Reckoning

by David Halberstam

  He had elaborate rules for financial presentations. Some of them were his, and some had been handed down by his predecessor, Ted Yntema, and embellished by him. The word “employee,” for example, must always be written with only one “e” at the end. Ford must always be referred to in a presentation as “The Company.” No infinitives could be split. As long as Ed Lundy was with the Ford Motor Company, it was never “under these circumstances,” it was always “in these circumstances.” Something would be “compared with,” not “compared to.” The phrase “due to” was not to be used, since “due,” he liked to say, was a word used in connection with library books; similarly the word “current” as a synonym for “present” was barred, for a current was a river. Sentences were not to start with the word “however.” He kept a Webster’s dictionary on his desk, the classic Second Edition, not the Third, for he thought the editors had corrupted the Third. Once during a critical meeting to consider an expenditure of more than $100 million, a young staff member was startled to find that the principal issue between Lundy and one of his top deputies, Will Caldwell, also a grammarian, was not the topic at hand but the proper use of “which” and “that.”

  Lundy was a great blue-penciler, working on other people’s copy, correcting them both on paper and in person. Marvin Runyon, then a young manufacturing man, once went in to see him. “Mr. Lundy,” he said, “we have this problem, and we have three alternatives to it.” “No, you don’t,” Lundy answered. “You have two alternatives or three choices.” A book for presentation was to be ready forty-eight, not forty-nine, hours before the presentation. It would be bound in black, and it would have three rings. Over the top and bottom ring hole on each sheet (but not the middle hole), paper reinforcing doughnuts must be pasted, and the brightest young men out of the nation’s business schools had all done their tours sticking the doughnuts on the pages. When anything was taped into a backup book, the tape had to extend along the entire length of the piece of paper; it was not enough to put tape on the corners. The tabs that were used as dividers were also important; dividers themselves could not be used, because Lundy did not like them. A red tab was for a major section, pink was for an important subtopic, and clear tabs were for backup items. That allowed him to flip through his book quickly during a meeting. To Lundy, this was no idle drill. Presentations were a source of power. Those who presented well dominated meetings. “Manage by presentation,” he told his young men, and by that he meant that the way in which they laid out their figures and graphs should lead an audience to the right and inevitable conclusion.

  Not only the graphs but the young men themselves should look right for a meeting. Their clothes were always to be a little better than the clothes of men from other departments—that was important to Lundy. If one of his junior men was going to make a presentation, Lundy checked out his attire. If a man’s tie was a little flashy—inappropriate, he would say—Lundy reached into his own desk drawer, where he kept a small supply of ties, and selected one that was appropriate. Thus, uniform in attitude, the Lundy men became uniform in appearance. In a company where clothes had once meant nothing—whose founder wore a dark suit and a stiff collar, so that he and all those who dressed like him looked as if they were equally ready to go to work or a funeral—clothes now became important. They were a statement of background and purpose and finesse and especially class—softer of cloth, narrower of lapel, quieter of pattern. Time and money and thought went into them, for they were an advertisement; they said that the wearer had been to the right schools, was well connected in the company, and had a promising future. The Lundy Look, some of the nonfinance people called it; one of them, Ben Bidwell, had his own word for these men—“suits,” he called them. Years later, after he had left Ford to go to Chrysler, he scanned a list of rising Chrysler executives and picked them out: “This guy’s a suit....This one’s okay....He’s a suit....He’s good....He’s a suit....”

  For over twenty-five years Lundy filled the company with his people, highly intelligent and highly motivated men who knew systems and understood how to apply them in the most forceful way. His was by far the best-organized and most disciplined group within the company. That discipline came from Lundy himself; he was able to instill his principles in the younger men, to minimize rivalries among them. Thus his wing was never faction-ridden. He made sure that earlier generations of Lundy protégés took care of succeeding ones. The older Lundy protégés were happy to annex the younger ones, for it was a sign of a rising star that he could get good people to work for him. They formed a company within a company. They knew both their place and their status, and those who were successful mastered the art of moving swiftly but cautiously up the company’s rungs, careful not to get ahead of themselves and become threatening to their superiors. It was said of one ambitious young finance man that on the day he received word of his vice-presidency, he drove out of the Glass House parking lot and headed straight for a real estate office where he put his house up for sale and inquired about prices of what would surely be an even grander house in Bloomfield Hills.

  Their loyalties were not to cars but to careers, their own and those of the men they served. They had all been to the same schools—if not to one of the best Eastern schools, then at least to a very good business school. (Harvard Business School was the desired one, and a Baker Scholar from Harvard was better than a non-Baker Scholar, just as a Sloan Scholar from MIT was better than a non-Sloan Scholar. Fred Secrest, one of Lundy’s deputies, kept a small card in his pocket with the number of Harvard Business School graduates in the company tallied on it. “Freddy,” Iacocca once chided him, “why don’t you keep a card with the sales figures on it?”) They had the same connections both within and outside the company, they had their own channels of communication, their own codewords. Within the company they were known as part of the Lundy School of Economics, or, for short, the Lundy School. “It’s a fraternity, Lee,” Charley Beacham, Lee Iacocca’s sponsor, once told him, “a closed Greek fraternity, and there’s no place for people like you or me in it.” The members were Ed’s boys; they served, and in turn they would be served.

