On the Eve of Chrysler's demise

When faced with adversity it's often good to look back at previous difficult times and try to find some wisdom for handling the one you are currently faced with. Looking at the current folding of Chrysler, people seem quick to forget that they have been here before.

In the early 80's, Chrysler was in trouble. Lots of trouble. Gas prices had recently rocketed and Chrysler had no small cars to fall back on. Chevy and Ford had some small cars, and some international sales, to keep them afloat.

In 1978, the average new American car got 13 miles per gallon. Japanese cars had been in the US since the mid 70's, offering cars with much better mileage- but they were much smaller, and therefore were experiencing slow adoption until the oil crisis. Then, suddenly, people started considering more efficient cars.

Sounds a lot like today's situation. And like today's situation in the early 80s, Chrysler was looking at closing their doors forever unless they made major changes to the cars they offered.

They hired Lee Iacocca, and let him lead as he wanted. He didn't have the time to hire and train new engineers and develop a new product entirely in-house. As such he bet the entire company on a business deal- Chrysler, despite having failing sales and bleak future, bought 38% of Mitsubishi. The result of this new alliance was the K Car, which history has certainly beat up- but fact is- it saved Chrysler because it was the right product at the right time. To this day, many Chrysler cars share parts with their Mitsubishi counterparts.

In 1978, new American cars got 13 MPG. By 1981, there was a Dodge which could get 50. (Video) That's with almost 30 year old technology- no hybrid, no flexfuel, no anything special.

And it wasn't just the O24 that got good mileage. The other cars Chrysler offered were very sensible, also. (Video)

Chrysler didn't stop at just getting themselves out of the grave. They took their new found success and used it to create an innovative product which created a new car segment- the Minivan. The 1984 Caravan got 37 MPG highway, and carried everything you needed to carry. Chrysler did it first, and couldn't build them fast enough. (Video)

This is what happens when one person does what needs to be done to make a company profitable. And that's what Lee Iacocca did, and in doing so kept jobs in America, provided the world with an innovative product, and most famously, did it with style. He was very outspoken and direct with his use of words and vision for what he wanted to accomplish with the company- as seen here, in a commercial from 1984. (Video)

Lee retired in 1992. Since then, Chrysler has returned to rehashing older cars, and has repeatedly ignored customer desires. Now they are in the grave, and what's left of them will be bought up by Fiat. Most major dealerships are closing this weekend.

This is what happens when corporations lose the fear of failing. They fail. Guaranteed money is the surest way to kill a company. When that happens, innovation stops. I've seen this personally even where I work.

The words Lee Iacocca says at the end of the video above are very telling. "Quality, hard work, commitment. The stuff America was made of. Without them, there is no future."

I wonder if he knew he was predicting the future of his company.