For a time the project seemed stymied. Then Iacocca had a brainstorm. He suggested adding jump seats in the back, making it a four-seater, a full family car. The numbers changed immediately; now it might possibly sell as many as 100,000 to 125,000 pieces. But the financial people were still tough: There was no way a bastardized little sports car was really going to work, they insisted. That it would be a relatively inexpensive car for Ford to produce—it would be able to use the platform and the engine from the Falcon and thus cost only about $75 million—did not seem to weigh in its favor with the financial people.
The key moment came when Iacocca took the decision to Henry Ford. In the past, selling Henry Ford had been something that Iacocca did particularly well. In those days, the good days, he had a sixth sense of how to handle Henry. He rarely went through channels in dealing with him, for channels were formal, and the formality, committee piled upon committee, tended to work against creativity. If he went through channels, Iacocca triggered a mechanism: The finance people immediately became the protectors of the company, and he became someone trying to take something from it. The impact of that struggle upon Henry Ford was almost always fatal to product. Iacocca’s approach, instead, was to let Henry gradually become proprietorial about a model, let the car become Henry’s car. He would show Henry things in stages, preparing him almost idly, with an impromptu trip through the design center, for example, or a casual look at a clay model, appealing to the part of Henry Ford that genuinely loved cars and doing it in unpressured circumstances. (The people under Iacocca worked much the same way; it was best to reach Lee outside channels, to let him smell a car on his own. If they had to force the sale on him, then they were in trouble, the designer Gene Bordinat believed, for Lee had so superb an eye for what would sell that he could always judge for himself. The sweetest satisfaction came when Iacocca took their car and sold it back to them, telling them how good it was. Then they knew they had him.) But with the Mustang, Iacocca’s early attempts to interest Henry Ford did not work. Ford seemed curiously resistant to the car.
Eventually Iacocca got Henry Ford to come to the design center. He was absolutely confident that the car was irresistible. He had prepared very carefully and was fully primed for the moment. He was only a few sentences into his spiel when Henry turned on him. “I don’t even want to talk about it,” he said and walked out. They were all devastated. They were sure the car was a winner, and Henry had turned them down. Later they discovered that Henry Ford had come down with mononucleosis. He went straight from the design center to the hospital.
The setback with Henry Ford did not deter Iacocca. He was at his best working outside the Ford system. The system, he believed, belonged to his opponents. Within the system his strengths were minimized, because he was playing on their turf, where numbers spoke louder than impulse. Going outside the system was more dangerous; it demanded of him more audacity, more cunning, more luck. He had to have absolute knowledge of who within the company was talented and who could deliver. If he stayed within the system, that did not matter, for the system protected those who did not deliver; as it limited excellence, so it protected mediocrity. Now, with Ford apparently resisting the early bait, Iacocca set out to surround him. He did it by getting the rest of the Ford Motor Company and then the auto world intrigued about the Mustang. He began giving glimpses of the car to people inside Ford and to Detroit auto writers. Their excitement, as he knew it would, soon turned into auto-world gossip. Soon the word was out: Ford had a hot car. As outsiders heard about the Mustang, they began to question people at the upper levels of the company, and within the company, now, anticipation about the Mustang began to build.
Iacocca used the early research on the car to particularly good effect. Not only were those surveyed unusually enthusiastic about the car, but, even more remarkable, they were willing to pay a good deal more than the company had anticipated. The company’s targeted showroom price was between $1800 and $1900. But most people responded that they would pay $5000 or $6000.
Eventually Iacocca’s lobbying began to bear fruit. Henry Ford soon found that Iacocca had him surrounded. Both inside and outside the company people wanted to talk to him about this hot new car Ford had come up with. One day he came over to the design shop to talk to Iacocca and Frey.
“I’m tired of hearing about this goddam car,” he said.
They both wondered if this was the end.
“Can you sell the goddam thing?” he asked.
Iacocca said they could.
“Well, you damn well better,” said Henry Ford.
So they got the car. If it was not entirely Iacocca’s car, it was certainly his victory. If that was his first great achievement, the second was the way he prepared the company for a success. Nothing else in his career at Ford so clearly reflected his confidence and his pure instinct for cars. The worst thing that could happen to a company was to have a hot car and then find its means of production too restricted to meet customer demand. The high estimates from the market research were between 75,000 and 100,000 pieces, but Iacocca was having none of that. He readied the company first for a one-plant build. That meant Ford could produce about 250,000 pieces. Having arranged that, and becoming more confident all the time, on the eve of production he moved to a two-plant build. That meant they could probably make as many as 400,000 pieces. Then, after the initial response, certain now of the success of his car, he added a third plant. He was rolling the dice very high on the Mustang. If the customers were ready, so too was Ford.
