Friday, May 1, 2009

Everything Old is New Again? Or Is It Just, Still, Old?

Back in 1979, Chrysler flirted with bankruptcy, trying to avoid being the first major American automobile manufacturer to file for such protection since Studebaker in the '30s (which, after all, had worked out really well for Studebaker in the long run, hadn't it?). Thirty years later, here we are, back to the future.

And just as a foreign white knight rode to Chrysler's rescue in 1998 (raise your hand if you remember the fiasco that was Daimler Chrysler), here we are, back to the future, with another foreign white knight, Fiat (one more round of "Fix It Again Tony" jokes, and then that's it. Please.).

The problems that Daimler Benz and Chrysler faced in their initial merger were many, but what doomed the merger appears to have been simply a clash of cultures. (There's a fine business-school case analysis on the Darmouth-Tuck website.)

"Culture" is another of those concepts (sort of like "ethics"....) that "real" business people tend to discount as critical to long-term success. It's all about the numbers, isn't it? Or the brand strategy. Or the supply-chain synergies. Or the whatever.

But who puts those strategies into effect? The management and staff of the companies, of course. And the companies' approaches are almost bred into the employees. With two companies whose styles and brand images were so different to pretend that this represented a "merger of equals" was laughable. Despite a lot of public-relations efforts to play nice together, it turns out that, almost from Day 1, there were arguments about everything, from the weighty (should Mercedes-Benz risk its lofty image in the U.S. by contributing parts to Chrysler vehicles?) to the ridiculous (should all employees use American-style or European-style business cards?).

Will things be different this time around? I'm not a gambler; but if I were, I don't think I'd wage very high stakes on a Fiat-Chrysler empire. All the problems of different cultures are present here too. Chrysler was in a stronger financial position then than it is now. And while Daimler-Benz had a well-known and highly-respected brand name in the U.S., few Americans under 40 are familiar with the Fiat name, and few Americans over 40 have fond memories of the brand (yes, I know about you Alfa Romeo fans; I loved that little Spider Veloce too). I hope I'm wrong.

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