Analysis: What is Marchionne's legacy at Fiat Chrysler?

Sergio Marchionne

Sergio Marchionne speaking at the FCA Group Capital Markets Day in June

Ill health has led to the abrupt end of Sergio Marchionne’s leadership of FCA Group – but he says the company has the culture to continue to grow

The sudden changes at the top of Fiat Chrysler Automobiles, with Sergio Marchionne’s serious illness prompting the company’s board to replace him with Jeep’s Mike Manley as CEO, is the latest development in its tumultuous history.

While exact details of Marchionne’s condition are unknown, it’s clearly serious and our first thoughts are with him and his family.

Undoubtedly, though, the hastened succession will have a major impact on FCA. Marchionne has steered the company through turbulent times, leading the merger of Fiat and Chrysler and attempting to balance the Italian and American sensibilities of the two companies.

Marchionne replaced as FCA Group boss due to ill health

Under Marchionne, Jeep has developed into a truly global brand, Alfa Romeo and Maserati have grown and Ferrari has been spun off as its own company. Conversely, the Fiat and Chrysler brands have both struggled, arguably hamstrung by a lack of clear vision.

While there have been successes and failures, and big questions remain for the future, Marchionne leaves FCA in a reasonable shape — free of debt, with a number of strong brands and some decent products, and it’s positioned to grow. He’s also left the company with a clear vision: at an event in June, FCA unveiled its next five-year plan, highlighting ambitious strategies and model launches for all of its key brands. It will now be up to Manley — who, as the boss of Jeep and Ram, would have been a key figure in these plans — to spearhead that strategy.

Heading into that event, several financial analysts questioned why Marchionne was launching a five-year plan that he wouldn’t be part of, since he was set to step down next year — the year when the plan was due to start. Marchionne addressed such questions directly in his closing remarks.

Analysis: why Fiat Chryler is focusing on its premium brands

“Whatever you think of the progress that has been made at FCA to date, and to the extent you think there is some level of logic and coherence to the five-year plan we put in front of you, there is an enduring element,” he said.

“It is one that most ensures success of the plan going forward, and actually has nothing to do with the industrial, commercial and financial elements of the business. It is about our culture and the leadership that lives it.”

Marchionne drew a comparison with improvisational musicians who couldn’t read traditional sheet music. Noting that much of the car industry is focused on method and process, he added: “While we fully understand that processes and procedures are important, at FCA we are, and always will be, about the music.

“Our approach will be different. Improvisational. Agile. Open to debate. And fearless, born out of humility. We will always be a culture where mediocrity is never, ever worth the trip.”

The leaders of FCA are, as Marchionne put it, “survivors”. He noted that those who worked at Fiat and Chrysler before the merger “faced the most difficult situations in the last 10 to 15 years” and they “confronted the threat of losing their dignity by losing their work”.

Marchionne concluded by directly responding to an analyst concerned about the impact his departure would have on the group and who asked: “Can Marchionne leave a script or instructions?”

“The answer,” said Marchionne, “is that there is no script or instructions. Instructions are institutional and temporary. FCA is a culture of leaders and employees that were born out of adversity and who operate without sheet music.”

Marchionne had clearly been preparing FCA to continue without him. The fact that it’s happened sooner than expected, and in such difficult circumstances, will show how well he has done that. Even if he hasn’t left a script, Marchionne’s biggest legacy could be how well FCA copes with such a dramatic transition of power.

Read more

Marchionne replaced as FCA Group boss due to ill health

Analysis: why Fiat Chryler is focusing on its premium brands

Opinion: behind the scenes at the FCA Capital Markets Day



Source: Autocar Online

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