Part IThe Story
A Car He Could Not Drive
In the spring of 1908, a railroad master mechanic from Oelwein, Iowa, walked into the Chicago Automobile Show and stopped in front of a Locomobile touring car. It was white, trimmed in red, and priced at $5,000. Walter Percy Chrysler was thirty-two, the superintendent of motive power for the Chicago Great Western Railway, and he had about $700 in savings. He came back to the same car for four days running.
He bought it anyway. A banker at Chicago's Continental National Bank, Ralph Van Vechten, lent him the $4,300 difference on the strength of a co-signature from a railroad official. The Locomobile went home by freight car, and a team of horses dragged it from the depot to the Chrysler barn. Then its owner did something that puzzled his neighbours and alarmed his wife, Della. He did not drive it. For roughly three months he took the car apart, laid the pieces out, studied how each one worked, and put it back together, more than once. When he finally took it onto the road, he lost control, ran into a neighbour's garden, and nearly struck a cow.
Chrysler explained himself decades later in his autobiography. He had not bought the car for transport. He bought it to find out how it was made.
— Walter P. Chrysler, Life of an American Workman, 1937I did not simply want a car to ride in. I wanted the machine so I could learn all about it.
That habit of taking the thing apart before trusting it runs through the whole career. It carried him from the floor of a Kansas railroad shop to the presidency of Buick, through the rescue of two failing automakers, and to the founding of a company that within four years stood beside Ford and General Motors as one of the "Big Three." It also paid for a skyscraper on Lexington Avenue that still carries his name.
By the Numbers
Walter Chrysler's Career
$4,300Borrowed in 1908 to buy a $5,000 Locomobile he dismantled before driving
19,812 → 124,834Buick's annual output, 1912 to 1916, under Chrysler as works manager and president
$1MAnnual salary Willys-Overland's bankers paid him in 1920 to rescue the company
32,000Chrysler Six cars sold in 1924, a first-year record for a new make
~$170MValue of the 1928 stock deal in which Chrysler Corporation acquired Dodge Brothers
1,046 ftHeight of the Chrysler Building, the world's tallest structure for about 11 months
The Shop Floor at Ellis
Chrysler was born on April 2, 1875, in Wamego, Kansas, the third child of Henry "Hank" Chrysler, a Canadian-born locomotive engineer on the Union Pacific, and Anna Maria Breymann. In 1879 the family moved to Ellis, a division point on the Kansas Pacific line where the railroad kept its repair shops. The town lived by the trains, and the boy grew up around them.
He was a working child in the ordinary frontier way. He sold calling cards door to door, delivered milk, and ran groceries for a local store. He finished high school in 1892 and wanted to go into the shops as an apprentice machinist. His father, who hoped for something more respectable, refused to sign the papers. Walter took a job sweeping the shop floor instead, at a fraction of an apprentice's wage, until the master mechanic, Edgar Esterbrook, talked Hank into relenting. The four-year apprenticeship that followed was the only formal technical education Chrysler ever had, supplemented by correspondence courses from the International Correspondence Schools and a steady diet of Scientific American.
Apprentices in that era were expected to furnish their own tools, so Chrysler made his: calipers, wrenches, and gauges, some of which he kept for the rest of his life. At eighteen he built a working model locomotive, about 28 inches long, that ran on its own steam. An older mechanic, Walter Darling, taught him the finer points of valve setting, including how to make his own reference marks rather than rely on someone else's. Chrysler was quick, proud, and by his own admission short-tempered, a trait that would cost him jobs and, later, win him several.
Two Dozen Railroads
In 1897, at twenty-two, Chrysler left Ellis and became what railroaders called a boomer, a skilled man who moved from line to line in search of better work. Over the next decade he held more than two dozen jobs. He started with the Santa Fe in Wellington, Kansas, and worked his way west and back again, through shops in Colorado, Utah, and Texas.
The pattern of those years was that he took on work other men found tedious and finished it faster. With the Denver & Rio Grande Western in Salt Lake City, he completed a repair in three hours that normally took five, and in February 1902 he was made roundhouse foreman, responsible for about ninety men at $90 a month. By then he had married Della Forker, a girl from Ellis, in June 1901. Their first child, Thelma, was born in 1902.
