Lessons from Iaccocca one of America's most respected business professional

After a long time, I decided to read Iaccoca’s autobiography again as several years ago when I was an aspirant to do my MBA, somebody told me this book was a good start. It did make some sense back then but it had even more sense now. Clearly reading the book the second time, you do realize the man has a very large ego and most of the book is written in first person, it takes pot shots at opponents and glosses over personal failures. Although it is an engaging book, it is not very objective and projects as Iaccoca as a superman. In my mind, the most objective business book written by a corporate manager must be ‘Who says Elephants cannot Dance?’ by Louis Gernster the CEO of IBM who oversaw the reinvention of the IBM business strategy in the late 90’s.

Who is Lee Iaccoca

Iaccoca was the son of an Italian migrant who went on to become the president at the Ford motor company, he was subsequently fired from his job at the age of 54 as a result of differences with the CEO and owner Henry Ford Jr. Instead of going home and enjoying retirement, he took over the reins of a financially struggling company Chrysler by taking a loan bailout from the US government and made it up and running again. This bailout package which has become so common in today’s economic scenario was extremely controversial in the early 80’s. One ironic fact, when Iaccoca testified before congress for a bailout, one of the staunch opponents was then chief executive of Lehman Brothers on the basis that a bailout was against the principles of free market economy. It is amazing indeed how times change so quickly.

Lessons for Professionals

Need for a good boss – It is very important to have a good boss to look up to. A good boss not only helps you to get the best of your professional capabilities and also helps the organization to be more profitable and sharper to handle competition.

Data is important but avoid analysis paralysis - Iaccoca is a believer in having good data and research work but it is not a great idea to wait endlessly for some small piece of data when you have more than 80% facts already.

Need for strong corporate governance - During his Ford days, Iaccoca talks about how the management regularly misused the company resources for personal use. The directors on the board often have collusions with the company executives which lead them to ignore excesses in financial planning. The problems faced by Chrysler highlights this fact. This point is pertinent as Iaccoca pointed this out in 1984 long before the Enron and Arthur Andersen scandals which shocked the world.

Lessons for Politicians and Economists

America is investing too much in paper money – Iaccoca in his closing remarks mentions that America is slowly moving away from a manufacturing and export driven nation to an import driven economy in many key sectors. An obsession with paper money was creating assets on paper instead on direct investment in the American economy. This point is well made as America has plunged into the subprime crisis and secondly the FIIs have been fuelling the economies of developing countries like India, China, and Brazil instead of strengthening the job market in the US. (Not that I am complaining about it, the IT industry boom has helped several professionals including myself to make a living and put India on the global map)

The debate about capitalism versus communism is dead- In the 80’s when Chrysler Corporation, the third largest American automobile company went to the government for a bailout package; it was severely criticized in the media and financial circles that it is a bad precedent. Now after the failure of the USSR in the later 80’s and the American economy meltdown in 2008 now question of taking extreme stands on capitalism versus communism is futile. You need free markets and competition but it has to be coupled with checks and balances in form of an industry regulator.

End Note

In the book it is mentioned, in 1980 when Chrysler was undergoing the financial crisis and was in line for a government bailout, the stand-up comedian Bill Cosby made a joke on the company's financial condition. "A guy was so mean... so mean that he called up Chrysler and asked them how is business?”

Two days back, Conan O Brien on the tonight show said“You know why Chrysler’s cars are the safest in the world, because most of them don’t leave the dealer’s store anyway”

The greatest lesson from history is that it repeats itself because men do not learn lessons from it.