When Ford and GM Wouldn't Listen, J.D. Power Turned to Toyota

DETROIT ( TheStreet) -- Like any great entrepreneur, Dave Power started with a good idea, got it in front of people who could pay for it and watched it grow.

As a result, the name J.D. Power became a symbol of credible consumer research, not just in the auto industry, where it has long been focused, but also in other businesses. Toyota ( TM), the company Power bonded most closely with, succeeded partially as a result. And Ford ( F) and GM ( GM), businesses that at first rejected Power, eventually came along.

At 82 year old, Power is a retired eminence today, living the good life in Westlake Village, Calif. Born and raised in Worcester, Mass., he still attends Boston Red Sox games. At his first game, he saw the rookie Ted Williams hit a preseason home run in 1939; most recently, he took half a dozen family members to see the Red Sox play the Dodgers in Los Angeles in August. He and his children run a family foundation that gives to his favorite causes, which include Boston Children's Hospital, the College of the Holy Cross, his alma mater, and other entrepreneurial and medical research causes.

Power reminisces in a recently published book, "Power: How J.D. Power III Became the Auto Industry's Adviser, Confessor, and Eyewitness to History," written by Sarah Morgans and Bill Thorness and published by Fenwick Publishing Group in Bainbridge Island, Wash.

In a recent interview, Power recalled two meetings with Ford CEO Alan Mulally, who is not mentioned in the book. When Mulally joined Ford in 2006, he reached out to many in the industry, including Power, to pick their brains. "He called me, he'd been on the job for six weeks, and he said he'd like me to come by and see him, so I did," Power recalled. "I spent an hour with him, and he was interested in my views of what was going on and so forth. Three years later, I ran into him at an event, and he came up to me, and he said 'Dave, I did everything you told me to do, didn't I?'"

It was a long way from the start of Power's career, when Ford and GM executives wouldn't let him in the door.

"Back in 1968, the automobile industry was very insular and they did their own market research," Power recalled. "They had market research suppliers who did whatever the market research department wanted. The reports were written within the halls of GM or Ford or Chrysler, and that allowed them to bend the story the way they wanted it."

Power's story provides a window on the decline of the U.S. auto industry, which wouldn't listen to its customers partially because it felt it didn't need to and partially because marketing departments used market research not to improve the product but to play office politics, using it to buttress their decisions. "They would do the surveys the way they wanted them," Power said. "Usually it came out in a positive fashion."

Power made his mark at Toyota, where in 1968 he realized he needed to push past American employees and speak to more receptive Japanese managers. Within a few days, he was introduced to Tatsuro Toyoda, then a U.S. executive, who one day would become president and who remains a friend. In 1968, Toyota was largely unknown in the U.S., but Power helped to change that. His relationship with Toyota was probably the most important single factor in his career, and makes for the most compelling section of his book.

When Power signed his first contract with Toyoda, he said, "I gave him the proposal, he looked at the cover, took out his pen, and signed the contract without even looking at it ... I was blown away."

As he expanded into other industries, Power found the airline business to be largely the same as the auto business. The big airlines wouldn't talk to him about third-party market research, but the upstarts would.

"The one that grabbed onto it," Power said, was Gordon Bethune, CEO of Continental, which merged with United ( UAL) in 2010.

Bethune "didn't like that Continental was way down at the bottom of the list," Power said. "He called me and wanted me to make a presentation to his staff. They were in last place (in customer satisfaction), but within two years they were on top."

In 2005, Power sold his company, which had annual revenue of around $230 million and about 850 employees, to McGraw Hill. Estimates at the time priced the value of the transaction at about $400 million. Power said he "sold at the right time," since the recession came a few years later.

Power finds it surprising that today, in retirement, he is busier than ever and time seems to pass more quickly. He said a Holy Cross classmate recently described the phenomenon for him, saying, "Life is like a roll of toilet paper. When the roll gets smaller, the paper goes faster."

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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