The promotions came steadily. In 1903 he joined the Colorado & Southern at Trinidad, Colorado, and rose to division master mechanic at $160 a month. In 1905 he moved to the Fort Worth & Denver City at Childress, Texas. In January 1906 the Chicago Great Western hired him as master mechanic at Oelwein, Iowa, for $200 a month. Within two years he was general master mechanic, and in December 1907, at thirty-two, he became superintendent of motive power, the youngest man to hold the title on that line. He now answered for the condition of every locomotive on the railroad and supervised roughly a thousand men for $350 a month. It was in this job, with a young family and a solid salary, that he took on a debt larger than a year's pay to buy the Locomobile.
The railroad career ended the way many of his earlier jobs had. In December 1909 the Chicago Great Western's president, Samuel Felton, confronted him over a train that had arrived three minutes late because of an overheated axle bearing. The argument escalated, and Chrysler threw his railroad passes on Felton's desk and walked out. He later wrote the episode up with a shrug: "That is how I became an ex-railroad man."
From Locomotives to Buick
He did not stay unemployed long. The American Locomotive Company hired him as general foreman of its Allegheny works in Pittsburgh at $275 a month, and within about eighteen months he was running the plant and had turned a money-losing shop into a profitable one. By 1911 he was earning $8,000 a year.
His work caught the attention of James J. Storrow, a Boston banker at Lee, Higginson & Co. who sat on the boards of both ALCO and General Motors. At the time Storrow's bank controlled GM, having rescued it from its founder, Billy Durant, in 1910. Storrow introduced Chrysler to Charles Nash, the president of GM's Buick division, who was looking for someone to fix Buick's manufacturing. ALCO offered $12,000 to keep him. Nash offered $6,000. Chrysler took the pay cut, accepted Nash's offer in November 1911, and reported to Flint in January 1912.
What he found at Buick horrified a railroad man accustomed to accounting for every bolt. Cars were built largely by hand, the plant had no real cost accounting, and many habits were carried over from carriage-making. Chrysler introduced cost accounting so that managers knew what each step actually cost. He noticed that chassis frames were being painted and then left to dry for days, although the paint would be hidden once the body went on, and he cut the unnecessary coats. Assembly time for a chassis fell from four days to two. He halved paint drying times, and he replaced the forest of posts that held up the factory roof with trusses, clearing floor space.
He also experimented with moving the work to the worker. Chassis were placed on tracks and pushed from station to station, a crude version of the moving line that Henry Ford was perfecting at Highland Park. Daily output climbed from about 45 cars to 75 and eventually past 200. Buick's annual production rose from 19,812 in 1912 to 124,834 in 1916. In a 1916 memo, the automaker Hugh Chalmers described Chrysler as "the best automobile manufacturer in the industry."
Chrysler knew his value. After a couple of years he told Nash he wanted $25,000 a year. Nash balked, Storrow intervened, and Chrysler got it, followed by $50,000 the next year.
The Durant Years
In 1916 Billy Durant took back control of General Motors. Nash left to buy the Thomas B. Jeffery Company in Kenosha, which he renamed Nash Motors, and he and Storrow wanted Chrysler to come with them. Durant got to Chrysler first. He offered the presidency of Buick at a salary reported as $500,000 a year for three years, a figure that made Chrysler one of the highest-paid executives in the country, and he promised a free hand. Chrysler accepted.
The promise did not hold. Durant was a gifted salesman and deal-maker with little patience for the plant-level discipline that Chrysler cared about, and he intervened in Buick's affairs whenever an idea struck him. Chrysler's responsibilities nonetheless grew. During the First World War he went to Washington and, within about three hours, secured a contract to build 3,000 Liberty aircraft engines, with a young engineer named K.T. Keller handling the tooling. In late 1918 he became first vice president of GM, and in April 1919 he launched the Modern Housing Corporation to build roughly a thousand homes for workers in overcrowded Flint.
