As top executive for a large manufacturing enterprise, Bob Nardelli was a tremendous success. As the man in charge of a gigantic retail business, not so much. Like any automaker, Chrysler’s survival depends on both its ability to manufacture class-leading products AND get its dealers to provide class-leading customer service. So, as Nardelli takes Chrysler’s helm, the question must be asked: is he half the man he needs to be? The answer is Six Sigma.
Navy vet and Motorola employee Bill Smith created the Six Sigma management system (a.k.a. the “Way of the Sword”) for Motorola in the 80s. Six Sigma’s goal: design and create products with no more than 3.4 defects per million. Like many such theories, its principles are enshrined in acronyms: DMADV (Design, Measure, Analyze, Define, Verify) for product creation, DMAIC (Define, Measure, Analyze, Improve, Control) for production. Its success depends on continuous, company-wide commitment.
GE CEO Jack Welch was an early accolade of Six Sigma. When Welch appointed Bob Nardelli CEO GE Power Systems, “little Jack” deployed Six Sigma with ruthless effectiveness. Applied to a division building and selling locomotives and power generators for other business (i.e. BTB), Six Sigma worked a treat. Excellent products were designed and built, and management limitations minimized (retarded innovation, inflexibility, group-think, insulation).
In December of 2000, Nardelli lost a bid to replace his mentor at GE. Despite a complete lack of retail experience, Nardelli landed the top job at Home Depot. Appropriately enough, Nardelli cleaned house, replacing Home Depot's top management and rationalizing every aspect of the business.
Seven years later, at the end of his tenure, Home Depot’s market valuation had declined by 40 percent. Much to the chagrin of stockholders, Nardelli floated away on a $200m golden parachute.
Nardelli’s over-reliance on Six Sigma lay at the heart of his troubles at Home Depot. As a system of measuring improvement, Six Sigma could work on a retail level— in the same sense that Darwinian principles of “survival of the fittest” could work as a political system. But just as social Darwinism isn’t flexible enough to subsume competitive belief systems, Six Sigma is not exactly what you’d call a people pleaser. For example…
Nardelli used Six Sigma to streamline Home Depot’s in-store staffing. By adding self-checkout technology and generally thinning the ranks of floor staff, Nardelli was able to correct a “defect” in the chain’s “production process.” The moves cut costs and, thus, increased the amount of money available for employee training.
The strategy reduced the number of employees on the floor, and turned many of the remaining employees into data measurers and desk jockeys, sapping time once lavished on Home Depot’s customers. Appropriate data was collected, but customers were not well pleased with the tumbleweeds blowing through the aisles of the big box home improvement store. You can do it, we can help, but you gotta find us first.
“Bump’em Bob” Nardelli also directed his [new] management team to apply Six Sigma principles to strategically re-position Home Depot’s displays and products. As you can imagine, the statistical emphasis robbed some of the “surprise and delight” from the Home Depot retail experience, in a genre where emotion is a precious commodity.
But more than that, Six Sigmatitis proved to be a demoralizing influence on Home Depot’s human infrastructure. Nardelli’s less than warm personality and his willingness to eliminate all those who opposed his methodologies cast a icy pall over Home Depot’s corporate culture.
"Facts are friendly" is one of Nardelli’s favorite sayings. So here’s a handful. In July of 2007, Chrysler’s sales were down eight percent compared to July 2006, even while they spent an average of $4,082 per vehicle on incentives. Inventory is down 17 percent over last year, but it’s still an 81 day average supply (45 days being the goal, 60 the current American norm).
Obviously, Chrysler’s manufacturing operations could use stricter guidance. Strict defect measuring is always welcome in the world of car production. And despite the trail of broken careers at Home Depot, it’s also true that Chrysler’s middle management torpor could benefit from some pruning.
But injecting Six Sigma into the Chrysler culture is no long term solution. In the ultra-competitive automotive marketplace, where Toyota’s lean production system sets the standard for manufacturing efficiency, an automaker needs more. It needs strong branding and a spark of genius. Even Jack Welch knew that Six Sigma had to be balanced against the need for risk in order to foster genuine creativity.
