On August 6th 2007, 59-year-old Robert Nardelli faced a daunting challenge when he was appointed the chairman and CEO (Chief Executive Officer) of Chrysler Holdings LLC (Chrysler). The challenge is two-fold. He should put his experience effectively for Chryslers turnaround. He should also be ready to back his reputation as an effective leader that was tarnished by his stint at Home Depot. This is so, because he received a high severance package to resign as Home Depots CEO in January 2007. Nardelli took over at a challenging time. The surprise move came days after the private equity firm Cerberus Capital Management finally took control of the loss-making car-maker Chrysler, acquiring an 80% stake from parent Daimler for $7.4 billion. Moreover, the US debt markets were in huge turmoil due to the crisis in the subprime mortgage market, affecting the auto-sector as financing tightened. Many analysts wondered whether his GE-honed management ideas could be carried over to Chrysler. They were sceptic about his skills, knowledge, experience and most importantly, the personal leadership characteristics whether that would allow him to lead a turnaround at Chrysler and he can silence his past spectres at Home Depot. Auto analysts are apprehensive regarding how well Nardellis skills, polished at GE, would profit Chrysler.

- Leadership Style of Nardelli

Throughout his career at GE, Nardelli had entirely focused on process and performance. His stellar career and performance at GE seemed to portray that aspect of his leadership. Nardellis style of using autocratic top-down, command and control approach worked great, as he focused on performance aspects cost and quality. Six Sigma, which he institutionalised at GE, measures all the process aspects wonderfully. His style at GE centred on cost-cutting, without attention to people-centred business value propositions. However, at Home Depot, the way of operating was decentralised, when he led it in 2000. Managers had a lot of discretion and there was a free-flowing, exciting feel about working there. Nardelli brought a much different leadership style to Home Depot one that focused more on financial discipline and corporate management know-how. That same style, which brought him laurels at GE, was less suited to the participatory culture of Home Depot. Nardelli tried to streamline operational performance in around 2,000 stores, to control them. At Home Depot, his leadership approach did not work well, given the history of the company. While GE is a great source of management talent, the style of leadership that works at GE doesnt necessarily readily carry over into a company that does not have GEs traditions or GEs riveting focus on performance, said Michael Useem, director of Whartons Center for Leadership and Change Management. Nardelli failed to recognise the importance of Home Depots culture and was unable to survive, in spite of having the raw talent to manage the company. Then, in August 2007, Nardelli was appointed as Chryslers CEO.

- Robert Nardelli as Chryslers CEO

Chrysler, an American automobile manufacturer, had been a part of Germany-based DaimlerChrysler AG from 1998 until August 3rd 2007. The DaimlerChrysler merger was announced on May 7th 1998. The Wall Street Journal named it the biggest industrial merger of all time. The merger was considered a merger of equals. In less than 2 years, it became apparent that it was an acquisition. Various problems confronted the merged entity. Identified synergies, before the merger, could not be realised. Differing culture and management styles were primarily responsible for the mergers failure. In August 2007, a US-based private equity firm, Cerberus Capital Management (Cerberus) acquired an 80.1% stake in Chrysler from DaimlerChrysler, for $7.4 billion. After the acquisition, Chrysler was renamed Chrysler Holdings LLC. On August 3rd 2007, Nardelli was elected to Chryslers board. On August 6th 2007, he was appointed as its chairman and CEO. According to a report, which refers to a source inside Cerberus, Nardelli will receive only $1 a year as base salary, while his remaining compensation was directly linked to the success of Chryslers turnaround. Nardellis objective for Chrysler was to improve the companys performance both financially and operationally. Chrysler posted a $680 million loss in 2006. As of August 2007, Chrysler was in the middle of a restructuring programme. This was initiated in 2006 by Tom LaSorda (LaSorda), who served Chryslers CEO before Nardelli; this was supposed would eliminate 13,000 positions, as Chrysler was expected to return to profitability in 2008. On the other side, Chrysler planned to double the capacity of its new four-cylinder engine plant in Dundee, Michigan by the end of 2007. It also wanted to improve product quality and expand into emerging markets. Immediately after his appointment at Chrysler, Nardelli emphasised that his immediate focus would be on implementing the restructuring plan. He told: Its not about creating a new strategy. Theyve got it. Were going to have laser-like focus on executing that strategy. What I bring is a fresh set of eyes, a new perspective if you will. Nardelli also said that he and his team could continue the momentum of Chryslers recovery and return this great American icon to a path for global growth and competitiveness.

- Can Nardelli do it?

