So long, Bob Nardelli. Today you hand over the reins at Chrysler to Robert Kidder. You are now 2 for 2 in terms of showing how damaging a Vulcan mindset can be to the management of a consumer business.
First at Home Depot, now at Chrysler, you displayed a lack of insight into the relationship between a company’s economic costs and the level of customer benefit that it delivers. To you, it would appear that cost cutting is a philosophy. What earns you my nomination as a Vulcan is your failure to discriminate between “bad” and “good” costs.
“Bad” costs are those that deliver an insufficient level of benefit to customers so that cutting them improves the ratio of customer benefit to economic cost (customer benefit declines but economic cost declines proportionately more).
But you have shown a frightening propensity to cut “good” costs – first in replacing the experienced hardware guys who used to man (yes, generally, they were men) the aisles at Home Depot; and, now, in starving the product development pipeline at Chrysler (did you really believe that having only four new models in the next five years was a viable business strategy?). Both are classic Vulcan errors – they are based on the failure to understand the nature and scale of the customer benefit that these costs support.
Question: On what planet does it make sense to severely damage your ability to deliver customer service and product innovation?
Answer: On the planet Vulcan where superior beings can navigate unerringly through the aisles at Home Depot and never require guidance about which product they need. Furthermore, these superior beings regard cars as nothing more than a functional device to get them from A to B.
I have news for you, Mr Nardelli – this is the planet Earth and we humans value things like service and styling. And we will continue to take our business elsewhere when Vulcan thinking like yours destroys the value proposition of the brands that we once loved to buy.