But Cerberus didn’t hire Nardelli to return Chrysler to greatness. They hired him to prepare the company for sale. To slash and burn the automaker's production process, corporate bureaucracy and dealer network, so they can strip and flip the result. Nardelli is all the executive Cerberus– if not Chrysler– needs.
[For more info. on Six Sigma, go here .]
If you think Sick Sigma can screw up a retail operation, you should see what happens when you apply it to a military organization. I had a commander who was head over heels in love with the methodology and sent all his senior staff for "green belt" training. Some embraced it, others saw it for what it was: the management fad du jour. It being a military organization, though, everyone had to follow it. Within 6 months there were metrics out the wazoo and the staff meetings became death by Powerpoint. Everyone got really good at playing the system, though, concentrating on what was being measured and letting all else go lacking. The metrics looked good while everything else went to hell. It got to the point that morale in the trenches was at an all time low. Then the general got himself promoted (as always seems to be the case) and his successor had to try to untangle the mess he left behind. "Facts" may be "friendly" but any time you reduce the human factor to a number in an equation, you're courting disaster. Many managers have forgotten that a large part of what they're managing is the workers– and that if you take care of the workers, they'll take care of the business.
I don’t think it really matters what Chrysler or GM or Ford does. I for one would never even consider a domestic car (and most of the people I know feel the same way I do).
The only people who really buy domestic cars (not large trucks – at least those they never screwed up) are employee’s, suppliers, and fleets. Those groups will continue to buy Ford, GM, and Chrysler no matter how of date or shoddy the products are.
Retail sales of cars (to real people with real hard earned money) all go to imports anyway. I don’t see the point of six sigma. The public doesn’t care anymore. The big 3 and thier cancerous UAW workers should all be a part of history soon.
Within 6 months there were metrics out the wazoo and the staff meetings became death by Powerpoint.
Hey, that’s what pays my bills. I create software for the Navy that does the tracking and analysis of these metrics and then automatically creates the powerpoint slides that are killing you :)
Actually, I do realize how silly it is. It’s crazy how many little things they like to keep track of and then apply a 1-4 rating to. I actually imagine that they spend more time coming up with a rating system than actually training for something. At least a lot of the money they waste goes to me.
Incorporating six sigma could be a step in the right direction for Chrysler. On these forums, many people have always said that Detroit need to start taking leaves out of the Japanese books, especially with Toyota’s production system.
Detroit do need to rehaul their way of thinking (like, Nissan did, like VW did and like FIAT did). Though, this is only a step in the right direction. They also need overhaul their cars too. The 300C is a boring ugly-arse car. In the UK Chrysler used to make the Neon, which was a cheap, non offensive car. Much more appealing than the 300C.
Who knows? Maybe Nardelli, might start pushing for a management cull and streamline the bureacracy to approving new car designs? Well, I can hope….
Passion and creativity (or the appearance of it) is crucial to any automaker. There is no place for either in a Six Sigma world. It simply cannot be justified.
I’d like to see the minds that brought us the 300, Viper, Ram, PT Cruiser, Prowler, Minivan and the original cab-forward LH cars to thrive under Nardelli, but I don’t see that happening.
Six Sigma is only one of several process improvement schools of thought, and it has little relavance to what Chrysler needs.
One thing in defense of Nardelli is that he doubled the actual profits at Home Depot during his tenure. The market refused to recognize this and were listening to people bitch. We can expect Chrysler to be a profitable company in short order. He may be hated but he makes profits.
Yes, he doubled Home Depot's profits. BUT, he was CEO of a home building supply chain at the time of a huge home building boom and the post-Katrina rebuilding effort. Who couldn't increase profits under those conditions? And was the increased profit over the short term worth the long-term damage he did to Home Depot's image with its customers? On the other hand, he's now CEO of a automaker which has fallen from third to fifth in sales and has one of the worst lineups in the US during a time when the domestics' overall market share is dwindling. He may manage to turn a profit, but it'll be by selling off the parts of Chrysler for more than Cerberus paid for the whole.
