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New chief Nardelli takes lessons learned at GE, Home Depot, expects quick action on problems
By Tim Higgins
Detroit Free Press
Published on Sunday, Feb 10, 2008
DETROIT: Think of it as Nardelli: The Sequel.
And as in many big-budget follow-ups, Bob Nardelli, six months into his role as Chrysler LLC's top executive, is following the same storyline from his days of running Home Depot.
Both at Home Depot and Chrysler, General Electric veteran Nardelli set out to rapidly change corporate culture by shaking up the top executive ranks and bolstering the role of the human resources department. He put greater emphasis on inventory management and customer satisfaction and working to expand global operations.
But like any sequel, there are some new twists and characters. And in this adventure, Nardelli hopes for a happier ending.
''What Nardelli is doing is applying lessons from GE first to Home Depot and then to Chrysler,'' said Peter Cappelli, a management professor at the Wharton School of the University of Pennsylvania.
''Every good executive has their own implicit system as to how things ought to work, and there are limits as to how much they can adjust it to circumstances and still feel like they know what they're doing. Home Depot started to look and feel more like GE; my guess is that Chrysler will as well. Not everyone likes that approach, of course, because despite all the success GE has had, it's a very competitive internal environment.''
Interviews with top Chrysler executives paint a picture of a new culture developing at the Auburn Hills, Mich., automaker that revels in speed. Nardelli publicly and privately talks about his philosophy of quick yes or no answers but ''never a slow maybe.''
Under Chrysler's previous owner, DaimlerChrysler AG of Germany, decisions could take months. Now as a private company under Cerberus Capital Management, Nardelli is creating a culture that seems to celebrate the idea that billion-dollar decisions can be made with great speed.
Noel Tichy, a University of Michigan professor and GE expert who has known Nardelli for more than 20 years, is not surprised that he has moved quickly.
''He went to school with Mister Speed, Simplicity and Self-Confidence,'' Tichy said, referring to legendary GE leader Jack Welch. ''He grew up under Welch, who said the worst thing to do in a transformation is to peel the Band-Aid off slowly.''
As at Home Depot, Nardelli has instituted Monday meetings with top executives to review the previous week's results and the turnaround progress, and to plot the future.
''If you are at target, you don't really have to say much. If you're not at target, you probably can't say enough,'' Steven Landry, executive vice president for North America sales, told the Detroit Free Press about those meetings.
Since Chrysler has lost billions of dollars over the last two years, Nardelli has been quick to make changes in an effort to stop the losses.
On top of existing plans to cut 13,000 jobs over three years, Nardelli announced in November the company would cut as many as 12,000 more jobs and eliminate four vehicles.
He presided when a new labor agreement was signed with the UAW that allows the automaker to hire new workers to non-assembly jobs at about half the wage current workers receive, and shifts billions of long-term health care obligations off the company's books.
He cut production and indicated the automaker could scale back on what are seen in the industry as undesirable sales to government and corporate customers, such as rental companies, by as much as 200,000.
At Home Depot, Nardelli surrounded himself with many colleagues from his days at GE. This time around, the marquee hires have been auto industry leaders, such as Toyota's former North American President Jim Press, whom Chrysler hired to lead sales and marketing efforts as president and vice chairman.
Part of the process of change at Home Depot came through setting up common metrics to measure performance, such as data quantifying perceptions of the shopping experience.
Doug Betts was recruited from Nissan to be Chrysler's chief customer officer. One of Betts' first big projects is creating a system to measure why potential customers are not buying Chrysler, Dodge or Jeep vehicles after shopping at the brands' dealerships.
Chrysler sales in the United States were down 3 percent last year from 2006, and the forecast for this year doesn't look good. A major hurdle is that Chrysler has little presence outside North America.
DETROIT: Think of it as Nardelli: The Sequel.
Get the full article here.
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