Transformational Leadership Blog

In April 2009, President Obama announced that Chrysler was filing for Chapter 11 bankruptcy. It was a sad moment for the automaker. But when Chrysler was first faced with the threat of extinction in the late 1970s, there was Lee Iacocca who stepped in to save it from bankruptcy. Now, there is no Lee Iacocca for Chrysler probably because of the overall macro situation of the American economy as well as the global economy.

Iacocca was born in Allentown, Pennsylvania to Italian immigrant parents. He went to Princeton University and upon graduation, got a job as an engineer at Ford Motors in 1946.

Capitalize on your Strengths.

Because of his background, he asked for a stint at the Sales and Marketing division of the operations. His career flourished as a result.

His first early success was the “56 for 56” campaign, which offered $56 monthly payment loans for 1956 car models. As he scaled the corporate ladder, a lot of people recognized his potential and thus in 1960, he became the Vice-President for Ford’s car and truck group. In 1967, he became executive Vice-President and company President in 1970-1978.

Be a hands-on manager.

As company president, Iacocca was hands on in the development of certain car models, particularly the Ford Mustang, which is a very popular car model to this day. He also led the development of the Lincoln Continental Mark II, the revival and flourishing of the Mercury brand, as well as the Ford Fiesta.

Stand on your convictions and principles.

He differed with Henry Ford II in a lot of things, however. This proved to be his undoing. That’s why he was fired by Ford in 1978 even if the company posted $2 billion profit on that year under his leadership. In Lee Iacocca biography book, he described Henry Ford II as a vindictive leader, which set his people against each other by playing favorites.

The falling away between Iacocca and Ford started with a disagreement with the way business was handled in Indonesia. Apparently, Henry Ford II gave the go signal to offer a $1 million bribe to an Indonesian general just to get a $29 project. Because of this disagreement and a couple of others involving financial management, Iacocca became perceived by Ford as a thorn in his side.

Yet, Iacocca stood by his principles and challenged Chairman Henry Ford II over several management practices. By 1978, the quarrel peaked and Iacocca was fired unceremoniously!

After a career drawback, move on!

After he left Ford Motors, Iacocca moved on with his life. Although it was a difficult time in his life, he faced an entirely different ballgame right after Ford. In late 1978, a few months after he left Ford, he was brought as the Chief Executive Officer of Chrysler Motors through the efforts of Chrysler Chairman John Riccardo.

Lee Iacocca was just 32 years old when he came aboard Chrysler, whose situation was really bad it was in danger of bankruptcy! He even took on a $1-a-year salary just to cut costs.

Don’t hesitate to make difficult decisions.

If your ship is sinking, you don’t have much choice! Instead of prolonging the agony of analysis, Iacocca decided to make sweeping changes—he laid off a lot of employees, sold off the European division of the company to Peugeot, and brought in a number of former Ford company men to Chrysler.

But the final straw of his difficult decisions was to go to congress and plea for a bailout plan! He knew he would be criticized heavily. He knew that the government might not accede to his request. And he knew that the critics of capitalism would throw their punches rightly!

Thankfully, Iacocca prevailed and Congress agreed to guarantee the loans of Chrysler! Right after the loan guarantee, Chrysler started making waves. Finally, Iacocca did not have to think of bankruptcy and he made significant improvements in the operations of the company. More than that, he also released a number of new cars that became big hits in the market.

Be the face of your organization.

Interestingly, Iacocca became the TV endorser of his own company. They produced a lot of Chrysler commercials that appealed to American car buyers. By 1981, two years after the Congress loan guarantee, the company cut its losses to $500 million from $1.7 billion in 1980. By 1983, Chrysler paid off its loans years in advance and posted a profit of $500 million! Iacocca’s efforts and sacrifices finally paid off!

Give back to the world.

In 1984, Iacocca established the Iacocca Foundation, which provided funding for research that seeks to find cure for Diabetes. To date, Iacocca is considered as one of the best CEOs in the United States. While he made a number of mistakes prior to his retirement, his business savvy and his leadership skills are worth emulating in this time of economic difficulties.

Reacting to the filing of bankruptcy of Chrysler, Iacocca said:

“This is a sad day for me. It pains me to see my old company, which has meant so much to America, on the ropes. But Chrysler has been in trouble before, and we got through it, and I believe they can do it again. If they’re smart, they’ll bring together a consortium of workers, plant managers and dealers to come up with real solutions. These are the folks on the front lines, and they’re the key to survival. Let’s face it, if your car breaks down, you’re not going to take it to the White House to get fixed. But, if your company breaks down, you’ve got to go to the experts on the ground, not the bureaucrats. Every day I talk to dealers and managers, who are passionate and full of ideas. No one wants Chrysler to survive more than they do. So I’d say to the Obama administration, don’t leave them out. Put their passion and ideas to work.”

To know more about Iacocca, do check Lee Iacocca‘s Autobiography. It was written by Iacocca with William Novak.

image credit: BusinessWeek

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1. Start Here! The Road to Transformational Leadership