Just like Lee Iacocca, Sergio Marchionne was intimately involved in making his auto company profitable, to increase its impact in the marketplace.  Except Marchionne did it with two car firms- for both Fiat AND Chrysler.  Unfortunately, he died last month at the relatively young age of 66- at least a year before he planned to tun over the reins of the company to someone else.  (He had chosen Mike Manley- the head of Jeep and Ram-  to be that person- just not at this time.)

Now, if you know me, you’d recognize why I like Sergio.  He had vision, technical expertise, was relatively open-minded, expressed himself fairly freely, and possessed analytic rigor.  In other words, he was a brilliant eccentric.

He manifested what the Leadership Institute of MIT calls “Challenge-Driven Leadership”.  (I will talk more about this soon.  Suffice it to say the concept stresses that leaders don’t exercise or maintain control over their staff- but we use our knowledge and enthusiasm to inveigle the best and brightest folks to want to join the solution- now.)   Marchionne called this building teams comprised of “courageous individuals with a hunger for challenges”.

My biggest problem with Sergio was that he incessantly smoked cigarettes.  (I believe everyone has the right to smoke cigarettes- atop the left wing of aircraft upon takeoff.)

Once he became the head of Fiat in 2004- before acquiring Chrysler- he was intent on winnowing out the folks who couldn’t help him turn around Fiat’s operations. (The market valuation of Fiat was then $ 6.9 billion- but it was making small, unprofitable cars.  It had actually lost $ 6 billion over the previous two years of operations.)  And, he was ruthless.

Sergio got GM to shell out $ 2 billion in fees to let it out of the deal that required it to take over Fiat.  (Yes, that left him in charge of the firm.   And, with the funds to achieve his goals.)

He got hired for the job at Fiat with a law degree (York, Toronto) and a Masters in Business (Windsor, Ontario), coupled with accounting and tax experience at Deloitte and Touche (one of the former big accounting firms).  But, what truthfully got him noticed was his management of the SGS Group (inspection and product testing); that’s why the Agnellis (the family who owned Fiat) offered him the keys to the firm.  (Gianni Agnelli, the family patriarch who led the firm for some 40 years had just died- which death was almost immediately followed by the death of his younger brother.  They had no scions to run the firm.)

By 2009, he convinced the US government to let him control (the now-bankrupt) Chrysler (and it’s tremendous engineering capabilities) without spending a penny. (That deal provided Fiat with a  20% ownership).  Actually, this deal also managed to get the US to provide him $ 10 billion in support, with the intent of saving some 300,000 manufacturing jobs during the Great Recession.

Fiat would still be responsible for the losses  (its competitors thought this would kill the firm- but Sergio proved them dead wrong, by focusing on SUV’s, pickup trucks, and Jeeps).  That switch in focus was made after he dropped the idea of using the Dodge Dart and Chrysler 200 (small cars) to salvage the firm, as was his original plan- because he recognized the market demands.

He then did for Chrysler what he did for Fiat in 2004. He revamped the management structure and shed those who could or would not help him turn around the venture immediately.

By 2014, Fiat took over all of Chrysler, and last year the firm reported pretax profits of $ 3.5 billion Euro (about $4.4 billion US).  And, this year, Fiat elected to produce the Ram Trucks in Warren (MI), instead of Mexico, which necessitated about a $ 1 billion investment in the facility- primarily to afford itself the benefit of the corporate tax cut enacted in December 2017.  (The market valuation is now about $ 60 billion!)

Mike Manley has some pretty big shoes to fill.  And, fast.

 

By the way, just because Marchionne was a great leader didn’t mean he was infallible.  Both he and Manley helped Jeep become the big thing in China- but they never developed an electric engine for it- or any other Fiat-Chrysler vehicle- which is the route that the Chinese regulators are demanding.  That’s another reason Manley has to move fast.