Nardelli will cut costs, fire dead weight personnel, and increase profits. He will help Chrysler on paper for sale but in actuallity will be a disaster among personnel and actual product.
Six Sigma, means nothing if your enitre product line is designed, engineered, and marketed to only one market segment. The current Chrysler family line up has nothing for the Toyota, Honda, Nissan, Mazda, Mitsubishi driver. Unless, Cebrerous has a new formula for cloning people I do not know where they are going to increase their market share with their current line up.
If Ceberous indeed sells Chrysler to the Chinese or Indians in the future it will be a sad day for U.S. and our automotive industry. We may just as well raise the white flag.
First, thanks for the links on the bottom of the page for Six Sigma training! Your writer is obviously unaware that people are just numbers in an equation no different from iron ore or leatherette. Nardelli’s job is to pare the company to the core so Cerberus can sell it off. The triumph of the MBAs is helping to destroy American manufacturing. Years ago in one of my MBA finance classes I suggested that any non-financial institution that put a finance guy in charge was doomed to failure because not one of us had a lick of imagination. Boy, that went over well. Almost 20 years later I am waiting to be proved wrong. Ya know, Jack Welch might have just been unique.. Sayanara C.
I was an intern at GE Aircraft Engines when Six Sigma was just appearing on the horizon. The folks at GEAE ate it up, but then again, they had already bought into the basic premise of fewest defects humanly possible. As was pointed out to me on my first day, “Ninety-nine percent isn’t good enough, because even a 1% failure rate in our industry means that Chicago O’Hare experiences twenty-four plane crashes per day.”
Personally, I think Chrysler can benefit from Six Sigma if it’s constrained to the actual shop floor. Lowering the tolerance for manufacturing defects is hard to argue against (unless it seriously slows production or increases costs), but elsewhere in the business, I don’t see how it can work.
At my place of employ during a mad unchecked growth period, a big deal was made in hiring people for the QA department with Six Sigma certification, and it was announced with big fanfare when such people were hired. It’s been a year and a half, and I have not seen one positive/negative/neutral piece of input from any of them.
The real sign of desperation for Chrysler, at least here in Canada is the return of Employee Pricing, coupled with 20 cents off per liter for a year.. I guess it is easier to make gas cheaper, than fuel efficient cars. I wonder if Six Sigma can help with that.
If Nardelli did so well at Home Depot, how do you explain Lowe’s kicking their butts under the same market conditions?
Six Sigma likely could help if confined to production like suggested by Loserboy. The problem is that the virus always finds it way into other areas where it never belonged, like sales and marketing.
At the same time there has been some good innovation and style coming from Chrysler. The problem is that it wasn’t well made. As soon as a style becomes associated with bad quality, it will be seen as ugly. The human brain just works that way.
You need a leader who can keep the virus contained and lead all kinds of groups well. If this editorial is correct, Nardelli may not be that guy.
It’s not the process – it’s the results that count.
The intellect and reasoning ability of TTAC writers never ceases to amaze me!
Six Sigma works at a B2B-level and not well at all on a B2C-level. Business is rational, the general consumer is emotional. Six Sigma works perfectly when producing widgets because it is pure, cold math and physics. It is robotic. It is Geekie. It is socially-retarded. Nardelli will appoint an Exec in charge of point-of-sale (Lasorda?). Six Sigma needs to end when the car is delivered to the dealership (with the exception of customer feedback and service order analysis). Six Sigma should never be revealed in polite company.
Folks, I believe we are seriously underestimating the state of Chrysler at the moment.
They still have thousands of unsold ‘2006’ units that literally have nowhere to go. At this point in the auction business you can literally pick up many of these vehicles for about 60% of their original MSRP. A model with only 5k to 15k is often going for less than half price.
Here are a few standouts…
2006 Dodge Stratus SXT with 12k – $9450 average book
2006 Chrysler Crossfire Coupe with 12k – $15775
2007 Chrysler Pacifica Touring – $17250
2007 Chrysler Pacifica Base – $15750
Other than discounted finance fodder, there really is no market for most of what Chrysler sells. I am also curious to find out how the sub-prime situation is going to play out for Cerberus. Mr. Nardelli may find that the time to slash and burn may be far more immediate than what’s being played out currently at the corporate level.