The Mustang, which came out in 1964, turned out to be the right car at the right time. The young kids just coming into the economy loved it; so did older people. Ford sold 418,812 Mustangs in the first year, which exceeded Iacocca’s own goal: He wanted to sell one car more than the 417,174 pieces McNamara’s Falcon had sold in the first year. More, the profitability of the Mustang, unlike that of the Falcon, was high. Iacocca had hated the bare, functional character of the Falcon. Customers might buy it, but they added little to it in the way of options. By contrast, the average Mustang buyer simply loaded his car with options. In its first year the Mustang made Ford more than $1 billion in profit. Much of that came from the options. Though the Mustang listed at $2368, the average buyer spent more than $1000 on options, where the profits were always greater. It was a triumph for Iacocca’s new, lusher era over McNamara’s utilitarian one.
As the car became legend, so too did Iacocca. Not only did all Detroit know of his success, but he became—as few auto men ever had—a national figure. For he had chosen to identify himself as personally as he could with the Mustang. That was a risky business at the Ford company, where it was an accepted part of the ethic that there was only one person who got credit for any success, and his name was on the car. Iacocca defied that ethic. For him, everything was personalized, and that included this car; he had not come this far and gained this sweet victory to forfeit his rightful credit. So it was that with the Mustang he brilliantly publicized not just the car but his own claim to it. It was Lee Iacocca’s Mustang. He thought he had a chance to get himself on the cover of either Time or Newsweek. So he began to work on Jimmy Jones, Newsweek’s Detroit bureau chief, and used Frey, who had gone to school with Leon Jaroff, the Time bureau chief, to work on Time. Iacocca and Frey each went to New York with photos of the Mustang to tout the car at the highest levels of both magazines. Jim Cannon, then the national editor of Newsweek, remembered the special magic of Iacocca at that session, his total belief both in the car and in himself, and the excitement he generated as he spoke of the car. Cannon was so impressed that he bought a car on the spot from Iacocca.
“That’s car number two that we’ve sold in New York,” Iacocca said.
“Who has car number one?” Cannon asked.
“Oh, some vice-president at Time,” said Iacocca.
All of it worked—he hit not one cover but, in one of those rare coups, both Time and Newsweek in the same week. If you read both magazines, Don Frey thought, you
’d think that Henry Ford was just a hired hand at the place. Frey believed Iacocca had for the first time crossed a line that was never supposed to be crossed. Don DeLaRossa, the designer who had done much of the work on the car, got up that morning, looked at Lee’s face on both magazines, and turned to his wife and said, “That’s a mistake, a serious mistake.”
Still, the success was sweet for Iacocca and for Frey as well. They had beaten the odds and beaten the financial people. They had come out with the car they wanted, and they had quadrupled the projections of the finance people. The whole country wanted the Mustang. Frey later thought that if there was one moment in his entire career at Ford that justified all the long hours he spent working, it was when he watched the first completed Mustangs roll off the assembly line. He stood there transfixed as first one and then another and then hundreds of them rolled slowly by. Soon the line of gleaming new cars extended as far as Frey could see. It was the most beautiful thing he had ever witnessed. He kept telling himself that this was in no small part his car, something that he had helped sketch on paper some three years earlier, and now finally it had come into existence. He had done this. He felt like an artist who was finally satisfied with a picture he had painted. Frey was sure for the first time that he had made the right choice in his career.
Victory it might be, but there were ominous signs as well. Although Iacocca had beaten the financial people, in reality the clash over the Mustang signaled not so much his strength but the strength of his opposition. That he nearly lost on a car that was so self-evidently salable and cost so little to produce spoke volumes about whose power was on the ascent. The lesson in the Mustang was not the success of the product people but their near failure with an almost perfect, inexpensive car, at a moment when the industry was enjoying unparalleled prosperity. The Mustang prompted a curious relationship between the leaders of the two factions, Iacocca and Ed Lundy; The two men could not have been more dissimilar, Iacocca blasphemous, aggressive, egocentric, Lundy reticent, private, deeply religious. Those who knew Lundy well felt that he never entirely trusted Iacocca, that he thought Iacocca tended to cook the numbers; but Lundy was impressed by how much money Iacocca’s Mustang made on so small an investment. Iacocca was the devil whom Lundy knew, and that was good enough; Lundy could estimate just how much Iacocca was bending things. During the Mustang experience they found that they could deal with each other. It was the beginning of an odd and unlikely alliance, if not a friendship; Lundy’s people might be beating up on Iacocca’s people every day, but at the very top the two men were surprisingly comfortable with each other.
With the birth of the Mustang, Iacocca had become a public figure. That of itself was audacious enough. There was, in the minds of some, a challenge implicit in his decision to take personal credit for the car. It meant that he saw himself as important enough, close enough to being invaluable, to break the unwritten rule. So it was that at the very pinnacle of Iacocca’s success the first step was taken in the complicated process that over the next decade would drastically affect his relationship with Henry Ford. It was not so much a move for power as an assertion of ego. He did it, despite warnings from a number of friends, because he needed to. He was still respectful to Henry Ford in meetings, still careful not to surprise him. But he wanted the publicity.
