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• Everything Lee Iacocca needed to know about succeeding in business he learned during his childhood.

• Although he studied engineering at Lehigh University, his true passion was sales.

• The key to successful sales is to listen to what customers have to say.

• Iacocca sold cars like shoes: He found out what size, style and price range the customer wanted.

• However, in the automobile business, the dealers are the real customers and must be served.

• Decisiveness is the most important quality in a manager.

• You can never know all the facts, so learn to work with the information you have.

• Bringing out a product too early is as bad as bringing it out too late.

• When you are in charge, identify unprofitable divisions and give them a deadline for improvement. If they miss it, shut them down.

• Incompetent managers often bring others along to give themselves cover.

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Iacocca

An Autobiography

by Lee Iacocca and William Novak Copyright © 1984 by Lee Iacocca. Published by arrangement with The Bantam Dell Publishing Group, a division of Random House, Inc.384 pages

Leadership & Mgt.

Strategy

Sales & Marketing

Finance

Human Resources

IT, Production & Logistics

Career Development

Small Business

Economics & Politics

Industries

Intercultural Mgt.

Concepts & Trends

This summary is restricted to the personal use of Pierre Elias ([email protected])

Iacocca © Copyright 2007 getAbstract 2 of 5

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What You Will LearnIn this Abstract, you will learn: 1) How Lee Iacocca prepared himself for leadership at Ford Motors; 2) How he excelled at marketing and manufacturing automobiles; 3) How he survived under Henry Ford II; and 4) What managerial qualities he prioritized.

RecommendationLee Iacocca, the corporate icon of the “go go” era, recounts (with co-writer William Novak) how he did it his way, with a little help from his friends. He sets the record straight about insinuations that he was a fl amboyant fl ash in the pan or had Mafi a ties. A sense of honesty pervades his narrative, which often reveals more about the man than he probably intended. This 1984 classic is a cultural account of a time when American manufacturing was full of vitality, and marketing was simpler and more direct. At the time, experts warned Iacocca that you can know too much about everything and that a fl ood of information will just slow you down. He decided to know it all, anyway. His philosophy, well expressed between anecdotes, seems almost naïve now, certainly when contrasted with the ruthlessness of his nemesis, Henry Ford II. Iacocca gets the last laugh with his insider descriptions of life in the corporate glass house. getAbstract recommends this frank, refreshing yarn to postboomer business leaders, managers on the ascent, car buffs and manufacturers who operate within a dealer network.

Abstract

Wieners and the DepressionWhen Nicola Iacocca crossed the American threshold at Ellis Island in 1902, he was already convinced that only the United States offered the promise that if you wanted something bad enough and were willing to work for it, you could become anything you wanted. His only son, Lee, embraced this ideal and embodied it.

Nicola was among the fi rst in Allentown, Pennsylvania, to own a new Model T Ford. After enlisting in World War I, he was stationed at Camp Crane, not far from home. Being one of the few who could drive, he was assigned to train ambulance drivers. In 1921, Nicola, then 31, returned to Italy to retrieve his mother. While there, he married a 17-year-old Naples girl. He brought both women to America. With his aptitude for vehicles and his eye for real estate, Nicola amassed a small fortune in the years before the Depression. The children never wanted for anything and the family always paid cash, because Nicola forbade buying on credit. He taught his teenage son two sound business lessons: Firstly, stay away from capital-intensive businesses because you yourself will end up as the property of the bank. Then, in hard times, sell the one thing that people can’t do without: food. When the Depression hit, the family lost most of their real estate, but their Orpheum Wiener House restaurant kept them solvent.

A devout Catholic who enjoyed confession, Lee Iacocca was a good son, an excellent student and, until rheumatic fever retarded his athletic development, a fi erce athlete. The Depression turned him into a materialist, but his father’s persistent optimism during those years bolstered Iacocca in later life when he carried the weight of giant corporations on his shoulders. His early years were comfortable, and he did not even realize he was

“There are times when even the best manager is like the little boy with the big dog, waiting to see where the dog wants to go so he can take him there.”

“By their very nature, financial analysts tend to be defensive, conservative and pessimistic.”


Italian until he was 11 years old. A smart kid with a knack for understanding adults, he worked hard at reading and writing, played the sax and loved big band music. When World War II began during his senior year in high school, he was deferred because of his childhood illness and went off to Lehigh University, near Allentown, to study engineering. He learned a lesson in college that he later applied to business: The ability to concentrate and use time wisely is everything. He was suffi ciently disciplined as a student that he could take weekends off to enjoy life. The same held true when he became head of the Ford Division at Ford Motors.

