There Is A Path For Ford To Get Out Of Its Own Way – Forbes

Posted: Saturday, June 03, 2017

(AP Photo/Seth Perlman, File)

After just three short years at the helm, Mark Fields’ tenure as CEO of Ford Motor Company came swiftly to an end last week. As the successor to Alan Mulally, Fields certainly had his work cut out for him. But his abrupt end and Mulally’s continuing renown at Ford  point to some clear lessons incoming CEO Jim Hackett should keep in mind as he takes up the mantle of leadership at Ford.

Despite inheriting a company poised for growth when Fields took over as CEO from Mulally in 2104, over the past three years, Ford’s stock price has declined nearly 40% from its high near $18 per share. Though profits hit new highs over that period, Ford’s business lines began losing market share, and investors hammered the company for falling behind in developing the kinds of high-tech vehicles that seem to be shaping the future of the automotive industry. Where did things go wrong?

The leading factor in Fields’ ouster seems to be a lack of leadership. From reports on the Board’s decision to remove Fields: “The shakeup is a result of Executive Chairman Bill Ford and the rest of the board losing confidence in Fields’ leadership […] Fields replaced Alan Mulally in mid-2014, but lacked his predecessor’s ability to rally employees around a common mission or to make critical decisions about the company’s strategy.”

Compare this path with Alan Mulally’s success at Ford. When Mulally took over as CEO of Ford in 2006, the company was already struggling with declining product quality, operational inefficiencies, looming legacy costs from pension and healthcare obligations and sinking employee morale and company culture. Then the Great Recession hit and the bottom dropped out of the auto market. By 2008, Ford was hemorrhaging $83 million per day, and the stock had sunk to just over a dollar.

Yet under Mulally’s leadership, three years later, business was booming, with Ford posting an operating profit of $8.8 billion on $136.3 billion in revenue worldwide for 2011 the best year for the automaker since the boom days of the late 1990s. How did Mulally accomplish such a drastic reversal?

Purposeful alignment Mulally excelled at getting everyone (starting with leadership) super-aligned on what they were working on and what they weren’t. This involved selling brands and businesses (not popular decisions or ones that everyone agreed with) and moving swiftly and decisively to action.

• Authentic engagement Mulally connected easily with employees at all levels, and did so more authentically than many of his predecessors. This included holding frank and honest union conversations, sharing his vision for the future of Ford and how success would be a win-win for both company leadership and line employees.

• Right leadership, right place Making quick and decisive leadership changes helped Mulally to get the right people into the right roles where they could have an impact. Of course, this quick and decisive leadership was another way of modeling the new behavioral expectations which in turn leads to culture shift.

• Culture of accountability and action Under Mulally’s leadership, a caustic company culture mired in endless meetings and PowerPoint decks was instead replaced with highly structured review meetings where individual leaders were held accountable for knowing their business lines inside and out. The emphasis was always on collaboration, producing a relentless drive for accountability and bias toward action.

Sitting above each of the actions above was one final key to Mulally’s success at Ford: leadership through a clear and compelling vision for the brand that united employees at all levels of the company. Mulally once said, “What I have learned is the power of a compelling vision, a comprehensive strategy, a relentless implementation process, and talented people working together…”

At Kotter International we talk about a Big Opportunity; an articulation of an aspirational outcome or destination/goal, that exists uniquely now because of the specific circumstances that have come together to shape the conditions of the marketplace. It is a statement that can and should apply to every single person in an organization, at all levels, in language that people understand; words like “execute” or “operationalize” don’t cut it.

Mullaly was able to rally the energy, passion and drive of thousands of concerned, frightened and uncertain employees around a Big Opportunity at a time when the market was perilously close to failure and mobilize them with speed and scale to a much brighter future. Mark Fields took over a far stronger company, in a market that would ultimately soften, and evidently wasn’t able to inspire his troops with his vision for the company. He wasn’t able to articulate the Big Opportunity that would harness their collective energy and drive. Instead, his tenure appeared to become three years of ‘business as usual’. And that never, ever ends well.

With the threat of Volkswagen on the horizon, declaring that they will soon leapfrog Tesla with a goal of delivering 1 million fully electric cars by 2025, Ford needs to be laser-focused on what it is going to do to maintain its market position and do all it can to ensure all employees (and partners) are on board to accelerate performance and get ahead of new threats. Ford needs a confident, competent driver with a clear vision for future success and Jim Hackett may be that driver. After all, it shouldn’t be ironic that Ford manufactures the Focus!

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