No Checkered Flag for Penske: Leadership Matters

NEW YORK (TheStreet) -- In the high-stakes game of automotive manufacturing, Roger Penske appeared to be on the verge of remaking the business model of the industry. Purchasing Saturn from General Motors, the president of the Penske (PAG Quote) group was to not only continue Saturn but rescue 350 dealerships from the brink of disaster by breathing new life into the brand. Unfortunately, the race was over before it really began last week as Penske pulled out of the deal because of the inability to find a suitable partner.

Roger Penske is one of the most impressive leaders I know. The word that comes to mind when you meet him is "steady." An admitted workaholic, Penske knows his company, his employees and his potential. He is known for his hands-on approach of visiting his current dealerships, checking in with the mechanics or having coffee with the parts departments. He knows his business and he knows people.

To understand Penske's motives, it is important to understand his philosophy. In an interview I had with him a while back, Penske stated his basic belief in doing what's right for customers, shareholders and employees.

"My dad told me a long time ago," Penske said, "'it's not what's good for you Roger, it's what's good for the company.'" While for many this approach would spell risk-aversion, Roger Penske has been known to take risks. Not all of them (Kmart Auto centers, for example) spelled success.

As a leader, Penske is not overwhelmed by his own press. Since winning the Sports Illustrated Racing's Driver of the Year in 1960, he has been known for his commitment and determination to be No. 1. While he would be a great coup for any of the automakers in a top executive position, and they have all tried to nab him, Penske is best when he runs his own show. To partner with Renault or any other manufacturer for a potential Saturn deal would have required a great commitment on the partners side to match that of Penske's winning nature.

The important thing about his decision to back out of the Saturn deal is that Penske's high-speed and consistent style is to do whatever it takes to be successful, if there is a chance for success. Unfortunately, he was never able to find the right partner to continue making Saturn cars after GM stopped making them in a couple of years. While strong leaders have to take risks, they also have to be aware of the consequences when the odds are long.

It is a shame because I believe that if anybody could have made this work, Penske would have been the one. As he stated in a USA Today interview back in June, the plan was never a "walk in the park." In order to make it happen he was going to have to find answers to a lot of questions concerning supply and manufacturing. The idea of a solely distributor-focused car company would have been an interesting and highly complicated innovation in auto sales.

The race is likely over for Saturn now. Saturn dealers will have to determine their own future as GM starts winding down the brand. It is also likely that there will be those that somehow find Penske to blame for not making it work. As a visionary leader, this is the chance you take. If you're willing to enter the race, you have to be willing to pull out when necessary. Kmart Auto didn't work out. On the other hand, Penske took Detroit Diesel from 3% to 30% market share in the heavy duty truck business.

As a leader role model, it's important to also notice that this isn't the same as quitting before the end. When there is no chance of success, there is little else you can do. Many times leaders are challenged to stick with a direction long enough to see it through. On the other hand, the courage to walk away when the time comes may be the most impressive of all.

-- Written by Todd Thomas in Southfield, Mich.