Companies are about people

Once Upon a Car: The Fall and Resurrection of America’s Big Three Automakers — GM, Ford, and Chrysler

By Bill Vlasic,

William Morrow, 400 pages, $26.99

The Greatest Business Decisions of All Time

By Verne Harnish,

Time Home Entertainment, 208 pages, $21.95

Bitter Brew: The Rise and Fall of Anheuser-Busch

By William Knoedelseder,

HarperBusiness, 416 pages, $27.99

The irony is sharp. Bill Vlasic ends his book “Once upon a car: The fall and resurrection of America’s big three automakers” with a description of a Chrysler television advertisement the company used to announce its comeback from bailouts and bankruptcy. To the beat of rapper Eminem’s “Lose yourself”, a Chrysler tours the Motor City, celebrating the resurgence of the company, its industry and its town. The pay-off line is: “Imported from Detroit”. The advertisement was a big hit.

But, while Ford, General Motors and Chrysler are back after reporting healthy earnings last month, their home city, Detroit, has just declared bankruptcy.

“Once upon a car” is the story of how the companies turned their fortunes around. The lesson for Detroit: hitting the bottom is sometimes necessary before people are ready to make the hard decisions.

Less than five years ago the Detroit motor companies were losing billions and cutting staff every quarter as motor sales fell in the United States and Europe because of the global financial and economic crises. The book is an insider’s view of their haul back to financial health. While it is peppered with anecdotes and details from top executives, it does lean towards those that survived to tell their story. The book is for those with an interest in the automotive industry or business and not really for a casual reader.

When the crisis hit, the Detroit motor companies were big, slow and arrogant. They were weighed down by poor products, bad sales strategies and debilitating labour, retirement and health-care costs. Most worrying, even as their home market collapsed and the economic crisis engulfed them, their unions and management did not seem to fully realise the depth of the problem.

In the end, it was former outsiders who pulled the companies out of the hole. At Ford, a former Boeing executive, Alan Mulally, mortgaged the company to the hilt and then bet it on smaller, more efficient cars that were simpler to produce. It paid off for the company, which emerged from the crisis leaner and more profitable.

Chrysler went into bankruptcy and was bought by Fiat, whose mercurial Italian chief executive, Sergio Marchionne, turned it around, in part by replacing the old guard with new, younger talent.

General Motors was also declared bankrupt and the US government effectively took over the company. They had to, in the face of entrenched management that believed it should stick to what it had been doing despite the obviously disastrous results. Pride led to the fall of the biggest automaker.

A new board and management have succeeded in turning the company around and selling off the government stake.

The companies only survived because, once they hit bottom, their new chief executives were able to clear out the dead wood and bring in people who were willing and able to take them in a new direction.

“The Greatest Business Decisions of All Time”, by management consultant Verne Harnish, is about the companies that “made radical choices that changed the course of business”. Carmakers Ford and Toyota are in the book.

Perhaps not unsurprisingly, Ford is not there to shed light on how to build cars. Rather, the book talks about the decision by Henry Ford to double the wages of his workers in 1914 and help create the consumer class that ultimately made the US the world’s largest economy. Higher wages created demand for goods and services, which was good for businesses. Some economists challenge this now, but Henry Ford’s insight made clear the business gains for treating workers as assets and a potential market.

The book also details the rise of Toyota and how it overtook the Detroit companies to become the world’s largest automaker by introducing a system of continuous improvement in its production lines — a process taught to them, ironically, by an American.

Written by Fortune editors, rather than consultants, the book is a concise, easy read — covering companies from Apple and Microsoft to industrial giants such as GE and Tata and retailers Nordstrom and Wal-Mart, among others.

Some of the decisions which made the companies dominant names were “long shot” passes or flashes of inspiration, others a result of their owner’s business cunning or personal beliefs. Relatively few were the outcome of carefully considered strategies.

However, the companies played to their own strengths and were able to survive and thrive amid the crises and opportunities the world threw at them. They were not afraid to make big changes or stake their future on big, sometimes counter-intuitive, bets, including investments in customer service and personnel in difficult times.

“Bitter Brew: The Rise and Fall of Anheuser-Busch”, by William Knoedelseder, is a cautionary tale about how fast a company can fall from the top. It is an entertaining read, dealing with the success and failures — both in business and personal lives — of the Busch family, which started and ran the brewing company that dominated the American market. The story is almost a soap-opera — full of death, divorce and debauchery — as well as a business saga.

The company was built up over 150 years by executives from the family, who lived by its products — and made sure they stayed in touch with the people who bought them. But, they lost control of the company with frightening speed in the wake of the public meltdown of the last heir, August Busch the Fourth.

Until then, the peculiarities of the family’s executives had either been charming or discrete, but Busch the Fourth simply did not have the business acumen to make his dangerous idiosyncrasies worth the risk to investors, especially at a time when it was losing market share to fierce competitors. They fled Anheuser-Busch, leaving it vulnerable to a takeover by a holding company, which stripped it of key assets and its culture. The family walked away with hundreds of millions of dollars, but left a now-hollow legacy.

Companies rise and fall all the time, but these books show better than most that their stories are really about the people and workers who built and led them — to disaster and success.