Have the Courage to Admit You Don't Know

Lessons From the Heart of American Business: A Roadmap for Managers in the 21st Century
by Gerald Greenwald, Charles Madigan

The age of shortcuts is over. Hitting the jackpot is passé. In today's business world, everyone knows that there is simply no substitute for hard work and hard-won knowledge. But listening to and learning from the "war stories" of American corporate legend Gerald Greenwald can give every business person an invaluable edge. From his seminal years at the Ford Motor Company and United Airlines, Greenwald draws on his wealth of personal experience and the actions and non-actions of some of the biggest names in American business. Discover:

• Five rules of behavior during business meetings-including "Speak with Candor and Honesty"

• How you can prepare for downturns and be ready to react in a time of crisis-and why a few key choices can help turn a company around

• The inside story of Greenwald's successful labor negotiations in the auto and airlines industries-and the real secrets to achieving consensus and building partnerships that last

• Why bridging the gap between management and employees may be the most important challenge of our time.

Chapter 1

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."

Copyright © 2001 by Gerald Greenwald

About the Author

Gerald Greenwald is a former chairman and CEO of United Airlines and former Chrysler Corporation vice-chairman. He has held top managerial positions at Ford Motor Company, Dillon Read, and Olympia & York.

Charles Madigan is a senior writer for the Chicago Tribune.