To avoid confusion with the cat, Big Dog has his name firmly stamped on his bowl – and I’ll bite anyone who tries to eat out of it. But I remain unconvinced that in a modern and dynamic economic environment, having your name on the building (unless you started the business yourself) gives you any reason at all to control what goes on within.
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We all know of the controls at Porsche that with the Wisdom of Solomon are designed to prevent members of the family achieving senior operational positions. This rule was established when it became clear to the older generation of the family that allowing the youngsters to fight it out for control would be detrimental to the Christmas dinner and the firm.
And the result? Ferdie Jr. became CEO of VW, while Porsche is the most profitable mass vehicle producer, by unit, in the world! Now don’t get me wrong, I’ll always believe that little Ferdie was a better engineer than CEO but fair play to him, he got to the very top on his own and family links could only have got him so far. I’m also sure that having a stable family oversight of the hired managers at Porsche has been beneficial – but the family can’t meddle day to day and the professionals run the business.
We’re also all aware how the Quandts and the Peugeot family seek to take a none-interventionist approach to the immediate movements of their companies, nudging the business in the direction they wish, but leaving day to day management to the professionals. This seems to give a company ownership stability but with management dynamism. At the same time, senior personnel know that if the family are happy, they have achieved 70% of what needs to be done and don’t need to mortgage next year’s profits to hit an unrealistic short-term goal. It often seems that the stability of family ownership allows for a long strategic game to be played, bringing the benefits of a cohesive planned future.
So if a highly successful business model for family-controlled auto companies is that at Porsche, BMW and PSA, why oh why do some of the least successful companies around still insist on the outdated and frankly potty concept of propelling family members into key senior management positions?
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By GlobalDataLet’s explode one myth from the beginning. I often read of the success of family members at companies like Ford, the articles lauding their never ending move towards the top and history of success, but this is possibly just so much tosh. Could you imagine being a middle manager who finds themselves with a Ford on the team? They may struggle to achieve breathing and walking, but are you going to criticise? One wrong move and you’ll be the area manager in Nebraska! Anyone else feel like criticising – well, there’s always Oklahoma? Not surprisingly these people are bullet proof and normally surrounded by toadying acolytes looking for a free ride on their coat tails.
Billy Boy Ford might well be one that springs to the more cynical mind. If he had got the top job at GM or DC, I would frankly be impressed – very impressed. But he didn’t, he took the cowards’ way out and rose to the top in the family business – and his performance speaks volumes. Lord help us there are more Fords following, all with glowing careers according to the articles I read. Let’s hope they have more about them, cos having seen Billy Boy in action I realised that as well as lacking in the charisma department he’s gradually running Ford to permanent junk bond status. Apparently he looked at a car once and ordered a rise in production – the market? the analysis? the pricing? Nah, he liked the looks – brilliant! (Yep, you’ve guessed it; you have more chance of seeing a pot of gold under a rainbow than this particular hit model!)
But while in many companies the lack of strategy at the top would be seen as a weakness and the shareholders would be getting frisky, all is silent at Ford because Billy Boy has the job till he gets bored of going to work. Get a life Billy Boy, and a proper job as well!
But if you view Ford as a possible example of nepotism gone mad, then there is surely one company that might be about to make it look like a rational and professional company. May I introduce you to, ahem, Fiat! Now against my better judgement, I’ve developed quite a fondness for the new senior team being assembled at Fiat, which perhaps is because they all seem to be non-Fiat. These are no nonsense business or car guys, especially the combination of Marchionne and Kalbfell who are giving the company new impetus that it deserves. There is some good product about like the Panda and new 159 (though the whole marketing team should be taken out and shot for the dreadful job they do with these products) and a belief in real success is now being openly talked about. But I have a theory that the same dark forces that helped to leave Fiat a basket case are about to come to the fore again.
Let’s debunk a myth. Many have described Agnelli as the man who saved Fiat. Cobblers! He simply ran a company that to all intents and purposes was Italy PLC and as a result exerted enormous financial and political power, in a country with poor governance both politically and financially. As a result, Fiat hid behind a wall of protection, and developed products that were fair to middling and rusted to hell. Once exposed to a real economic situation in the 1990s, the decrepit morass of the over political and frankly civil service style corporation that was Fiat has shown every indication of following MG-Rover to motor heaven. Agnelli displayed all the delicacy of touch that the management training course for an Eastern Front officer might lead to and left Fiat a shambolic mess. The management was seemingly entirely based around politics rather than achievement and anyone with talent who might be threatening to some half-witted senior exec seemed to be held back or leave.
Since his demise, a new professionalism seems to be flourishing and the shoots of recovery appearing. But in a recent interview, one of the Elkann brats was rattling on about how he felt he could help at Fiat. Worse yet, one is already in the company doing something in brands. And he’s been promoted! I kid you not; I think it won’t be long before we see one of these twits starting to want to play with the train set. And as the article made clear, for the younger brat his life to date seems to have involved sailing in yacht races on grandfather’s boat (with crew of course) and generally doing, um, well. I guess he was breathing cos you have to do that yourself.
And what will the new management team think when some youngster whose great achievement to date has been birth, starts to tell them what to do? Exit stage right I suspect. The brats can then surround themselves with the sycophants that surrounded Agnelli, bankers coming to their door to try and get their hands on the family fortune, government to get money, jobs and power and everyone else to try and be part of the team – a very none critical team. But real advice? Real acumen? This is Italy, and as long as the country revolves around the company, it will survive, but those days are fast ending. The Italian banks are being bought; the country is locked into EU regulation and the tide of international commercialism has made underachievement not an option.
The company is on a knife-edge and only by leaving everything to a real and truly motivated management team can it survive. If the Brats want to rule from afar then fine, but I suspect they have the arrogance of royalty, and no concept of what they are really capable of and competent to do.
If these woefully underachieving little rich kids really believe that they are capable of dynamising an ailing multi-national industrial conglomerate, they will have inherited more than suits and wealth from their grandfather – they’ll have his brains and business competence as well. Viva Italia!
– Big Dog
The strong views expressed in this column are exclusively those of Big Dog and are not necessarily reflective of those of the publisher, editor or other members of the just-auto editorial team. just-auto gives Big Dog an occasional platform (and dog biscuits).
