Ford's Mulally Could be Excellent Fit For What Ails Big Blue

Posted by: David Kiley on October 25, 2006

I had a chance to talk with Ford’s new CEO, Alan Mulally, yesterday. [See the Q&A on Businessweek.com]. After watching Ford pretty closely for 20 years, my take is that I give the former Boeing executive an excellent chance to make the kinds of moves inside Ford that are required to save the company.

No, he didn’t talk about tearing up the Lincoln product plan, or killing the Mercury brand. What he is stressing inside the company, and in my interview, is strict accountability of individuals to execute the plan put in place by chairman Bill Ford and the senior team.

For too long, Ford’s senior ranks have been silos…managers were more focused on the numbers posted in their corner of the company and advancing their own career to the next level than on what was good for the entire enterprise. Mulally moved right away to knock down some of the procedures that enable those practices. Execs “who get it” say they like the changes, especially dragging all the business heads together weekly to find out where they are in executing against the plan so that everybody hears and knows how their peers are doing. Pressure? You betcha. But a good kind of pressure.

I was struck by a little anecdote I heard. Mulally wanted to know in a meeting why some people were titling slides “Second quarter” and others titled their slides “2Q.” He made a point of getting everyone on the same page to use the “2Q” terminology in future when they are talking about qarterly results or forecasts. I don’t think Mulally was being a b**l breaker, nor do the people I talked to think he is some uptight detail freak. The point of a small exercise like that (though there are other examples coming up every week as he digs into the company) is to force everyone to get on the same page and speak the same language and break down the silos and cliques.

Prior to this week’s awful quaterly report, he pulled everyone together last Thursday to go over every inch of the press release and slides. In the past, that would have been sweated over by a much smaller group.

Mulally, say Ford executives who have been in his orbit so far, is obsessed with execution and accountability. Some of the criticism from below at Ford about Bill Ford when he was CEO was that he was not tough enough, and did not hold enough feet to the fire. If someone wasn’t doing the job, he just kept shuffling the cast. And he perhaps too readily accepted failures without challenging the system enough.

In the end, Bill Ford’s smartest move as CEO may be owning up to the fact that he wasn’t cast properly in the job. He will, I predict, be a much more effective chairman.

Mulally is a west-coast guy. He and his wife both have been driving Lexus vehicles—-he had an LS430 and she has been driving an RX330. He made a point in our interview of stressing that he had remade Boeing’s manufacturing and engineering system and proceeses following Toyota’s model. All that perspective should equip him nicely to tackle Ford’s problems. He seems like the right kind of outsider for Detroit.

Ford has a history of eating outsiders, and punishing people who moved too deliberately to change the hidebound, careerist culture at Big Blue. It appears, though, that a lot of the chief instigators of that culture have been cycled out of the company, and that those who remain must realize by now that the company simply won’t exist without changing the culture.

It will take a lot more than everyone using the same title language on their powerpoint slides. But you have to start somewhere.