  Year after year he consolidated his power, pushing his people into increasingly meaningful slots. He sulked if someone criticized the performance of one of them, and even Henry Ford tried to be tactful. If he had to pass a message to Lundy through another executive which somehow reflected poorly on a finance man, he would take the executive aside and say, “Now for God’s sake, be gentle with Lundy—I don’t want him upset. You know he’s so damn sensitive about things like this.” If any of his people had to be disciplined, then the problem was taken to him, so he could do the disciplining.

  The company’s personnel charts were marked with green tape to designate employees who were outstanding. An exceptional number of Lundy’s people, because they were smart but also because they were doing each other’s personnel reports, were graded outstanding and had strips of green by their names on their charts. There was noticably less green in the charts from the other departments, which irritated some. When Iacocca or one of the others challenged Lundy about the green awarded one of his boys, he grew immediately defensive. “Of course he’s green, he’s one of my best people,” he would answer. (Later, after Iacocca and his team of ex-Ford men went to Chrysler, all of them in their minds victims of the finance people, they would on occasion talk about a young man at Chrysler, and one of them would say, “He’s a green-tape guy.” It was not a compliment. It was their shorthand for a man seriously overrated.)

  If Lundy thought an area of the Ford company was undermanned by finance people, he would move some of his better people in there. He kept a close score of how many of his troops had gone on to other divisions and other companies, and each Lundy man who went on and did well was a feather in his cap, one more acknowledgment that he turned out the best people in the country. The nation’s headhunters, always searching for an able, restless young man to run some company, loved Lundy, for his reports on the m
en he had employed were detailed and unbiased, and the discipline they had had was a given. Lundy was intensely proud of his people, and he did not mind sharing them with other divisions and even other companies, particularly the men who were not on his absolute A list. But he did not like poaching; the movement of talent had to be done on his terms. In the late sixties, Xerox, a rising company looking for talent, took what Lundy considered too many Ford people. Lundy refused to forgive either Xerox or the men who left. Though the amount of paperwork generated by the finance people was prodigious and required endless copying, he refused to let his staff use a Xerox machine. Instead they had to use a much more primitive device called an Ozalid, which was less efficient and, among other shortcomings, did not collate the papers it copied.

  To Lundy the growth of his cadre meant that the company was more disciplined than ever before, that its processes were more rational, and that therefore it would make fewer mistakes. He and his people regarded it as their mission to slow down the creative people and make them think twice. Others in the company took a different view. Lundy had built his power base too well, they thought. Where there had once been a system of checks and balances, now, because of the growth of finance, there were too many checks.

  Lundy’s growing power was a reflection of Henry Ford’s conservatism. More and more, Ford feared the risks and wanted to preserve what he already had, for himself and for his family. That made Lundy’s the welcome voice; he was the one who was always talking about preserving the company, while the product men like Iacocca and Frey always seemed to be talking about risking it. He had still another strength: He could speak with authority on what Wall Street would think of a particular course of action. That was the ultimate power. If there was a meeting and the product people were pushing for a sizable expenditure, Ed Lundy would often say what the impact would be on Wall Street. Invariably, it seemed, the Street preferred the Ford Motor Company to save rather than spend its resources. “If we do that, Mr. Ford,” he would say, “the market won’t like it,” or merely, “The stock will go down.” For the product men, it was the unanswerable pronouncement, what they privately called the doomsday argument.

  It was Lundy who defined the postwar culture of the Ford Motor Company. The newcomers were conventional in their thinking, ambitions, and behavior, but they were also quick and verbal. They were especially good at sensing the mood of the company. They could tell whose star was on the rise, and whose descending. They knew the various tracks within the company, which ones were fast and which ones were slow, and whose bandwagon they should hitch on to. The one thing you should never do, they warned each other, was go to the plants or into the hinterland. It was as if a key part of their code was that in order to succeed it was important to stay as far away as possible from the reality of the company. To the top men in finance, talent was its own reward, and there could never be enough bright young brains. Lundy and his colleagues seemed to hire two MBAs where one was enough. If nothing else, that heightened the competition among them. To someone like Lundy, so sure of what he was doing for the Ford Motor Company, the more gifted young finance disciples the company had, the better. But to those from other divisions who crossed paths with them, something was amiss. Too much manpower was being applied too far from the real business at hand. They were putting too much effort into gamesmanship, into making themselves and finance look good at the expense of other divisions, and at the possible expense of Ford.

