Sergio Marchionne's first days as Fiat CEO were marked by fear at the company's headquarters, as some top managers saw their careers abruptly end in a 20-minute chat.
The new chief executive quickly determined whether each manager had the skills to help transform tradition-bound, family-run Fiat -- namely "speed, simplicity and self-confidence."
"Many did not make the cut," Marchionne recalled later.
Marchionne then dismantled Fiat's old hierarchy in favor of what he calls a "flat management structure" -- fewer managers for quicker decisions. He has already said similar changes also are needed at Chrysler, the limping U.S. automaker that he may soon be running.
The 56-year-old Marchionne's bold conquest -- a deal finalized Thursday for 20 percent of Chrysler, with not a penny down but in exchange for Fiat technology valued at some $8 billion -- was made possible by the deepening financial crisis that has crippled the automotive industry.
Chrysler is just the kind of train wreck the dual Canadian-Italian citizen, who solidified his reputation as a turnaround expert in Switzerland, has shown he can fix, employing an outsider's detachment and a willingness to shake things up.
"He has one method, one genetic impulse," said Klaus Stoehlker, a leading Swiss management consultant who observed Marchionne's rise from a controller to the head of Swiss industrial concern Alusuisse Lonza Group, then to the helm of goods inspections firm SGS SA and onward to Fiat in the space of 12 years.
In each of those cases, Marchionne walked into situations of weak management and cleaned house, unfettered by local loyalties.
"I don't think it is ruthless, it is very deliberate," said Stoehlker. "His priority is the shareholders. He knows whom to serve. That is what he did at Alusuisse, what he did at SGS and what he is doing in Turin."
His focus on shareholders' interests is what got the attention of the dynastic Agnelli family, Fiat's controlling shareholder and and a stakeholder in SGS, where Marchionne cut jobs and expenses, slimmed management and more than doubled the share value.
Marchionne joined Fiat's board in May 2003, four months after the death of Gianni Agnelli, the patrician industrialist who for decades controlled the company. He became CEO in June 2004, following the death of Gianni Agnelli's brother Umberto, Fiat's chairman.
Marchionne's status as an outsider was an incalculable advantage. He was born in the central Italian town of Chieti but raised from age 14 in Canada. He received a commerce degree at the University of Windsor, where he also did MBA work. Marco Ferrante, who published a 1997 book about the Agnelli family, suggests the fact that Marchionne never met Gianni Agnelli, the man all of Italy revered as "The Lawyer," freed him.
"It was the first time that a boss had no memory of the myth, didn't have to confirm himself to his memories," Ferrante wrote.
Marchionne brought in outsiders into key positions, including Harald Wester, chief technology officer who hailed from Volkswagen and Ferrari and who has been part of the Chrysler talks.
While Marchionne inherited the Grande Punto and Panda -- both small, hot-selling cars -- he pushed for the redesign of the iconic 500 and the new Fiat Bravo, a car that proved Fiat could build a midsize sedan people would buy. In an example of flat management at work, Fiat came out with both cars in just 18 months.
He also inked more than 30 limited industrial alliances that have allowed Fiat to share technology and expand into new markets.
Key to funding Fiat's turnaround were a pair of savvy financial moves. One was a $2 billion payment from General Motors to walk away from an option to buy Fiat, which at the time was teetering on the edge of bankruptcy. Another that received less buzz but was just as important was a deal to get suppliers to cut costs by up to 5 percent, said Francesco Zirpoli, an expert in organizational innovation at the University of Salerno.
Marchionne, who speaks both unaccented Italian and English, has won the confidence of the analyst community with clear goals, unmuddled thinking and plain speaking.
He comes off as part business professor and definitely more leader than manager. More comfortable in sweaters than business attire, he quotes economic theorist Adam Smith, Austrian economic and political scientist Joseph Schumpeter's "creative destruction" theory and author Lewis Carroll's "Red Queen" in a single speech.
Lest anyone think he's not really a car guy, Stoehlker recalls him pulling up to Alusuisse offices every day in a Porsche. Marchionne infamously totaled his Ferrari 599 GTP Fiorano on a Swiss highway in November 2007, walking away unharmed.
Marchionne isn't afraid to put in seven-day work weeks and, even before the Chrysler deal was in play, he often flew to the United States for the weekend to work on the turnaround of Fiat's agricultural and construction vehicle business CNH.
Marchionne expects his team to put in similar hours -- a tendency which has forced out some able managers, said Giuseppe Volpato, a professor at the Ca' Foscari University of Venice who wrote a book on Fiat.
"If he has a defect, it is one of managing by stress," Volpato said. "Not everyone can sustain these rhythms for two to three years. It is very heavy."
Adam Jonas, a Morgan Stanley auto analyst, said trying to manage both Fiat and Chrysler has its risks. "Chrysler needs strong leadership," he said. "There are only so many hours in a day."
Stoehlker says Marchionne's dominant characteristic is one of a survivor who seeks new challenges -- something Stoehlker has dubbed Nansen theory, for the Norwegian Polar explorer Fridjof Nansen who survived a 1893 expedition by leaping from ice floe to ice floe.
"Marchionne jumps from ice block to ice block and tries to make a win out of it. He has to jump to the ice block of Chrysler."
(This version CORRECTS ADDS age and provision that Fiat share in Chrysler could go up to 49 percent; RECASTS 10th graf to CLARIFY Agnellis controlling shareholder at Fiat; 12th graf corrects that Marchionne did MBA work, sted has MBA; minor edits)
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