It is with sadness that we here at CC note the death of John Riccardo, the former Chairman of Chrysler Corporation, who died this past Saturday, at the age of 91. His death did not get a lot of attention, coming on the same day as that of Supreme Court Justice Antonin Scalia. But in a way, this was vintage Riccardo.
John Riccardo was not a “car guy.” Instead, he was a CPA who, in the 1950s, worked at the “big eight” accounting firm of Touche, Ross, along with the slightly older Lynn Townsend. Both men worked on automotive accounts during their years at the firm, with Townsend being assigned to Chrysler and Riccardo to Kaiser-Frazer.
Two years after Chrysler’s chairman Tex Colbert hired Townsend to become Chrysler’s Controller in 1957, Riccardo joined Chrysler’s financial section. Finance seemed to be the management path for a modern corporation in those years, and it certainly was at Chrysler. Townsend would be company President by 1962, at age 43. As Townsend put his imprint on the company, Riccardo followed not far behind, and by 1970 had replaced Virgil Boyd as Chrysler’s President.
In fairness, “Rule by Accountant” was not a smashing success at Chrysler. After some initial success, Lynn Townsend’s preference for sales volume above all else would sow the seeds for the eventual downfall of the company, which experienced a minor financial crisis in 1970 and a bigger one in 1974-75. These financial crises were accompanied by products increasingly out of sync with industry trends and epic quality declines.
When Townsend relinquished the chairmanship in 1975, he seemed to have been unsure of what the company needed in order to go forward, evidenced by his choice to name Riccardo as both Chairman and Chief Executive Officer and, at the same time, naming Gene Cafiero as President. In theory, Riccardo would bring his financial expertise to the company’s finances, systems and controls, while Cafiero would run the operational parts of the business.
In practice, two problems developed. First, the two men did not get along at all. The company had not been functioning well for quite some time, and following the 1975 management changes, things began to unravel as management by trench warfare took hold. This was the inevitable result of the second problem, which was that Townsend had not divided the roles of President and of CEO in a way that gave each man’s role a clear deliniation of responsibility.
One thing that could be said for the management team that succeeded Townsend was that it nurtured the new small front wheel drive platforms that would become the company’s eventual salvation. The Plymouth Horizon and Dodge Omni were in production in early 1978 and the K platform was under development. Without these two projects, Chrysler would surely have gone the way of Studebaker.
1978 proved to be a disastrous year for Chrysler. Even in a good year for the industry as a whole, the company saw a record loss for the first quarter. As the company’s performance continued to deteriorate, Riccardo came to realize that the company’ s problems were beyond his ability to solve. When Henry Ford II unceremoniously fired Lee Iacocca in July of 1978, Riccardo took the lead in recruiting Iacocca to come over to Chrysler.
Journalists Michael Moritz and Barrett Seaman wrote an in-depth examination of Chrysler at the time of the transition from Riccardo and the old guard to Iacocca and the new, which is still an excellent read (Going For Broke, the Chrysler Story, 1981). In their telling, Riccardo came off as the sacrificial hero while Cafiero presented as, shall we say, much less noble. Real life is often much more complicated than the stories we glean from it, but it is undeniable that John Riccardo played a key role in the company surviving to see the 1980s.
As Iacocca was preparing to take the helm, Riccardo was preparing a pitch to Carter Administration Treasury Secretary G. William Miller for aid to the beleaguered company, Riccardo argued that rapidly multiplying regulations hit the smaller companies hardest, and his request was for tax abatements and regulatory relief. When Miller turned down the request, Riccardo agreed to step down early in order to make a clean break between Chrysler’s old, failed management and its future. Riccardo knew that things were bad and governmental help was going to be required. Chrysler’s chances to get that help would be so much better without “old management” still having a role going forward. His voluntary departure earned Iacocca’s admiration as a brave act of personal sacrifice for the company.
John Riccardo certainly left a mixed legacy at Chrysler. The years from his ascendency to President in 1970 until his 1979 resignation are in the running for the worst decade in Chrysler history. His role in that fiasco cannot go unrecognized, though his sins were not so much about actual mismanagement as about lacking the necessary skillset. After all, Chrysler’s problems were never so much financial as they were operational, a situation that had begun to snowball even in the late 1950s. Riccardo has also been noted for a management style that was blunt to a fault, having earned the nickname “Flamethrower.” In his defense, however, John Riccardo was never really in a position to be in complete control of the kingdom, as he was either under Lynn Townsend’s ill-fated direction or was stuck in a managerial tug of war with a President with whom he found it impossible to work productively.
There are few instances in automotive history where a changing of the guard is as stark as that which took place at Chrysler in 1979. Within two years, virtually every senior executive of “Old Chrysler” would be gone, replaced with either ex-Ford people or those whom the ex-Ford people found elsewhere. The purge came despite Iacocca’s desire to keep Chrysler’s better managers on board. The new chief’s desire for at least some continuity was done in by a longstanding system that had encouraged development of executive talent that was broad but shallow in its expertise. The managers that rose through this flawed system were, much like those at GM three decades later, unprepared for the demands of a corporate rescue.
This massive change was also evident in the products that the company designed, built and sold. The New Chrysler certainly brought the company out of the wilderness and into the mainstream of the American car and truck market. But we cannot help but notice that this 1980s success came at the cost of the unique personality or attitude that had been a hallmark of the old days.
There are many stories of failing auto manufacturers led by men who ride the company until its last breath. Others are fired, while others escape in the nick of time and go elsewhere to complain about how they were thwarted by forces beyond their control. John Riccardo did none of those things. He took a singular course in seeing the problem, finding a replacement who was more skilled than he was, and then retiring to a private life that did not involve attempts to burnish his legacy. He was, by all accounts, an honorable man who did his best in a time and a place where his best was not good enough. His recognition and acceptance of these hard facts displayed a talent and levels of grace and unselfishness that are not seen often enough in big business.