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The Rescuer

Then there was Perot’s failure at General Motors. A myth grew up after GM’s purchase of EDS in 1984 that the auto company wanted to use Perot’s leadership to remake its corporate identity, and that Perot went along because he wanted to rescue Detroit from Japan’s depredations. Both parties would, for a while, lend support to this version of the purchase. But things had begun far more conventionally. At the time of the mergers-and-acquisitions binge, Roger Smith of GM decided he wanted to diversify GM and take out the insurance of acquiring a profitable company. Salomon Brothers, the investment bankers, prepared a list of prospects (a “menu” or “shopping list”) with twelve companies on it, including Hughes Aircraft, which GM also purchased. EDS, which seemed on the verge of a new giant contract with AT&T, looked as if it were growing faster than the other companies, and Salomon was authorized to make a quiet friendly bid.

Perot was not eager to sell, but he entertained the offer, at first, to see if he could at least get a contract for computer work at GM. The cover story invented to keep the negotiations secret was that Perot was visiting Detroit to consider an EDS job for GM—and the cover story was partly the real story in Perot’s eyes. He liked to use any contacts with a large system to scout up business—as he had used his insider’s job at Blue Cross to set up health system codes.

It was Perot’s tactic, as well as his real instinct, to play hard-to-get. The longer the negotiation was prolonged, the more valuable information he was acquiring. But this tough stand played to an amazing streak of masochism in Roger Smith. An accountant who had risen to the top in Detroit by his deskwork at the ledgers, Smith was painfully aware that he lacked the flamboyant skills of Detroit’s swash-buckling leaders. He thought he could purchase some flair—a vain hope that led to the disastrous courtship of Horst-Dieter Esch, the playboy director of Germany’s IBM Holding, who drained $40 million dollars from GM in the early 1980s, before going to jail for fraud.19

Perot’s objections led to an escalation of concessions on Roger Smith’s part, recorded in the amazing FAX messages they sent whizzing back and forth at the height of negotiations. Perot wanted all the advantages of being owned by a great corporation and no limitations of his former autocratic hold on EDS. He wanted to keep selling separate stock, taking on new contracts, keeping his books secret from the parent company, while getting a monopoly on GM’s computer operations. He wanted, that is, to have a deal like the one he began with, when he was inside Texas Blue Cross, getting paid by it, yet running a company that contracted with it from an autonomous position. But when the SSA found out about Perot’s equivocal status, they forced him, in long-fought and grudging backdowns, to make a few concessions. Smith, by contrast, seemed anxious to grovel before Perot. Each demand was greeted with an appreciative yip of joy. It was at this point that Smith began to talk of EDS less as a profit-margin acquisition and more as a kind of disciplinary headmaster that would come into Detroit and force a stagnant middle management to shape up. He was lovingly preparing for his own punishment. Without knowing it, he was also preparing for Perot’s.

By giving in to most of Perot’s demands, Smith lured the cocky autocrat into demanding more than he could handle. In the past, EDS had serviced companies by arriving with more programming manpower and computer expertise than in-house processors could muster. That situation was stunningly reversed at GM. Though the automotive company had computer problems that needed solution, its range of functions was far greater than EDS had ever dealt with. GM used computers to help design, engineer, and test automotive functions. It was experimenting with robotics, with cybernetic systems, using technology still being invented.

Perot, who had stressed discipline, aggressiveness, salesmanship, and bravado over esoteric skills, sent a macho team of ill-equipped people into the GM organization, where those already on the job could not tell which was the newcomers’ more obnoxious quality, their bossiness or their ignorance.20 Perot, as usual, blamed others rather than his “eagles,” and offended all parts of GM by wide-ranging criticism of GM production, sales, and service. He had been brought in as a gadfly and disciplinarian, but the outrage at his arrogance made Roger Smith heed his own officials’ reports on the trouble Perot was making. Lawyers were looking for ways to let Smith back off from the ill-considered FAX commitments. The frustration on both sides could only be eased by Perot’s departure; but he made sure that GM paid dearly for it.

Perot left EDS behind, and GM tried to protect its original purchase by demanding that Perot not criticize the treatment of EDS, or set up a competing business. Perot quickly defied both bans. He had inserted a clause he thought of as his “free the slaves” clause, saying any of his executives could follow him out of GM. He presented this as a way that they could cooperate in new ventures with him, including his charitable and patriotic endeavors. But he got an exception to the noncompete ban for these employees.

Perot had tried to protect himself from the kind of raids he originally made on IBM talent and systems. EDS employees could not go to other processing firms without a long interval, or take their secrets elsewhere. He even demanded that employees pay back their training costs if they left before a stated minimum of service. This, like his stock options, forged “golden handcuffs” by which he tried to retain employees.21 Yet even with these soft manacles, frequent burnout and high turnover were always problems in his driven organization. He thought good people would stay with him for the challenge and adventure, but even his first team of EDS managers, hired in their mobile twenties, began to desire stability and predictability as their children reached college age; and newer recruits had never shared in the lean, mean glory of EDS in its commando days.

