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Ford – Back on the Road

April 5, 2011 1 comment

Ford has received a lot of publicity recently, much of it due to the launch of its new global Focus model which represents the coming together of its One Ford strategy. Much of it has focussed on CEO Alan Mulally, who was recruited from Boeing 5 years ago. Inevitably he is the man the media want to speak to, so he has been doing the rounds as part of the Focus launch – plenty of similar puff pieces from interviews are available online from late last year onwards

Nevertheless, without resorting to hagiography, there is little doubt that he has been instrumental in turning the company’s fortunes round.

One of the more considered pieces was a BBC Radio 4 In Business broadcast at the very end of last year looking in a bit more detail at what Mulally has achieved in Ford. As well as the obligatory interview with Mulally, it went beyond it to try to understand why he had succeeded in changing the company, when his predecessors had failed.

I spent some time working at Ford before he was appointed, and it is probably not giving too much away to say that the consensus among my colleagues was that Ford looked doomed in 2005. Instead it just managed to start to turn things around in time so General Motors and Chrysler went bankrupt first.

One of the key aspects of the One Ford strategy was to unite the company into a single way of doing things. Ford was previously a set of local fiefdoms; somehow Mulally has managed to converge the various parts into a coherent whole (or so it is claimed). This was tried before – when I was there, a lot of the IT work was putting together various systems into a single global one, a task that was frustratingly slow.

In the parts of the organisation with which I was involved, the culture was of resistance to any change at all. There was definitely a fear of failure among management; success was defined as not failing, so doing nothing automatically qualified as success. Getting any IT change through was hard work because there were always massed vested interests opposing it. Turning the entire company round must have been like this in spades. In the programme Mulally talks at length about overturning the culture of secrecy he inherited.

Secondly, there is a much sharper focus on Ford, the brand. When Mulally took over, he inherited a disparate set of brands, most of which were soon sold off (Jaguar, Land Rover, Volvo) to focus on Ford itself. The range of cars is also becoming standardised worldwide, but with the aim of being the best in class in all market segments. Many fewer models are now offered than five years ago, and they are becoming the same worldwide. For the new Focus, 80% of parts are the same globally, and there are 10 variants off the same platform from five factories. Manufacturing plants are the same around the world so production can be moved around and made to meet demand. This is the same strategy pursued by Toyota and Volkswagen.

Thirdly, there is the value of an outsider’s perspective (Nick Scheele, Mulally’s predecessor, picked this out in the BBC programme) – he spent his entire 37-year career at Boeing, rather than at another automotive manufacturer. Not radically different, perhaps, and maybe not as much of an outsider as claimed (still engineering, albeit planes not cars), but outside the Detroit bubble. Certainly it is Boeing rather than the Japanese automotive manufactures that inspires his philosophy of Continuous improvement.

But beyond all this, as with Napoleon’s preferred Generals, luck played its part. When globally the market crashed, Ford was ahead of the game and had already taken the action needed – Bill Ford should get some credit too.

The conclusion was that previous attempts failed because crisis wasn’t bad enough (yet). Also according to James Womack of the Lean Enterprise Institute, the crisis made it much easier to get everyone to focus on company’s interests and not their own. But it’s too soon to tell whether it will be a permanent change.

Some other articles

An article from Time (09/08/2010) covering much of the same ground – Can Alan Mulally keep Ford in the Fast Lane?

Peter Day’s own comments on his BBC blog

An older article from the New York Times (28/4/09)

An IT perspective from Automotive ITIT plays crucial role in Ford’s new global strategy

A view from the marketing perspective on recovering Ford’s focus as a brand – What Marketers Can Learn From Ford, Branding Strategy Insider (13/08/2010)

The BBC’s In Business page

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