Men's Journal

Lutz has always been afforded the chance to play. Born in Zurich, where his father was a top banker at Credit Suisse, he attended a string of private schools in Switzerland and on America’s East Coast. He avoided schoolwork. In high school he was constantly in trouble due to “girls and unauthorized driving.” Expelled from one Swiss prep school, he didn’t receive a high school diploma until age 22.

Hoping to instill some sensibility in his son, Lutz’s father persuaded him to join the U.S. Marines, where he became a fighter pilot in the peacetime lull between the Korean and Vietnam wars. The marines taught him how to speak truth to power. “Officers, even junior officers, are encouraged to think and express their opinions.’’

In the early ’60s he took his flattop haircut and squaresville shoes to the University of California–Berkeley, where he wrote a master’s thesis titled “The Influence of Design on Product Image.” In an experiment that would hone his eye for design, he built two car models, identical but for one small difference: The wheels on one model were moved outward for a slightly wider stance. “That car was seen as more stable and safer,” Lutz says, even though the wheel change was so slight as to be almost imperceptible to onlookers. “They weren’t able to say why they felt the way they did.”

His thesis was about consumer psychology, and that’s where Lutz’s genius lies. He knows what makes people subconsciously connect with products. It’s a tight gap between two body panels, soft leather on the seats, balance and proportion in a car’s profile. As such, his Theory of Design is simple: Spend money where it makes the customer feel a difference. This is where he has clashed with the engineers at GM — they used up so much cash on under-the-hood improvements that there was never money left over to upgrade what customers see and feel.

After college Lutz was hired by GM. His foreign-language skills prompted the company to send him to Europe, where he succeeded as a marketing executive, only to flee to BMW to become executive vice-president for global sales and marketing. He took the German sport-luxury carmaker from niche family manufacturer to baby-boomer status symbol before landing at Ford of Europe. There he championed the Sierra, a Euro-only model that presaged a marketplace migration toward curvy cars. Nine years later he created the millions-selling Ford Explorer.

Despite those home runs, Ford’s elder statesmen saw Lutz as a troublemaker, and eventually they asked him to see a psychologist. Lutz says they wanted him to cool his jets, to play along. Soon after, he left Ford for Chrysler, where he found a kindred spirit in the entrepreneurial CEO Lee Iacocca. There Lutz secured his place in Detroit history.

In the early ’80s, Iacocca saved Chrysler from bankruptcy with financing from federal bailout loans, but by the ’90s his boring compact K-cars and boxy four-doors weren’t cutting it. Lutz sparked excitement at Chrysler — and helped keep it afloat — by producing the Dodge Viper and restyling the angular sedans using a novel configuration that created more room in the front and back seats.

Everyone in Detroit considered Lutz a shoo-in to replace Iacocca when he retired in 1992. But Iacocca snubbed Lutz, tapping Bob Eaton, a colorless executive who would let Daimler control Chrysler after the merger — with disastrous effects. Iacocca’s ego was huge and his skin thin. Lutz would paint him into logical corners at meetings, embarrassing the boss in front of other executives, incurring his wrath. When it was time for the board to choose his successor, Iacocca lobbied against his protégé. As Lutz explains, “He had something called the ABL program: Anybody But Lutz.”

Iacocca seems to regret the grudges. In his latest book, Where Have All the Leaders Gone?, he excoriates auto industry execs but spares Lutz, whom he calls a “savvy veteran.” Earlier, Iacocca told a reporter that the Bob Eaton affair was “the biggest mistake of my life.” When I tried to reach Iacocca for a comment, he spoke through his assistant, and offered only a single-word response about the reason for his difficulties with Lutz: “Personality.”

“Sure, I would have liked to have been CEO of Ford or Chrysler,” Lutz says. “But I think I have a personality that is antithetical to that ambition. I would have to have been more go-with-the-flow. Who knows? If I hadn’t argued with Iacocca so much and caused him to explode in white-hot fits of anger…” He trails off, before getting in a final dig. “I’ve never made CEO, but I’ll be 77, and I’m still working. So there’s a sort of revenge on Iacocca, who didn’t want to go.”

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