Mindset: The New Psychology of Success

His belief in his inherent superiority had blinded him. Now the other side of the fixed mindset kicked in. He wondered whether Henry Ford had detected a flaw in him. Maybe he wasn’t superior after all. And that’s why he couldn’t let go. Years later, his second wife told him to get over it. “You don’t realize what a favor Henry Ford did for you. Getting fired from Ford brought you to greatness. You’re richer, more famous and more influential because of Henry Ford. Thank him.” Shortly thereafter, he divorced her.

So the king who had defined him as competent and worthy now rejected him as flawed. With ferocious energy, Iacocca applied himself to the monumental task of saving face and, in the process, Chrysler Motors. Chrysler, the once thriving Ford rival, was on the brink of death, but Iacocca as its new CEO acted quickly to hire the right people, bring out new models, and lobby the government for bailout loans. Just a few years after his humiliating exit from Ford, he was able to write a triumphant autobiography and in it declare, “Today, I’m a hero.”

Within a short time, however, Chrysler was in trouble again. Iacocca’s fixed mindset would not stay put. He needed to prove his greatness—to himself, to Henry Ford, to the world—on a larger and larger scale. He spent his company time on things that would enhance his public image, and he spent the company’s money on things that would impress Wall Street and hike up Chrysler’s stock prices. But he did this instead of investing in new car designs or manufacturing improvements that would keep the company profitable in the long run.

He also looked to history, to how he would be judged and remembered. But he did not address this concern by building the company. Quite the contrary. According to one of his biographers, he worried that his underlings might get credit for successful new designs, so he balked at approving them. He worried, as Chrysler faltered, that his underlings getght be seen as the new saviors, so he tried to get rid of them. He worried that he would be written out of Chrysler history, so he desperately hung on as CEO long after he had lost his effectiveness.

Iacocca had a golden opportunity to make a difference, to leave a great legacy. The American auto industry was facing its biggest challenge ever. Japanese imports were taking over the American market. It was simple: They looked better and they ran better. Iacocca’s own people had done a detailed study of Honda, and made excellent suggestions to him.

But rather than taking up the challenge and delivering better cars, Iacocca, mired in his fixed mindset, delivered blame and excuses. He went on the rampage, spewing angry diatribes against the Japanese and demanding that the American government impose tariffs and quotas that would stop them. In an editorial against Iacocca, The New York Times

scolded, “The solution lies in making better cars in this country, not in angrier excuses about Japan.”

Nor was Iacocca growing as a leader of his workforce. In fact, he was shrinking into the insulated, petty, and punitive tyrant he had accused Henry Ford of being. Not only was he firing people who were critical of him, he’d done little to reward the workers who had sacrificed so much to save the company. Even when the money was rolling in, he seemed to have little interest in sharing it with them. Their pay remained low and their working conditions remained poor. Yet even when Chrysler was in trouble again, he maintained a regal lifestyle. Two million dollars were spent renovating his corporate suite at the Waldorf in New York.

Finally, while there was still time to save Chrysler, the board of directors eased Iacocca out. They gave him a grand pension, showered him with stock options, and continued many of his corporate perks. But he was beside himself with rage, especially since his successor seemed to be managing the company quite nicely. So in a bid to regain the throne, he joined a hostile takeover attempt, one that placed the future of Chrysler at risk. It failed. But for many, the suspicion that he put his ego before the welfare of the company was confirmed.

Iacocca lived the fixed mindset. Although he started out loving the car business and having breakthrough ideas, his need to prove his superiority started to dominate, eventually killing his enjoyment and stifling his creativity. As time went on and he became less and less responsive to challenges from competitors, he resorted to the key weapons of the fixed mindset—blame, excuses, and the stifling of critics and rivals.

And as is so often the case with the fixed mindset, because of these very things, Iacocca lost the validation he craved.