On Saturday 21 July 2018 an announcement from Fiat Chrysler Automobiles (FCA) reported that their chief executive officer, Sergio Marchionne, had experienced complications following surgery and would be unable to return to work. This was an undoubted personal tragedy for Marchionne and his family – he had been planning his retirement for April 2019, it was also a huge shock, not just to the global automotive industry, but also the world of Formula 1 where Marchionne had made a big impact as CEO of Ferrari, despite his wider responsibilities across FCA.
In an accompanying statement, FCA Chairman John Elkann made the following comments: “..Sergio has always made a difference, wherever his work took him and in the lives of so very many people. Today, that difference can be seen in the culture that he introduced in all the companies he has led, a culture that has become an integral part of each and every one of them. The succession plans we have announced, even if not without pain from a personal point view, mean we can guarantee the maximum possible continuity, preserving our companies’ unique cultures.”
It’s interesting to note that his comments are not about profit ratios or debt reduction or earnings per share – all things that Marchionne did improve at FCA, but culture – if you want to change an organisation you have to change the culture, all the edicts and mission statements in the world won’t make any difference, as Peter Drucker once observed – ‘culture eats strategy for breakfast’.
I have written a case study on Ferrari that I use for teaching strategic change and the importance of culture – ‘Transforming the Prancing Horse’ – it focuses on how the embedded historic culture of Ferrari was changed by the efforts of John Barnard, Luca di Montezemolo, Jean Todt, Michael Schumacher, Ross Brawn and even Enzo himself to create the most successful Formula 1 team in the history of the championship. One of the aspects in the case is that Enzo’s death in 1988 was the trigger for Fiat’s ownership in Ferrari to increase from 40% to 90%, this subsequently led to a number of Fiat executives being ‘parachuted in’ to run Ferrari with disastrous consequences. These executives attempted to micro-manage the team, driven by a concern for losing face this led to a dysfunctional organisation that was frightened to innovate as everyone was watching their backs and worried about losing their jobs. It took the appointment of di Montezemolo in 1991 to change things and along with Jean Todt to provide the platform for the Schumacher years when Ferrari won the constructors’ championship for six consecutive years from 1999 to 2004.
I have to admit that when I heard that Marchionne had taken over as CEO of Ferrari and was now undertaking a detailed review with all key staff himself, I assumed that history was about to repeat itself. Here we had a car executive (although much of his experience was outside the car industry) getting involved in micro-managing an F1 team, look at what happened to Ferrari in the late eighties and Jaguar Racing in the early noughties, it could only end one way. But it seems I was wrong. Under Marchionne’s guidance a new culture seems to have developed from the post 2004 Ferrari which for several years had appeared to be slipping back into some of its old dysfunctional habits, we now have Ferrari coming up with a continual stream of radical concepts, some pushing the limits of the regulations, some going a bit beyond, but no different from the incessant quest for performance that we see from championship winning teams. So is this change of culture due to Marchionne? The honest answer is I don’t know, but the evidence is that whatever has happened under his stewardship Ferrari have been able shift their culture to make the team more innovative and closer to the leading edge of F1, just as they were in 1999-2004.