Consider the global business community today, and ask yourself: who is the most courageous leader out there? I would vote for Faced with financial catastrophe, they selected Sergio Marchionne as the new CEO. Marchionne, who had never worked in the auto industry and was in no way related to the family, went to work, operating as if the family didn’t exist.
- In 2006, Fiat returned to profitability, the first time since 2000.
- In 2007 the Fiat Group announced it would pay a dividend for the first time in six years.
Chrysler
In 2009, as Chrysler headed toward bankruptcy, the U.S. Government badly wanted to find someone to acquire Chrysler and save the company. Nobody stepped up, so Marchionne decided to approach the government and offered to take it over, but refused to put up any cash. He did offer the fact that Fiat had small car expertise and technologies that he believed could save it.
He also demanded $11 billion of bailout assistance. The government continued to demand cash from Fiat, so Marchionne got up from the table and was leaving the room when the government agreed to his deal.
- By 2011 Marchionne had achieved impressive results, enabling Chrysler to return the $11 billion to the government.
- Very recently Chrysler announced its best quarter in 13 years, earning $473 million.
- It is currently the fastest growing of the U.S. automakers, with its share of the market now at 11.2%, up from 9.4% a year ago .
So how does Marchionne do it?
After studying this guy closely in recent years, his fundamental approach is as follows:
# 1. Assemble a Winning Team:
At Fiat, he spent his first few months walking around, looking for strong performers who operated with confidence and were making bold moves to improve things. He also searched within the auto industry for top performers in the upper middle ranks. He then assembled his team of direct reports and business unit heads. He used the same approach at Chrysler.
# 2. Reorganize and Streamline:
At Fiat, he wiped out several layers of management and eliminated time-killing committees. Overall headcount was reduced about 10%. He did very similar things at Chrysler. More recently at Fiat, given the terrible auto market in Europe, he has gone to the Italian labor unions and the Italian government and indicated that Fiat cannot continue to operate manufacturing facilities in Italy without significant layoffs and wage reductions. That recent standoff will be resolved in the next few months.
# 3. Create Winning Plans:
Chrysler needed to fix its quality problems and invigorate many of its models, and Marchionne put enormous energy into getting this done fast, which he achieved. That is what has driven the big market share gains recently. Its first new model that has leveraged Fiat’s small car expertise, called the Dodge Dart, has recently been launched. It is built on Fiat’s highly rated Alfa Romeo Giulietta chassis.
# 4. Set Demanding Performance Targets:
Marchionne is notorious for focusing on setting and achieving demanding targets. For example, soon after arriving at Fiat, he demanded that the number of platforms its various models where built on be reduced from nineteen to four. Importantly, his business unit heads also knew there were implications for not making those targets.
For example, at one Fiat Management Committee meeting, one business unit head was patting himself on the back for turning a big loss into a small loss, even though he badly missed his promised target to turn in a decent profit. He departed from Chrysler soon after that session
It sounds quite simple: assemble a winning team, reorganize and streamline, create winning plans, and set targets. On the other hand, it is clear from the examples provided here that a lot of guts are required!
Who do you consider to be today’s gutsiest leader?
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