The Reluctant EngineerAfter he graduated, Princeton University recruited Iacocca for its master’s degree program by offering him a scholarship that covered everything, including spending money. However, each year, Ford Motors selected one student from each of the best 50 colleges for its engineering program – and that year, that student was Iacocca. He earned his master’s in a year and talked his way into Ford’s next class as the 51st student.

Once he arrived at Ford headquarters in Dearborn, Michigan in August 1946, Iacocca discovered that he hated the actual work of engineering and angled to get into sales, where the action was. After some networking, he got a low-level fl eet sales job in Chester, Pennsylvania. Thanks to a backlog of orders and little postwar inventory, Iacocca found fl eet sales very profi table. By 1949, he was a zone manager who succeeded by treating dealers fairly. Because of this early experience, he rarely had the dealer problems other auto executives endured. He appreciated dealers as the only customers an auto company really has. Iacocca learned salesmanship from the local sales manager, who got his material from his brother-in-law, comedian Henny Youngman. He learned how to qualify buyers. It was like selling shoes. The choices were vast but you needed to know the style, the size, what it would be used for and the price range. While in fl eet sales, Iacocca found a mentor in Ford’s East Coast regional sales manager, Charles Beacham, another engineer-turned-salesman.

“56 for 56” Iacocca succeeded by using a remarkable string of marketing gimmicks. During the 1956 recession, he put together his “56 for 56” program. A Ford buyer at a regional dealership could put down 20% and make 36 monthly payments of $56 to buy a 1956 model Ford. This worked so well that Robert McNamara, head of the Ford Division, employed it nationwide. An additional 75,000 Fords sold under the program. That year, Iacocca married fi ery Mary McCleary, his lifelong soul mate and a source of great support and pride.

Iacocca followed his mentor, Beacham, back to Ford headquarters and became his marketing manager for trucks. Within a year, he was promoted to marketing manager for the Ford Division under McNamara. In 1959, McNamara introduced the small, effi cient Ford Falcon. It didn’t set the world on fi re, but it demonstrated Ford’s innovative side. Iacocca started thinking about another new car. When McNamara joined JFK’s administration, Henry Ford himself told Iacocca in December 1960 that he was the new general manager of the Ford Division, the biggest division at America’s second largest fi rm; he was 36. It was his fi rst conversation with the boss.

Structured ManagementIacocca set up a quarterly review system forcing each executive to report his or her accomplishments, failures and plans each quarter to the executive one level up. The

“I only wish I could find an institute that teaches people how to listen.”

“The most fulfilling thing to me as a manager is to watch someone the system has labeled as just average or mediocre really come into his own, all because someone has listened to his problems and helped him solve them.”

“The biggest problem with American business today is that most managers have too much information. It dazzles them and they don’t know what to do with it.”

“If I had to sum up in one word the qualities that make a good manager, I‘d say that it all comes down to decisiveness.”


result was a fairly tight ship that was also quite agile. Iacocca prized decisiveness in himself and his managers. He was unfairly characterized as flamboyant and hasty, when, in fact, he was conservative and resolute. He believed that since you can never be 100% sure of what you need to know about anything in business, you must act decisively based on a fraction of the facts. Too many managers get weighed down by decision making,

“especially those with too much education.” While you wait for the last 10% of data, the first set is probably already out of date. Iacocca trusted his motivational ability and valued it almost as much as his determination.

The Cougar, uh, Torino, uh, Mustang!Iacocca’s first major project as head of the Ford Division tested his management theories. Marketplace facts suggested to him that a new day had dawned in American business. The future belonged to the young and young at heart. Optimism and vitality spilled from consumers. Iacocca went to Europe to check on the Cardinal, McNamara’s four-cylinder, economical answer to the VW Bug. Iacocca found it insufficient to accomplish its sales goals. Gas was cheap and people wanted cars with power, room and pizzazz. The Cardinal was small, underpowered and ugly. Iacocca killed the project for the U.S. market, saying, “Just as the car industry cannot afford to lag too far behind the consumer, it also can’t afford to be too far ahead of him. Coming out with a product too early is just as bad as being too late.”

Iacocca assembled a can-do engineering and marketing team to build the new American dream car. It was sporty and exciting, with lots of options and a price tag of less than $3,000. He saw that the U.S. market was in search of a new car and believed he knew what it wanted, though some executives at Ford disagreed with his vision. Iacocca wanted the car to debut at the 1964 New York World’s Fair, but lacked even a clay model in late 1961. Designer Dave Ash’s model, called the Cougar, won the in-house contest. After the design and the construction costs were approved, the marketers renamed it Torino. Henry Ford’s fling with an Italian lady undermined that name, and Mustang was chosen at the last minute. On March 9, 1964, only 571 days after the clay model was okayed, the first Mustang rolled off the assembly line. Ford hoped to sell 75,000 the first year at a base price of $2,368. By year’s end, 418,812 Mustangs had sold, netting the Ford Division a $1.1 billion profit.

