To: Robert L. Nardelli, chief executive of Chrysler
From: Jack Flack
Re: Saving yourself by saving Chrysler

Yesterday provided the simple, noisy theater required to get you what you needed. They pretended to strike, and you pretended to cave. In reality, the $11 billion you paid to get the health-benefit liabilities off your books will soon look outrageously cheap, and limiting job guarantees to the lifetime of the individual products will give you far more maneuverability than anyone is reporting. You were right to allow the U.A.W. to claim victory while you quietly suppressed a smirk, knowing you have just secured much greater flexibility for Chrysler.

With that accomplished, it’s time to get focused on the bigger game. I assume that you’re still furious about the way the story of your time at Home Depot has played out and that you crave redemption. With that in mind, I recommend seven courses of action:

Understand what’s achievable. Your friends tell you that you are a misunderstood genius. Virtually everyone else on the planet views you as a tin-eared tyrant and shameless champion of corporate greed. That part of your reputation is indelible. So act professionally, but do not embarrass yourself by pretending to be nice.

Instead, you must focus on the recent criticism that you are a poor business strategist, given that you barreled down the wholesale supply path with H.D. Direct  while also dismantling the service culture at the retailer. That label can indeed be reversed. In fact, it must be. Because if you fail to do that, the world will conclude you were never really C.E.O. material after all, and you will be permanently tagged a prickly, poisonous flower that could flourish only at a lower level and within the unique atmosphere of the old G.E. hothouse.

Free-agent dream teams seldom work in business, and you need to restrain your hands-on instincts and confine your role to the tiny tip at the very top of the pyramid, focusing on high-level strategy. The Cerberus time frame for the endgame of its Chrysler acquisition is four years, and your tenure should be half that. Your job is to make the big moves that get the business model properly structured and then turn it over to a popular auto industry guy, either Press or LaSorda.

Chrysler can’t fully grow its way back into viability, and belt-tightening will be insufficient. Instead, you must create a dramatically different cost structure by paring the company down to its three assets of value: Chrysler Finance, the dealer network, and your brand portfolio. Everything else must be off-loaded, dropped into an alliance, or shut down.

Frame the crisis—and then the solution. Establish the context by declaring that the world changed long ago and that Chrysler teeters on extinction. Point to a long history of woes, and make the case that Chrysler will never escape from recurring crisis until it is completely recast. Your language should sound something like this:

“Folks, it’s much, much worse than we thought. Our business model is fundamentally flawed, and it has been for decades. Iacocca couldn’t fix it, and neither can I. If we want Chrysler to exist a decade from now, then we are going to have to drastically change our basic composition. We can create a great business, but we will have to move boldly.”

Whatever cuts are required, make them early and cluster them as tightly together as possible. If you don’t do that, it will appear that you are randomly hacking away until you happen upon a sustainable break-even threshold.

In reality, you’re about to transform an old-line engineering and manufacturing enterprise into a finance operation fronted by a branding and distribution company. Call the strategy “Embracing Our Strengths.”

Sell superiority. The Chrysler brand must shift to aggressive comparative marketing versus imports. A decade ago, all three U.S. automakers had effectively closed the quality gap with Japan and Europe. But they have since collectively committed marketing malfeasance by failing to close the perception gap—mainly because they were pitching generic hipness, irrelevant patriotism, or vague claims of luxurious style. Perception can no longer be allowed to trail reality. So you must explicitly stake out points of superiority on the most consumer-relevant quality and performance aspects of your vehicles. You can’t simply say you’re as good as imports; you must say how you’re superior. The tagline “Engineered Beautifully” plays to your historical strength as the industry’s fashion leader, but it will get you nowhere unless you fix the quality perception. Instead, go to “Engineered Better,” and then challenge your product guys to make it more credible every day. The dealers will love it, and the consumers will finally begin to reconsider. You must go fast, as Ford is already headed in that direction.


Leverage the dealer network. Remember that while your dealer network is economically strained, it is also an asset that cannot be replicated by a newcomer to the U.S. auto market. Thus, you should accelerate the alliance conversations with Chery. After you’ve completed the layoffs, announce that you have cut a long-term deal to put Chrysler’s skin and brand names on vehicles from China’s premier automaker. Price those vehicles to win at the low end. As you pump them out through your network, you’ll strengthen the marginal economics of both Chrysler and your dealers.

Limit your exposure. Once you’ve framed the crisis and articulated the strategy, you should master the Cerberus art of inaccessibility. Let LaSorda talk to labor, and let Press manage the dealers. Sign the product guy you’ve been chasing, and let him be the public evangelist for Chrysler style. Then, when the business model starts coming together about a year from now, offer exclusive access in exchange for a BusinessWeek cover story. Given its unquestioning love for anything G.E., you’ll probably get the cover headline you want. That will do much to reset your legacy, and you will then need to go quickly to the next action.

Get out on time—or even a bit early. Once you have made the big moves, there is no benefit in lingering, only liability. Stand tall in the chariot as you take a short, fast victory lap, but show complete graciousness by repeatedly saying, “It’s been an honor to lead the team that has restored a great American institution’s long-term viability.”

Do it again. Well before you leave Chrysler, ask Feinberg to buy another high-profile property with a broken business model and then give you the task of sorting it out. Ideally, go straight from Chrysler to the new gig, so it’s clear you are leaving because Cerberus wants the same kind of turnaround at the new company. Execute that assignment just as cleanly and then retire as a hands-on executive.

Do all that, and your reputation will be defined by your last two chapters, not the earlier ones titled “G.E. Bridesmaid” and “Overpaid Autocrat.” The orange aprons in Atlanta will still curse you, but the single-sentence summary of your broader legacy will read, “Bob Nardelli was the rough-edged realist who administered the tough love required to save two American business icons.”

P.S. Ask Welch to quit telling everybody you got raw deal at Home Depot. That does you even more harm than it does him.