Bob Nardelli. A good leader for Chrysler in its present plight?

bob-nardelli.jpgIf you believe in situational leadership you may feel that Bob Nardelli’s style is an appropriate one for Chrysler, following the Cerberus takeover

The bloodletting at Chrysler is not going to be pleasant. It calls for a special kind of leadership to avoid worse outcomes than might have been possible. There have been business leaders in the past who relished the prospects of being in charge in such a crisis. They had earned their reputations as uncompromising men willing to made the big decisions in a slash-and-burn situation.

Uncompromising men? It’s just that there are fewer stories about equally ruthless business women, because they haven’t had as many opportunities. A few years ago there was Linda Wachner, America’s first Fortune 500 female boss, whose high-handed management style was blamed for the bankruptcy of clothing company Warnaco. And I have little doubt that if Margaret Thatcher had found herself in change at Chrysler at the moment, she would have entered into the spirit of things with her legendary energy and decisiveness.

Heroes and villains

In times of crisis, it is tempting to portray events as dominated by the actions of great villains or heroes depending on your view of capital market mechanisms. The leader as hero rescues what can be saved, and in the process accepts that casualties as a vital part of winning the battle. That might be called the unconditional free-market view. Opposed to that, is notion of the leader brought in to a company in trouble is a villain, a mercenary, a ruthless bounty-hunter contracted to deliver what is required, ‘dead or alive’ in order to earn his own booty on behalf of a powerful rapacious corporate raider. That’s the unconditional anti-capitalist view.

Young people around the world learn of their national heroes and traitors in terms rather like these. Cultural forces sustain the views, as part of each culture’s ‘national heritage’, regardless of efforts at history teachers to offer a more nuanced explanation of events and of the impact of individuals.

Many years ago, Thomas Carlisle took the view that great leaders could be excused human flaws. Assuming they have something special which achieves great results, we must beware of belittling them for being all too human. That’s one argument. Carlisle warned against what he called valetism. (‘No man is a hero to his own valet’).

One of various objections to Carlisle’s idea is the way in which heroes suddenly become villains (the hero to zero effect), but in either case are granted exceptional abilities. It anticipated the more technical studies of leadership in search of the right stuff, the essence of leadership.

It took us a hundred years of work to suspect that the impact of great leaders was to a considerable degree based on the perceptions of followers. That’s why I am rather keen to promote the suggestion that we get the leaders we deserve, and that they are to some degree the creation of our collective imaginations.

Remember Chain-Saw Al?

Before returning to Chrysler, it may be worth recalling the rise and fall of other leaders once hailed great, and then trashed. ‘Chain saw’ Al Dunlap comes to mind. Older subscribers will remember Al as hero of Wall Street, the wizard of down-sizing. Al was in demand for a company in need of the slash and burn treatment. Al kept producing the goods, metaphorically. He eventually was found not to be producing the goods literally, and had been engaging in all sorts of creative accounting.

Morer recently, we witnessed had the rise and fall of Sam O’ Neal at Merrill Lynch. Sam had been lauded as Sam the Man who had shaken Merrill Lunch out of its strategic slumbers. He had also presided over the company at the time when it hit the buffers as one of the biggest losers in the sub-prime markets this year. Exit Sam with some $16 million compensation for his efforts during the good years.

Once the performance of Merrill Lynch fell, Mr O’Neal’s contribution, and his leadership style were called into attention. He was autocratic. He would not listen to advice. He could be very difficult to work with. And so on.

Which brings us back to Bob Nardelli

When Nardelli left Home Depot, earlier this year, the consensus was that

Home Depot faces a well-known dilemma. It has long passed a growth phase when its stock was rising in sensational fashion. Efforts to maintain the growth led to a decision to bring in new and dynamic management. When the desired growth was not achieved, the leader was deposed. Nardelli’s demise was made easier by his management style and a skill at extracting extremely favourable personal rewards. It should be noted that this might suggest he was a difficult boss, but not a stupid one

When Cerberus acquired Chrysler, they turned to Nardelli.

Why? Private Equity business deals require leaders to be able to follow a plan, stick to the numbers. They may or may not be ‘good with people’. If they are, it’s a bonus.

Matching the situation and the leader

Situational leadership suggests that different situations call for different leadership skills. In one well-known leadership formulation, leaders are invited to assess situations and seek an appropriate style. In Chrysler’s situation, the temptation for the new owners is to regard a directive style as appropriate. That’s how it’s worked in the past. Hello, Bob, I think we’ve got just the job for you …Yes, a bit like Al., but we don’t want any financial tricks. Remember what happened to Al.

