By Thomas Moore Ross Perot

(FORTUNE Magazine) – In a genial, three-hour interview recently in his Dallas office, Ross Perot spoke expansively to FORTUNE's Thomas Moore about how he came to understand the depth of GM's troubles and how he began to formulate his plan for putting them right. Excerpts: We've got to nuke the GM system. We've got to throw away Sloan's book ((My Years With General Motors, former chairman Alfred P. Sloan Jr.'s description of GM's management system)). It's like the Old Testament -- frozen thousands of years ago. We still believe that we can find the right page and paragraph to give us the answer to any question we have today. When you get down to the guys who actually have their hands on things, they know what to do. They can design, engineer, and build the best products in the world. My question is: Why haven't we unleashed their potential? The answer is: the General Motors system. It's like a blanket of fog that keeps these people from doing what they know needs to be done. I come from an environment where, if you see a snake, you kill it. At GM, if you see a snake, the first thing you do is go hire a consultant on snakes. Then you get a committee on snakes, and then you discuss it for a couple of years. The most likely course of action is -- nothing. You figure, the snake hasn't bitten anybody yet, so you just let him crawl around on the factory floor. We need to build an environment where the first guy who sees the snake kills it. At Electronic Data Systems employees were trained from the day they joined the company to spend all day serving the customer, getting results, being the best in the world -- not being good bureaucrats. At GM the stress is not on getting results -- on winning -- but on bureaucracy, on conforming to the GM system. You get to the top of General Motors not by doing something, but by not making a mistake. You form groups, hold meetings, get consensuses, don't make decisions. You just kind of let this big old log keep rolling, knowing that sooner or later you're going to retire and get a big retirement anyhow. One day I made a speech to some senior executives. I said, ''Okay, guys, I'm going to give you the whole code on what's wrong. You don't like your customers. You don't like your dealers. You don't like the people who make your cars. You don't like your stockholders. And, to a large extent, you don't like one another. ''For this company to win, we're going to have to love our customers. We're going to have to stop fretting about dealers who make too much money and hope they make $1 billion a year through us. The guys on the factory floor are the salt of the earth -- not mad-dog, rabid, burn-the-plant-down radicals. And all this sniping at one another -- the financial guys vs. the car guys -- is terribly destructive.'' Of course, it was a waste of time to make that statement. I GOT MY FIRST INDICATION that consumers would stop buying many GM cars because of the large number of calls I received from customers and dealers with car complaints. I answered every customer complaint about a General Motors car the whole time I was on the GM board. This created great trauma inside GM because there was a department that did that. I tried that department, and all they did was send out form letters. I would call people and tell them that I got their letter, listen to their problem, and call the regional office. If I couldn't get a response from the regional office, I would send out an EDS trainee. GM would say, ''What does he know about cars?'' Nothing -- but he knew that his whole life depended on making sure that the customer was treated right, because he had been trained on that since day one.

We had a crippled state employee in Massachusetts who wrote me the nicest letter and said, ''I can't even get to work.'' I immediately called. He'd already been through the regional office. So I just called the EDS office in Boston. I said, ''Find a hot young trainee and have him call me.'' The kid calls. ''Ross'' -- everybody calls me Ross -- ''what's up?'' I gave him all the details. He says, ''Don't worry. I'll take care of it.'' I didn't tell him how. I called him back in a couple of days. He says, ''It's all taken care of.'' I say, ''Just out of curiosity, what did you do?'' He said, ''Well, the guy is exactly what he said he was in the letter. He's a great guy, not a complainer. His car is a mess. I got the regional guys, and I got the car down there. I showed them the car. I told them, 'Do you want to have this on the front page of the Boston papers? It's just a matter of time, because this is a hell of a ) story.' I captured their minds and hearts. They're fixing the car. But the poor guy can't get to work while they're fixing it, so I rented him a car from Hertz, with all the special devices he needed.'' I said, ''And you didn't clear that with anybody?'' He says, ''You told me to take care of it, didn't you?'' I say, ''You did exactly what you should have done.'' You wouldn't get anybody inside General Motors to use that kind of personal judgment, because someday the auditors would show up. Dealers started contacting me. I met with the top 20 Cadillac dealers one morning in Dallas. They were as mad as hornets. I said, ''Okay, guys, what are you mad about?'' They just went through the list of everything they thought was wrong. They felt that their dealerships' existence was threatened because their cars were that bad. They said a Cadillac needs to look different from a Chevrolet or it's