Chrysler, Culture and Cerberus

Posted by: Bruce Nussbaum on May 1, 2009

There is a deep divide between my good friend Steve Baker, the author of The Numerati, a remarkable book, and myself over which is more important in business—numbers or culture. Coming from a tech background, he believes data. Coming from a design background, I believe culture.

The bankruptcy of Chrysler is a great space to analyze this confrontation. I would argue that Chrysler thrived when it’s brands and design aligned with American culture. Jeep, Dodge—muscle stuff. Vans—family stuff. Chrysler failed when got out of touch with US culture—and merged with German car culture. Daimler Benz ran the numbers and saw efficiencies of scale. It believed it could cut costs by sharing components, technology, people and design. Never happened. Daimler presented the takeover of Chrysler as a merger of equals and when its own culture of organizational hierarchy met Chrysler’s culture of—well, not that—the merger failed. The two couldn’t share technology, products, people or brands.

Enter the private equity firm Cerberus, which bought Chrysler from Daimler Benz

and installed a numbers guy, Robert Nardelli. Nardelli didn't understand the retail culture when he led Home Depot and was forced to leave. He found a home at Cerberus, where financial numbers are the culture. And then he was put in charge of Chrysler, and ran it into bankruptcy because he didn't understand either Chrysler culture or American culture.

Now he is trying to sell Chrysler to Italy's Fiat. There is simply no cultural congruence between Chrysler and Fiat and this too will probably fail. Americans remember the bad quality of Fiat cars. Fiat doesn't have leading edge electric technology. And Italian auto makers have little understanding of American car culture.

The Obama Administration's lead car guy, Steven Rattner, is a Wall Street investment banker who lives by numbers and it makes sense to him to basically give Chrysler to Fiat to save American jobs. But neither he, nor Nardelli nor President Obama understand that cars and car organizations are all about culture, not numbers.

Which is why, in the end, it makes more sense to fold Chryslers brands, Jeep, Dodge, the Sebring, into General Motors than Fiat. If the bankruptcy hearings fail, this is the way to go.

What do you say Steve?

Reader Comments

Gong Szeto

May 2, 2009 11:41 AM

i look forward to several things, and i don't care what steve baker has to say. you are right - culture is it. when you die, your last memories are more likely to be a rememberance of your first love than your last balance sheet audit.

1) alfa romeo comes back to the US
2) the punto and 500 sell like crazy
3) americans inadvertently learn italian by having to figure out the italian owner's manuals
4) americans breathe the offgassed new-car smells of these new fiats and get 'italianized' - decide to slow it down, eat with more gusto and passion, get a little less puritanical and have more sex
5) be inspired to travel to italy, then europe, then eastern europe and beyond, where they will see that all cars are dinky and everyone is pretty happy anyway.
6) lobby the FCC to relax the no-nudity rules on prime time TV
7) chrysler who?

Bruce Temkin

May 2, 2009 4:01 PM

The problem is that you need to manage both; culture and numbers. Over the last few decades, however, executives have overdosed on the numbers. So it leads to situations where leaders like Nardelli sap the soul out of Home Depot because they don't understand culture.

Times have changed, but management has not kept up. That's why I wrote a mini book called "The 6 New Management Imperatives: Leadership Skills For A Radically Changed Business Environment." The first imperative is: "Invest in culture as a corporate asset."

The mini book is available for free download on my blog, "Customer Experience Matters" at http://experiencematters.wordpress.com

Michele Lorenzelli

May 4, 2009 2:11 PM

You are right, culture definitely matters. I just don't see how GM + Chrysler would do better than Fiat + Chrysler. Isn't GM loosing billions of dollars? Fiat is a good company who hasn't lost so much money in the first quarter of this year as GM or Chrysler did. Moreover, Marchionne succedeed in restructuring Fiat with only a few layoffs.

MShears

May 4, 2009 5:06 PM

Numbers are the tangible, culture the intangible. As we have yet to find a suitable metric for the intangible, numbers will always rule.

Tossing Chrysler to Fiat is as much a death warrant as dumping it on GM (who can't even figure out what to do with Pontiac - another American cultural icon). Perhaps some well-funded entrepreneur and petrol-head will step up and acquire Chrysler and get it back to its iconic roots. It could then retool, redesign and re-connect with those customers and workers who have cultural affinities to its brands like Jeep and Dodge.

Moose

May 6, 2009 12:37 AM

Chrysler failed because for decades and decades their products were perceived as less reliable than average and they were too problematic for many owners to justify buying another product from Chryco. Fiat is a long shot but Marchionne could be Ghosn-like in his ability to structure a successful merger. However, Fiat's sub-par reputation for reliability does not bode well for this arrangement. Like it or not, reliability is the single most crucial perception needed to succeed in the U.S. market. Honda and Toyota didn't get where they are by making the best-looking or most culturally-aligned vehicles in the market. If they go under, the Chrysler assets will be auctioned to the highest bidder. It'd be great to see a Honda or Toyota wind up with Jeep. Imagine: a reliable Jeep! THAT would be a license to print money. Never happen, though...

Chaz

May 6, 2009 3:39 AM

The problem with the Fiat+Chrysler scenario is that Fiat wants nothing to do with Chrysler now that any deal with it may involve the US gov't

BOBMX

May 11, 2009 4:45 PM

Im totally agree with you, the culture is very important in the develop and life of a product and a company, but also the numbers...

However, i think that every body has been forgot, "the BRAND", and forgot that the brands has life, has personality, the brands are like a "person", they can have credibility, or they just can be untrustable... the big problem with chrysler was delayed since Daimler make the fusion with them, and i agree with MOOSE, chrysler has decades with a bad perception, quality, cultural assets, design, service, and a lot of problems, that to be honest i don´t know how a brand can survive with all that issues for many years!!!

The solution??? START THE ENGINE OF THE AMERICAN DREAM!! (cultural asset) REDESIGN, REINVENT, NEW APPROACHING STRATEGY! (numbers asset).... chrysler need to back to the basics, they need a DESIGN PHILOSOPHY like dodge or jeep have it.

bob arnold

May 16, 2009 7:31 PM

chrysler has been walking the titerope for years robert eaton the ceo before the damilar mess was on the way to revitialize chysler but he was pushed out by damilars german management, cerebus bought crysler because it was cheap and has no interest in rebuilding the corp but ride it out and sell it or its pieces at a great profit. now fiat who was almost bankrupt a few years ago and has had a terrible quality reputation in the usa. fiat,uaw,fiat and the gov. are now going to revitalize chysler? this is the saddist joke of all.put it out of its misery and euthanize the corp walter p chyslers legacy doesnt deserve any more of this foolishness. sadly bob arnold

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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