So is Nardelli likely to be a good leader for Chrysler?

There are no easy answers in a case study like this one. Conclusions have to be supported by argument and indications of the assumptions being made. So far, I’ve been putting forward a qualification that it is not possible to put leaders into one of two boxes ‘good or bad’. This is based on the evidence that leaders may have a style that suits them to some circumstances better than others.

The next point to consider is good for what and for whom. In evaluating Nardelli’s impact at Chrysler we may wish to take the broad view that Chrysler appears to be in need of drastic and painful change, and that Nardelli was attracted with a deal in which he is generously rewarded for carrying out the painful operation of change.

I suspect he has some of the characteristics of the tough-minded leader required to meet the short-term financial objectives of Cerberus. I don’t know if he will succeed in the wider challenge of creating something permanent that will be recognised as the New Chrysler. Sadly, among the biggest losers at Chrysler will be tens of thousands of workers who will be without jobs over the coming months. The unconditional free-marketeers will Maybe argue that the alternatives would likely have led to even more job losses at Chrysler further down the line. Maybe a tough approach now will create more jobs elsewhere, than a more ‘humane’ and collaborative approach which fails to bring about changes in market prospects of the ailing corporation.


14 Responses to Bob Nardelli. A good leader for Chrysler in its present plight?

  1. Tudor,

    It has been some time since Lord Browne got a mention on your site. Working here in Moscow, I only accassionally get to see the FT. However, I was at the office of a client the other day and noticed an old FT front-page headline “BP chief calls for profound cultural change”. There was a further article on p23 (I cannot remember the date!)

    Tony Hayward (the new CEO) was reported as making a number of points, including the “situational leadership” one that Lord Browne’s approach to leadership was “incredibility invigorating” when BP was “much smaller” — but “it is not the way to reap the benefits of the scope and scale that BP has today”. BUT Browne was a HERO only YESTERDAY, so to speak!!

    Was Browne a lemon long before he lost the CEO job? Or, did the “situation” change in a flash? Over to you!

    Jeff Schubert

  2. Tudor says:

    There you go, Jeff. I’m working on a post about the circumstances around at the moment, and the even more rapid flip ‘from hero to zero’ of business leaders.

    I’m been concentrating on the financial ‘executions’, but Lord Browne did come to mind …

    ‘I come to bury Caesar not to praise him …’.

    Best wishes


  3. paul says:

    Anybody can make growth in a company, when they hit rock bottom. Just ask for bail out, simple. Any company does good in a housing boom.(building supply company). The real issue is, the capital management companies that purchase these companies at rock bottom by design. It’s like, “let’s dictate highs and lows, good times and bad times, and in the mean time we own it all anyways but decide to sell at the top. What capitalism. Never new politicians had to own everything, all necessities, utilities, oil, gas, water, clothing, drugs, basically everything, oh yes i forget out food source and sources and distribution or our food. What capitalism. God bless america with lies in our face. Make oil rise to all hell so companie go bust, then we will simply slurp them up like a slurpy, so good and hummy. For the people by the people, My Asssssssss! I want my money back from cerberus capital management, they stole from me.

  4. paul says:

    Just how much bail out money is actually going to cerberus capital management who hired nardelli, probably buddies, they all are. They already bought everything in the world. Things went down a little further from purchase price, now they want the money from the tax payer to bail them out, after crooking and designing for all companies to go bust, then buy them. This mentality and action is either totally stupid, just capitalism at its best, or the new era of new personality of politicians that have ” the gut to control all people and rule kingdoms(world) under everybody’s foolish noses. I don’t know what site I’m on now, but please call I would love to here something of this new ceo(buddy’s of the politicians). Got new’s for you all, honesty will control you soon in the brightest of ways.