I’ve seen the inside of a company when it goes all gaga for the management fad of the moment. It isn’t pretty and rarely ends well. The expert game players rise further up the org. chart and the people with real smarts and initiative head for the doors.
Years ago I remember reading about some new high efficiency light controller that Motorola claimed to have developed. They were very proud that even though the defect rate was low by industry standards they were not going to release the product because it hadn’t hit “Six Sigma” quality levels.
It’s pretty clear that Apple, Microsoft, Google, Amazon, eBay and other fast growth companies don’t fall down the Six Sigma Rathole.
In fact, websites like TTAC would grind to a halt if all business processes were held to a Six Sigma defectively standard. Certainly you can’t have user generated content in such a world as there is no way to measure it’s defectiveness!
Congratulations Michael. You’ve written the best analysis of Nardelli’s resume that I’ve seen; far superior to anything in the business press, let alone automotive.
I think it will be interesting to see what role 6 Sigma has at the new Chrysler. As other posters have mentioned, it’s really hard for carmakers to focus both on defect reduction and on passion at the same time.
On the one hand, you have the Alfas and Land Rovers of the world — lots of passion, and lots of defects too. On the other hand, well, Toyota.
Pre-Daimler, Chrysler was successful when it was design-led, as in the Cabforward Intrepid, chunky Cherokee and BigRig Ram. But customers weren’t loyal because the engineering was subpar.
Daimler actually fixed a lot of that. The platforms all get 5 star safety ratings now, and the quality is better, if not class leading.
The problem is that the vehicles now (300C/Charger/Challenger excepted) elicit so little interest. It’s not clear to me how Nardelli will change that.
KatiePuckrik writes,
“Incorporating six sigma could be a step in the right direction for Chrysler. On these forums, many people have always said that Detroit needs to start taking leaves out of the Japanese books, especially with Toyota’s production system. Detroit does need to rehaul their way of thinking (like Nissan did).”
Katie, it’s important not to confuse these “zero defects” MBA creations with the Japanese philosophy of Total Quality Management. TQM was cribbed from W. Edwards Deming, the American visionary snubbed by various American manufacturers and then embraced by the Japanese. Deming specifically rejected defect counting and individual numbers-based employee evaluations as the standards of success for a manufacturing company. He emphasized instead that the company should identify one broad and imaginative goal, judge EVERY employee against their contribution to the WHOLE enterprise, and specifically seek to think about customer satisfaction in the broadest possible terms (hence, “surprise and delight” as Japanese-brand watchwords).
Nissan, for instance, has gone the exact opposite direction from Toyota and Honda. Under Carlos Ghosn, their approach has actually been more like the Americans: squeeze your suppliers’ cojones until your fingertips touch your palm. Not coincidentally, the measured reliability of numerous Nissan products has dropped like a piano pushed out an eighth-story window.
As you can tell, I’m an amateur fan of Deming’s doctrines. Speaking of American boardrooms misapplying the philosophy du jour, I found myself sitting one day in the conference room of a very famous American paint company, waiting to represent one of its vendors. They had a framed “Mission Statement” on the wall. It said, really no kidding really: “Our mission is to deliver defect-free products and services, on time.”
The meeting hadn’t started yet, but I knew right then we were in deep, deep trouble.
tonycd is right; you can tell a lot from an organization’s mission statement. And even more by watching the development of a statement! An outfit that has to spend time figuring out what it should be doing, or that changes mission statements yearly, is in trouble. Then they usually come up with something meaningless or irrelevant.
For several years I worked in an outfit that evaluated the performance of non-profit organizations. We liked to joke that when we asked upon arrival “what is your goal?” the answer would be “to serve the public.” When we’d say, “but what is your quantitative goal?” they’d say “to serve 100% of the public.” Their real goal, of course, was “keep getting our paychecks.”
