Bob's Gutsy Leadership Blog

A Lesson From a Legendary Auto Executive

Sergio Marchionne, who engineered a merger of the auto industry’s weakest companies – Fiat and Chrysler,  and turned the combination into a profit generator, recently and suddenly passed away.  His accomplishments are worth reviewing because we can learn such a powerful lesson.

Sergio joined the Board of Directors of Fiat in 2003.  One year later, when the company was facing a leadership vacuum due to some recent deaths, he was selected to fill the CEO job at Fiat.  The company had historically been dominated by the Agnelli family and was in very bad shape.  He quickly moved into action, removing some of the high level executives that had been family favorites, cut costs, and launched some exciting new models.

By 2008, with Fiat on a very positive growth trend, he lined up $8 billion in loans from the U.S. and Canadian governments and took control of Chrysler, which had filed for bankruptcy protection.  As with Fiat, he quickly removed numerous long-term Chrysler executives, launched a program to close a significant number of dealerships, and began overhauling the line-up of models that Chrysler was offering.

While the U.S. government was interested in having Chrysler obtain some of the small car expertise of Fiat, Sergio had different thoughts.  It didn’t take him long to realize that U.S. consumers were moving away from sedans and into larger vehicles.  Consequently, Sergio discontinued nearly all of Fiat Chrysler’s sedans being marketed in the U.S. and moved aggressively to re-tool U.S. factories to ramp up production of the Jeep sports utility vehicles and the RAM pickup trucks.  These larger vehicles were in high demand and obviously commanded premium prices and attractive profit margins.

Sergio’s aggressive moves enabled Fiat Chrysler to vastly outpace Ford and General Motors over the last four years.  Specifically, the Fiat Chrysler share price during that four year period is up well over 150%, while the Ford share price is down -30% and General Motors is basically flat.

As a side note, most of the articles you see on Sergio will also outline the very unique ways which he ran his life.  He worked seven days a week, usually carried a stack of up to 5 smartphones, and only wore black sweaters and jeans, even when visiting dignitaries and leaders such as President Trump.  He kept the same sweaters and jeans in his various homes in Michigan, Italy, and Switzerland, which he pointed out, allowed him to travel with minimum luggage.

So what can we learn from this legendary auto executive?  What Sergio did over and over again was apply the basic principles well.  He always quickly put the right people in the right jobs, cut the cost structure so that it made sense financially, and overhauled the product offerings so that there was strong consumer appeal.  It all sounds so simple, but as organizations prove day in and day out, it is hard to implement, especially in a large organization.  Sergio reminded us that it’s all about doing those basics very well over and over again.

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