The break came in 1919 over money and control. Chrysler had negotiated with the A.O. Smith Company to supply car frames, a deal he calculated would save GM about $2 million a year. Durant instead announced a $6 million GM frame plant. Chrysler also opposed Durant's purchase of a tractor company and his plan for an enormous headquarters in Detroit. He resigned effective October 31, 1919. Durant paid him $10 million for his GM stock early in 1920. At forty-four, Chrysler was rich and intended to retire.
His relationship with Durant proved sturdier than their working arrangement. Years later, broke and running a bowling alley, Durant began a memoir he never finished and dedicated it to "Walter P. Chrysler, the best friend I ever had." The GM that Durant lost for the final time in 1920 passed to managers such as Alfred Sloan, who built the decentralized structure Chrysler would compete against for the rest of his life.
The Million-Dollar Turnaround Man
Retirement lasted a matter of weeks. Willys-Overland of Toledo, then the second-largest American carmaker, was drowning in debt, and its bankers wanted a professional to save it. On January 6, 1920, the company announced that Chrysler would take over as executive vice president and general manager at a salary of $1 million a year for two years, with absolute authority over operations. John North Willys kept the title of president.
Chrysler treated the salary as licence to be blunt. He cut Willys's own pay from $150,000 to $75,000, closed operations that lost money, and worked through obligations owed to 127 banks, reducing the company's debt from about $46 million to about $18 million. He also looked for a new product. In July 1920 he hired three engineers from Studebaker, Fred Zeder, Owen Skelton, and Carl Breer, to design a modern six-cylinder car. He scrapped the car Willys had in development and planned to build the new design, informally called the Chrysler, at a Willys plant in Elizabeth, New Jersey.
The bankers would not fund the roughly $8 million the project required. Willys Corporation, the holding company that owned the Elizabeth plant, went into receivership on November 30, 1921, and Chrysler left when his contract ran out. At a June 1922 auction of the Elizabeth plant and its car designs, Durant, now building a new company, outbid a group representing Maxwell with a winning bid of $5,525,000.
Chrysler kept the engineers. He paid Zeder, Skelton, and Breer to set up their own consulting firm, ZSB, and in November 1922 he signed them to develop the car he still wanted to build. His later judgment of them was simple: "Those three young automotive engineers were wizards."
Fixing the Good Maxwell
While he was running Willys, Chrysler had also agreed, in August 1920, to chair the reorganization committee of Maxwell Motor Company and its partner, Chalmers. Maxwell owed about $26 million and had some 26,000 unsold cars sitting in lots, many with rear axles that were known to fail. Chrysler's condition for taking the job was $15 million in fresh working capital. Maxwell went through receivership in 1921, was bought at auction that May, and was reconstituted as the Maxwell Motor Corporation with Chrysler as chairman.
His first problem was the inventory. Rather than write the cars off, he had the axles braced and sold the backlog at a small profit per car, which turned dead stock into cash. The company then advertised the "Good Maxwell," acknowledging, in effect, that the old one had not been. Sales recovered quickly: about 19,000 cars in 1921, about 55,000 in 1922, and some 83,000 in 1923, when the company made a profit of $2.7 million. Maxwell bought the Chalmers assets at auction in December 1922.
By mid-1923 Chrysler had agreed to a new contract as president at $100,000 a year plus 5 percent of net profits, which paid him bonuses of $206,000 for 1924 and $856,000 for 1925. He was, for the first time, tying his personal income to the results of a company he ran. He also had to fend off an offer that would have ended the project. In late 1923 Studebaker offered about $26 million for Maxwell. Zeder, who had left Studebaker to work for Chrysler, reportedly threatened to destroy the new car's blueprints rather than hand them to his old employer, and the deal collapsed. Chrysler later remarked that there would hardly have been room for Studebaker's president, Albert Erskine, and himself "in one pasture lot."
The Chrysler Six
The car ZSB designed appeared in January 1924 as the Chrysler Six, officially the B-70. For a mid-priced car it was advanced. Its six-cylinder engine used a higher compression ratio than most competitors, it had four-wheel hydraulic brakes when most cars still braked only at the rear, and it came with oil and air filters. Prices started at $1,595.
