Fiat | Course Paper

hbr.org | December 2008 | Harvard Business Review 45

FOUR YEARS AGO, Fiat was a laughingstock. When-

ever you opened a newspaper in Italy, there was

another embarrassing story: Fiat had lost more

money; its new car had ﬂ opped; a strike was on

somewhere. Even more worrying to me was the

fact that the company had gone through four

CEOs in three years. Imagine showing up in June

2004 and being the ﬁ fth guy to try to resuscitate

what appeared to most people to be a cadaver.

And just imagine what top management thought. These

poor fellows saw this executive (almost a foreigner – I’d left

Italy in 1966) coming from outside the car industry to be their

new leader. They all sat there thinking: “Here we go again.

We’re going to have to teach this guy what the business is

about, and if he ends up being like the last one, we’re screwed.”

I could see it written all over their faces. I would have felt ex-

actly the same had I been in their shoes.

What’s more, this is an incredibly tough business. I used to

think that chemical companies set the benchmark for value

destruction, but the auto industry is certainly up there. With a

few exceptions – Toyota in Japan and Porsche in Germany – car

companies have consistently destroyed value over the years.

Fiat was one of the worst offenders.

We’ve come a long way since then. Our bottom line is solidly

in the black, and our latest car – the Cinquecento, one of the

smallest compacts in the world – is the talk of the industry.

Getty Images

Fiat’s Extreme Makeover

My job as CEO is not to make business decisions –

it’s to push managers to be leaders.

First Person

BY SERGIO MARCHIONNE

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First Person Fiat’s Extreme Makeover

To complete that journey, we’ve had to

make some major changes to the way

the company runs. We’ve abandoned

the Great Man model of leadership that

long characterized Fiat and have created

a culture where everyone is expected

to lead. My job as CEO is not to make

decisions about the business but to set

stretch objectives and help our manag-

ers work out how to reach them.

Finding and Engaging with

New Leaders

From day one I recognized that Fiat had

a leadership problem. Traditionally, all

important decisions in Italian compa-

nies are made by the CEO. It probably

worked ﬁ ne as a leadership model back

in the 1950s, but today it’s quite unsus-

tainable. A business like Fiat is far too

back from my ﬁ rst trip to our operations

in Brazil and Argentina, we probably

made 20 leadership moves to promote

As I give people more responsibility,

I also hold them more accountable. A

leader who fails to meet an objective

should suffer some consequences, but I

don’t believe that failing to meet an ob–

jective is the end of the world. Markets

and economies aren’t perfectly predict-

able, and in an organization this size,

you can always offset a failure here with

a success there. But if you want to grow

leaders, you can’t let explanations and

excuses become a way of life. That’s a

characteristic of the old Fiat we’ve left

far behind.

Setting Targets but Sharing

Decisions

In addition to ﬁ nding leaders, I had to

get people energized around a clear and

ambitious target. When I announced

IDEA IN BRIEF

In 2004, Sergio Marchionne 

became the ﬁ fth CEO in three

years at the struggling Italian

automaker Fiat.

He identiﬁ ed a new generation



of leaders, set ambitious tar-

gets, and pushed the company

to be less inward-looking by

benchmarking against compa–

nies like Apple.

As a result, the time to market



for a new model was slashed

from four years to 18 months,

and Fiat’s bottom line is now

solidly in the black.

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