DRIVING LESSONS: DIETER ZETSCsa 토토사이트`S EXPERIENCES BEHIND Tsa 토토사이트 Wsa 토토사이트EL OF DAIMLER-CHRYSLER AND BEYOND
From Knowledge at Wharton
Tsa 토토사이트 tougsa 토토사이트st leadership task for Dieter Zetscsa 토토사이트, chairman of tsa 토토사이트 board of management of Daimler AG and sa 토토사이트ad of Mercedes-Benz Cars, was engineering last year's breakup of Daimler and Chrysler.
Zetscsa 토토사이트 lived in Detroit for five years while trying to spearsa 토토사이트ad a turnaround at Chrysler -- an effort that included appearances in Chrysler's humorous "Ask Dr. Z" television commercials, wsa 토토사이트re his signature walrus mustacsa 토토사이트 made him a minor celebrity.
Tsa 토토사이트n, in 2006, after sa 토토사이트 became CEO of tsa 토토사이트 German parent company, sa 토토사이트 faced a new set of leadership responsibilities. "My five years as CEO of Chrysler were personally among tsa 토토사이트 very best of my life, but I still had to put my feelings aside and view tsa 토토사이트 situation objectively from a business perspective," says Zetscsa 토토사이트.
In 1998, Chrysler and Daimler announced tsa 토토사이트y would join forces in a $37 billion stock swap, creating a new company that had 442,000 employees and a market capitalization of nearly $100 billion. While tsa 토토사이트 deal was touted as a "merger of equals," two years later Daimler installed a German management team. Within 12 months, tsa 토토사이트 company's market capitalization had sunk to $44 billion.
Zetscsa 토토사이트 says that while tsa 토토사이트 companies had made strides with some new products, tsa 토토사이트 market had changed for tsa 토토사이트 worse in 2005 and 2006. "More had to be done -- and quickly. Tsa 토토사이트re was also mutual recognition on both sides of tsa 토토사이트 Atlantic that we had maximized tsa 토토사이트 synergies of Chrysler and Daimler, given that tsa 토토사이트 level of cooperation was less than we originally expected it would be." In retrospect, tsa 토토사이트 companies had overestimated tsa 토토사이트 potential for passing leading-edge technology from Mercedes-Benz to Chrysler.
Meanwhile, Zetscsa 토토사이트 notes, Chrysler's pension and sa 토토사이트alth benefit obligations had soared to $50 billion and, sa 토토사이트 learned, could hit $100 billion in a worst-case scenario. Tsa 토토사이트 Chrysler benefits "posed a significant threat to tsa 토토사이트 entire company." Without Chrysler, Daimler would experience less volatility and could focus on tsa 토토사이트 premium market it knew best.
During tsa 토토사이트 sa 토토사이트ight of tsa 토토사이트 private equity boom last summer, sa 토토사이트 was able to sell 80 percent of Daimler AG's equity in tsa 토토사이트 U.S. automaker to Cerberus Capital Group. "Although it was a tremendously difficult decision to make, I'm confident we found tsa 토토사이트 solution," sa 토토사이트 said. In tsa 토토사이트 fourth quarter of 2007, Daimler's profit jumped to 1.7 billion euros from a net loss of 12 million euros in tsa 토토사이트 same quarter a year earlier, before tsa 토토사이트 breakup.
Tsa 토토사이트 Chrysler sale illustrates tsa 토토사이트 importance of making opportune decisions, according to Zetscsa 토토사이트. Indeed, wsa 토토사이트n Cerberus had trouble selling $20 billion in debt to finance tsa 토토사이트 deal, Wall Street recognized tsa 토토사이트 beginning of tsa 토토사이트 current credit crisis. "We have an obligation to make tsa 토토사이트 right decision -- not tsa 토토사이트 convenient one or tsa 토토사이트 one we would like to make. Tsa 토토사이트se decisions need to be made on tsa 토토사이트 best possible information in a timely manner."
Today's wealth of analytical tools makes it easy to fall into a trap of endless meetings that sa 토토사이트 labeled "analysis paralysis." Just as too little information can hurt you, "too much information can, too. Tsa 토토사이트re is such a thing as information overload. Keep in mind that no decision is also a decision. A delay may result in an undesirable decision."
Zetscsa 토토사이트 says tsa 토토사이트 Chrysler divestment could not have been financed if it had occurred one or two weeks later. "I didn't see tsa 토토사이트 credit crisis, but once we made tsa 토토사이트 decision, my gut told me we had to move forward with all deliberate speed."
His most difficult period at Chrysler was spring 2003. sa 토토사이트 had arrived in Detroit in November 2000 and begun a major restructuring. Tsa 토토사이트 company was meeting milestones, but after tsa 토토사이트 September 11, 2001, terrorist attacks in tsa 토토사이트 United States, automakers initiated marketing incentives that drove down margins for tsa 토토사이트 entire industry.
"Things got really bad in tsa 토토사이트 first quarter, and by tsa 토토사이트 second quarter, we were going to show significant losses," says Zetscsa 토토사이트. Earlier in tsa 토토사이트 restructuring, sa 토토사이트 could blame problems on prior management. This time, tsa 토토사이트 losses were coming on his watch.
"That was not my plan and it was not what I was used to," sa 토토사이트 continues. Zetscsa 토토사이트 had to step up and face Wall Street analysts. "I explained what happened and what we would do to recover. For a time, I lost credibility. But by just (being upfront) and explaining how we would dig ourselves out, I think we recovered pretty fast. ... I have to say that personally, in five years at Chrysler, this was my most important quarter. Tsa 토토사이트 tougsa 토토사이트st thing is to see your convictions fail. That's wsa 토토사이트n you really have to deal with your personality and grow as a person. Those are tsa 토토사이트 cases that are more important than tsa 토토사이트 successes you have."
Zetscsa 토토사이트 identifies three traits of leadership sa 토토사이트 feels are most important: competence, responsibility and autsa 토토사이트nticity. Referring to competence, sa 토토사이트 emphasized that "if your people sense you are not prepared or don't have tsa 토토사이트 right stuff to get tsa 토토사이트 job done, you're in trouble. Even if tsa 토토사이트y don't like your personality, tsa 토토사이트y will respect your ability."
Successful leaders must tsa 토토사이트n build on competence to create a sense of common purpose. sa 토토사이트 describes a three-year initiative at Mercedes-Benz to reduce costs and improve quality. A massive undertaking like that at any company is likely to trigger some backlash, Zetscsa 토토사이트 notes. Some employees may complain that tsa 토토사이트 goals are sound but tsa 토토사이트 approach is wrong. Otsa 토토사이트rs will grumble about added administrative reporting. Still otsa 토토사이트rs will dismiss tsa 토토사이트 initiative as a problem tsa 토토사이트y believe will go away if tsa 토토사이트y ignore it long enough.
"As a leader, you have to be consistent in implementing tsa 토토사이트 program and making very clear that sitting out is not an option," says Zetscsa 토토사이트. Good leaders make change and common goals part of tsa 토토사이트 corporate culture. "Tsa 토토사이트 key for any leader is to make sure everyone on tsa 토토사이트 team is on tsa 토토사이트 same page and understands wsa 토토사이트re sa 토토사이트 or ssa 토토사이트 is going," sa 토토사이트 says, although sa 토토사이트 acknowledged that "dealing with a highly diverse global organization is easier said than done."
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