Creative Destruction

Creative Destruction – words most often associated with today’s world of newly intensified innovation. A term first coined by economist Joseph Schumpeter in the 1940s, it’s only in much more recent years that business leaders have come to understand its wisdom.

Nowhere is this understanding more clear than in the recent appointment of Robert Nardelli to the helm of Chrysler. Amid a great deal of criticism over his tenure at Home Depot, Nardelli appears to be a perfect choice for Chrysler.

Most experts agree that Chrysler will need to excel on many fronts: a razor-sharp discipline, a take-no-prisoner’s attitude toward cost cutting and a genuine willingness to destroy before recreating will be at the forefront. While many people have accused Nardelli of destroying the culture at Home Depot – much as they’ve accused James McNerney of destroying the innovation culture at 3M – I would argue that perhaps neither destroyed too much of anything in their first forays outside of GE. In fact, they may not have destroyed enough, or done their destroying creatively enough, and they were replaced before they could meet their boards’ high expectations. Then again, neither of them had a predecessor like Jack Welch, who’s own predecessor left him behind instructions to “blow it up.”

The expectations for Jeff Immelt, Welch’s successor at GE, were pretty clear. In the case of McNerney and Nardelli, they both took the helm of other companies, not the one where they earned their reputation for excellence. Therefore, they were more challenged to build a reputation. A la Home Depot, Nardelli has been accused of being a “command-and-control” kind of leader. Great leaders ARE command and control types, when the situation demands it; and they’re great listeners and empower when the situation demands that. Jack Welch had a great reputation for empowering his people at GE, but that only came after years of being known as “neutron jack” in the 80’s when he cut literally hundreds of thousands of jobs at GE.

I suspect we’ll see something more neutron-like from Nardelli during his Chrysler tenure. If you think he broke up the culture at Home Depot, Chrysler needs a real turnaround, and I don’t think Nardelli will be nearly as timid this time around. And maybe this will buy him a little more patience from those to whom he answers as he transforms and rebuilds his new company.