Lee Iacocca is a transformational leader who took over Chrysler when it was on the brink of bankruptcy in 1978 and transformed the corporation’s culture to turn it into a profitable venture.
The first turnaround
With a vision of turning around Chrysler, Iacocca started by focusing on the three pillars of people, product and profits. His trait of promoting intellectual stimulation led him to first deal with Chrysler’s inefficient management. He fired a huge number of people, replacing them by a competent team which included – his former Ford colleagues at managerial positions, as well as experts in production quality from GM and Volkswagen. Labor was next dealt with but knowing that ‘telling’ style won’t work. He first hired president of Chrysler’s labor union to the board of director. Then he used the ‘selling’ style by first reducing his salary, and then giving the labor an option of cutting their salary or leaving Chrysler. To deal with losses, he convinced the federal government for a $1.5 billion loan guarantees largely by taking the onus of Chrysler’s turnaround. He assured the government that the steps being taken would reinstate Chrysler. Being a charismatic leader he engaged in emotion inducing behavior citing the jobs of thousands of Americans at stake. Alongside dealing with finance, Iacocca understood that a strong, innovative product lineup was needed to restore customer confidence as well as to survive. Under his leadership Chrysler produced a new range of small front wheel drive economical car line the K-car. These cheap low cost cars with their excellent fuel economy and improved standards of economy helped Chrysler revive. Iacocca also launched a major new advertisement campaign for their products in which he took centre stage demonstrating his inspirational motivation skills. He appealed to the American public’s sense of patriotism portraying Chrysler as an American company leading the way in innovation and their own recovery while also...
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