Matters Column

Whiz Kids jump-started my distrust of large companies

April 6, 2018
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I bought a book that gathered dust on my bookshelf for at least five years.

“The Whiz Kids” by John A. Byrne is about 10 Harvard graduates who met during World War II. Their initial notoriety arose out of using statistics and analysis to streamline Air Force operations. At the end of the war, they convinced Henry Ford II to have them bring their statistical magic to the auto industry. By doing so, they drastically affected manufacturing, Michigan, Flint and me. Reading the book was a trip back in time for me and a window into my small business advocacy and distrust of large organizations. It also tells the story of the destruction of our auto industry.

I am using my own and family experience because I can openly use that information without violating confidences. Some people need to work for large organizations. Some need to be on their own. Many people who functioned well in a large organization have suddenly found themselves in an unhealthy environment due a merger or change in management. For my father, the change came through a promotion.

My father was promoted from the head of engineering to general superintendent of the Buick manufacturing plants in Flint in 1958. He was a farm boy from Iowa who only received one B on his report card, for which his mother said the teacher needed to be fired. Vernon only got A’s. When he was promoted in 1958, he left the world of factory floor manufacturing and entered the world of executive politics. At this point, he ran head-on into the mythical world the Whiz Kids had created. My father hated them. He said they were educated beyond their usefulness. 

The Whiz Kids’ three best-known members were Robert McNamara, Tex Thornton and Arjay Miller. McNamara was secretary of defense in the Kennedy and Johnson administrations, Miller was president of Ford and Thornton built Litton Industries. All 10 made their mark on American business. 

John Kenneth Galbraith described them: “These men of the technostructure are the new and universal priesthood. Their religion is business success; their test of virtue is growth and profit.” American industry, particularly auto, was taken over by people to whom the financial statement was all you needed to run a business. They believed you could run any business, regardless of your knowledge, with just financial statements. My father was an engineer and manufacturer, and damn proud of it. When he moved up to the main office, he found himself under the control of “bean counters.”

I have known for years the lack of respect and co-operation between departments was the kiss of death for any-sized business. You need to make the product, sell it and do an accounting of the profitability. Fail in any one area and the whole entity is at risk. Think of it this way. Which organ could you best do without? Would it be your brain, heart or liver? The answer is obvious, but these men in effect tried to manage companies that had lost vital organs.

Imagine a group of men who drastically altered a major corporation’s best-selling product, considering only cost-cutting. The results were disastrous. In the early 1950s, Ford’s best-selling automobile had an eight-cylinder engine. To save money, Ford changed to a six-cylinder engine. They did not tell the dealers or ask the customers. That is when Chevrolet passed them in sales. No matter what your cost saving, if the product doesn't sell, it's a disaster. Yes, they were the Whiz Kids.

Corporate culture was well-defined in the auto industry. GM suggested my father move from Flint to Warwick Hills near Grand Blanc. My mother did not want her boys to grow up to be elitist, so we stayed in Flint. GM had an informal preferred spouse prototype. My mother told my father that if she met Ed Cole, president of GM, or John DeLorean, general manager of Pontiac, she would slap their faces. Both had divorced long-term wives to marry much younger women. My mother did not attend social events. Dad said she wasn't an engineer, so there was no point in attending.

My father fought for his principles against the largest corporation in the world. At the urging of family, he tried to leave Buick in the ’60s. He accepted an offer for a position with Republic Steel, which immediately was rescinded at GM’s request.  

GM explained it would take his pension, his farm and everything he owned if he left. The company pointed out it had hundreds of attorneys with nothing to do but make his life hell. I think the cruelest blow was when asked by an executive out of Detroit why he seemed so distracted, he said his son had just died. The man asking the question responded, “Did you hear anybody say, ‘How's the ----ing family?’”  

My point is many people are in job situations similar to my father’s. He referred to GM's benefits as the golden girdle. They are in a job that is literally killing them but can't get out. It is not just financial. Pride plays a huge role in staying. My father’s strident criticism of his employer proved accurate in the end. He felt that Volkswagen would replace GM as the leading auto manufacturer. He died in 1978 before he saw if his prediction came true. His view was shared by McNamara, who also saw Volkswagen as the threat. They were only wrong about who would surpass them. 

My father’s story is the one I know best. The same story is going on today in businesses all over the country. I am aware of others but am not at liberty to discuss them. Many people are caught in these situations due to mergers and acquisitions. You suddenly find yourself working for a different company whose culture you cannot morally support. How many people at Wells Fargo found themselves participating in unethical activities because the company demanded it? If you want to get along, you have to go along. In many companies, that is the rule. 

I was able to escape to self-employment, which was a great gift. I shared my father’s tendency to speak first and suffer the consequences later. He at one point challenged his boss to a duel. God, I hope he was kidding. The problem is there is a man who I feel that strongly about. I have asked friends if it would be appropriate to challenge this person to a paintball duel for charity. Nobody thought it was a good idea, but it does prove the nut doesn't fall too far from the tree.

Paul Hense is the retired president of local accounting firm Hense & Associates and past chairman of the Small Business Association of Michigan.

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