A persistent story says the New York Automobile Show refused to exhibit the new car because it was not yet in production, and that Chrysler rented the lobby of the Commodore Hotel in response. The surviving records tell a less dramatic story. The car appeared at the show in the Bronx and also in the Commodore's lobby, a display arranged by Maxwell's sales manager, Joseph Fields, where it drew the attention of the dealers and bankers Chrysler needed.
The Chrysler Six sold 32,000 units in 1924, a record for the first year of a new make, and Maxwell earned $4.1 million. The circular badge that appeared on the cars featured lightning-bolt shapes drawn from Zeder's initials. On June 6, 1925, the Maxwell Motor Corporation was reorganized as the Chrysler Corporation. K.T. Keller, the engineer who had tooled Liberty engines at Buick, joined in 1926 and would become Chrysler's most trusted operating executive. In 1927 the new company sold 192,083 cars and earned $19.5 million.
— Walter P. Chrysler, Life of an American Workman, 1937There is in manufacturing a creative joy that only poets are supposed to know.
The Year of Plymouth, DeSoto, and Dodge
The year 1928 made Chrysler a mass producer. The company had been selling mid-priced and expensive cars. To compete at the bottom of the market against Ford and Chevrolet, it introduced the Plymouth on July 7, 1928, priced at around $670 for the cheapest model, and had Amelia Earhart drive one for publicity. Less than a month later, on August 4, it announced the DeSoto, a car aimed between Plymouth and Chrysler. Together with the Chrysler line, the company now covered several price tiers, the same kind of segmentation Sloan had used to push GM ahead of Ford.
A low-priced car required huge quantities of castings and forgings, and Chrysler did not own enough foundries or forges. Building them would have taken about two years and an estimated $75 million. The alternative was Dodge Brothers, the company founded by John and Horace Dodge, which had excellent manufacturing capacity and a strong dealer network but had drifted since both founders died in 1920. The banking firm Dillon, Read & Co. had bought Dodge in 1925 for $146 million, and in April 1928 Clarence Dillon approached Chrysler about a sale.
The two men negotiated for five days in adjoining suites at the Ritz-Carlton in New York. The boards approved a deal on May 29, 1928: an exchange of stock worth about $170 million, with Chrysler Corporation assuming around $60 million of Dodge debt. Dodge was the larger company by assets, and the acquisition was widely described as the smaller fish swallowing the larger. The deal closed on July 31. Within hours, signs reading "Dodge Division, Chrysler Corporation" went up at the Dodge plant in Hamtramck, a demonstration of speed Chrysler seems to have intended. The combined company had about 12,000 U.S. dealers by late 1929. The trade press had already begun using the phrase "Big Three" for Ford, GM, and Chrysler.
Time named Chrysler its Man of the Year for 1928, only the second person to receive the title after Charles Lindbergh.
A Tower on Lexington Avenue
That October, Chrysler bought something unrelated to cars. The developer William H. Reynolds had leased a site at Lexington Avenue and 42nd Street and hired the architect William Van Alen to design a skyscraper there, but he could not finance it. On October 15, 1928, Chrysler acquired Reynolds's lease, the plans, and Van Alen's services for more than $2 million. He paid for the building himself, as an investment for his children, rather than through the company. Chrysler Corporation leased space there but never made it the corporate headquarters, which stayed in Highland Park, Michigan.
The Chrysler Building became a competition. Van Alen was racing to beat 40 Wall Street, whose architect was his former partner. Van Alen had a 185-foot stainless-steel spire assembled in secret inside the building's crown and in October 1929 hoisted it into place, bringing the building to 1,046 feet and 77 floors. It was the tallest structure in the world when it opened on May 27, 1930, and held the title for about eleven months, until the Empire State Building surpassed it.
Its ornament is a record of its owner. Brick friezes on the 31st floor show stylized hubcaps and fenders, winged radiator caps project from the corners, and steel eagles look out from the 61st floor. Critics were divided. Lewis Mumford dismissed the design, but the building became one of the most admired in New York. The Chrysler family sold it in 1953 to the real-estate developer William Zeckendorf.