So, when Perot tried to free his eagles, he called on them to rejoin him, but few of the top men came. Morton Meyerson, whom Perot had made EDS president when he moved to the chairman’s position, refused to help Perot set up the new business. DeSoto Jordan, an EDS lobbyist, was considered the traitor, since he did follow Perot. Even Paul Chiapparone, one of the hostages Perot rescued from Iran, refused to leave GM—Perot, in retaliation, refused to attend a dinner Chiapparone organized on the anniversary of his escape.22 EDS was supposed to change the corporate ethos of GM. Instead, it adopted more normal corporate behavior, and it is flourishing—more so than Perot Systems, the new Perot business. Perot Systems made $200 million in revenue last year—but EDS revenues were $7 billion. Lester Alberthal, one of the eagles who stayed to lead EDS, says now: “For the first twenty-two years of our existence, EDS the company really didn’t have an image. All of the image-building was around what Ross wanted for Ross.”23

4.

The approach or ascent, the gradus ad Rossium, is exquisitely calibrated. You enter Suite 1700 of Perot’s business office on the north rim of Dallas through one-way visibility glass doors. Seen but unseeing outside, you have much to see as you come through the doors into the anteroom, overlooked by a guard at a high desk. There is a huge artist’s model of the seated Lincoln in the Lincoln Memorial, a flag flown on the Capitol on the day of the moon landing, an autographed page by FDR, a quadriplegic’s painting of a country schoolhouse dedicated to Perot. On the office table there is a book, The American Eagle.

Buzzed through a second set of glass doors, you go down a long room separated into two corridors by a huge bronze eagle in the middle. In fact, seen in glimpses to the left, in receding rooms and corridors, there is a bewilderment of eagles, sculpted in bronze or in wood, painted in oil or in water-colors. Jacques-Louis David may have been slyly tweaking Napoleon when he filled his painted Distribution of the Standards with hundreds of represented eagles, and never a real one. In the same way, one hopes for a satirical decorator’s hand in this flapping of eagle’s wings amid the kitsch; but it soon becomes apparent that everything here has been personally chosen and placed and tended by the man celebrated in many of the items on display.

Ross Perot,” he snaps when he comes out to shake hands—the same two words he will snap into the telephone during my hour with him, through presumably his secretary, whom he is answering, knows his name by now. He takes me into his office, a museum within the museum, with more of the omnipresent Norman Rockwell paintings. Frederic Remington cowboys writhe in bronze all around the room, breaking wild horses (but not their noses). At one table Perot pauses reverently, since it is a shrine to Colonel Arthur “Bull” Simons, who led the Iran rescue team for EDS. Set in a table mount is Simons’s heavy gold ring with a bull’s head jutting out from it. “I had one of these made for each member of the rescue team—if you find these guys anywhere, in their sleep, they have that.” I ask about a Rommel-era set of desert goggles on the table. “He wore those when he released the survivors of the Bataan death march in the Philippines.” Even Ken Follett, writing the book Perot had to approve before it saw print, permitted himself a discreet Jeeves-like cough of warning over Perot’s credulity where the Bull is concerned. “Perot had never checked out this [later, Vietnam] legend—he liked it the way it was.”24 A World War II–era compass is “the one he [Bull] carried on all his raids and rescues for thirty-five years.”

When we settle down, Perot is not behind his desk, but knee-to-knee on comfortable chairs bunched before the desk. Up close, his face is larger and more interesting than it looks floating a foot or so below other heads when he moves about in public. The liquid smear of the nose across his face gives it character, and emphasizes the difference between his eyes. The right eye, under a sloping lid, is comparatively passive; but the left one widens as he pops up his lid in a kewpie-doll expression of surprise-pleasure. It says, even more often than his tongue does, “Isn’t that interesting?”

We have barely settled down before we are up again and touring the room. I had asked what book had the deepest influence on him. “I can’t think of a single book that had the greatest impact.” But he shows me the books, mainly in sets, that he does have. “Just about everything here is by or about America”—Robertson’s history of America, eighteenth-century edition; the complete Theodore Roosevelt (“Here’s my favorite book”—TR’s letters to his children). He ducks into a further room to bring out a copy of the book he thinks so much of that he gives it away to visitors, “the summary of Dr. and Mrs. Durant’s big volumes of history, in only eighty pages.” The Lessons of History (1968) is proof that simplisms can be further simplified ad infinitum. Though the married team ground out their eleven volumes of world history in the middle of the twentieth century, they expressed a quaint old Social Darwinism unchanged from the 1890s. In the book Perot admires I later read:

  1. 19

    Levin, Irreconcilable Differences, pp. 133–135.

  2. 20

    The head of GM’s research lab sniffed that he had “more Ph.D.s in computer sciences in a single department than EDS had in its entire organization” (Lee, Call Me Roger, p. 163). Perot, who had mocked academic credentials saying Edison and the Wrights did not need them, moved one of his favorite Norman Rockwell paintings into his Dallas office, the one that has a young World War II veteran telling awed relatives his war stories—to remind GM visitors that “we used to whip the Japanese,” and could do it again “in the car business” (Lee, p. 166).

  3. 21

    The requirement that employees pay back their training costs seems to have violated Michigan law. See the AP dispatch “Perot Backed Illegal Employee Payback Scheme,” Chicago Tribune, May 25, 1992.

  4. 22

    Mason, Perot, p. 6.

  5. 23

    Wendy Zellner, “H. Ross Perot Who? EDS Is Doing Just Fine On Its Own,” Business Week, December 23, 1991, pp. 86–87.

  6. 24

    Ken Follett, On Wings of Eagles (Morrow, 1983), p. 61.

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