Business Insight Zone

Turns out that Chrysler insiders were just as surprised (although probably not as giddy) as journalists when the company chose Bob Nardelli as its post-Daimler CEO:

Even Chrysler Officials Were Surprised at New Owner’s Leadership Choice

[...] As recently as Aug. 2, Chrysler officials were planning to announce on Monday that Wolfgang Bernhard would become the chairman of Chrysler, people with direct knowledge of those plans said Thursday. [...]

While the officials prepared that announcement, they did not know that Mr. Nardelli, a former executive at Home Depot and General Electric, was being courted to replace Thomas W. LaSorda as chief executive, these people said. [...]

According to the article, it’s possible that Nardelli’s experience with corporate turnarounds helped to iron out the credit difficulties that Cerberus faced while it was working to finalize its purchase of Chrysler. That’s nothing against Cerberus — everybody’s having a harder time borrowing money these days, and lenders are looking for more protection against risk than they would have demanded six months or a year ago.

Nardelli might not be a bad bet in terms of mitigating risk. Given all the squawking that surrounded his ignominious departure from Home Depot, you might think the guy had lucked his way to the top, but in fact he earned a solid-gold reputation as an operating executive during 30 years at GE — so much so that he was a finalist to succeed former CEO Jack Welch alongside Jeff Immelt (who got the job) and James McNerney (who subsequently took the top jobs at 3M and then Boeing). Pretty good company for an executive to be in, especially in the manufacturing sector.

The question in my mind is, how much has Nardelli learned from his failure at Home Depot? As a prelude to answering that, I wonder if he even admits that he did fail there. Many executives with track records like Nardelli’s are very, very accustomed to being the boss, being more capable than those around them, and getting results where others have failed. To be the CEO of a company of Home Depot’s scale, you have to have chutzpah and drive at a level not very common even among successful executives, and that often implies a level of self-belief that can border on the delusional. If Nardelli can realize what he did wrong at Home Depot — especially in terms of alienating employees and shareholders with his autocratic style — he may be able to build a happy future for himself and Chrysler, because his brass-tacks operating skills while at Home Depot were impressive, even if the company’s stock-market performance wasn’t.

How well Nardelli approaches the “soft” side — the people side — of his Chrysler duties will be essential. He’s certainly going to have plenty of tough chores on the “hard” side, too, because Chrysler needs considerable reshaping. (If it didn’t, Cerberus would have looked elsewhere for its new CEO.) But the vested interests of Chrysler stakeholder — especially within the UAW — have to be treated diplomatically, even if the actual operational changes are far from delicate. The good news for Nardelli is that he now reports only to the chieftains at Cerberus, not to a fickle stock market. So long as he keeps the confidence of Cerberus, he’ll be able to perform surgery as radical as necessary to reshape Chrysler. But the “soft” issues won’t just be window dressing; handling them well will be essential to the company’s future success.

A funny twist: Nardelli’s “baby” at Home Depot was HD Supply, the commercial supply unit intended to make Home Depot a dominant player in the market for supplying contractors and builders. But the same tight credit market that may have tipped the scales in Nardelli’s favor at Chrysler is keeping Home Depot’s new management from hiving off HD Supply in orderly fashion, which they would dearly love to do. So as the turnaround specialist tries to do his best with one of the most venerable US automotive brands, his successors at Home Depot are working diligently to turn around the turnaround he worked at the nation’s #2 retailer.