Saturday, May 16, 2009

How Alan Mulally is Saving Ford Motor Company

I think readers will enjoy Fortune's new cover story on Alan Mulally, the CEO of Ford Motor Corporation: "Fixing Up Ford." I enjoyed the piece as a premier case study in corporate leadership; but also as one of personal success for Mulally, who at 63, sounds like a man possessing the vigor of someone half his age.

CEO Alan Mulally challenged his designers to build a cool Taurus and this is what he got. Combining "Bold American" and European "kinetic" styling, it's more of a personal luxury sedan than the workaday four-door it replaces. That will mean lower sales volumes but also higher profit per unit.

Mulally moved to Ford in 2006. He had worked at Boeing since 1969. He had been chief engineer for development of the 777, and was later Vice President of Engineering for commercial aircraft. Mulally had no sales experience, and he wasn't a "Detroit car man," much less a car man at all. He sold his Lexus after moving to Dearborn. What's most impressive is Mulally's "results oriented" leadership style. His management is crisp and authoritative, although he defers to the firm's design experts on the minutiae of the product lines. But on the big questions of the company's past mistakes and where it's headed, Mulalley made key decisions that placed Ford in good stead. When Mulally testified before Congress in December 2008, along with GM's Rick Wagoner and Chrysler's Robert Nardelli, he annouced that Ford would be able to survive the recession without a bailout.

For some flavor,
here's the paragraph discussing Mulally's decision to revive the Ford Taurus:
The story of how Mulally revived Ford's best-known sedan is a quintessential demonstration of the Mulally method - analyzing a situation using accepted facts and then winning over support through persistence. Here's the story, told by Mulally:

"I arrive here, and the first day I say, 'Let's go look at the product lineup.' And they lay it out, and I said, 'Where's the Taurus?' They said, 'Well, we killed it.' I said, 'What do you mean, you killed it?' 'Well, we made a couple that looked like a football. They didn't sell very well, so we stopped it.' 'You stopped the Taurus?' I said. 'How many billions of dollars does it cost to build brand loyalty around a name?' 'Well, we thought it was so damaged that we named it the Five Hundred.' I said, 'Well, you've got until tomorrow to find a vehicle to put the Taurus name on because that's why I'm here. Then you have two years to make the coolest vehicle that you can possibly make.'?" The 2010 Taurus is arriving on the market this spring, and while it is not as startling as the original 1986 Taurus, it is still pretty cool.
And I like this section of his preparation and leadership style:

Arriving at Ford, Mulally boned up on the company like a student cramming for an exam, interviewing dozens of employees, analysts, and consultants, and filling those five binders with his typed notes. The research allowed him to develop a point of view about the auto business that now frames all his decisions. Its pillars draw heavily from his experience at Boeing: Focus on the Ford brand ("nobody buys a house of brands"); compete in every market segment with carefully defined products (small, medium, and large; cars, utilities, and trucks); market fewer nameplates (40 worldwide by 2013, down from 97 worldwide in 2006); and become best in class in quality, fuel efficiency, safety, and value.

Are corporate mission statements so 1990s? Not to Mulally. To let everyone know what he had in mind, Mulally created those plastic cards with four goals on one side ("Expected Behaviors") and a revised definition of the company ("One Ford") on the other. To Mulally, it is like sacred text: "This is me. I wrote it. It's what I believe in. You can't make this shit up."

"I am here to save an American and global icon," Mulally declares. He drives performance the way he did at Boeing, with the Business Plan Review, a meeting with his direct reports, held early every Thursday. "I live for Thursday morning at 8 a.m.," he says. First up are Ford's four profit centers: the Americas, Europe, Asia Pacific, and Ford Credit. Then come presentations from 12 functional areas (from product development and manufacturing to human resources and government relations).

"When I arrived there were six or seven people reporting to Bill Ford, and the IT person wasn't there, the human resources person wasn't there," says Mulally. "So I moved up and included every functional discipline on my team because everybody in this place had to be involved and had to know everything."

