The private equity guys at Cerberus Capital Managerment who bought Chrysler from Daimler think that Six Sigma can bring Chrysler back from the dead but they are dead wrong. Ex-GE, Six Sigma-believer Robert Nardelli practically ruined Home Depot in his stay there as CEO by putting the company through a Six-Sigma ringer, bringing in ex-military officers with a bent for hierarchy and replacing the company’s once-wonderful customer-focus with a wholesale mania that infuriated customers—and sent the stock down 8% during his tenure. Chrysler needs that?
The conventional wisdom is that Nardelli is the perfect “outside” guy to come in and straighten out Chrysler, just the way top Boeing exec Alan Mulally has been brought in to save Ford. Nardelli, described as “pugnacious” in the WSJ, will show the unions that they have to give up money and benefits and kick suppliers around too. That Chrysler has to downsize and rightsize to survive is, well, obvious. Any CEO will have to do that. But downsizing is only necessary, not sufficient.
Chrysler needs a top manager who is one with its customers—who knows their culture, their needs, their dreams. Nardelli isn’t that guy. He was successful at GE with their electric-power business. That’s a a b2b kind of business. Home Depot is a b2c kind of business but Nardelli ran away from retail. He felt comfortable only with b2b and built an entirely new wholesale operation that drained money and energy away from Home Depot’s core competency of listening to and understanding its retail customers. Hundreds, if not thousands of Home Depots wonderful store “helpers” left. In the end, the downturn in the housing market hurt the wholesale operation deeply and now, post-Nardelli, Home Depot is getting rid of it.
Private equity guys tend to like Six Sigma because it plays to their ideas of what makes for a successful turn-around—cutting costs, making business process more efficient, etc. They would do better to learn about innovation and design, especially when it comes to a car company.