Recently, I had the opportunity to speak with James David “Dave” Power III, the visionary entrepreneur whose company, J.D. Power & Associates, has become a household name since it’s inception in 1968. Dave shares many of his successes and failures in the new book, POWER: How J.D. Power III Became the Auto Industry’s Adviser, Confessor, and Eyewitness to History (Fenwick Publishing, Sept. 2013). We discussed how he was able to build a brand synonymous with the automotive industry, the power of the press, and Dave shared his tips for young people looking to get ahead.
How did your brand and company get started?
We built the company as a brand back in the 1970s. And it was our intention to sell our market research for the automobile industry. We had an independent viewpoint where we owned the data, so we could use it in a public way and let the consumers know how their ratings turned out with each car. We wanted to inform them for when they purchased their next car. However, one thing led to another and we were forced into public focus. This happened in 1973 when we did a survey on the Mazda rotary engines. We found a major problem with the engine, the “o-ring” problem as we ended up calling it, and we actually sold the results in a survey write-up and it was very popular. We sold 14 companies on the survey results, and they were supposed to treat them confidentially. But Mazda didn’t purchase it, so they didn’t know what the results were. One of the American companies, I can’t recall which, released the information that Mazda engines were failing once they reached 30,000 miles. Then I got a call from the Wall Street Journal a few days after the report had been issued. And they said, “I understand you’ve done a survey of the Mazda rotary engine owners.” I asked him how he knew about that, and he said, “We have our ways.” I could tell he had the full report in front of him. I said, “I hope if you’re going to print something on this, you have my information from my press release. I want to make sure it’s balanced.” And he told me to get it to him right away, so I sat down and wrote my first press release on a yellow pad of paper. I’m located in Los Angeles, and we had to get it to Detroit and it’s already 3 PM in Detroit. So we found a Telex machine operator in our small office building and she typed it up for us and sent it. The next day we’re on the front page of the Wall Street Journal claiming Mazda had a problem, which they denied. We had to continually verify, and Mazda became very interested in our study after that, so it showed me the power of the press. That’s when we started looking at ways to control it, and as long as we owned the data we could make it better. If the press gave the information back to the manufacturers or consumers, we could bring about greater acceptance of our studies. And that’s how it started for me and the company.
Building off of that publicity, your company became a household name. How has your brand become synonymous with the automotive industry?
Another thing that happened when we were doing the “Customer Satisfaction Survey,” it was the third time we did it and we covered all models. We came up with a summary ranking each company and model, according to the results from owners. In the first couple of years, Mercedes and Toyota were at the top. Mercedes was on top the first year, Toyota was second. Then they flipped. The third year, Mercedes was back on top, but Toyota had slipped to third. Subaru had slid into second. They had subscribed to the study as well. I didn’t know anything about it, but they used half of their entire budget on one commercial for the Super Bowl in January of 1984. At halftime I’m sitting in my living room watching the game with my wife and we were amazed when the screen came up with a black background that said, “According to J.D. Power & Associates, Subaru is second only to Mercedes in customer satisfaction.” We didn’t know about this ahead of time, but my head statistician got a call from CBS and they asked “is that a legitimate claim?” And he said, “yes, our data shows that.” He had no idea what it was actually about, and then we realized the strength of the survey. Monday morning, right when I got to the office, I had a call from Mercedes saying, “how dare you allow Subaru to use our name in their advertisement.” But I had no idea, so we had to do some more work regulating how the companies could use the reports in advertising. We got the lawyers in the room and determined that we would only give certain awards that could be advertised. Of course, number one in customer satisfaction was one of them. We limited it to a few, and then later expanded it to trucks and so forth, but we controlled it. We said to the companies, “these are the ground rules; we don’t know who will come out on top.” And we charged a fee to companies that wanted to advertise, they didn’t have to do it, but we found that companies would seldom give up the chance to advertise it. That also required us to think through, and I did a good job at deciding, that I would not be the person giving the award. It would be J.D. Power & Associates, and my daughter-in-law, who was an art director at an ad agency, designed the trophy. I had a clock on my desk so we decided to use that in the trophy. She designed it and that’s the trophy that is still used today. About 90% of consumers don’t think that J.D. Power is an actual person.
A publishing company in New York that had Good Housekeeping and a few other magazines was talking with me about publishing a new magazine on automobiles called The Power Report. I got some good advice from a lawyer who was working for them. I had a problem deciding whether I should have these awards or not and I asked him about the “Good Housekeeping Seal of Approval.” And he said that it was very effective, however some people in the organization started selling the seal to companies, and you’d have to buy six full-page ads to get the seal. They were selling the seal rather than the research they were doing. His advice was for us to have a separation from church and state. So the people selling the awards have nothing to do with the researchers. That helped me out tremendously.
You were ahead of the curve when it came to enabling the voice of the consumer. What did that do for your company?
The results of our surveys were not well-accepted by the companies, especially those who were down at the bottom of the rankings. We had to really work hard to let them understand we were independent. What we wanted to do was to feed the information from the consumer, we learned from the consumer. We had an 8-page questionnaire with a lot of detail and we said to consumers to write on the back anything they thought we were missing. We told them we wanted to hear it from them, and that we would pass it along to the manufacturers. And we would get a 10-12% return on people who added to the full questionnaire, and that was tremendous, I used to keep a number of those letters, and we’d get photographs, and we’d pass it on to the manufacturers. I don’t know what they did with them, but I think some of them looked into it. So that was very important. People loved to talk about their cars. We respected the consumers, and they felt that they were helping themselves and others by providing this information. Another thing was that everyone who worked in our company was called an “associate,” and it was really like a family company. Everyone felt like they were doing something that would provide better cars and trucks for people.
Can you provide one or two pieces of advice to young people looking to build a successful career?
Well, I think in Macbeth, “Philonous” said to his daughter who was leaving home to marry and never return, he says a lot to warn her about the world. The final piece of that scene is, “above all, be true to thine self.” I carried that through with our staff and my children, if you are not true to yourself, you can’t be true when you’re trying to give advice. Second, in the book, the beginning speaks about my background. I had a liberal arts education in college, then went 4 years in the Coast Guard on an icebreaker, then went to graduate school, and then went to work at Ford Motor Company. I had 5 jobs in 10 years before starting my own company. I learned the ropes through that experience before starting my company. I learned how to live, and how to be successful. It was a long journey, and I was well-along in years by the time we started the company, and today I’m happier with the results because of it. I think we never used the term “entrepreneur,” we just did the work. My wife and my four children worked in the company and they did the folding of the questionnaires on the kitchen table and living room floor. They’d put a quarter on the envelope as an incentive, and it had to be face-up and just so. It doesn’t happen overnight, unless you’re one of the lucky ones.
Thank you to Dave Power for taking the time to speak with me. His wealth of experience and success is a treasure trove for young people looking to build a successful business or take the next step in their career.
