Gigaom

The Case for Ford's Chief Executive to Run "One Microsoft"


Ford CEO Alan Mulally at the launch of the new Mustang in New York, on Dec. 5

Photograph by Scott Eells/Bloomberg

Ford CEO Alan Mulally at the launch of the new Mustang in New York, on Dec. 5

As the Microsoft (MSFT) CEO succession story drags on and on—much to the chagrin of people in Redmond, Wash., Ford Chief Executive Officer Alan Mulally is either the leading contender for the job or is fading as Microsoft insiders Satya Nadella and Tony Bates gain ground.

If you wonder what Mulally might bring to the table, you probably couldn’t do better than chat with Bryce Hoffman, author of American Icon, a book about Mulally’s tenure at Ford (F). So I did. Hoffman has covered the auto industry at Detroit News since 2005 and—bonus points—also covered Microsoft in the late 90s and early 2000s while at the Contra Costa Times and other outlets.

Here are some reasons why Hoffman thinks Mulally could be just the ticket for Microsoft:

Mulally gets “big” and isn’t cowed by it: As CEO of Ford and former CEO of  the Boeing Commercial Airplanes (BA) division, both gigantic manufacturing companies, Mulally has experience with scale. Ford has trailing twelve month revenues of about $146.5 billion and market cap of $66.4 billion, with about 65,000 employees (not counting a few hundred thousand in Ford dealerships.)

He has engineered major culture change: Pre-Mulally Ford competed as much with itself as with GM (GM) or Toyota (TM), Hoffman says. Microsoft has a comparable rep: Product groups were (are?) often at odds with each other, so Windows hated Office, Office hated Windows, Windows and Office hated Azure, and so on. That was the main reason for the “One Microsoft” reorganization announced last summer. Someone who could blow up those barriers and get people working together would be a huge plus.

An example of Ford’s version of that dysfunction: At one point, the head of Asia actually mandated that a new, fuel-sipping car under development for that market be built in such a fashion that it could not be sold in the U.S. without prohibitively expensive changes. The reason? The head of Asia saw his counterpart in North America as a rival: “He didn’t want the North American guy to get his hands on this hot car,” Hoffman says. Division heads often worked in ways that were not only damaging to rival divisions but damaging to Ford as a whole.

Mulally was able to get that gaggle of “sharp-elbowed” executives to work together, Hoffman says.

He is data-driven: Mulally mandated that everyone collect and work from the same information. Before he came in, executives built spreadsheets to suit their own needs. But at Mulally-instituted  business-plan review meetings held every Thursday, no one brings their own set of self-serving numbers.

“All of the businesses were reduced to measurable data that could be measured and presented in a series of slides—just numbers and color-coded charts. Before that, meetings were like a scene from an old western: Everybody came in sort of reaching for their guns,” says Hoffman. Something about a single set of charts leached ego from the room.

He understands compensation: Before Mulally, Ford execs were compensated according to their division’s performance, fostering internecine bloodshed. “If that guy won, you lose,” went the thinking. After Mulally arrived, bonuses were calculated—at least, in part—on how well all divisions fared, focusing attention on the company as a whole.

He knows he doesn’t know everything: Mulally relies on the experts. When he joined Ford, he was asked whom he was going to fire. The answer was: No one. “He said he wouldn’t sack anyone because Ford had the talent to do what needed to be done. He saw his job as bringing that talent out,” Hoffman explains.

He’s a techie: Ok, Mulally’s not a programmer or a software engineer, but he was trained as an aeronautical engineer and that’s certainly a techie realm. He brings an engineering focus to the problems at hand. which is something that Microsoft people should appreciate.

He thinks big, multifaceted companies can work: In one anecdote from American Icon, candidate Mulally told then-CEO Bill Ford that he was not interested in coming over just to break Ford up. Assured that this was not the case, Mulally in September 2006 was named the automaker’s president and CEO.

Many on Wall Street would love to see Microsoft broken up “to unlock shareholder value.” That’s not a plan that Microsoft Chairman Bill Gates and outgoing CEO Steve Ballmer would support. Nor would Mulally.

In summary, the biggest thing is culture change. At Microsoft—as at Ford—lots of very smart people could invent the “next big thing,” but the next big thing only brings short-term gains. A reinvigorated corporate culture that promotes innovation and rewards collaboration in pursuit of common goals could be a winner for years to come.

If the “One Microsoft” idea has any future, Mulally’s past performance says he’d make a logical CEO choice.

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Darrow writes for Gigaom.

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Companies Mentioned

  • MSFT
    (Microsoft Corp)
    • $45.01 USD
    • -0.17
    • -0.37%
  • F
    (Ford Motor Co)
    • $17.19 USD
    • -0.04
    • -0.23%
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