Chrysler's Last CEO

The folks who just took over Chrysler have shown that they don’t understand Detroit’s problems. That makes them prone to making some big mistakes. They made a huge, and possibly fatal mistake in appointing Bob Nardelli CEO of the beleaguered company. Of all the marquis names they could have selected, none come to mind that are less suited to reversing Chrysler’s fortunes.

I’ve thought on occasion that some spark of cosmic insight prompted Jack Welsh to choose Jeff Immelt as his successor at GE over Bob Nardelli. In many ways, Nardelli was closer in style and corporate temperament than Immelt. But Welsh made his decision as though he knew that he was going to be the last 20^th century style hierarchically defined, command and control (HC&C) CEO that GE would ever have. He seemed to intuit that a different breed of leadership would be needed in the 21^st century to keep GE hearty, well out front and as productive in producing innovative solutions as it has ever been in its long life of over 120 years.

Washington Post op-ed columnist David Ignatius called Immelt “a symbol of a new CEO style that emphasizes a company's obligations to a range of stakeholders and interests including the global environment.” Nardelli is a symbol of the old CEO style. The only stakeholders in the worldview of most 2oth century CEOs were shareholders (and upper level management).

Nardelli failed at Home Depot not because of the sinful level of compensation he took – a quarter of a billion dollars for less than a handful of years at the helm. Some say that is the case. They say shareholders forced him out because of that. But the truth is, after a brief honeymoon period when slashed costs by centralizing everything he could and precipitated a mass exodus of the talent that built Home Depot into a great company, it became harder for Nardelli to prove his worth. All the low hanging fruit was picked. He had to find new ways of producing growth an profits. He now faced the challenge of answering, “what’s next?” But he had no viable “what next plan.” The board engineered his exit.

Detroit’s biggest problem is its culture. Always has been. But it’s a bigger problem now than ever. For generations the elite of the Big Three were part of a good ‘ol boy’s country club culture. Way down the ladder, workers were those worms that labor unions lived off of that had to be tolerated because someone had to build the cars.

Meanwhile, Toyota, Honda, and BMW – all three of which are “firms of endearment” – began a couple of decades ago studying external conditions like the emergence of new global markets, and rising oil prices and environmental concerns among legislators, regulators and consumers, Detroit ignored all that and continued producing super-sized vehicles like the Hummer, Explorer and Dodge Durango. Top management was obviously oblivious to the same reality that foreign car makers worked in but read differently.

Nardelli is a confrontational kind of manager. Shaped by military training, he relishes a hierarchically defined command and control position. But folks, I gotta tell you. The days when an HC&C management style was best for a large industrial company are over. Now, it’s about working with stakeholders like employees and their unions, not about working them over. Now, it’s about realizing that design engineers don’t have all the answers. Now, it’s time that the haughty cognoscenti of Detroit run out and buy some humble pie and let the scales fall from their eyes to see a different kind of world out their than it was in the days when jet age tail fins adorned the rear fenders of cars that were too ostentatious by half.

But none of this holds any meaning for Nardelli. So, there’s a strong likelihood that he will be Chrysler’s last CEO.

DBW

 

Comments

[David Wolfe]

Atare,

I do not think it possible. That would require a different consciousness than the life history of Nardelli and his peers would permit. Too bad, isn't it?

DBW

[Atare E. Agbamu]

David --

Is it possible that Bob Nardelli and Detroit might be awakened to the SRM consciousness and be "born again"?

-- Atare