Private equity’s only rule that can’t be violated is the Golden rule-those that have the gold make the rules. Nardelli and his types use smegma six and all TOAMP(those other acronym management programs)like religion is sometimes used to rule the masses(now that has really worked out well throughout history). Reality is that the person in power is expected to have answers and most of the time they hide behind something. If they fail they can point to people not adhering to their principles/faith/programs. If it makes Nardelli feel better implementing his manifesto-let him. The only number that matters in this game is how much metal goes out on the street, how it gets there usually can’t be attributable to any one cause. This is a tough business, tough times and
Nardelli is portrayed as a tough guy. I say give John Wayne 90 days then review him.
A bit off-topic, but speaking of Nissan, what the hell happened to this car manufacturer? Once a company I admired, Carlos Ghosn has left their products looking good on the surface, but consisting of non-powertrain parts so lacking in long-term durability as to be a purchase risk on par with the worst of the domestic manufacturers. Is their painting process the only thing left of value?
tonycd,
thanks for you analysis and, trust me, I love to learn new angles.
But my point was this. Detroit have been severely lacking in vision and a direction for a long time (unless you count “stack ‘em high and sell ‘em fast”). So incorporating six sigma, will give Chrysler somewhere to go (doesn’t matter where). It can’t be any worse than where they were heading, surely…..?
Incidentally, I agree with Nissan wholeheartedly. They’re going in a direction which I disgree with. Their reliability is in the toilet because they insist on sharing parts from Renault (a company which is notorious for poor reliability) rather than Nissan to Renault. Ghosn seems to believe that Toyota are “imperious and sure of itself” (his words, not mine). Trouble is, Ghosn seems to casually gloss over the fact that Toyota (and Honda, to a lesser extent) have been on a steady march to the top. When Toyota implemented the Toyota production system, the rest of the world laughed saying it was a pointless exercise based on the ramblings of a mad man. When the Toyota and Honda brought Hybrids to the market many dismissed them calling them a “fad” (including Mr Ghosn*). But now who’s trying to rush hybrids to market while the other are working on their THIRD generation model?
In many ways, Toyota and Honda remind me of Jack Bauer from “24”. Over 6 seasons Jack Bauer has continually proved himself to make the right call and yet other doubt his judgements. What does it take for him to prove himself?!
* = Ghosn the “visionary” is pushing Diesels as a better alternative to hybrids, especially at Renault. Well, compare the mpg’s for a Renault Laguna for a Toyota Prius and see who wins hands down? In fact, I’ll give Renault an advantage, compare a Renault Megane (which is the size of Corolla) against a Toyota Prius!
Letter in this morning's Atlanta Journal-Constitution: I have a couple of questions for the management group who just hired Home Depot's former CEO, Bob Nardelli, to run Chrysler into the ground. First, How will you assemble cars with just one worker on the assembly line? Second: When that rare customer wants to buy one of your cars, will there be a self-checkout available when the sales person is off?
Forget Nardelli’s resume. As Michael pointed out in the article, Chrysler is no longer owned by a disorderly band of zombie shareholders, and Nardelli does not report to an impotent board filled with management lackies and rent-a-directors. Cerberus calls the shots, not Bob. Bob is a hatchet man, pure and simple. Cerberus is not dazzled by six sigma. Bob doesn’t get to impose his “vision” on Chrysler. He gets to do what Cerberus tells him to do, and that’s it. And if I had to guess, I would say that Cerberus wants Bob to scare the living bejeebus out of every single person in the organization. In that sense, he is probably the perfect hire.
I give them credit. I didn’t know what the hell they were going to do with Chrysler based on the names I heard thrown around for CEO candidates. But as soon as I heard Bob Nardelli, it all made sense. They get it – it’s not just about labor costs, it’s about bad management, and they are going to clean out every worthless bureaucrat and sycophant from that rotted organization. I’m looking forward to seeing how it works out.
I don’t believe that anyone at this site honestly believed that Cerberus was going to hold Chrysler in it’s “Permanent Assets” colomn on the ledger. Regardless of what our hopes are, Cerberus is in the initial stages of sales preparation. Instead of lamenting the fact that the management and corporate philosophy is changing, let’s embrace it, see what kind of ideas come from this exercise, rate them, and see if they could be applied successfully at other car companies. After all, I don’t see a lot of fresh ideas flowing from the other drowning companies.
