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In an address to employees around the world, Chrysler Chairman and CEO Bob Nardelli and Chrysler Vice Chairman and President Tom LaSorda outlined the strong suits of The New Chrysler as a blend of longstanding traits and a willingness to embrace new processes to thrive in today's ultra-competitive marketplace. The new management team of Nardelli and LaSorda was announced earlier today.

The New Chrysler is breaking ground as the first major North American auto manufacturer to become privately owned in more than half a century. Both executives pointed out that a key benefit of going private is that it would allow The New Chrysler to strengthen its focus on long-term success rather than pursuing the short-term expectations of capital markets."

Source: Chrysler LLC, August 6, 2007

Bob Nardelli Named CEO of Chrysler

Can his plan work? "Ab-so-lute-ly," says Nardelli. "This is the third time this business model has been successful." He rejects the idea that he has created a culture of fear. "The only reason you should be fearful is if you personally don't want to make the commitment," says Nardelli. "Or there's a bolt of reality that you're in a position, based on the growth of the company, that you can't deliver on those commitments." He says Home Depot (NYSE:HD) is dealing with the challenges of being a more centralized company just fine.

And he makes no apologies for laying off the ranks of underperforming store workers and executives to achieve aggressive financial objectives. "We couldn't have done this by saying, 'Run slower, jump lower, and just kind of get by,"' insists Nardelli, hardening his gaze. "So I will never apologize for setting the bar high."

Source: Business Week, March 6, 2006. "Renovating Home Depot"

Rather than trying to intimidate you, he'll try to disarm you. "Turn that tape recorder off," he tells me. "I want to know more about you."

Eventually, the tape recorder goes back on, and Nardelli explains his corporate vision--one that is so simple it can be expressed on one page, and one that hasn't changed since he arrived. It consists of one goal--"To improve everything we touch"--with three objectives: Enhance the core with innovative merchandise, modern stores, and good leaders; extend the business through new services and channels; and expand the market by moving upstream and overseas. "What I love about it is the simplicity," he says. "With 325,000 associates, you want to have something that is easily communicated and actionable." Nardelli is repeating a mantra he has chanted for five years running. He is playing the role of visionary and messenger--two skills critical for any leader.

Source: FastCompany, Jennifer Reingold, December 2005. "Bob Nardelli is Watching"

As you have probably heard by now, Robert Nardelli, the rather controversial former CEO of Home Depot was named CEO of Chrysler.

I usually do not comment on stuff going on in the world of private equity. Comments about these things generally do not further my mission of delivering greater understanding (insights) to you, and instead end up fanning the flames of some rumor. So I tend to be very reserved when there are things going on in the world of private equity.

But I have to admit. Up until this moment Cerberus Group's purchase of Chrysler made absolutely no sense to me. Why would acquiring a company that Daimler (DCX) felt it could not make the economics work (despite some pretty attractive global scale leverage opportunities) and keeping the same management result in a turnaround?

I think I read somewhere the answer to this question said something to the effect of "a greater motivation and sense of autonomy as an independent company." But that seems pretty lame.

I am told the definition of insanity is doing the same thing over and over again and expecting a different result.

So clearly a change was needed. And like Ford Motor Company, the situation had gotten to such a point, that the Chrysler Group needed an outside perspective.

I have never met Bob Nardelli. So there is very little I can say about what this means for the large public dealers. Except that I suspect Penske Automotive Group's CEO (Roger Penske) is familiar working with Bob Nardelli because Roger Penske once sat on the Home Depot Board (not to mention GE, which is where Nardelli came from.) And I think Nardelli tends to be pretty demanding of his board of directors, even making them do monthly store visits.

And given Bob Nardelli's considerable experience in manufacturing and big box retail (a trait very rare among CEOs,) it can have considerable ramifications on the large dealers trying to centralize functions at their dealerships. Why? Because as someone who led the centralization of one of the leading big box retailer's in America, Home Depot (a company I have regularly cited as the "opportunity that awaits these large dealer groups,") Bob Nardelli knows firsthand the advantages of having a centralized distribution base, and the disadvantages.

Now you are probably going to hear all sorts of things about Bob Nardelli's "military style" of leadership. And how he took such a large compensation without delivering much in the way of shareholder returns (although the company's earnings grew considerably) at Home Depot. Further, the AFL-CIO did not seem to appreciate his compensation package versus the regular Home Depot workers. So you could hear big complaints from the UAW almost out of the gate.

But I think trying to speculate what Bob Nardelli will do is futile. Like I say with every CEO that takes the reigns, the first thing he needs to do is get in, size up the assets (physical and people,) and then establish a vision for the company. So what I like to do when someone has been named the new CEO of a major organization like Chrysler, like I did when Alan Mulally was named CEO of Ford, is to find an old speech that the newly appointed CEO has delivered, take what he/she has said, and say ok, how might this philosophy translate to the new company?

It is not perfect. But I hope it reduces speculation, and instead takes you into the mindset of the individual now leading the company.

So today, I just wanted to share with you three quotes from a speech Bob Nardelli delivered October 19, 2006 to accept the 2006 Hunt-Scanlon Human Capital Advantage award for Home Depot.

Quote #1: Philosophy on Assets

Having been part of 13 different businesses in 35 years, I know that the most important responsibility I have is allocating resources, both physical and human.

Physical capital depreciates over time, while human capital does just the opposite.

It appreciates and when you invest in individuals, there is tremendous appreciation, both in their value and in your appreciation of them.

It's more about head content than head count.

That's not just what I believe. It's what I've experienced.

Human capital is the deciding factor in the marketplace.

Source: Robert Nardelli, October 16, 2006

What could this mean for Chrysler?

Less investment in physical assets. Greater investment in human capital.

Quote #2: Philosophy on Talent

When I joined The Home Depot nearly six years ago, I knew I was joining a runaway winner. . .

Yet there was a critical area that presented a major obstacle to our long-term growth prospects: operating by a decentralized and autonomous model where it was hard to achieve scale - and there was little to no leverage. . .

Our store managers, in particular, were overwhelmed and focused on customer service and sales. They didn't have time to recruit, select and develop their people.

So at the top of our list was investing heavily in the human resource function across our company. . .

Everyone has access to the best technology and the best equipment. But the one true area where companies can gain competitive advantage is in attracting, developing and retaining talent.

For us, that means building bench strength. While it's natural for all eyes to be on the person at the plate, our belief is that it's even more important to look out for the one who's up next.

Source: Robert Nardelli, October 16, 2006

What could this mean for Chrysler?

You might see a similar mantra emerge from Chrysler as what you hear Alan Mulally calling for at Ford: "One Ford."

But here again, you could see a much greater focus on people maximization.

Quote #3: Philosophy on Motivating and Retaining Talent

Once we get the best candidates to walk through our door, we're committed to a long-term relationship. Key to making that happen is aligning the organization around achievement.

We've done so by implementing a standardized performance management process, with built-in objective, results-based metrics. . .

It's our job to:

· Set the tone

· Model the behavior

· Inspire the achievement and

· Build the relationships

It takes daily coaching and mentoring and monitoring to match the right people to the right jobs and to keep them there engaged with the tools to execute.

That's something I strive not only to communicate, but also to demonstrate passionately and personally every day.

If we don't lead, they won't follow.

If we don't coach, they don't play.

If they don't play, we will lose as a company.

Source: Robert Nardelli, October 16, 2006

What could this mean for Chrysler?

Changing the tone at Chrysler from one based on seniority to one focused on merit based achievement.

The bottom line?

This could be interesting.

Source: The Quotable Bob Nardelli: What His Appointment Means For Chrysler