Why is this company in so much trouble?
Where do the problems originate?
What isn’t working?
Miller asks for the bad, and then tries to outsmart it. He listens for explanations, not excuses. When a mutual friend offered to introduce us, I eagerly accepted and booked a trip to New York City to see him.
Miller cut his turnaround-kid teeth alongside legendary Chrysler CEO Lee Iacocca. Burdened by high labor costs, poor quality, and uninspiring design, Chrysler faced extinction when superior Japanese imports began flooding the American market. As Chrysler’s financial answer man, Miller helped put together that historic federal bailout that saved the company. After a falling out with the charismatic Iacocca, Miller left Chrysler and went looking for other endangered corporate species. He helped rescue trash giant Waste Management. He led Bethlehem Steel through bankruptcy. He salvaged what he could of auto-parts manufacturer Delphi.
Miller’s approach has always revolved around fast questions, fast answers, and decisive, often painful action. Time has never been on his side. Sprawled in his office on Park Avenue in Midtown Manhattan, Miller told me that when companies call, it’s usually because their situation has gone “from troubled to desperate.”
When he takes on a challenge, he brings a fiercely competitive survivor’s instinct and an outsider’s eye to the job. “I like to say I’m fearless and clueless.” He starts by looking for the problem that was the core threat to the business. “I do not regard myself as the answer man,” he says. “I am the question man …”
Typically, Miller spends the first few weeks meeting with people—encouraging them to tell him what’s wrong, what doesn’t work, where the brick walls are getting in the way. After he asks about the past, he wants to know how people see the future.
When did things start going wrong?
What have you learned?
How do you think we fix it?
He explained to me that his biggest professional challenge was as CEO of Delphi, the auto-parts behemoth that had once been part of General Motors. The Delphi Corporation was a $28 billion company, hemorrhaging money when Miller took it over in 2005. Ultimately, Miller took the company through Chapter 11. At the time it was the biggest bankruptcy in the history of the American auto industry. An ugly, nasty, and exceptionally painful process, at times it seemed there was nothing but bad news.
Delphi had grown into the biggest auto-parts maker in the United States. By the time Miller walked through the door, the company had diversified into too many side ventures. It had lost focus on its core products even as global competition got fierce. It was buckling under huge legacy costs of healthcare and union pensions that it inherited when General Motors spun off the company six years earlier. It was paying unionized workers up to $75 an hour in wages and benefits. Workers could retire at age 48 and keep their healthcare for life. Whenever the company closed a factory, it paid laid-off workers indefinitely until they got another Delphi job, a policy that cost the company $400 million a year.
Miller told the Wall Street Journal at the time that labor costs were “roughly triple” what any other unionized American auto supplier had to pay. He wanted to know:
What got us into the ditch?
What happened to the business plan?
Over dinner at the Frankfurt Auto Show, Miller recalled, he asked Delphi’s international corporate customers to critique their experiences. It didn’t take many rounds of schnapps for the horror stories to start flowing. They complained that Delphi had become a plodding, distant, tangled, bureaucratic nightmare of a company to work with. Getting a new braking system to Mercedes-Benz, for example, required sign-off from multiple divisions in different countries. Decisions took forever. The supply chain was broken. It was no way to run a competitive business. “It meant we were paralyzed,” Miller told me.
In his book Miller compared himself to a surgeon and described Delphi as a “desperate patient who waited too long to seek treatment.” He concluded that major surgery was required. Five months after his arrival, Delphi filed for bankruptcy and began its painful reorganization. Miller closed twenty-one of twenty-nine factories, putting four out of ten workers out of their jobs. He forced major wage concessions on the United Auto Workers (UAW) and unloaded most of its legacy costs in worker healthcare and pensions. He moved the company away from manufacturing old-style, low-profit parts—chassis, brakes, hoses—and into high-tech electronics, navigation, and fuel systems.
Miller fumbled some public statements, making a difficult task even harder. He complained that Delphi couldn’t afford to pay union workers $65 an hour and fund healthcare and other expensive benefits even as the company approved big bonuses for top executives. Hourly workers erupted. Miller faced protests and court challenges. As penance and a PR move, he cut his salary from $1.5 million to just $1. Still, when he looked out his window one day, he saw union protesters carrying signs that said, “Miller Isn’t Worth a Buck.”
But as a result of asking his “bad news” questions, Miller knew the situation was dire. He also knew the crisis extended beyond Delphi. General Motors and other companies depended on Delphi auto parts. If Delphi went under, it could take automakers down with it.
“My goal was to do minimal harm to the world’s auto industry,” he said. “Yes, we had come out of GM, but we sold parts to every automaker on the planet, without which no automaker could do much.”
At tremendous cost to workers and his own public profile, Miller salvaged the company. The concessions he forced and the ripple effect it had through the industry prompted business writer Allan Sloane to give Miller credit for saving “what’s left of the Detroit Three automakers.”
If the problem is eliminated, can we survive?
Miller’s “fearless and clueless” approach to asking about and acting on bad news did not make him popular. But as a surgeon working on a desperately sick patient, he lived by the idea that if you want to fix a serious problem, you have to go looking for it and cannot avert your eyes when you find it. For years after his experience at Delphi, Miller wrote notes to the people whose lives were shattered in the reorganization, explaining and apologizing.
Bad news comes with a price, and whether it’s a business that’s confronting impossible legacy costs or a patient who is in denial about her diabetes, looking for bad news is a necessary first step toward diagnosis and action.
History Is News, Too
News can be bad or it can be good, but history is forever. And history is part of diagnostic questioning. It provides clues and reveals patterns.
When did you first notice this?
How long has it been going on?
What was it like before?
Some of the most effective diagnostic questioners are history buffs. My neighbor, Al Darby, is one of the best. He’s a roofer who specializes in slate roofs, copper gutters, and that tricky flashing that wraps around chimneys and keeps the water where it belongs when it rains: outside. He usually gets called when a homeowner finds water in a bedroom or a hallway, dripping down the wall or puddled on the floor. He starts by asking about the history of the house, the roof, and the water problem.
Does it leak every time it rains?