At least some part parts of Chrysler is actual (sub)assembly manufacturing, and if six sigma helped GE doing this, it may hold some benefits for Chrysler.
Another benefit of detailed measurements applied throughout an organization, is that they make it easier to spot and document which parts are actually performing well, and which are not. In Chrysler’s case, there may be pockets of excellence (hard to believe, I know….), that are grossly underappreciated, since the rest of the company is such a dreary place. These pockets are much easier to package up and sell independently if their qualities are documented according to a framework any potential acquirer is familiar with. It doesn’t take many such diamonds to add up to the relative pittance Cerberus paid for Chrysler.
I, for one, think the best thing that can happen to bigcorp US manufacturing, as well as bigcorp pretty much anything, is getting chopped into smaller pieces, some of which can profitably remain locally, others which makes more sense abroad. There is no reason talented Chrysler employees working in well managed teams, should be dragged down by surrounding mediocrity, when they instead can sell their value add to a Chinese, or whatever, operation less apt to destroy the value they create.
“There is no reason talented Chrysler employees working in well managed teams, should be dragged down by surrounding mediocrity…”
Well said stuki. The competent engineers should not be worried for their livlihoods under Nardelli. It is the “Peter-Pricipled” employees that should be worried. Flattening the Org. Chart is an attempt to chop bureaucracy. Warren Buffett buys under-valued companies and the first thing he does is clear-out upper and middle management. The company immediately becomes more valuable.
If you look beyond Six SIgma as a regimented process and look at the wide-scope concept, it is the mind-set of the Craftsman…Those that “Sweat the details”. Quality is not a department on an Org. Chart…It is a state of mind.
# CliffG:
August 11th, 2007 at 1:07 pm
The triumph of the MBAs is helping to destroy American manufacturing. Ya know, Jack Welch might have just been unique.. Sayanara C.
Few Americans can take as much credit for outsourcing manufacturing as Jack Welch. He was famous for directing GE to do things like announce to suppliers that a GE widget factory was moving to Mexico, and that all the suppliers had better do the same to keep their prices low enough to keep their contracts. Before Jack, GE was a manufacturing enterprise, after Jack, GE is mostly a financial enterprise, if memory serves.
No mention of Nardelli should be complete without discussion of his military fetish. I wonder how that will go over at Chrysler?
I wonder if we’re all not overreacting a bit. Yes, Nardelli is a slash-and-burn type. Yes, I shudder at the thought of how a six sigma regime might apply to something as crucial to “good competitive product” (which is Chrylser’s and gM’s greatest current failing) as the R&D and design processes. Yes I think this is a big fat gamble by Chrylserberus. But even if Nardelli/Cerberus strip and flip Chrysler, the question remains — will what they leave have better upside potential than what they start with? Chrysler’s turnaround ain’t gonna happen in 3 years, even with a visionary CEO on par with someone like Steve Jobs at the helm. But if the result of Cerberus/Nardelli’s strip and flip is that Chrylser emerger leaner, meaner and more capable of bulking up (which Cerberus will leave to the next owner), why is that not a good thing? Businesses are bought and sold based on potential, not existing performance. Nardelli’s goal here is to revise the framework, shed what needs to be shed.
It’s a huge gamble, and given the inherently bad position of Chrysler now and its decontented, plasticky cars and ill-conceived mid-market offerings (coughSEBRINGcough), it is less likely to work under Nardelli or anyone else than it is to tank. But Something has to be done. At least Cerberus is doing something radical to save what may already be on a nonsurvivable death spiral.
brownie “Nardelli does not report to an impotent board filled with management lackies and rent-a-directors”
You’ve just perfectly summerized the main impediment to an improvement in management at GM and why just maybe Chrysler might make it
Special thanks to Frank Williams for putting our (USAF) experience with Sick Sigma into words….and excellent, accurate, and prescient ones at that.
Sound and fury, sigmafying nothing.
