At the beginning of 1992, the directors of General Motors Corporation, the world's biggest industrial company, decided to figure out what was going on in the organization they theoretically controlled. The company by then was losing more than $1 billion every three months, and it had given up 10 percentage points of its U.S. car market share - an amount greater than the Chrysler Corporation's total car sales - in the previous seven years.
So in an unprecedented end run around top management, the board deputized one of its own, John G. Smale, the retired chairman of Procter & Gamble, to spend two months interviewing G.M.'s executives and reviewing the company's internal reports.
What Smale found, as described by Paul Ingrassia and Joseph B. White, was astounding: G.M. built lousy cars; it was the industry's most inefficient car designer and producer; and its announced cutbacks wouldn't close the gap between its dwindling sales and its colossal production capacity, meaning the losses would continue.
I say astounding, because the findings were so mundane. This is roughly equivalent to a blue-ribbon presidential commission taking two months in 1994 to figure out that the federal government is running a really big deficit. As the authors note, G.M. did not lack for independent sources of criticism: Automotive journalists and Wall Street auto analysts had been saying all this for years. But the board didn't believe them, because it was easier not to, and because management kept telling them everything was under control.
One of the unstated lessons of this absorbing, rich book is the power of individual men - and they are all men - to bring enormous companies to their knees by spinning captivating visions of financial growth and then controlling information as things go wrong. At G.M., the notorious Roger Smith would issue board members thick financial papers on the mornings before their monthly meetings, then grab them back as soon as the meetings ended. Who could have expected the directors - "bewildered sheep," the authors call them - to have noticed little changes, like when Smith blithely altered projections in 1990 to assume retirees would die two years earlier and that the pension fund would earn 10 percent more per year?
The authors, who won a Pulitzer Prize for their coverage of the G.M. boardroom shakeup that followed Smale's investigation, suggest such shenanigans are past for Detroit. The book ends at last January's chest-thumping Detroit auto show, with Big...