Sergio Marchionne first came to Fiat in
2004. Europe’s sixth biggest automaker was
losing €1bn a year and nearly went bankrupt
on several occasions. In 18 months, the
Canadian-Italian returned it to profit and has
subsequently been heralded as one of the
most effective global CEOs in the world.
Simon Hobbs: You believe that success comes down
to people being able to make cultural changes
in the organisations. What are your principles
of leadership?
Sergio Marchionne: Primarily, Fiat is a total and complete
meritocracy. No one here has a right to lead
unless he earns that right. We review our
leaders twice a year but paper only takes you
so far. The real issue is having continuous
interaction with the issue of leadership. Also,
being able to lead people without being able
to bring about change is not worth much.
SH: Fiat has borrowed from Toyota the World
Class Manufacturing (WCM) initiative: zero
waste, zero deficiencies, zero inventory.
SM: I’m not ashamed to have taken it – it’s
not our idea. It’s worked very well for Toyota.
We’re a way from there yet, I have to be
honest, but we’ve embraced the concept.
SH: What sort of upbringing did you have? You
were born in 1952 in Italy, the son of a military
officer, and emigrated quite young to Toronto.
SM: I had a very normal upbringing. My father
had become disenchanted with the way things
were in Italy and wanted to move away. I was
very much into the arts – I have a passion for
classical music, Russian literature and opera.
I started in theoretical physics, moved to
philosophy, then business, then law. I wanted
to become an international businessman.
SH: Why is it that in your thirties you rarely
stayed in a job more than two years?
SM: If you get very accustomed to a particular
organisation’s culture it’s actually quite
damaging. I was exposed to a variety of
businesses, business conditions, and styles
of leadership. And I moved up every time I
moved – not just from a career standpoint but
also in terms of becoming more international.
SH: Would you tell young people to do this?
SM: Yes, I would.
SH: In June 2004 when you became CEO of
Fiat, did it take a lot of persuasion? At the time,
Morgan Stanley suggested that relaunching
Fiat would be the hardest job in the world.
SM: I’ve been told that by a number of other
bankers that I met around that time.
SH: Fiat had lost €8 billion over four years
– why did you take the job?
SM: The decision to come to Fiat was
relatively easy. When Fiat ask you to help
– and I consider myself, at least in my origins,
to be Italian – then you just do. It was like
coming to help resurrect the national icon
of Italy. But I had no idea, even though I was
sitting on the board at the time, of the sheer
diversity of the operational problem that
plagued the company.
SH: So how did you approach these problems?
SM: I spent the first 50 days travelling,
meeting people, seeing the plants. I listened
a lot, I asked questions, I was shown the
business and the plans. At the end of the
50 days I sat down with a group of senior
leaders and crafted the next four years.
SH: Were you building on something that
existed or did you have completely new ideas?
SM: What we took to the board was an
operational plan to fix this business. There
were some existing stop-gap measures to
bring down the level of debt but they didn’t
fix the underlying problems.
SH: So you moved in decisively and also took
over as Auto-CEO, as well as group CEO, kicked
out the guy who was there for 15 months – then
what did you do?
SM: We took out about 2,000 white collar
positions, which took a while to negotiate with
the unions but we got it done. We promised
that if we were successful, we would rebuild
the business and start rehiring, which we
did. I think it was a wise choice of the unions
to support us.
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