Is the Fiat boss an industrial genius or has he lost control?

Sergio Marchionne, Fiat chief executive, today travelled to Berlin where he presented his plan for a three-way alliance among Fiat, Chrysler and Opel to German Foreign Minister Frank-Walter Steinmeier and German Economy Minister Karl-Theodor zu Guttenberg.

Sergio Marchionne

According to a Fiat press release from May 3, Fiat will consider creating a new publicly traded company that combines the auto maker’s car unit, Fiat Group Automobiles, including its stake in Chrysler, with GM’s European operations (including Opel (DE), Vauxhall (UK), and Saab (SE)). The three-way alliance is expected to generate €80 billion ($106 billion) in annual revenues.

Fiat needs the support of the German government, which is leading Opel’s search for a new investor as GM has officially declared that it will not finance Opel long term.

Let’s hold on there for a second and recap what Mr Marchionne has been doing lately. After he was appointed CEO of Fiat on June 1, 2004, he has turned around the then borderline survivor to a profitable company and credible industry consolidator. Only four days ago, Fiat announced the acquisition of a 35 per cent stake in the troubled US carmaker Chrysler in return for technology and other resources but without any cash injection from the Italian group. Together with the announcement today, Mr Marchionne is up for a much bigger challenge than the re-structuring of Fiat itslef.

One thing is certain: German companies really don’t like to be bought by big foreign competitors. Anyone who remembers the row back in 2000 when Vodafone aquired Mannesman? This at the time largest corporate merger in history was initially criticized by the then German Chancellor Gerhard Schröder. This time rumour has it that Mr Steinmeier opposes the deal. Since the Opel business is depending on government backed-up loans, you can be sure that the German national interest will play a big role in this deal. Now consider the fact that the current German government is a “Grand Coalition” between the two biggest parties with a general election due in September, and you understand that Mr Marchionne has to master both the political and the business side of things.

The question is if Mr Marchionne is an industrial genius of a rare kind or if he pushed the accelerator too hard this time. Maybe he knows something that everyone else doesn’t. Are we maybe at the bottom of the economic downturn? Buying Fiat shares, anyone?

Media links: FT, Handelsblatt (DE),  DN (SE), AFV (SE)

Principles of Project Management, Part 1: Forming your core team

If you haven’t managed a project yet, but are interested in doing so, one way of preparing for that task would be to read a book on the topic. However, I am the first one to admit that while many books give you a good insight into the technicalities and the techniques of Project Management, they can’t prepare you for the parts more related to leadership such as how to form a team and manage conflicts in the project. [1]

The simple reason for starting with the team is that if your core team isn’t working as a unit, you can forget about the project charter, the plan, the risk assessment and all the other stuff. In the face of even the smallest challenge, your project is going to fail anyway.

So, how to do it? The first step is to realise that you are in charge of forming your team and of the team’s performance. Hence, you should preferably pick the team members yourself. Here you must strike the balance between specialized experts and good team leaders. If a certain position in your core team implies leading a sub-project with 10 members or more, you should definitely select the person with the best team management skills.

You may object that your company’s way of working doesn’t allow you to freely choose your team members. This is quite often the case, but you should nevertheless try to negotiate a compromise with the project sponsor. There are often positions in a project core team, which will be more critical than others. Argue that for these positions it is essential that you’ll have Mark and Susan (or whatever their names are) on your team.

My advice is to go with the people that you know will be committed and work hard to achieve the project targets, even if they potentially have controversial opinions or will cause disagreements from time to time. Of course, you shouldn’t inject permanent sources of conflict into your core team, but remember that a project team without intense discussions isn’t a working one.

One team selection principle that I would caution against is to choose weak and even incompetent members with the purpose to make you seem better and stronger in comparison. One person famous for practicing this principle is the former Swedish Prime Minister Göran Persson, who after the election in 2002 announced as ministers at least six previously rather unknown individuals with merits inadequate for their respective positions. Mr Persson himself failed to get re-elected in 2006, not because the Swedish electorate so much preferred the opposition but because they were fed up with the Prime Minister.

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[1] The techniques are of course important, and one good example of a rather condensed book on Project Management is this one from Verzuh.

It is worth mentioning that in this version from 2008, Verzuh has added a Chapter 10: “Building a high-performance project team”, which wasn’t present in the first version released in 1999.

Dåligt Ledarskap, Tunhammar!

LO vill att AMFs styrelse kräver tillbaka pensionsmiljoner från AMFs förre VD, Christer Elmehagen. Man anser tydligen att den totala pensionsavsättningen blivit större än styrelsen godkänt. Jag tänker här inte bedöma om Elmehagen fått 20 miljoner för mycket eller inte, det finns delar i detta som är mycket intressantare ur ett ledarskapsperspektiv. I ett uttalande citerat i SvD och på e24.se säger styrelsens ordförande Göran Tunhammar:

“Styrelsen ser mycket allvarligt på det som har hänt och hur det påverkar spararnas förtroende för AMF. AMF är ett mycket välskött bolag. Det är min bestämda uppfattning att den senaste tidens händelser gäller enskilda personer och inte reflekterar AMFs värderingar.

Denna typ av argument är möjligtvis trovärdig i ett fall där lägre tjänstemän agerat på eget bevåg, som t.ex. i fallet med de numera ökända “Cevian-” och “Carnegie-” männen. Strategin från ledningen, i detta fall t.o.m. styrelsen, är solklar: isolera skulden och det klandervärda, eventuellt olagliga, agerandet till en eller ett antal individer för att företaget och dess kultur inte ska ifrågasättas. Detta formulär 1A i krishantering, av Olle Zachrison på e24 även kallad  rötäggsteorin, är välkänt men får endast effekt om man kan bevisa att tjänstemannen verkligen agerat helt på eget bevåg.

Det anmärkningsvärda här är att den Tunhammar bl.a. avser med  “enskilda personer” är AMFs VD under 10 år. Att frikoppla AMFs bolagskultur från den verkställande direktörens agerande under 10 år får anses vara lite väl magstarkt. Dessutom är det ju Tunhammar själv i egenskap av ordförande som är är ytterst ansvarig för VDs pensionspaket.  Att inte ta sitt ansvar är att visa prov på dåligt ledarskap. Att ge andra skulden för sina egna misstag är annu sämre!