  For their loyalty was channeled not so much to Ford as to finance. In the early sixties, Iacocca took Paul Lorenz, a smart young man from finance, under his wing in the parts-and-services division. It was a particularly difficult and important part of the company’s operation, and Lorenz did well there and showed an aptitude for the job. When his tour was up, Iacocca suggested that he might want to stay around and work there some more. “I’d like to,” Lorenz answered, “but I can’t.” Why not? Iacocca had pushed him. “If I do,” Lorenz replied, “I’ll lose my union card.” It was important for an ambitious executive to get back to headquarters and rejoin the finance people and be seen again. Visibility was crucial. The boondocks might be where the cars were made, but they were death on careers. When Steve Miller, a comer in finance, thought he might like to work for Ford in Mexico for a few years, because it would be more exciting and there would be more to learn, his superior frowned on the idea, for it would remove him—at least momentarily—from the pecking order. The best I can promise you, he told Miller, is that when you come back you can have your old job back. “Sometimes,” said Phil Caldwell, eventually Ford’s president and himself very much a product of that system, “I think that the problem with the Ford Motor Company is that we are growing too many sunflowers, flowers with big heads who rise too high seeking the sun at the expense of all else.”

  They were the right men for the era. Starting in the late fifties and then more rapidly in the sixties and the seventies, Ford and companies like it promoted men who would conserve what existed, rather than men who would risk what they had for an increasingly expensive shot at gaining even more. The growing power of the finance people made the creative people more vulnerable than ever. For the creative people always, no matter how good they were, made mistakes. No product man was perfect; for every model that was a success, there were others best forgotten. By contrast, the finance men were careful. They were never identified with a particular product. They never had to create anything. In meetings they attacked but never had to defend, while the product people defended and could never attack. Once Iacocca told Lundy, “Ed, the great thing about being in finance is, you don’t have to worry about ten-day reports, you don’t have to worry about sales, you don’t have to worry about design, you don’t have to worry about manufacturing breakdowns—just what is it you guys do for a living?” But Iacocca made sure when he chided Lundy like this that there was no one else around. Criticism of finance or of Lundy, even light joking, was permissible, but never in front of anyone else.

  He came to be a man apart. He even had his own chair in the Ford executive dining room. Everyone else, even Henry Ford, took a chair at random as he filed in. Not J. Edward Lundy. Over the years he had managed, without anyone’s realizing it, to do what no one else had done—he had staked out his own chair. (A few of the older, more senior people knew why—Lundy had trouble with his eyes and liked to sit with his back to the glare from the window—but most did not know and simply accepted it.) No one dared to walk in and occupy that chair. If he hadn’t arrived, the others left his seat vacant. If it was positively known Lundy was out of town, someone might eventually take the seat, but timorously. It was only a chair in an executive lunchroom, a small thing, but it was also an extraordinary manifestation of power.

  Lundy was the one Whiz Kid who stayed the whole course. Of the original group, both McNamara and Arjay Miller had made president, but McNamara served for only a few weeks, and Miller’s term was comparatively brief and uneventful. Lundy made it all the way through, and, more than either of them, he put his stamp on the Ford Motor Company. That he could hold so much power for so long surprised men who had in the earlier years underestimated him. In the end it was a reflection of the age of the company, the need to preserve and conserve rather than to create, and the fact that he represented, in the most personal way, the Ford family interest. That was critical. For Henry Ford was not just the head of the Ford Motor Company but the head of the Ford family and the conservator of its interests. Ed Lundy was his life-support system. Lundy’s job was to protect Ford. He knew the company, he had no other loyalty, he had none of the raging ambition of an Iacocca or the troublesome talent of a Don Frey, and he would spend as little Ford money as possible. Lundy and Ford were on the phone all the time, and Henry Ford checked out everything with Ed Lundy. Everything. They were not close socially, and Lundy avoided social occasions in Detroit and the foreign trips as much as he could, fearing, his friends suspected, what would happen when Henry Ford started to drink, and the sudden cruelty
of Ford’s tongue. But most in the company knew how much Henry Ford trusted Lundy, and for those who did not there were constant indications. It was clear, for example, that before every important meeting Lundy and Ford had caucused, that to a large degree the decisions had been made by these two men even before the meeting started. Once it convened, Henry Ford would turn to Lundy and say, “Well, Ed, as we were just saying...” or Lundy would turn to Ford and say, “Of course, Mr. Ford, you know my position on this...” No one else in the company had that access and that trust, and thus no one else in the company had that much power.

  Even his opponents respected Lundy. He was a man of goodwill. Product men who thought that the power of the finance people was pernicious nevertheless believed that in contrast to McNamara, he was a fair man. He did not bully those who disagreed with him. He did not, as McNamara did, load the questions so that there was only one answer. (There were, it was believed, few honest answers given at Ford during McNamara’s years because there were few honest questions.) He had none of McNamara’s overwhelming ambition. McNamara had ruled by the force of his personality, often intimidating the people beneath him; Lundy ruled by kindness—almost, one critic thought, by love. That he was pledged to the greater good of the company there was no doubt. He was decent and fair, but the system he created was not.