Can the Poacher turn Gamekeeper?

Chrysler the US car maker now owned by private equity group Cerberus has announced a string of high profile appointments. First was Robert Nardelli late of Home Depot and famous for extracting a £103m severance package. His appointment is seen as a sign that Cerberus are intent on fast and radical restructuring as Nardelli has a reputation as a tough negotiator (just look at the severance package!) and decision maker.

Then last week Chrysler announce that James Press, President and CEO of Toyota North America and the first non-Japanese to sit on the company’s worldwide management board, is to join them to lead Chrysler’s sales and marketing team. This is the second top executive Chrysler has poached from Toyota. Last month they hired Deborah Wahl Meyer, previously vice-president of marketing for Toyota’s luxury car division Lexus. Then Chrysler announces that Jim Murtaugh, head of GM’s China business is to head up Chrysler’s Asian business.

Commentators see all this as signal of how serious Cerberus are about turning round Chrysler and doing it fast. The appointment of Press in particular who joined Toyota in 1970 and oversaw their dramatic growth in the US is seen as quite a coup. Jim Hall, an analyst at AutoPacific told the Bloomberg news agency “Press understands automotive sales better than 98% of people involved in the business. More significantly, he has real product savvy, something that Chrysler needs”.

Whilst both these recruits from Toyota bring in talent and expertise that Chrysler sorely need note that they are also both “front end” appointments. Toyota’s success is built on the whole organisation from front to back and back again operating to the highest standards of excellence and Chrysler haven’t been near that ever. The research on which our Competitive Strength Report is based demonstrates clearly that being excellent in just one or two dimensions is not enough to achieve more than marginal additional pay off. These ex-Toyota appointees will make a difference but on their own they are unlikely to make “all the difference”.

What is more Press and Wahl Meyer are used to the backing of a business that consistently delivers on the promises they make to customers and will soon grow frustrated with a business that does not. This will happen even quicker if they find they are unable to directly influence and implement change throughout the whole business.

Applying Exceeding Expectations principles our perspective on this is simple. If Nardelli carries out the restructuring and then bows out leaving a good foundation for Press and others to build Excellence as standard throughout Chrysler then this could work. If it does then the people who should really worry are Ford and GM. However if Nardelli hangs around then it won’t get much further than the restructuring.

Cerberus may decide to cash in all or part of their holding in Chrysler around the time the numbers look better following the restructuring (and they will for a while).

Guess which of the above scenarios would suggest to us that the shares would be worth buying and which suggests don’t touch!

Either way we suspect that the one company that won’t lose any sleep is Toyota.