Sergio Marchionne on Leadership – Halifax, June 2012

Sergio Marchionne, the late CEO of Fiat Chrysler, gave the following remarkable speech on leadership values,  meeting challenges to democratic societies, and the courage to change, at the opening night of the 2012 Canadian Leadership Conference, organized by TSA in Halifax, N.S. 

I really have no intention of giving you a lecture. I’m not here as a professor or as an economist and certainly I’m not here as a politician. I’m here as a simple metal basher on a global scale. What I can do this evening is to share some of my experience in running a very large industrial group like Fiat Chrysler, the actions that we took to achieve our comeback and, above all, the big issues with which we all need to deal with today, in a world, that for several reasons – financial, political and social – has been turned upside-down, and is shaped by forces that must be answered to as soon as possible. And I also would like, at some point in time in my comments, to emphasize the moral responsibility of leadership to make their communities and the society, better places in which to live.

A leader today needs to maintain a keen awareness of the fact that we’re living in a period of radical transition between the past and the future. The so-called certainties and points of reference that we have been able to accumulate since the end of the Second World War have been completely swept away. In its route, the issues of sustainability is about finding ways to fulfill the needs of our house and our time without compromising the capacity of future generations to meet their needs.

Building a more secure future requires us to honestly assess the conditions that form the contours of our economic and of our political landscape.  And right now there are at least three large overbearing issues that we’re all facing, which no amount of training or attendance at Ivy League schools could have prepared us for. They’re new and they’re going to condition the running of businesses around the world for a long period of time.

The first issue, which is an experiment clearly driven by the United States, had as a clear objective the liberalization and the deregulation of financial markets. The second issue, which was concocted in Europe, proposed the single market and the single currency as the solution to the political instability that had characterized Europe for hundreds of years and resulted as a final act to the tragic manifestation that we now know as World War II. The result of the first experiment was the near collapse of the US financial system and brought us close to Armageddon. The second has the potential to finish the job.

Now, just to put people’s minds at rest, I’m not here to preach doom and gloom. In fact, I don’t subscribe to the more pessimistic scenarios. With regards to the United States, we often underestimate its amazing capacity to fall and to get back up. To rally in times of crisis and to commit to courageous structural change. Change that will ultimately require the rethinking of capitalism itself, and the re-establishment of markets as being the governing framework for economies, but not for society. This is a subtle but not inconsequential distinction. Markets cannot be the determining factors of a just and equitable society. They have no conscience and they have no moral understanding. Left, is the operative mechanism of society at large, they will treat human life itself as a commodity. And this cannot be allowed. 

Now, just to add insult to injury, there’s a third overbearing issue which is currently causing great consternation in many parts of the world, and it has nothing to do with economic or financial crisis, but it is truly a reflection of severe social concern. Globalization and the advance of technology increase efficiency but they also contribute to the social crises that we’re now seeing in many parts of the world, from the Arab uprising to the protest that forms spontaneously in many European countries and to the Occupy Wall Street movement. Some commentators have begun referring to this as the Age of Outrage. In the emerging markets we see people fighting for their piece of the wealth that is being created by globalization. And in mature markets we see people who have been dislocated, robbed of their jobs, of security and dignity by large global forces that they did not create. Time Magazine declared a protester as its person of the year. And in explaining its selection Time wrote: “All over the world the protestors of 2011 share a belief that the country’s political systems and economies have grown dysfunctional and corrupt. Sham democracies rigged to favour the rich and the powerful and prevent significant change.”

The fact is, even if we looked at this trend only through the lens of business, this anger can ultimately have a devastating impact. Political instability is disruptive to any economy, and it discourages investment. And taking this to an even higher level, a free society that wants to endure, has a vested interest in supporting those affected by changes caused by movements in the markets. A factor that has heightened dissatisfaction, is that a realization that the gap between the rich and the poor has become now, a gulf. Anger is fuelled by the fact that the only people who walked away unscathed, from the great financial binge that preceded this mess, were its main architects and the greatest beneficiaries: bankers, financiers and hedge fund honchos. And this too is fuelling a time of outrage.

