Tribute to Sergio Marchionne

July 2018
James Anderson
JOINT MANAGER, SCOTTISH MORTGAGE INVESTMENT TRUST

Sergio Marchionne, the CEO but more crucially the leader, and more accurately the saviour of FiatChrysler and Ferrari, died today after a brief illness. Adjusted for the difficulties of his tasks he was probably the greatest leader of an established business that we have had the privilege to know and watch in action.

This was a man of humble background, backed by an aristocratic family that showed unwavering support and endurance, who transformed two bankrupt mass market companies and one faltering supercar brand despite a global financial crisis, multiple car industry collapses, the Southern European debt crisis with Italian political and social strife, as his continual backdrop. After 14 years he had built a team, a series of competitive moats and an ethos that has the chance to survive his own presence. For shareholders the gratitude ought to be immense.

In our case we have been major supporters of first Fiat, then FiatChrysler and finally the spun-off Ferrari, since 2011. Despite the circumstances, year after year we squinted with amazement as his companies multiplied in value as they improved under his guidance. And to think that Marchionne’s first triumph back in early 2005 was to extract $2bn from GM so that it would no longer be forced to buy Fiat Auto, so threatening was its situation.

After a few moments to warm up, he launched into the panel with a bravura combination of commitment, deep thought and bluntness laced with civility born of charm and a humanity forgotten by too many in authority.

Shockingly it was little more than a month ago that we were fortunate enough to co-host an event with our friends at Vanguard, looking at varieties of corporate governance and leadership. My splendid colleague Tom Coutts suggested that we ask if Sergio might be willing to participate. I said that would be wonderful but that it would surely be tough to persuade a man with his legendary commitment to the many tasks in hand to give up his time and make a rushed detour to New York. Tom, to my pleasure but great surprise, managed to persuade Mr Marchionne and his handlers that this would indeed be possible.

On the day Sergio rushed in, straight off a plane from Europe and on his way to Detroit. After a few moments to warm up, and without the aid of the espressos and cigarettes of his former routine, he launched into the panel with a bravura combination of commitment, deep thought and bluntness laced with civility born of charm and a humanity forgotten by too many in authority. His theme was primarily the acute difference between management and leadership. He felt there was too much of the former and too little of the latter. The prime example he understandably cited was Fiat acquiring the rump of Chrysler in the dark days of 2009 whilst all others froze. I’d add that this was also deserved tribute to the trust that Marchionne had built in prior years with the Agnelli family holding company and especially his ever firm alliance with John Elkann (first built over several grappa). As John Elkann has pointed out in a fascinating podcast, Sergio’s single greatest contribution was bringing the capacity to be a ‘truth teller’ to a faltering organisation that initially did not want to hear the reality of its parlous situation – and to an industry that was similarly reluctant to reconsider failing nostrums. Naturally Sergio continued by telling a few truths about the financial industry too. His assessments of unreformed, greed of the nonsensical noise of quarterly earnings, of the absence of true purpose and ethics was painful but surely correct.

I’ve never been so sad at the premature death of a business leader so needed by his industry and his troubled country and who had so much more to give to each - and to a wider audience who will sorely miss his wisdom and values.                      

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