First of all, six sigma is already in place at Chrysler and probably has been for the last 7 years at least. In manufacturing it can be an effective tool for minimizing or controlling variance and identifying risk. In design it is an effective root cause analysis tool. Of course none of its concepts are new, its just a standardized tool that is then somewhat bastardized/misapplied by everyone who puts it to use anyway.
Second, I have to agree with the slash and burn management idea. That is slash and burn the management. The beurocratic-acronym du jour-cya-groupthink culture among middle to top level execs in Detroit is arguably the root cause of Detroits problems. Its about time for some hatchet work.
I don’t think it really matters what Chrysler or GM or Ford does. I for one would never even consider a domestic car (and most of the people I know feel the same way I do).
I absolutely despise these kinds of statements. To say say you would never consider a model is one thing; maybe even an architecture, fine. But to impune the entire NA Auto industry is just plain (fill in the blank).
Heh, I’d just like to know what exactly it means to apply Six Sigma to car salesman. Do we WANT them to be nearly free of defects? Do we expect there to no statistical variance among deals?
Personally, I’ll take my chances with a defective car salesman, I like the odds.
“Facts” may be “friendly” but any time you reduce the human factor to a number in an equation, you’re courting disaster. Many managers have forgotten that a large part of what they’re managing is the workers– and that if you take care of the workers, they’ll take care of the business.
Mr. Williams,this is perhaps the most outstanding example why many of the domestics have trouble actually connecting to ” Joe Blow ” that works on the floor.
Six Sigma sounds alot like GMS.Global manufacturing systems…Which the later is employeed at G.M.Many times I have told members of management to quit refering to the workforce as ” bodies.” I need bodies here or I need bodies there.
If they could understand that this in itsself is offensive, it would go a long way.
Call us people,personell,workers or hell.. knuckleheads I dont care.But Bodies???
If anyone in management wants bodies they could surely arrange a tour of the local morgue.
Luther said on August 12th, 2007 at 3:39 pm:
“Warren Buffett buys under-valued companies and the first thing he does is clear-out upper and middle management. The company immediately becomes more valuable.”
That’s 100% wrong. The truth is exactly the opposite. Warren Buffett buys companies that are already well managed in the first place but, for one reason or another, are undervalued in the marketplace. He always keeps the existing managament team in place, because they were doing a good job in the first place, hence the reason Buffett was even interested in them. He looks for flawless gems that are underappreciated, not fixer-uppers.
I think the real question is whether it is possible to screw up Chrysler. IIRC, there was an item last week that said they were losing ~$1,900/vehicle sold. That is CTD* in medical terminology.
* circling the drain.
Wednesday, August 08, 2007
Chrysler Cerberus – Can the Outsider turn the corner fast enough?
8/8/07
Robert Nardelli ex-boss at Home Depot and at one time in line for Jack Welch’s job at GE was just hired as Chrysler Cerberus (CC) new CEO.
Being from Michigan I always chuckle when I see the same quotes and sayings when a new CEO takes charge, especially if they don’t know the industry they are now running. In fact I have heard it and lived through these type of changes in my career.
The first one was when The Central Region of phone companies became known as Ameritech. A flood of top executives from outside the phone industry were hired to turn the Bell shaped heads into salespeople and marketers with “Rat Like Agility (SN) since we are now in a competitive business.
After slicing and dicing the company for about two years and removing former phone executives and hiring Presidents and VPs from companies like Proctor & Gamble, General Mills and a bunch of other companies Ameritech now was all about awards and quotas and not production and cost effectiveness. Oh yeah the employees were never in the mix regardless of what anyone says.
They were expendable and they were fired and let go by the thousands (you see that is the only way a CEO can keep his promise to turn the company around. The people from the outside were hired to get rid of the current people plain and simple.
Many of the Execs that were from the phone side resigned because of the way people were being treated and what was happening to the company were they spent most of their lives. The new execs did not care, they were hired to get rid of people and make a name for themselves as great managers because of the short-term and easy(cowardly) way to look like your making money and that is to get rid of employees (even though they were experienced). After a few years or less they left with a star around their name and the next company gobbled them up and then those company’s were in trouble.
