Transcript The Art of Thought

Iacocca and Chrysler:
How a Corporation was
Saved
Presented by:
Steve Kaman
Outline
• Background
• Life at Ford
• Chrysler Ripe for Change
• Enter Lee Iacocca
• Changes at Chrysler
• Iacocca’s Qualities of a Leader
Background
• Lido Anthony Iacocca
• Born: October 15, 1924
• Allentown, Pennsylvania
• Son of Italian Immigrants
• Experienced Racism
• Mechanical Engineering at Lehigh
• Masters from Princeton
Career at Ford Motor Company
• Began as student engineer in August 1946
• Decided to leave engineering
• First job in sales
• Rapidly moved up the corporate ladder
• The Mustang
• 8 years as president
• Fired July 13, 1978
Conditions at Chrysler
• Over $1.2 billion in debt
• Debts with hundreds of creditors
• Sales dropping
• Increasing Federal regulations
• Top management not aware of what was
going on
• Habit of treating suppliers poorly
The Chrysler Years - Problems
• Immediately recognized numerous
problems
– All sections worked independently
– 35 vice-presidents with no committee setup
– No centralized accounting department
– $500 million in inventory (not at dealerships)
– Leasing cars to Avis and Hertz
The Chrysler Years - Solutions
• Built his own team
• Established “quality circles”
• Fired two Ad agencies, and hired Kenyon
& Eckhardt
• Showed suppliers the future
• Gave $62 million rebate to Army
The Chrysler Years – The Loan
• Asked for guaranteed loans from
government
• Had to prove company on new path
• Concerns over effects on free enterprise
• Numerous concessions
The Loan – The Next Step
• Began working on concessions:
– Reduced own salary to $1.00
– Used “help or go bankrupt with us” with
suppliers
– Explained that helping was only way banks
would get money
– Work cuts through unions
The Loan – The Payback
• The K-car – American alternative for
economy car
• Tied K-car with K-Mart
• Load repaid in full, seven years early
Continuing the Upswing
• Brought back the convertible
• Brought in the minivan
Iacocca’s Qualities of an Innovator
• Preparation – Art of Thought
• Decisiveness – Creativity in Business
• Management is motivating people – The
Owner’s Manual for the Brain
• Speak to people in their own language –
The Owner’s Manual for the Brain
Iacocca’s Qualities of an Innovator
• Consulting workers – Programming Pearls
• Don’t judge too early – Creativity in
Business
• Providing a dominant design – Mastering
the Dynamics of Innovation
Summary
• Skills cultivated at Ford
• Chrysler ripe for help
• Iacocca steps up
• Management, process and product
innovation saved company
• Connections between Iacocca and our
readings
References
• Iacocca, Lee with Novak, William.
Iacocca: An Autobiography. New York:
Bantam Books, 1984.
• Levin, Doron P. Behind the Wheel at
Chrysler: The Iacocca Legacy. New York:
Harcourt Brace and Company, 1995.