In his days as CEO of Home Depot, Nardelli brought his strong personality, aggressiveness and GE discipline to it. Yet, his autocratic style and his growing sense of irritation that he was passed up for the top job at GE bugged him, leading to a stagnant stock price of Home Depot. He became unpopular with the shareholders of Home Depot. Many analysts questioned whether Nardelli is well-suited to lead Chryslers turnaround. Cerberus appointed a new CEO from outside the automotive industry. By doing so, it passes over both LaSorda and Wolfgang Bernhard to bring in an auto industry outsider. This triggered a lot of debate. Gerald Meyers, the former president of the American Motors Corporation and an expert on crisis management, said, Nardellis lack of automotive expertise will be his biggest hindrance. Theres nothing in his background that says he lives, breathes and loves cars. Aaron Bragman, an auto industry analyst with the consulting firm Global Insight, said that he was concerned because Nardelli did not have any product experience, and the most important part consumers want to buy. He was also criticised for his autocratic style. He was also known as a hard-nosed boss, one who routinely took employees to task and was unafraid of making hard decisions. At Home Depot, his ways were whined as he assumed that the solution was simply applying the GE Way as brutally as he could. GE has a deeply held, corporate cultural value around the idea of performance. Achieving results is the key to success at GE. Nardelli joined GE in 1971, as an entry-level manufacturing engineer. By the late 1970s, he wanted CEO Jack Welch (Welch) to analyse his job performance. Welch, who met Nardelli in the late 1970s, says that he used to relentlessly seek feedback about his own performance. Welch, on Nardellis drive, says, He would always say, What am I doing that I need to do better? In 1988, though Nardelli had risen to a manufacturing vice presidency, he asked Welch for a general management job. Welch refused and Nardelli quit. Nardelli spent the next 3 years as an executive vice president at Wisconsin-based industrial-equipment maker, Case Corporation, where he ran the worldwide parts and then the construction divisions. Then, Nardelli in 1991 came back to GE and ran the Canadian appliance manufacturing company for a year in Toronto. In 1992, Nardelli took over GE transportation in Erie and then in 1995, he took over GE power systems in Schenectady. Nardelli broadened the companys base to cope with energy-industry cycles and government turmoil around the world. He not only took advantage of opportunities created by industry deregulation and increased power demands, but also turned outdated manufacturing facilities into high-tech service centres for global customers. Nardelli formulated a strategy called the meta-market view. This puts the customer in focus and looks at every cost that customer incurs. It then looks at what percentage of that customer cost can become its revenue. It can be viewed as a strategy to develop different ways to serve a single customer. Nardelli reinvested with the focus on the core products of GE Power Systems, extended its product line and acquired more than 50 energy-related businesses. He shifted from selling products to selling services, including long-term contracts to operate facilities. In 1996, Nardelli instituted Six Sigma Quality Improvement Training at GE Power Systems aimed for the statistical near-perfect variation of 3.4 defects per million. It was a business process-oriented technique that relied on data and analysis to discover where defects could occur, measure those defects and help eliminate them. GE Power Systems became synonymous with one of the biggest success stories in its history. In 3 years, he pacified hostile unions, modernised the product-line, expanded into services, took the business global and more than doubled profits. He initiated annual worker training and continuing education. In an intense three-way competition between Jim Mcnerney, Bob Nardelli and Jeffrey Immelt to become CEO of GE, Jack Welch chose Jeffrey Immelt. Nardelli was devastated. After being passed up for the top job, Nardelli joined Home Depot in 2000, which was in a poor state. Nardelli was astonished to discover that Home Depot lacked the infrastructure to send a company-wide e-mail. Its stores did not have automated inventory systems; shipments were logged with clipboard and pencil. Home Depot stores were run down and had a reputation for poor customer service. There was no sense of financial discipline or accountability, and as the company had been run by its founders, Bernie Marcus and Arthur Blank from the time it was set up in 1978, the culture was deeply ingrained and strongly resistant to change. Nardelli, though being an outsider CEO renowned for his cost-cutting skills initiated significant changes in improving the companys financial performance. He renovated Home Depots systems for purchasing and technology, and initiated extensive financial management programmes. He also adopted GEs policy of firing under performers every year. Home Depot witnessed an increase in profits and revenue, during Nardellis 6-year reign there. Between 2000 and 2005, sales grew from $46 billion to $81.5 billion and profits more than doubled. However, the stock price, at about $43, has not followed suit. It has barely moved since Nardelli took over in December 2000. The stock is in the tank, complained Bernie Marcus. Thus, the problem at Home Depot under Nardelli was its share performance. In 2006, the company planned to raise its share price through measures like stock buyback. Also, Nardelli was chided for his generous compensation package. In May 2006, at the companys annual shareholder meeting, irate investors criticised boards absence and questioned Nardellis pay. A shareholder of Home Depot, Richard Fillano, said, This is outrageous that they (the board) are not willing to appear before shareholders. I think theyre too chicken to face shareholders whether to allow vote on CEO compensation or answer questions about the performance of the company. You hide behind various metrics, you wont report same-store sales, youre chicken. Nardelli was the only director on hand to take questions, and he refused to answer any inquiries about his pay. Since then, criticism about Home Depots performance and Nardellis pay continued. In January 2007, Home Depots Board granted a severance package worth $210 million to Nardelli. This was in addition to his average compensation of $25.7 million a year, since he joined in 2000. The surprise departure of Nardelli came amid investor unhappiness over Home Depots stagnant share price. He was also unpopular, due to his autocratic style.

Based on what you have read define the context you find yourself in. What type of company?; Which industry or sector?; In which countries/continents are you active?; Who are your competitors, what are substitutes to your product or service, is it high tech or low tech, and are you a start-up or a fully-fledged corporation?, Which functional disciplines are and/or should be involved, etc. Furthermore, assess current and future (expected) performance compared to the competition: how are they adding value (value drivers to performance).