Chrysler, Culture and Cerberusby
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?