I sometimes think back to an occasion some twelve years ago when I had the good fortune to meet Nelson Mandela. And during his speech, Mandela touched on several thorny subjects which affect us all. “How can we remain indifferent to the scandalous distribution of the world’s wealth? And how can we talk about development or well-being, if the majority in our society have nothing to contribute but their own lives” And these issues call into question the moral responsibility of our actions. Any discussion of sustainability needs to be widely interpreted as a reformulation of market-based economies, and of capitalism itself.

I have many more questions than I have answers, but the truth is that we are in a delicate phase of history where we cannot afford to stand still and to watch what happens. We can’t afford to waste time, we are at a crossroad. The factors at player are too numerous and too complex for any precise calculation as to what the future ultimately holds. The one thing that is absolutely clear is that the future depends on those in the industrial, in the economic and political spheres to be clear-headed and far-seeing. We should remember that the choices or even worse the non-choices that we make today will have consequences for the society of tomorrow. It is not something that we can escape.

The western world has a duty to evaluate what its role ultimately ought to be. And sometimes I wonder whether we have stiffened our mental models to such an extent, that even in the face of clear threats, we’re so comfortable in our relative well-being that we’ve become simply indifferent to those in need. I wonder whether our political leaders would have been able to harness the same type of coalition if the war in Afghanistan or Iraq was a campaign on poverty and not on terrorism. I wonder how many soldiers would have been prepared to go abroad and defend, not their own country, but a future of those who have nothing. And I wonder whether global TV networks would have provided 24-hour coverage of the war on poverty? I tell you I don’t have the answers. But I do believe that a future is not just the responsibility of governments, it’s an individual and collective responsibility. It’s a challenge that calls for a concerted and shared commitment. Closing our eyes, or thinking that finding a solution is someone else’s role, makes us part of the problem.

I’m raising this issue because those responsible for running a global enterprise also have the duty to open their minds and look beyond the walls of their offices. I’m speaking to you because, as future leaders, your commitment goes beyond a simple professional obligation. And the essence of leadership is this; it is to personally assume the moral duty to act and to commit yourself to building a better future. Embracing your personal responsibility, to give future generations hope for a better future.  This is what makes leadership a privilege and a noble calling.

I’d like to conclude with one final thought. In our personal and our professional lives we often set up mental boundaries that take the form of reassuring habits and routines, that become a type of prison that we construct around ourselves. And that prison is the first thing that needs to be knocked down because it is the most dangerous. I constantly encourage my co-workers at Fiat and Chrysler to go beyond the cliché and the conventional, to try new approaches and change perspectives each and every day. I exhort them not to repeat the same things, but instead, to embrace a mentality that is truly free. And being truly free means knowing that at any time you can change course, and that you can set new goals. It means, not allowing the choices made up to a certain point in life to preclude the rest.

If I look back at the education and the career choices I made, the objectives that come to mind are chaotic. When I started university here in Canada, I chose to study philosophy because at that time in my life, it was incredibly important to me. And then I completely altered my course of study and went to work as an accountant, then as a lawyer. And I changed my career path several times after that, first working in finance, then moving to running a conglomerate that was involved in packaging aluminium chemicals and bio technology. Then ultimately, the services, and now in automotive. I can’t say if philosophy made me a better lawyer back then, or if it made me a better CEO today, but it did open up my eyes and my mind to other things.

There are many doors along each of our paths, and behind each of those doors are things that can change us and our lives. But only those who have learned to appreciate every experience, whose minds are open to change, who have a desire to learn, and to prove themselves, are capable of seeing those doors.

One of the most enjoyable books I’ve read, the book that also made me think about how to approach life was “The Curious Case of Benjamin Button” by F. Scott Fitzgerald. And I’m sure that some of you have seen the movie. There’s a passage where the old Benjamin, who has become a baby says, “For what it’s worth, it’s never too late, or in my case, too early to be whoever you want to be.” There’s no time limit. Stop whenever you want. You can change or stay the same, there are no rules to this thing. We can make the best, or the worst of it. I hope you make the best of it. And I hope you see things that startle you, and I hope you feel things that you’ve never felt before. I hope you meet people with a different point of view, I hope you live a life that you’re proud of and if you find that you’re not, I hope you have the strength to start all over again.

And this is the message of hope that I would like to leave with you today. Always have the courage to change yourselves, to change your ideas, to change your approach and your point of view because this is the only way to change what’s wrong, and make your life and the life of others a better life.