary. These executive secretaries were not only highly paid but wielded considerable power, which flowed through to them from their bosses' positions. In return, they kept even longer hours than the workaholics they served, did whatever they were asked, whether it was work related or not, and maintained absolute discretion regarding their bosses' personal lives. Some of them shopped for Christmas presents for their bosses' wives or typed and edited term papers for their children. Elmer Johnson's secretary managed his household accounts, paid his bills, and even held the key to his safe-deposit box. Alan Smith's made daily trips to his Bloomfield Hills home to tend to the family cats while he was away running GM of Canada, even though she was temporarily assigned to work for someone else.

  The GM rule was that executives were not allowed to take their secretaries with them when they were promoted, on the sensible grounds that secretaries' career tracks should be independent of their bosses'. But when I selected the most competent secretary in the Detroit offices of the Economics staff to move upstairs with me, I knew that no one would dare refuse my request, any more than the women who reported to my mother in the shop that built radar sets during World War II would have dared to vote no when they were asked to decide whether they would be willing to have “Negroes” work alongside them. Gloria Pearson, a smart and savvy Detroit native and single mother, would be the first African American secretary on the executive floor. I chose her for her impressive skills; her sharp wit came along for free. When I asked her how a black girl from inner-city Detroit wound up as a student at Brandeis University, a Jewish school on the outskirts of Boston, she instantly replied “white liberal guilt.” But she was immensely proud that, between us, we had broken through two hitherto impregnable barriers to the fourteenth floor. Her loyalty to and high expectations of me were downright intimidating.

  The other executive secretaries gave Gloria the cold shoulder when she first arrived, as much because she was an outsider to their tightly knit group as because of her color. But they soon came to appreciate her intelligence, competence, and keen sense of humor; she eventually became the recognized leader of the group. She was also an early and enthusiastic adopter of computerized office skills when desktop personal computers became available. Having this buffer between my Luddite backwardness and the brave new world made possible by my father's pioneering work was invaluable, but it also led occasionally to a hilarious blooper. Gloria's faith in the spell-check function made her careless about proofreading. Once, reading over a letter I was about to sign, I called to her, “Gloria, it isn't a good idea to leave the l out of public affairs.”

  If only I could have adjusted to life on the fourteenth floor as readily as Gloria did! While I was based in New York, I had dealt with the GM culture from a safe distance; in Detroit I had to confront it face-to-face as I struggled to define my new role. The main function of the group executive responsible for public affairs, as I saw it, was to identify and articulate a vision for the group and then push in every possible way to help bring that vision alive. The vision I articulated for the Public Affairs Group was to provide “windows on the world” for GM. This included “windows out,” counseling management on trends and events in the world outside GM, their likely impact on the company, and how it should respond. It also included “windows in,” representing GM's situation, viewpoints, and interests to the rest of the world. “More crudely put,” I said, “we're advocates outside and nags inside.”

  There was a world of difference between this high-flown language and the day-to-day realities I had to deal with, starting with my new boss. As chief economist, I had reported to Alan Smith, although much of my interaction was directly with Roger Smith, with whom Alan shared a last name but no family relationship. Short, compact, and silver haired, Alan possessed not only a first-class financial mind but also a wry sense of humor that occasionally burst through the cautious bureaucratic style honed over a lifelong career at GM. The Public Affairs staffs, though, reported to Vice Chairman Howard Kehrl, a living example of the operation of the Peter Principle, which holds that in a hierarchy every employee tends to rise to the level of his or her incompetence. Howard presumably rose through the ranks on the strength of his engineering talents, but as a top-ranking general executive, he was a disaster. A compulsive micromanager, he demanded that every word or action be checked and rechecked several times by successive layers of management, up to and including himself, with the result that no one who reported to him took full responsibility for anything.

  No one had his head more deeply buried in the sand than Howard, hiding from the truth about Japanese competition. When a young member of the Economics staff returned from Japan with firsthand knowledge of the Toyota production system (which came to be called “lean production”), I lobbied hard to have him present his findings to top management. Although some of us had been struggling for several years to alert them to the truth about GM's competitive disadvantage, this would be the first time that they would be hearing such a report “from the front.” After the presentation ended, the silence was broken by Howard Kehrl, saying, “We can't have something in GM called the Toyota Production Sy
stem.” To my horrified astonishment, there was no follow-up discussion of what the group had just seen, or its implications for GM.

  Howard's refusal to recognize the superiority of Japanese production and labor-management methods was impervious to evidence. When he learned that Toyota and Honda were planning to build plants in the United States, he responded, “Just let them come here and try to work with American labor. We'll push ’em back into the sea.” And, when I tried to persuade him that restricting auto imports would ultimately stand in the way of GM's plans to become a more global company, his answer was that it was only US production and sales that really mattered to the company's bottom line. This reflected hindsight but no foresight. In 1985, when Howard made this comment, some 70 percent of GM's vehicle output was produced and sold domestically. But the trend was downward; twenty years later GM was producing and selling more cars and trucks outside the United States than it did at home.1