These days everybody in Detroit is in awe of Dan Gilbert, the Quicken Loans czar who moved his operations from the suburbs to downtown, and has been buying up millions of square feet of city real estate. Some have joked that the cure for Detroit’s problems is just to get through bankruptcy and sell him the rest.
But we sometimes forget that before there was Dan, there was Pete. Peter Karmanos Jr, that is. Ten years ago, he was the first Detroit-area CEO in modern history to move a major corporation downtown -- Compuware, which he founded with two other guys forty years ago, and built into a powerhouse.
Some people thought Pete had taken leave of his senses when he insisted on building a gleaming new building near the ancient parade ground known as Campus Martius. Some of his thousands or workers weren’t too happy about leaving the suburbs.
But the move and the building were a smashing success, and may have inspired Gilbert to follow. Now, if you know Pete Karmanos, you know nature did not intend him to be a diplomat. He says what he thinks, and doesn’t worry about being invited to the right parties.
Though he is still Compuware’s biggest stockholder, he’s now retired as CEO. Normally, retired CEOs hold their tongues when asked about their successors. Not Pete, however.,
After being honored at a charity breakfast over the weekend, Karmanos got up and tore into his successors. I have no idea if his criticism of Compuware’s leadership is valid. But I think what he said is worth pondering when it comes to American business in general.
Karmanos has what is to me a delightfully old-fashioned idea about the way to do business. He thinks it should be about making money, yes indeed. He made himself a billionaire, after all. But he also thinks business needs to provide value to its customers and the community and has a duty to them and the employees.
He fears that too often today, those running companies are interested only, or at least mostly, in driving the stock price up. He said “CEO (should) mean community, employees and then the owners.” He said the present management of his old firm needs to, quote “understand they have more responsibility than playing some kind of silly game with some jerks in New York City.” What he was referring to was the fact that Compuware has been the target of takeover bids, some from so-called hedge funds.
Never shy, Karmanos suggested at the breakfast that the hedge funds should do something anatomically impossible. Some months ago he warned that if a hedge fund bought Compuware, it would only want to, quote, “make as much money as they can as fast as they can. If that means breaking it up, throwing the pieces into the wind and eliminating a company in Detroit, they don’t mind that.“
A Compuware spokesman later denounced the founder’s comments as uninformed, and said they didn’t deserve a response.
But when you look at what hedge funds and fly-by-night artists have done to companies across the nation, it seems to me that what Pete Karmanos said is worth thinking about.
Jack Lessenberry is Michigan Radio’s political analyst. Views expressed in the essays by Lessenberry are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.