Chrysler Steals Toyota's Competitive Advantage! Not.

Big news here: James E. Press, formerly the highest ranking Toyota North America executive, is now co-president at Chrysler. The article mentions that Toyota North America is not fazed, and they promptly replaced Mr. Press with a Japanese executive (I predict this is a temporary move). The Toyota Way, normally defined as an approach based on principles "which emphasize employee involvement and continuous improvement." This is contrasted with the top-down management style of Chrysler that relies on a charismatic, strong leader.

So, what will Mr. Press bring to Chrysler? After all, hiring him is a sign that the private equity company that bought the automobile manufacturer probably isn't going to strip it down and sell it. So surely Mr. Press has talents that fill a gap.

I don't think it will be teamwork and continuous improvement. To do this, he'd need a team that fits the Toyota culture. And he'd need some control over manufacturing. As for teamwork, he's got to fend off Robert Nardelli, Chrysler's new CEO, recently of Home Depot. Ah, now you see. Yes. This is the guy who got the golden parachute, earning millions and outraging just about everyone but his family, even though he eviscerated the Home Depot customer experience, hammering down its customers' satisfaction levels (see here), and sucking the wind out of Home Depot's stock.

Oh, sure, Mr. Nardelli shouldn't take the blame for a slow housing market. Right. (I hope you can hear my sarcasm.) When people buy houses, they use Home Depot. When they don't buy houses, they use Home Depot to fix up the one they're keeping. How was Lowe's stock doing during his tenure at Home Depot? Look at what Google Finance tells you in the chart below.

Lowe's has a strong reputation for delivering a great in-store experience. How important is that? New Home Depot CEO Frank Blake has reversed the company's slide in marketshare loss, even though the housing market it truly in crisis. How? Improving the customer experience. See here.

OK, back to how Mr. Nardelli's track record at Home Depot presages his approach at Chrysler. What was his mantra while managing things at Home Depot? GE style top-down management (certainly as authoritarian as Chrysler's existing culture) with continuous improvement. Any guess what mantra he'll use at Chrysler as CEO? Probably the same thing. Probably with the same results. Improvements in his way of thinking probably included things like profit per employee. Easy to make that go up by firing your front line. That's a sure what to annoy Home Depot customers. While I'm not privy to the actual metrics that Mr. Nardelli optimized, I know the result was that he damaged satisfaction ratings and dropped the stock. If he uses similar methods at Chrysler? That's not good news.

With all this as background, Mr. Press is window dressing right now. He can't be much more unless he's able to do what has made Toyota truly strong: Build cars that meet the full range of customer requirements. These include things like solid door closures and green engineering. These are critical examples of how customers filter information about their choices in the market. A door closure that sounds solid sends a signal about the entire care -- and about the entire company. Toyota didn't invent hybrid technology, but they own it in the minds of US consumers (just ask 10 people who invented the hybrid car), because Toyota can credibly claim it and US companies (who invented hybrid technology) cannot credibly claim it. Facts matter less than perceptions.

That is what has driven Toyota: they understand market perceptions. And even though they surely believe in continuous improvement, they are not competing at the margins. Little changes and improvements are fine, but Toyota wants the customer for life, and to do that, they think in a much bigger picture, and over a longer time frame, than American automobile manufacturers do. Period.

Mr. Press is likely to be on the sidelines watching his co-president Tom LaSorda, who heads up manufacturing, and Mr. Nardelli wring "profit" out of the company to bolster shareholder value. Will Mr. Press ever get in the game to build a company based on a true customer focus? I hope so. And if he gets this mandate, he's got his work cut out for him. It will require a change in culture, information sharing, processes, strategic planning and financial investments with long time horizons ... in short, a lot of stuff that private equity firms don't know much about.

We need to look at Mr. Press' appointment with a jaundiced eye. After all, to really bring his value to Chrysler, he's really got to run this show. And, the measure of his success should be winning back the credibility of the company in the eyes of consumers.

It's not about making good cars -- Chrysler already does that. It's about building a company that global consumers can be passionate about. From this, profits can come. But don't put profit down as his main measure of success. It's long past time when corporate decisions were driven from transaction data, or from (at best) customer data poorly integrated into service, innovation and touchpoint management. It takes a really sophisticated company to understand what drives profit for their target markets. And it takes a company that can work as one. Looking at the top of Chrysler's management, I see problems ahead.

[NEWS FLASH: Chrysler has just named Phil Murtaugh as CEO of its Asia operations. See here. Phil has been running SAIC Motor, the huge car maker from China that, along with companies like Chery (think "Chevy knockoff" and you're most deeply correct) and First Automobile Works, has been bringing the Chinese car industry up really fast. In the next few years, the efforts of companies such as SAIC will be obvious in every major Western market. I think Phil is going to really help out Chrysler, by forcing the executive team to look at customer-relevant quality (the localization part of globalization) as well as helping them figure out the labor arbitrage issues. I hope he gets close to the US labor unions who have so much at stake with Chrysler's success.]