From Coffee Break to Chrysler’s Break

When Starbucks CEO Howard Schulz announced last month that all 7,100 shops around the country would close at 5:30PM on February 26 for a three-hour, company wide re-training session (just one measure Schulz was taking to boost a sagging stock price), Bob Nardelli must have been paying attention. Maybe it was even during those caffeine-deprived three hours that the Chrysler CEO first got the idea for the memo he issued on Thursday announcing that he had decided to expand the traditional model changeover period to a “two week mandatory vacation” — a company-wide shutdown.

The complete text of Nardelli’s badly written memo was made public right away.

Dear Employee,
A willingness to try something new has proven to be an important catalyst as we transform into The New Chrysler and, in many corners of this company, new ways of doing business are firmly taking root. That’s not just because of new leadership; it’s also a product of an “Own It” mindset. As a private company, we all need to think like owners and do our part to accelerate Chrysler’s recovery and transformation.
One idea that we have taken a fresh look at is the implementation of a two-week mandatory vacation shutdown. This year, in order to create better alignment and efficiency across organizational lines and boost productivity, Chrysler will use a corporate-wide vacation shutdown for the weeks of July 7 and July 14. While some operations will need to work during the shutdown to support business-critical activities and others may need to maintain minimal support staffs in place, most organizations should use this two-week time period to schedule employee vacations.
Employees who have already used their earned vacation days, have insufficient earned vacation for the year or are otherwise committed to noncancelable vacation plans during other time periods should work with their local management to make alternative arrangements. We ask that you approach this idea with an open mind and a team spirit. It’s going to take your cooperation and teamwork to achieve success.
Thank you in advance for your cooperation and continued support.

Several bloggers and auto-industry watchers rightly took Nardelli to task for sending an unambiguous distress signal to Wall Street and for hiding behind management speak when the occasion called for candor and plain speaking.

To be sure, the claim that Nardelli and his team will “create better alignment” and “boost productivity” by shutting down operations for two weeks is patently absurd, as if alignment and productivity are calibrations made to a machine during idle time. Or as if during a two week hiatus you can retool an industrial operation and a sales organization in the same way Schulz hoped to train coffee jockeys to make a better espresso in 3 hours.

The absurdity is compounded by Nardelli’s suggestion here that ordering everyone off the premises for two weeks somehow amounts to entrusting them with ownership of the business, or requires from them an “own it mindset.” The phrase is telling, and its provenance is likely the doctrine of “individual and organizational accountability” laid out by Tom Smith and his partners in The Oz Principle. The borrowing may be direct or indirect. The Oz Principle has enjoyed wide acceptance and popularity; its special mix of self-help methods and theoretical persiflage is pitched just right for managers who want their people to act as they would act if they had a real stake in the business. And it’s a lot easier to muster these platitudes than give them a real stake.

But if you are going to muster these platitudes, and you’re out to persuade people to act like owners, it’s probably best not to use the dead, impersonal, and distancing salutation “Dear Employee,” or opt for the passive voice over the active. As if to accentuate those stylistic or rhetorical shortcomings, Nardelli’s letter never once uses the first person singular — always “we” — as if “Bob,” the signatory of the letter, is merely a front man for a decision making group. How does any of that add up to individual accountability?

Maybe it’s unfair to put this kind of pressure on an internal email, but there’s more than bad writing here. If this were simply a matter of management theory once again inflicting its ugly language and conceptual inanities on an office memo, there would be nothing remarkable at all in Nardelli’s note. Management speak provides a refuge from, and a hedge against, hard decisions; and it’s often as sinister as it is cowardly: it’s a way of keeping the truth from people even as you pretend to engage them candidly.

No surprise if there are cynics or cowards in the Chrysler executive suite; but the larger point is that the news this week was really about a failure of leadership at the automaker — or at least of the kind of leadership the present moment demands. Nardelli established his reputation at GE and Home Depot wielding what Joseph Nye would call “hard power,” which consists mainly in threats and inducements. “Soft power,” on the other hand, consists in the ability to attract people and lead them by inspiration; the evidence suggests that Nardelli wields it about as gracefully as Hillary Clinton. Even when he’s trying to be considerate and respectful — please keep an open mind about these new policies — Nardelli sounds wooden, rehearsed, flat.

Is Nardelli just tone deaf? Maybe. For Nye, it’s more than achieving the right pitch. There is a third power — “smart power” — that knows which kind of power, hard or soft, suits which occasion, and how the two kinds of power can be combined and applied in a specific context, to effect change or make people do what you need or want them to do. And in addition to smarts, you also need grace in execution.

Smart power also requires an awareness of history, of the moment in which you find yourself. And there’s no sign at Chrysler of an honest reckoning with history. So while Nardelli’s letter may have been lacking in grace, or downright awkward, because he isn’t accustomed to addressing (or regarding) his Chrysler employees as real stakeholders, it’s also pretty clear that like every other U.S. automaker he is trying to buy time with words, to persist in denial or remain willfully blind, to hold out for just a few more years, rather than see and seize change.

Chrysler along with the entire U.S. auto industry is in dire straits. They are relics of an industrial era and an old economy that has run its course. At the very moment that Nardelli and other leaders should be planning for real “transformation” — how to leverage their existing infrastructure, reorganize their business for the 21st century, and take calculated risks on new post-industrial-era services and technologies — they are exerting their nearly spent powers to stay the course, shine it up, scrape off the rust and call it new.

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