The Thursday meetings are held in what's known as the Thunderbird Room, one floor below Mulally's office, around a circular dark-wood table fitted with three pairs of videoscreens in the center. Eight clocks, one for each Ford time zone, are mounted on the wall. There are seats for 18 executives around the table, with additional ones on the perimeter ("Here's where I sit," says Mulally, indicating a chair: "Pilot's seat").

There are no pre-meetings or briefing books. "They don't bring their big books anymore because I'm not going to grind them with as many questions as I can to humiliate them," Mulally says. "We'll see them next week. We don't take action - I'm going to see you next week." No BlackBerrys are allowed, and no side conversations either - Mulally is insistent about that. "If somebody starts to talk or they don't respect each other, the meeting just stops. They know I've removed vice presidents because they couldn't stop talking because they thought they were so damn important."

Mulally instituted color coding for reports: green for good, yellow for caution, red for problems. Managers coded their operations green at the first couple of meetings to show how well they were doing, but Mulally called them on it. "You guys, you know we lost a few billion dollars last year," he told the group. "Is there anything that's not going well?" After that the process loosened up. Americas boss Mark Fields went first. He admitted that the Ford Edge, due to arrive at dealers, had some technical problems with the rear lift gate and wasn't ready for the start of production. "The whole place was deathly silent," says Mulally. "Then I clapped, and I said, 'Mark, I really appreciate that clear visibility.' And the next week the entire set of charts were all rainbows."
Read the whole thing here.

Mulally's story reminds me of why America is the greatest industrial nation in history, but why we will be the greatest industrial nation for decades, if not centuries, to come.

Photo Credit: "
Seven Cars for Ford's Future."

6 comments:

smitty1e said...

If I'm buying a domestic car, it's a Ford.
How will BHO tolerate Ford?

Donald Douglas said...

Cool Smitty!

Dave said...

I applaud Ford's efforts, but if I were Alan Mulally, I would be seriously considering moving Ford's HQ to Australia.

-Before Obama decides to go after them, as well.

-Dave

Jordan said...

Move Ford to the South. Right-to-work = screw you UAW!

Also, why aren't there any anti-trust laws on unions? The UAW has it hands in so many companies, but its the businesses that can't get too big?

Dennis said...

A rather nice article about what it takes to be a CEO and what appears to be a well thought out approach to putting FORD back in the green. All the better that FORD chose, correctly, not to allow government interference in their business by taking bailout money.
It is always interesting to see people attack others who have to make complex and difficult decisions that affect large numbers of people in a corporation. This is not to count the numbers of third party businesses that get their business, directly or indirectly from a company like FORD.
I would suggest that anyone who wants to protest the government's illegal stance in TARP, et al, should buy a FORD and frequent only those businesses that do not take government bailouts to the best of their ability.
Leadership is very demanding and requires one to take responsibility for their actions. One is not going to get all of the right solutions, if that is possible, but is doing well to get a large number of them solved in a positive manner.
The time is past approaching where Obama, Congress, democrats and the Left can blame Bush, et al, for everything. Sadly, I doubt that taking responsibility is just not one of the attributes they have inherent in their makeup. That is why there is so much emphasis on groups.
Many solutions to the issues we face do not have totally positive means. It would be interesting to hear those on the Left gladly take responsibility for the thousands or more deaths that might have occurred given that "water boarding" was not used, but they will whine that there are better methods, of which they never explain, to gain information in a timely manner to take the requisite precautions.
Well after all the Left is the Dark Side for almost every tenet contains the death of some group, be that through abortion, infanticide, euthanasia, et al. Oh how they enjoy wishing this person or that person death through a number of means, but they do not really mean it.......hint, hint, hint............

The Vegas Art Guy said...

Great article. I'm still seriously considering getting a Harley though...