What makes Fiat think that it can succeed where Daimler failed?
Lately we’ve been reading a lot about the US automobile industry and the recovery plan for Chrysler (click here to read a New York Times piece on the subject). That plan includes Fiat’s acquisition of a significant portion (up to 20%) of the company. Fiat intends to bring their small-car technology, and take advantage of Chrysler’s network of dealerships to sell Fiats across the US. It’s a bold and ambitious plan, but it would be advantageous for Sergio Marchionne, Fiat’s CEO, to know that it was not an absence of technology that caused Daimler to lose 80% of its $36 billion investment in Chrysler. It was, in fact, a clash of national and corporate cultures.
Looking back to learn from that experience – managers and employees of both Daimler and Chrysler were completely unprepared for the significant hurdles their respective cultures would present. No one anticipated that Daimler dealers wouldn’t sell Chryslers and that its engineers wouldn’t share a chassis with Chrysler.
Signs of culture clash were apparent from the beginning: Chrysler’s executives flew coach to meetings in Germany, while their Daimler colleagues came to the US in first class. Then, like now, smart senior executives somehow failed to acknowledge the need to plan for cultural due diligence while taking care of financial and facility planning.
Marchionne’s plans overlook the cultural impact of having integrated management teams, consisting of Italian automakers and Chrysler management made of union and government officials, which will certainly sink this deal. Unlike Daimler, Fiat intends to invest no money of its own. Of course, it wasn’t the absence of German technology that sunk the DaimlerChrysler deal. It was, rather, culture clash that did the deal in.
- Mike