kind of tough to sell. A Cadillac needs not to come back every few days with a transmission problem, an engine problem. When you step on the accelerator, a Cadillac needs to move. Your trunk needs to be big enough to put a thermos jug in. You don't need oil puddles under any car -- and you damn sure don't need them under a Cadillac. The gaskets are bad. As a result of that meeting, I went out and talked to Cadillac mechanics. I said, ''What's going on with those gaskets? What happens when you fix them?'' They said, ''Well, we put a new gasket in, and they leak again.'' I went to an independent mechanic, a high school graduate, and asked, ''Do you have a lot of General Motors cars coming in here with bad gaskets?'' He says, ''All the time, Ross.'' I said, ''Can you fix them?'' ''Yep.'' I said, ''Do they come back?'' ''Nope.'' I said, ''How do you fix them?'' He winked at me and says, ''Come back here.'' He had all the General Motors gaskets. Then he had a good piece of gasket material, and he would lay the GM gaskets there and draw a picture with a pencil. Then he would take an X-Acto knife and cut out a good gasket from the gasket material, and he'd put that on the car. He says, ''They don't ever come back.'' He said, ''Ross, the problem is, some accountant at General Motors is probably saving 3 cents a gasket.'' Somebody probably got a bonus out of that, because 3 cents times millions of gaskets is a big number. I say put the best material in the world on the cars. Mark it up and charge customers a profit for it -- and tell them what you did. People will rush to buy it. When we ended the Cadillac dealers' meeting, I said, ''Okay, guys, I'll take every complaint that you've given me right to the top of General Motors. I'll pursue them. But answer one question for me. Why didn't you just put the list down on the annual surveys about how to improve Cadillac?'' ONE OLD GUY stood up and said, ''Ross, I've been a Cadillac dealer for 35 years, and this is the first time anybody has ever given us an opportunity to tell them what is wrong.'' I said, ''What about the surveys?'' He said, ''There are no surveys.'' I said, ''Gentlemen, I'll change that. I'm going to see that we bring in an outside firm to find out exactly what you are thinking, what your mechanics are thinking, what your customers are thinking, what the people in the Cadillac factory are thinking.'' That survey is a turning point in the history of the Cadillac division. GM is so sensitive and responsive to Cadillac dealers and customers now. You're going to see Cadillac come out with a hell of a car in a relatively short time. General Motors does not understand how to reward people. If I work for you and I feel like you really appreciate what I'm doing, I'm going to be far more effective than if I feel like I'm a commodity you use, as at GM. There will never be a time in EDS when you tell the troops that we're cutting out red meat and dessert and we order champagne for the top officers. Look at what happened when GM slashed the pool of GM-E shares that I was supposed to be able to award EDS managers. Two top managers, who were already rich before the GM merger, refused to accept any shares because they wanted them to go to the younger people who didn't have any. The General Motors guys went crazy. They said, ''It must be nice to be so rich that you thumb your nose at several million dollars' worth of stock.'' I said, ''No, you're missing the point. It goes to the troops. That's what leadership is.'' By contrast, the General Motors guys closed the plants, said no profit sharing, and the next day gave themselves a $1 million bonus. Are they bad? No -- they just don't understand. I'd get rid of the symbolic things that separate people. Symbolism is important. I took the position that anybody who needed a chauffeur to drive him to work was probably too old to be on the payroll, and that anybody in a car company ought to be driving his own car because you didn't get much of a feel in the back seat. We shouldn't be giving handmade cars to executives. We ought to cut out this business that if you're an executive your car comes into the garage every morning and the mechanics take it, and if there's anything wrong with it they fix it. You don't know what reality is. Your car is perfect. I say no. Go to a dealer. Buy a car. Negotiate for it. Have the engine fail. Have the transmission fall out. Have the tailpipe fall off. You should walk around the 25th floor of the General Motors Building in New York. An entire teak forest must have been decimated for that floor -- and this is something they use one afternoon a month. I said, ''Let's get rid of the 25th floor. This is obscene waste. This is a let-them-eat-cake floor.'' They went nuts on me. They said, ''Well, where are we going to meet?'' I said, ''Wherever. In a conference room in the Holiday Inn.'' Of course that was bad. I should have said in the Waldorf-Astoria, in the Pierre. Anywhere is cheaper than keeping that mausoleum. I like Roger Smith. Roger is very bright, very creative. Roger has a thousand ideas a minute. I told General Motors very openly that the only reason I was selling my company to them is that I couldn't think of anything more interesting to do with my life than to work night and day to help revitalize one of the world's great corporations and help it achieve its full potential. I'll work night and day to help them. They grew up inside the system, and things that are killing the company may still look normal to them.