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What Must Nardelli Do To Succeed at Chrysler?

The appointment of Bob Nardelli as CEO of the newly privatized-and Americanized Chrysler surprised analysts and shocked observers including many Chrysler workers. The struggling number three automaker lost $680 million last year and says it will remain unprofitable until 2008 as it faces job cuts of 13,000 and restructures and closes less productive assembly plants. For …

The appointment of Bob Nardelli as CEO of the newly privatized-and Americanized Chrysler surprised analysts and shocked observers including many Chrysler workers. The struggling number three automaker lost $680 million last year and says it will remain unprofitable until 2008 as it faces job cuts of 13,000 and restructures and closes less productive assembly plants. 

For Cerberus Capital Management, which in its $7.4 billion deal owns an 80 percent interest in the company, naming Nardelli to this post is a bold move. He comes to Auburn Hills with some untidy baggage from his departure from Home Depot where he left under the cloud of a sagging share price and ill feeling among the orange-aproned troops. He also took a reputation hit with his $210 million exit package. (Two-thirds of which was simply restitution for his GE comp that he had to give up, but no one much cares about this detail.) 

His aggressive management style and his reputation as one of GE’s most stellar operational chiefs are both his biggest strengths and biggest weaknesses. He knows and can manage manufacturing process like few others. (Jack Welch, who gave grudging praise to the man, nonetheless said his skill-set was among the best he’d seen.) The charge that Nardelli had a tin ear at Home Depot is a bit overblown. The truth is that when Nardelli arrived as CEO in 2001 the big box retailer had inadequate reporting and communication systems that would have caused an operational train wreck had he not stepped in. (For example, prior to Nardelli’s arrival store managers spent much of their time responding to faxes from Atlanta throughout their day instead of being on the floor understanding what customers wanted. The shrewder managers waited until 4 PM before taking action on some of tasks demanded of them because by then half the directives were countermanded anyway.)

But Nardelli needs to be more than a strong operations chief. It’s not enough to execute his predecessor’s strategy more effectively than another choice. He needs to re-ignite pride and purpose in a Chrysler wounded by its bad marriage with Daimler. What’s more he needs to boost creativity in the product. But Nardelli’s one potential drawback is that he’s not a car guy. (But then neither is Ford’s Alan Mulally who came from Boeing.)  Some observers think product excitement trumps everything including romancing the UAW. 

It’s reported that he lobbied aggressively for the job. A Chrysler turnaround would certainly redeem his reputation and Americans love redemption stories. Arguably Nardelli has about 100 to 200 days to plant his flag. The decisions he makes during this period will have a decisive impact on his overall success or failure. The opening transition period is a time of great fluidity where opportunity, chaos, triumph and disaster all beckon.

When a newly minted CEO comes into a situation like this everyone and everything pleads for his attention. What he does and what he chooses not to do will count for a lot. Every action, every decision every furrowed eyebrow and upturned lip will be scrutinized with equal gravity.

 What Should He Be Doing in His First 100 Days?

We would like to know what three things you think Bob Nardelli needs to do in his first 100 days to put Chrysler on the right path. If you like, also tell us what he should avoid doing -what he should safely put off during this testing time because it might be a distraction.

Please email your ideas to jpdonlon@chiefexecutive.net

We will publish the most interesting responses. Who knows, perhaps Chrysler’s new CEO will be inspired to take-up your advice.

 -J.P. Donlon, Chief Executive Magazine

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About JP Donlon

JP Donlon is the Editor-in-Chief of Chief Executive magazine.