The “Glass House”Ford headquarters in Dearborn, Michigan, is a huge campus dominated by the building which used to house the offices of Henry Ford and those closest to him. In the “Glass House,” servants in white coats deliver oysters or pheasant for lunch, the decor is royal and the air is rarified. In January 1965, Iacocca moved in as corporate VP in charge of planning, producing and marketing all Ford and Lincoln Mercury division vehicles. He got a Glass House office and lunch each day with Henry Ford. Iacocca felt like “His Majesty’s special protégé,” with a mandate “to rub some of that Mustang ointment” into the sagging Lincoln Mercury division.

By 1966, Iacocca and his team were celebrating on the beach in St. Thomas with hundreds of newly invigorated Lincoln Mercury dealers. In the fl icker of a thousand torches, a craft landed on the glistening beach. The forward ramp opened to reveal the fi rst gleaming white Mercury Cougar, driven by Italian-American singer Vic Damone. The dealers were in heaven. The very successful Cougar was the fi rst part of Iacocca’s

“That may be the most important consideration of all when it comes to quality – that the worker believes his ideas will be heard.”

“But I do think that our national leadership consists of too many lawyers and not enough people from business.”

“[Henry Ford] lived by his grandfather’s motto: ‘History is bunk.’ It became an obsession with him. His attitude was ‘destroy everything you can’.”

“The arbitrary use of power wasn’t merely a character flaw. It was something Henry actually believed in.”


package to revitalize Lincoln Mercury. The division thrived under the big cat, and its sporty, glamorous Mark III model gained ground on Cadillac. The Pope agreed to ride in a Lincoln on his next U.S. visit. Cartier, the exclusive jeweler, even lent its name to the clock in the Cougar Mark III. A television ad showing a diamond cutter at work in a smoothly maneuvering Mercury was so popular it was parodied: Saturday Night Live’s version replaced the diamond cutter with a mohel – a Jewish circumciser.

No one would argue against Iacocca as Henry Ford’s successor, except Henry Ford, whose management philosophy called for keeping everyone off-balance, making underlings uncomfortable and destroying all the evidence of his own actions. Iacocca did not realize it, but Ford began undermining his authority by hiring Bunkie Knudsen to head the Ford Division instead of him. Knudsen had headed General Motors and the media considered his hiring to be a Henry Ford coup. Jealous of Iacocca’s media attention, Ford grabbed the spotlight. Bunkie didn’t last long in Ford’s alien, ally-free culture. He got fi red because he insisted on walking into Henry’s offi ce without knocking and that just was not done.

The Glass House CracksIn December 1970, Iacocca was anointed president of the Ford Motor Company with a Glass House office next to Henry’s, unlimited use of the corporate aircraft and a bull’s-eye painted on his forehead by a wide variety of rivals. While the outside forces were daunting, the pressure from Henry Ford was the most intense. Ford tried to control Iacocca. He ordered him to fire many trusted friends for no reason. Once, he ordered a friend and valuable employee to be fired because he was a “fag,” though Iacocca assured him the man was not. Only then did Iacocca learn that Henry did not want anyone to be at ease around him. Henry told him never to let an employee get too comfortable:

“Always do the opposite of what he expects. Keep your people anxious and off-balance.” Henry did just that to Iacocca. On July 13, 1978, Henry told a reporter that Iacocca was fired, and the reporter leaked the news to Iacocca. The company had just enjoyed its most profitable six months ever, but Iacocca was relieved to go.

Saving ChryslerIacocca went on to rebuild the failing Chrysler Motor Company by employing many fired or retired Ford executives. He brought in the Mustang and Cougar marketing team. He brought in his own bean counters to fix the disorganization he inherited; he sold losing assets, and motivated his designers and marketers to think creatively and act decisively. The Dodge Caravan and “K” cars soon followed, complete with amazing warranties and impressive financing. Following an unprecedented loan from the U.S. government, Iacocca brought Chrysler back in the face of the energy crisis and a recession. When he presented Chrysler’s $1.2 billion repayment check to the government far ahead of its due date, the government had no idea how to cash a check that large.

About the Author

Born in Allentown, Pennsylvania, Lee Iacocca, the son of immigrants, rose to become head of the Ford Motor Company and Chrysler Motor Corporation. He is the author or co-author of several books, including Where Have All the Leaders Gone?

“Life has its ups and downs, and each person has to come to terms with his own share of misery.” [ – Nicola Iacocca]

“Remember the only thing you’ve got going for you is your ability to reason and your common sense. That’s the only real advantage we’ve got over the apes.” [ – Charlie Beacham, Lee Iacocca’s mentor]

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