Depression and the Plymouth Bet
The stock market crash in October 1929 came just after the Dodge merger had loaded Chrysler Corporation with new plants and debt. Profits collapsed from a peak of about $34 million in 1928 to a loss of roughly $11 million in 1932. Chrysler's response was to double down on the cheapest car he made. The Plymouth received an improved engine mounting, marketed as "Floating Power," which reduced vibration, and in 1931 Chrysler sought to put Plymouth at the head of the low-price field with Ford and Chevrolet. Dealers of all three Chrysler divisions were allowed to sell Plymouths, which gave the brand a far larger retail network than its size would otherwise justify.
The bet worked. Plymouth sales rose from about 180,000 in 1932 to more than 298,000 in 1933, and its assembly lines ran at speeds that rivals struggled to match. Company-wide sales grew from 451,734 vehicles in 1933 to 843,599 in 1935, when Chrysler earned nearly $35 million and was the only major American automaker to exceed its 1929 sales. In 1936 it sold more than a million vehicles and earned $62.1 million. By 1937 Chrysler had passed Ford to become the second-largest carmaker in the United States, behind GM. Having carried heavy debt since the Dodge purchase, the company paid off its long-term debt by mid-1936.
Not every bet paid. In January 1934 Chrysler and DeSoto introduced the Airflow, a streamlined car designed with wind-tunnel testing and with the engine moved forward over the front axle for a better ride. The engineering was ahead of its time, but production problems delayed deliveries, early cars had defects, and buyers found the styling strange. Rivals encouraged rumours that the car was unsafe. Chrysler and DeSoto Airflow sales fell from about 25,000 in 1934 to about 4,600 in 1937, when the model was dropped. Chrysler did not mention it in his autobiography. The company absorbed the loss because Plymouth and Dodge were carrying it.
Stepping Back
On July 22, 1935, Chrysler gave up the presidency to K.T. Keller and remained chairman. He was sixty and had been working since boyhood, but the transfer was also a deliberate act of succession. Keller had run production and knew the plants, and Chrysler trusted him to preserve what he had built.
The chairman was drawn back into the company's gravest crisis in 1937. Chrysler had resisted independent unions. In 1929 the company established the Chrysler Industrial Association, a company-sponsored employee organization, and in 1933 it adopted an Employee Representation Plan, while it also paid for labor spies. After the United Auto Workers won recognition at General Motors following the Flint sit-down strike, workers occupied Chrysler plants on March 8, 1937. Michigan's governor, Frank Murphy, brought Chrysler and the CIO leader John L. Lewis together for negotiations in Lansing. The workers left the plants on March 25, and on April 6 the company signed an agreement recognizing the UAW as the bargaining agent for its members. Lewis mocked Chrysler's negotiators as "Chrysler's House of Lords," but Chrysler personally was treated with surprising warmth by the strikers.
That same year, the Saturday Evening Post serialized his autobiography, Life of an American Workman, written with the journalist Boyden Sparkes. The book spends most of its pages on the railroad years and the shop floor, not on Wall Street. He had never stopped thinking of himself as a mechanic. He punched a time card at the plant, and he kept the tools he had made as an apprentice.
Chrysler suffered a stroke on May 26, 1938. Della died that August. He lived two more years, largely withdrawn, and died at his estate at Kings Point, Long Island, on August 18, 1940, at sixty-five. He was buried at Sleepy Hollow Cemetery in New York. His company continued, through several near-collapses and a series of owners, as Chrysler, later part of Fiat Chrysler and Stellantis. The Automotive Hall of Fame inducted him in 1967.
Part IIThe Playbook
Walter Chrysler's management approach came from a machinist's view of the world: understand the mechanism, cost the parts, and find out where the time goes. He carried that approach from locomotives to cars and from cars to corporations. The principles below are drawn from what he did at the Chicago Great Western, Buick, Willys-Overland, Maxwell, and Chrysler Corporation, and from his own account of those years.
The principles
- 1.Take the machine apart before you trust it.
- 2.Price every step of the process.
- 3.Remove work nobody will see.
- 4.Accept a pay cut to reach a bigger arena.
- 5.Demand authority equal to the responsibility.
- 6.Sell the inventory you are ashamed of.
- 7.Keep the engineers when the company fails.