Quote from Mr. Nardelli about Chrysler “It’s not about creating a new strategy. They’ve got it. We’re going to have LASER focus on the EXECUTION of that strategy.”
Two words standout – Laser – this refers to the speed at which things will change (Can anyone say “Slix Stigma (G.E. & Home Depot – used the process improvement strategy as their means to move quickly on solving problems and making solutions quickly – NOT).
The next word is Execution – now that is a great word for scaling and trimming a company down to be lean and mean (Spare ME).
Leading all this was Bill Weiss with the advice from Consultant Noel Tichy from the University of Michigan and former Consultant at G.E. Jack Welch.
The next time I was at AT&T when Mike Armstrong became CEO. Motorcyle Mike was also from the outside (Hughes Aircraft). I can’t go into that again (trying to forget). Let me just say it was brutal and bloody as thousands of employees hit the streets and were replaced by Consultants and Contractors.
PREDICTION # 1:
Watch for Chrysler Cerberus (Don’t end up like AT&T) to begin buying up small companies and merge with others to grow rapidly ( This makes the fools on Wall Street happy for the short-term and they will say you are the best CEO of all times). Jack
Armstrong did this too and then he sold them to soon because he had bad advice from the people he brought in from the outside. They had no allegiance to AT&T, they only had allegiance to themselves.
Guess What? Both companies were eventually bought up by SBC (Still traditional phone company) at very low prices.
PREDICTION # 2: Why did Chrysler Cerberus make these changes now? I believe it has to do with the upcoming Labor Talks. It is going to be bloody and nasty with the Union losing big time.
Mr. LaSorda will leave a short-time after the negotiations end a very rich man.
Below is a post I wrote a few years back that pertains to the type of Leadership Mr. Nardelli was taught and managed in for many years at G.E.
“Manage their own destinies.” When I read this I thought of the Noel Tichy and Jack Welch book – “Control Your Own Destiny or Someone Else Will.” Anyone who “truly” knows the history of GE’s early days. (In the early 1980s he was dubbed “Neutron Jack” (in reference to the neutron bomb). The chapter “the neutron years” in his book says that GE had 411,000 employees at the end of 1980, and 299,000 at the end of 1985. Of the 112,000 that left the payroll, 37,000 were in sold businesses, and 81,000 were reduced in continuing businesses).
When other companies were implementing TQM, GE was removing employees (how come GE didn’t use Six Sigma). What Quality folks (especially fly by night consultants) won’t admit is in the early 80s to mid 90s many of the leading Quality companies had already removed “low hanging fruit” (please read @ http://qualityg.blogspot.com/2006/05/quality-tooltechnique-term-low-hanging.html). and identified which processes needed to be fixed. Once you do that you are left with very complex fixes to correct and stabilize processes that were neglected for years.
When GE started the Six Sigma rush in the mid 90s they were removing “low hanging fruit,” which gave the perception that the other companies quality efforts were all wrong. Now in the mid 2000s go to any of the major Six Sigma related chat rooms and tell me if you are hearing anything different as to why it won’t work (i.e., leadership won’t support, not producing fast enough results, costs to much to train everyone, mid management feels threatened, and of course teams don’t have time to meet because of their “regular” jobs, Blah, Blah Blah!
Very wise words “control your own destiny.” You have to go out and find your destiny, search for what it is in life you wish to accomplish and go after it. No one is going to knock on your door and tell you it’s waiting for you on the front lawn.
Example, when you lose your job, no one is going to call you and say “please come work for me.” You have to get off your butt and make it happen, that is destiny. If you don’t then you can go on welfare and let the Government control your destiny.
The saddest part about an Outsider bringing in all his or her people it takes years after their gone to filter through all the bad managerial decisions that were made that affected the employees and the bottom line.
Good Luck Chrysler Cerberus & Mr. Nardelli, I really want you to do well. Trust your employees and not your cerberus moneychangers.
Since writing this post I have received Emails providing a number of examples where outsiders have made a postive impact on their Company and Stock.
The most Emails were about Ford Motor Company and Mr. Allen Mullaly. All I can say is it’s too early to tell. I also wish Mr. Mulally (formerly of Boeing) good wishes.