Iacocca and Chrysler: How a Corporation was Saved Presented by: Steve Kaman Outline • Background • Life at Ford • Chrysler Ripe for Change • Enter Lee Iacocca • Changes at Chrysler • Iacocca’s Qualities of a Leader Background • Lido Anthony Iacocca • Born: October 15, 1924 • Allentown, Pennsylvania • Son of Italian Immigrants • Experienced Racism • Mechanical Engineering at Lehigh • Masters from Princeton Career at Ford Motor Company • Began as student engineer in August 1946 • Decided to leave engineering • First job in sales • Rapidly moved up the corporate ladder • The Mustang • 8 years as president • Fired July 13, 1978 Conditions at Chrysler • Over $1.2 billion in debt • Debts with hundreds of creditors • Sales dropping • Increasing Federal regulations • Top management not aware of what was going on • Habit of treating suppliers poorly The Chrysler Years - Problems • Immediately recognized numerous problems – All sections worked independently – 35 vice-presidents with no committee setup – No centralized accounting department – $500 million in inventory (not at dealerships) – Leasing cars to Avis and Hertz The Chrysler Years - Solutions • Built his own team • Established “quality circles” • Fired two Ad agencies, and hired Kenyon & Eckhardt • Showed suppliers the future • Gave $62 million rebate to Army The Chrysler Years – The Loan • Asked for guaranteed loans from government • Had to prove company on new path • Concerns over effects on free enterprise • Numerous concessions The Loan – The Next Step • Began working on concessions: – Reduced own salary to $1.00 – Used “help or go bankrupt with us” with suppliers – Explained that helping was only way banks would get money – Work cuts through unions The Loan – The Payback • The K-car – American alternative for economy car • Tied K-car with K-Mart • Load repaid in full, seven years early Continuing the Upswing • Brought back the convertible • Brought in the minivan Iacocca’s Qualities of an Innovator • Preparation – Art of Thought • Decisiveness – Creativity in Business • Management is motivating people – The Owner’s Manual for the Brain • Speak to people in their own language – The Owner’s Manual for the Brain Iacocca’s Qualities of an Innovator • Consulting workers – Programming Pearls • Don’t judge too early – Creativity in Business • Providing a dominant design – Mastering the Dynamics of Innovation Summary • Skills cultivated at Ford • Chrysler ripe for help • Iacocca steps up • Management, process and product innovation saved company • Connections between Iacocca and our readings References • Iacocca, Lee with Novak, William. Iacocca: An Autobiography. New York: Bantam Books, 1984. • Levin, Doron P. Behind the Wheel at Chrysler: The Iacocca Legacy. New York: Harcourt Brace and Company, 1995.