- 8.Buy capacity instead of building it.
- 9.Cover the market from the bottom up.
- 10.Tie your own pay to the results.
- 11.Let the cash cow fund the experiment.
- 12.Hand over the controls while you can still watch.
Principle 1
Take the machine apart before you trust it.
Chrysler's first act with the Locomobile was disassembly, and the same instinct appears in every company he ran. At Buick he walked the floor to see how chassis were built before changing anything. At Maxwell he inspected the failing axles instead of relying on reports. He believed that a manager who did not understand the mechanism could only guess at the cause of a problem.
The method is a form of reverse engineering, and it is slow at the start. Three months in a barn is a long time to own a car without driving it. But the knowledge compounds. The man who understood how the Locomobile worked was later able to judge the Chrysler Six design, question engineers on equal terms, and spot waste in a plant that others had accepted as normal.
Tactic: Before you manage, buy, or fix a system, spend dedicated time tracing how it actually works end to end, preferably by doing the work yourself for a day.
Principle 2
Price every step of the process.
Buick had no real cost accounting when Chrysler arrived. Workers and supervisors knew what they did but not what it cost, so nobody could see which steps were expensive. Chrysler's railroad background had taught him to account for materials and labor on each locomotive repair, and he brought that discipline to Flint.
Once each step carried a price, the waste became visible and the arguments became factual. The frame-supply dispute that ended his GM career was, in essence, a costing argument: he could show that buying frames from A.O. Smith would save about $2 million a year compared with building a new plant. Durant overruled him anyway, but Chrysler's case rested on numbers, not preference.
Tactic: Build a cost map of your main process, assigning a dollar figure to each step, and review it before approving any change or investment.
Principle 3
Remove work nobody will see.
One of Chrysler's early wins at Buick was to stop painting parts of the chassis that the body would cover. The extra coats took time to apply and days to dry, and they added nothing a customer would ever notice. Cutting them helped halve chassis assembly time, from four days to two.
The lesson generalizes. Organizations accumulate steps that once had a reason and now persist by habit. Many sit on the critical path, so removing them frees capacity without buying anything. Chrysler's attention to drying times and the posts cluttering the factory floor shows the same focus on bottlenecks: find the step that slows everything else and ask whether it needs to exist at all.
Tactic: For each step in a slow process, ask who would notice if it disappeared; cut or shorten every step where the honest answer is nobody.
Principle 4
Accept a pay cut to reach a bigger arena.
In 1911 ALCO offered Chrysler $12,000 a year to stay, and Buick offered $6,000. He chose Buick. Locomotives were a mature business, while automobiles were the fastest-growing industry in the country. Half the salary bought a seat in a much larger game.
The trade paid back quickly. Within a few years he was earning $50,000 at Buick, then a salary reported at $500,000 as its president, and he left GM with $10 million in stock. The choice reflects clear thinking about opportunity cost: the relevant comparison was not this year's salary but where each path would lead in five years.
Tactic: When comparing offers, estimate the size and growth of the market each role sits in, and weigh that ahead of the starting salary.
Chrysler left GM because Durant would not let him run Buick as promised. When Willys-Overland's bankers came to him, he asked for absolute authority over operations and a two-year contract, and he got both. He then used that authority immediately, including cutting the founder's salary in half.
A turnaround manager without real power ends up blamed for decisions made by others. Chrysler had learned at GM that informal promises of independence evaporate under pressure. Putting authority in writing at Willys and Maxwell let him move fast on debts, product plans, and costs.
Tactic: Before accepting responsibility for a result, get the decision rights you need defined in writing, including what you can change without approval.
Principle 6
Sell the inventory you are ashamed of.
Maxwell's 26,000 unsold cars had defective axles and a bad reputation. The obvious response was to scrap them or sell them off at any price. Chrysler instead had the axles reinforced and sold the cars at a small profit each, turning a liability into working capital.
He then addressed the reputation head-on with the "Good Maxwell" campaign, which implicitly admitted the previous product's faults. Fixing a problem and saying so openly rebuilt enough trust that sales roughly quadrupled within two years.
Tactic: Before writing off bad stock, price out the cheapest fix that makes it sound, and tell customers plainly what you changed.
