Organizational Culture At Chrysler

Organizational culture

Organizational culture can loosely be defined as the shared assumptions, beliefs, and "normal behaviors" (norms) of a group. These are powerful influences on the way people live and act, and they define what is "normal" and how to sanction those who are not "normal." To a large degree, what we do is determined by our culture.

Organizational culture is similar to, say, regional culture. The same person in different organizations (or parts of the same organization) would act in different ways.

Culture is very powerful. (One example is the cultural change effort at British Airways, which transformed an unprofitable airline with a poor reputation into a paragon of politeness and profit).

An example: Cultural change at Chrysler (1994)

Many companies have turned themselves around, converting imminent bankruptcy into prosperity. Some did it through financial gimmickry, but the ones who have become stars did it by changing their own culture.

Few remember that companies like British Air or Volvo once had a poor reputation. That's a credit to their drastic changes in customer (and employee) satisfaction, quality, and profits.

The underlying causes of many companies' problems are not in the structure, CEO, or staff; they are in the social structure and culture. Because people working in different cultures act and perform differently, changing the culture can allow everyone to perform more effectively and constructively. This applies to colleges and schools as much as it applies to businesses.

In the early 1990s, HYPERLINK "http://www.allpar.com/" Chrysler had terrible customer service and press relations, with a history of innovation but a present of outdated products. Its market share was falling, and its fixed costs and losses were high. Bob Lutz, then the president, wanted Chrysler to become the technology and quality leader in cars and trucks -- a clear, globally applicable vision. A program of cultural change, Customer One, was built around it.

It is also worth noting that quite a bit of the change in culture came from AMC, a much smaller company acquired from Renault. AMC executives and engineers brought the "do more with less," cross-functional methods they had at the unfortunate smaller automaker. These ideas and values were to play a major role in Chrysler's revival; two vehicles designed largely by AMC people with AMC methods were the 1993 Dodge Ram and 1995 Dodge Neon, both runaway successes (though the Neon would be handicapped by executive-ordered "cost saving" moves).

The results were impressive: overhead was cut by $4.2 billion in under four years, the stock price has quadrupled, and the company reversed its slide into bankruptcy and became profitable. A completely new and competitive line of cars or trucks has appeared each year since. New engines produce more fuel economy and power as new cars provide more comfort, performance, and space. They did this with the same people, but working in different ways.

It is important to note now, with hindsight, that the problem with this cultural change program - which afflicts far too many cultural changes - is that it can easily be sabotaged by new management. Chrysler's many gains were lost when the company was acquired by Daimler-Benz, forming DaimlerChrysler and instigating years of poor morale and financial performance. Still, this proves the importance of culture even more - for that is the main thing that changed in 1998.

Involvement of People

When Chrysler was entering its final "golden age," in four years, 4,600 ideas were solicited from suppliers; 60% were used, saving over $235 million. Customers were also called in during "virtually every stage" of the development of new models, to provide suggestions (rather than just ratings of what they liked). One designer was sent to photograph the interiors of about 200 pickups, to see where cups, maps, etc. were being stored, so they could tailor the interior of the new trucks to the needs of the drivers. Chrysler has also been listening to customers who write to the company; the designers even respond to some letters by phone.

Rather than have a small number of people control new products, Jeep/Truck product manager Jeff Trimmer said planners were "speaking out for customer wants and needs in the initial stages...and working along with each of the various functional groups...The role becomes more advisory." Everyone who would be involved participated to "harness the best ideas and creativity."

Even the assembly line workers were included; with the new Ram trucks, they were working with engineers six months before production started. Mechanics were consulted early, to help prepare the cars and trucks for real-life maintenance.

Product teams followed vehicles through their development to identify systems and process issues. "Today, we feel we have a lot more facts, and more of a groundswell of information that comes from groups of people who know exactly what we're trying to do," reported Robert Johnson of Dodge Trucks.

Agreeing on Objectives

One change which helps to keep projects pure is setting down objectives clearly, at the beginning. Core objectives were agreed on at the beginning by all parties; because "Everybody agrees up front and we stick to the plan," (Bernard Robertson, Jeep/Truck team), there were no last-minute changes in focus, which can result in expensive disasters (such as the Corvair, Vega, and Fiero). Because everyone was involved in setting goals, they took responsibility for living up to them.

Learning

Changes in the way cars were made began with help from AMC, which had operated with a far smaller staff than most automakers. Bob Lutz and former AMC engineering chief Francois Castaing reorganized their departments into AMC-style teams.

Since then, Chrysler changed its teams by learning from its achievements and mistakes. "We do a 'what went right, what went wrong' analysis at various points, and we transmit this information to the other platforms," said James Sorenson of the Jeep/Truck Team.

Pilot vehicles in the new Ram program - which would triple Chrysler's market share despite a price premium - were ready 13 months ahead of time. The number of improvements made each year increased dramatically each year as learning spread.

Emphasis of Quality

Most people like building a quality product. It's natural to want one's labors to produce something of quality and beauty. That might be