As head of General Motor's Cadillac division, Jim Roche's fussy obsessions came at the expense of vision and strong leadership


In a recent Wall Street Journal, the former auto executive Bob Lutz tells the story from around 1960 of how Jim Roche, head of the Cadillac division of General Motors, revised a Christmas card he had commissioned with a "heartland" scene, which the artist interpreted as a boy pulling a Christmas tree on a sled to a cabin on a hill.

Mr. Roche loved [the artist's original drawing] -- but wait! Where was the relevance to Cadillac? He ordered away the small boy with the sled, to be replaced by a Cadillac sedan, with the trussed tree tied to the roof. The artist was able to render the Cadillac accurately and duly pasted it over the boy with the sled. The modified card was again presented to Jim Roche, but he discovered a new flaw: The humble cabin on top of the hill was no longer a suitable destination. Why would an achiever live in a dump like that?

The agency was told to make the dwelling more appropriate for a Cadillac family, so the artist went to work again and rendered a substantial residence, which required a major expansion of the hill it sat on. A second garage was also added, since Mr. Roche felt that a single-car garage looked out of place next to a home of that size.

The point for Mr. Lutz was that Mr. Roche -- who also insisted that the tire tracks be re-drawn to reflect an "approved" snow tire -- brought the same fussy obsessions to GM when he later became CEO, at the expense of vision and strong leadership.

Was the card with the large house, the multi-car garage, the expanded hill and the Cadillac sedan more appropriate and artistically meritorious than the original boy-with-sled?

The anecdote is even more relevant for consumers than for managers. It reflects a tendency that the anthropologist Grant McCracken dubbed the Diderot Effect, from a story in which the philosopher's new dressing gown, a friend's gift, leads to a complete redecoration that leaves him less comfortable than he was before. Harriet Beecher Stowe, author of Uncle Tom's Cabin, applied the same principle to family life in a story called "The Ravages of a Carpet," that concludes:

In fact nobody wanted to stay in our parlor now. It was a cold, correct, accomplished fact; the household fairies had left it, -- and when the fairies leave a room, nobody ever feels at home in it. No pictures, curtains, no wealth of mirrors, no elegance of lounges, can in the least make up for their absence. They are a capricious little set; there are rooms where they will not stay, and rooms where they will; but no one can ever have a good time without them.

The housing bubble's popularity and bipartisan support came from the power of the Diderot Effect, that the big new house needed appliances, furniture and even automobiles appropriate to its scale. Not that there's anything necessarily wrong with grand living. But it should be chosen deliberately by those with the means. What's really disturbing is that almost three years after the recession's beginning, even affluent professionals let themselves fall into the Diderot trap. As Barry Ritholtz has written in the Washington Post:

Those partnership-track careers? The dirty little secret: Those firms love to get their young employees leveraged up. They will even help you get that way, co-signing mortgages for big houses or even directly lending you the cash on favorable terms.

They encourage up-and-comers to spend extravagantly; they extend lines of credit to their rising stars. You need a big house with a jumbo mortgage; you cannot pull up to a business meeting in anything less than the best luxury car. It is part of their corporate culture.

Isn't that nice of them?

Not really. The big banks, investment shops, law firms and accountants have learned how profitable it is to have "golden handcuffs" on their best employees. These highly-leveraged, debt-laden wage slaves will work harder, put in longer hours and stay with the firm longer than those debt-free workers.

So before that next big purchase, think of Diderot's dressing gown, Stowe's carpet and those "approved" snow tire tracks.

Image: Wikimedia Commons.

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