Principle 7
Keep the engineers when the company fails.
When Willys-Overland could not finance the new car, Chrysler lost his employer but not his team. He kept Zeder, Skelton, and Breer on retainer through their own firm and brought them to Maxwell. The design work they had done became the basis for the Chrysler Six, which launched his company.
Chrysler understood that a company's failure does not destroy the capability of its best people, and that a strong engineering team is harder to replace than a factory. Plants can be bought at auction, as Durant proved in 1922. A team that works well together takes years to assemble.
Tactic: When a project or company ends, identify the few people whose skills you cannot easily replace and find a way to keep working with them, even informally.
Principle 8
Buy capacity instead of building it.
In 1928 Chrysler needed foundries and forges to produce a low-priced car. Building them would have cost about $75 million and taken two years. Buying Dodge gave him the capacity, plus thousands of dealers, in a matter of months, paid for largely in stock rather than cash.
The deal was about time as much as money. Entering the low-price market in 1928 rather than 1930 meant that Plymouth was established before the Depression hit, not launched into it. Chrysler's willingness to buy a bigger company is an example of treating acquisitions as one option among several in capital allocation, and choosing the one that got the capability soonest.
Tactic: When you need a new capability, compare the full cost and time to build it with the cost of buying a company that already has it, including the value of getting there early.
Principle 9
Cover the market from the bottom up.
Before 1928 Chrysler Corporation sold mid-priced and expensive cars. Within weeks it added Plymouth at the bottom and DeSoto in between, and it absorbed Dodge. That gave the company a car at almost every price point and made the Plymouth the volume engine that carried it through the 1930s.
The low end mattered most. Volume spread fixed costs across more cars, a direct application of economies of scale, and letting all Chrysler dealers sell Plymouths gave it distribution that no stand-alone brand could have reached as quickly. By 1937 that volume had lifted Chrysler past Ford.
Tactic: Map your product line against price tiers, identify the largest tier you do not serve, and test whether an entry there could share the fixed costs you already carry.
Principle 10
Tie your own pay to the results.
Chrysler's contract as Maxwell's president in 1923 paid $100,000 plus 5 percent of net profits. The bonus was modest in the first year and much larger in the second, as the Chrysler Six took off. He had moved from a fixed salary, even a very large one at Willys, to a stake in what he produced.
That arrangement gave him skin in the game and told investors he believed in the plan. It also matched how he paid for the Chrysler Building: with his own money, taking his own risk, rather than through the company.
Tactic: When you take on an ambitious project, propose a pay structure where a meaningful part of your compensation depends on measurable results.
Principle 11
Let the cash cow fund the experiment.
The Airflow was a bold engineering bet that failed commercially. It did not sink Chrysler Corporation because Plymouth and Dodge were selling in large numbers and generating profits at the same time. The company could absorb years of poor Airflow sales and still pay down its debt.
Chrysler's lesson, visible in the numbers even though he never wrote about the Airflow, is that radical products need a stable base behind them. A firm betting everything on one new design risks everything on the timing and the public's taste. A firm with a steady volume business can afford to experiment and to be wrong.
Tactic: Size any risky new product so that the business could survive its complete failure on the profits of existing lines.
Principle 12
Hand over the controls while you can still watch.
In 1935, at sixty, Chrysler made K.T. Keller president and moved to chairman. He had known Keller since the Liberty engine contract at Buick and had watched him run production for nearly a decade. The handover happened while Chrysler was healthy enough to advise and while the company was profitable.
Three years later Chrysler had a stroke. Had he waited, the company would have faced a sudden succession during a period of labor upheaval. Instead, Keller was already in charge and led Chrysler for the next fifteen years.
Tactic: Name and install your successor while you are still able to coach them, and set a date rather than waiting for a crisis to force the decision.
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Part IIIMaxims
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Curiosity is worth borrowing for. Chrysler went into debt for a car he wanted to study, not drive. Paying to learn how something works is often the best investment available to someone without formal training.
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Make your own tools. The apprentice who made his own calipers and wrenches understood them better than anyone who bought them. Building your own instruments teaches you what they can and cannot measure.