Henry Ford was not unaware of this most subtle challenge. At first he said very little. Then there were low rumblings from him. At meetings Henry would throw out a mild zinger, usually about some photo of Lee in a magazine or in a newspaper. Gradually these comments became more barbed. Henry was glad, he would say, that Lee was not so overworked that he had no time to deal with reporters and photographers. The Iacocca ego was not something that Henry Ford liked very much, but in the beginning it was tolerable, part of the price of having so able an executive working for him. Later, as other things went wrong between them, the distaste for Iacocca grew. One day in the mid-seventies, Henry Ford II went on a tour of the design shop. There he encountered a young designer who was working on what he hoped would be a new car. With some excitement he showed the clay model to his ultimate boss.
“Look, Mr. Ford,” he said. “We’ve got a really hot car here. Why, it could be another Mustang.”
“Who needs that?” Henry Ford answered.
21. THE RIVALS
LEE IACOCCA’S FIRST YEARS as general manager of the Ford division, before the Mustang, had been almost an idyll. The job liberated him. His cars always did well, and he had a genius for knowing how to make them even more profitable by adding on accessories. He was full of ideas for sales promotions. He also, in the beginning, handled Henry Ford with great skill. Lee was, after all, only the head of the Ford division, and there was a still grander position to be aspired to. Though he could be blunt and often caustic with everyone else, he was always supple and deferential with Ford, whom he unfailingly referred to as Mr. Ford. When he was with Ford, some colleagues thought, it was like watching a great lion tamer working a temperamental lion. It was all intuition, Iacocca sensing the moods of a somewhat querulous, autocratic man, adapting quickly to his every change. He knew that if Henry Ford told him that the door to his office was always open, Ford meant precisely the reverse; the door was not really open, the proper distance should always be observed, and Iacocca should not come wandering in.
Not everyone who knew both men thought they were destined for perpetual amity, for the whimsical nature of Henry Ford’s friendship was well known within the company, how quickly he could grant it and how quickly he could also, for no noticeable reason, withdraw it. Nor was the danger to the friendship entirely one-sided. For some of those close to Iacocca, who knew the inner man and knew how his energy and ambition were fueled in no small part by resentments, were not sure that Lee would always be as grateful to Henry Ford for his success at Ford. Gratitude, they thought, was not necessarily a quality natural to Lee Iacocca; the inner Iacocca believed as the first article of faith that everything he had gained in this world he had not only earned himself but, even more, because he was an immigrant’s son, had earned against great odds. Therefore gratitude, such as it existed, was likely to be short-lived. If anything, some of his closest friends thought, there was the possibility of a collision between him and Henry Ford. For Lee was very much Nick Iacocca’s son, his codes were Nick’s codes, and if one listened to Nick Iacocca carefully, for all his love and praise of America and what a great country it was, one picked up attitudes that were very different from the expressed optimism. Nick’s was the much harder, tougher theology of the newcomer to a society dominated by a sort of aristocracy. In Nick’s creed, passed on as if by osmosis to Lee, there were certain tenets, such as Screw or Get Screwed, and Don’t Get Mad, Get Even.
Lee Iacocca, then, was grateful, but not really grateful, for his place at Ford; confident of his skills but not of his place; aware and resentful always that in social terms between him and Henry Ford there was not a gap but a chasm, and that Henry Ford had no intention of closing it. Professionally no one could have been more sensitive to Ford’s moods or quicker to remove the pressures that Henry Ford did not want to feel. He knew never to force Henry Ford into a decision, and above all never to force a confrontation in front of others in the company. Iacocca seemed to have a sixth sense about the danger signals emanating from Ford, knowing when he was ready for a new idea, knowing when Ford’s light edginess was about to flare into something more serious or was simply the normal protective manner of a man who knew that all suggestions might in the end cost his family money. He was smart about never showing fear; he might be deferential, but he had learned early in his career, watching the head of the company, that there was a trace of cruelty there. Henry Ford could tell when a man making a presentation was nervous; he might watch and see if a man’s hands shook as he held a pointer, and if they did, he would often bore in.
Above all, Iacocca knew when to pull back. Once Norman Krandall, a somewhat junior colleague of Iacocca’s, thought he had an agreement f
rom Lee to oppose Ford on naming an offshoot of the Thunderbird line the Fiera. Henry Ford took nomenclature very seriously, particularly after the Edsel, a great fiasco of a car that had been named after his father. On this occasion Krandall believed he knew the game plan. He would oppose Henry Ford on the name, fight off Ford’s early resistance, and then at the last minute Iacocca would come and tip the scales in their favor. So Krandall had begun, and he had run into heavy resistance from the chairman, and he had pushed a little harder and the resistance had not softened. He gave it one more shot, and Ford came back even harder. At this point Krandall looked over to Iacocca, his reserve battalion. There was Lee, leaning back in his chair, puffing away on his cigar, his eyes very much on the ceiling and definitely not on Norman Krandall. There was, Krandall thought, the smallest glimmer of a smile on Iacocca’s face. Routed, Krandall turned to Henry Ford. A Krandall-Ford fight would not, he knew, be a very fair one. “Well, if you feel that strongly about it, name it what you want,” he said. Everyone laughed, and Krandall realized that Iacocca had read and responded to a signal that he himself had never even seen.
Reckoning Page 48