  5. paul says:

    God bless america, no, god bless the industrial revolution. Hate to read. Istincts tells me, the revolution to save people. My Asssssss, to control people! Let’s see, if I remember correctly. ytk, fearing all people, only technology will save you. Fear. Fear everything in capitalism(democracy),(media). That’s the strategy of are forces(politicians)(President), fear all so they defend themselves more fealing more frightenend. This is the excuse to make more laws to claim safety upon us. Becoming more powerful yourself, weapons, more police, more tickets, happier attornyes, more court cases, more taxes, more cameras, more ohone tapping etc etc etc; what a bunch of shittttttttttt! Just remember, the more laws you make fearing people, they were just defending themselves probably. Government wants chaos, government want chaos, government wants chaos. Corportions have the finance to pay off and support politicians, therefore there connected noespecially, always have been. Laws are good, but they already own them, now are water and food and lighting, it has to stop. I want my money from cerberus capital management. Happy holidays! I think holidays are even regulated and dictated now from gov’t. survey’s, studies, studies, studies, census’s, stat control, etc etc etc; God bless America! No,god bless America, the ones trying to own a kingdom and control people. It could just fall on your head

  6. Tudor says:

    Sorry to hear all your pain, Paul. This small site is mostly for people interested in leadership and how it works in all its shapes and forms.

    I’m leaving your comments up for the moment to give other subscribers a chance to comment. Unless there are contrary suggestions, the comments will then be reviewed, and a decision made to keep them or provide a note to say what has been removed and why.

    Since the original post the financial wreckage has been intense.

  7. paul says:

    Leadership, sure. Mr. Tudor. Good to here from you, you have to forgive me on my nature of writing, it’s just honest and truthful, lot of people get frightenend(concerned) by it.. As tax payer’s (the one’s that actually work hard) the truth is never revealed. I don’t know how I even got to this site, and I’m not sure I know more than you on issues , but the wreckage and issue is simply the leadership you refer to either from cooperation, enterprise, government, etc; craving greed. This sways other work forces under to become greedy also.(Tired of that gap of wealth)(jealous)(minumum wage increase, unions) Everyone knows you need cheap labor to sell products especially in a depression, its that that shapes a company and the value of a currency. If the shape works good then it forms into a growth company. Who’s willing to work for what? If anyone is reading this, just remember, honesty is the new rise to help everyone. Nice talking, Happy Holiday’s. P.S. Please don’t erase my comment’s Tudor, people really do need to know why this website is here and what it’s portraying and intending. I certainly don’t. Freedom of speech and expression and the right to bear arms is a great, good, and honest thing.

  8. paul says:

    Hello again, never got a response. Just wanted to write again. How about those investment buddies. Get lot’s of bail out money and now just simply fraud people of 50 billion dollars. Changing the subject a little. Just thought I would bring more honesty and truth to your viewer’s/reader’s. What a country were becoming or have been all along. Again all linked to our greedy crooks and politics. People paying off others to [pay off other’s to pay off other’s to pay off other’s and then one day it won’t matter. People’s honesty and truth will prevail. Happy Holiday’s. P.S. hope your sight evolves more of the truth to people not cover-up.

  9. paul says:

    Curious, sorry to change the subject again. But why was Cunningham out of California just pardoned by President Bush. Fishy to me!! Sound’s to me paying off those and then protecting those again is now normal to them. No, pardoning Cunningham was a favor for Cunningham release so no beans our spilt on the truth of the realstate sceaming at the highest level. You know inflate value to all eternity by design(bernanke)(Paulson, ex Goldman Sacks Stud) etc; then tell people new wealth of ownership of homes(hippi high ho my ass)Speach after speach after speach “million new home owner’s” etc;. And then how about the speaches to invest invest invest invest in our market’s to the people, is this because they own everything now and now invest in them. Let’s hope the Harvards and Yale’s and the most prestigious colleges are teaching this tactic based on our countries truth’s and capitalistic-democratic ways, oh yes, economic’s of course.They all new lending money was unsustainable to those and the loose policies. Did’nt matter, they just come in and own them anyways, by design. God Bless America! P.S. If our voting-in member’s our so afraid that other countries our owning American companies more and more, so they do and feel to corrupt-backstab-steal-fraud-loophole there own people and country tax pay’ers to have the piece of there own pie, what’s left, then just call me 619-504-8557. Don’t worry truth and honesty will prevail even trying to get the pie back! Please you need my comments our your sight, it’s the hidden message that the most damageing of all, don’t hide things no more. Meryy Christmas!

  10. Tudor says:

    Hi Paul

    I intend to edit a range of comments on the blog to retain the key points, but to reduce repetition. This will be a matter of editorial judgment. When I do, you may feel I am censoring you. Hope not.

    And a merry Christmas to you too.

  11. paul says:

    Save everyone time, if you want listener’s and lots of interest blogger’s on your sight just edit the truth. All of my blogs are partially opinion but also definite-fact. Please edit on your will, bloggers do want truth though. Thanks for your response.

  12. […] have been following the declining fortunes of Chrysler in recent […]

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