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A temper can be a negotiating asset. Chrysler walked out of the Chicago Great Western over three minutes and left GM over a frame plant. His willingness to leave made every employer take his demands seriously.
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Plants are cheap; teams are dear. Factories changed hands at auction throughout Chrysler's career. The engineering team he kept together was the one asset that could not be bought.
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Admit the old product was bad. The "Good Maxwell" worked because it acknowledged what customers already knew. Candour about past failures can be a sales tool.
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Speed of integration is a message. Dodge signs came down within hours of the merger closing. Moving fast told employees, dealers, and competitors that the new ownership was real.
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Personal money buys personal freedom. Chrysler paid for his skyscraper himself and built it as he pleased. Spending your own capital lets you take risks a board would never approve.
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Downturns reward the low end. In the Depression, the cheapest car Chrysler made kept the whole company alive. Customers trade down in hard times, and the firm positioned to catch them gains share.
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Stay a mechanic. Chrysler punched a time card as chairman and filled his memoir with shop-floor detail. Leaders who keep close to the work keep the judgment that got them promoted.
In Their Own Words
The real secret is to build an organization that isn't dependent on you. The best managers are those who can walk away from their jobs and find that everything continues to run smoothly.— Walter Chrysler
The secret of success is to do the common things uncommonly well. In manufacturing, this means attention to every detail, no matter how small.— Walter Chrysler
Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction, and skillful execution.— Walter Chrysler
I believe in the principle that you can manufacture anything better if you understand how it works. That's why I took apart that first Locomobile—I had to understand every component before I could improve upon it.— Walter Chrysler
In business, you must be willing to take calculated risks. The Dodge acquisition was expensive, but it gave us the scale and market presence we needed to compete with Ford and General Motors on equal terms.— Walter Chrysler
A company that cannot survive a recession without borrowing money is not a healthy company. Financial strength comes from earning more than you spend and saving for the inevitable difficult times.— Walter Chrysler
The secret of successful management is to keep the five guys who hate you away from the four guys who haven't made up their minds.— Walter Chrysler
A good manager is a man who isn't worried about his own career but rather the careers of those who work for him. My advice: Don't worry about yourself. Take care of those who work for you and you'll float to greatness on their achievements.— Walter Chrysler
I have always believed that the way to get ahead is to start at the bottom and work up. There is no substitute for knowing your business from the ground up.— Walter Chrysler
The best time to prepare for a crisis is when business is good. Companies that wait until trouble arrives to build their financial reserves rarely survive.— Walter Chrysler
Debt is a tool, not a crutch. Used properly, it can accelerate growth. Used improperly, it can destroy even the most promising business.— Walter Chrysler
I never worked a day in my life—it was all fun. When you love what you do, work becomes play, and success becomes inevitable.— Walter Chrysler
The most valuable education comes from doing, not from reading about doing. Books can teach you theory, but only experience can teach you wisdom.— Walter Chrysler
Success is not about where you start—it's about how far you're willing to go and how much you're willing to learn along the way.— Walter Chrysler
The man who stops learning stops growing. In a rapidly changing world, continuous education isn't optional—it's essential for survival.— Walter Chrysler
Engineering is the art of making what you want from things you can get.— Walter Chrysler
The difference between a successful company and a failing one is often found in the details that nobody else bothers to get right.— Walter Chrysler
Innovation isn't about creating something completely new—it's about making something work better than it ever has before.— Walter Chrysler
The best engineers are those who can see not just how something works, but how it could work better. That vision is what separates true innovation from mere tinkering.— Walter Chrysler
Every problem is an opportunity to demonstrate superior engineering. The companies that solve problems better than their competitors are the ones that will ultimately prevail.— Walter Chrysler
Competition is the greatest teacher in business. It forces you to constantly improve and never become complacent about your success.— Walter Chrysler
The companies that survive are those that can adapt to changing conditions while maintaining their core strengths. Flexibility without focus leads to failure.— Walter Chrysler
Success in business comes from doing a few things exceptionally well rather than many things adequately.— Walter Chrysler
Further reading
- Life of an American Workman by Walter P Chrysler
