Mulally: Ford's Most Important New Model

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Plainspoken New Guy

Mulally is big on symbolism to get his message across. An early example came at one of his weekly Thursday meetings at which he brings together the operating heads of the Americas, Europe, South America, and Asia to share progress they are making against their targets and to find new ways to share resources. In preparation for third-quarter financial results, some regional chiefs' slides said "3Q," while others said "Third Quarter." It may sound picayune, but Mulally questioned why the slides weren't uniform. Now they are. "When you get people on the same page talking the same way in the little ways, it helps with the big ways," says Mulally.

But Mulally is still somewhat green about the job. Besides his C-pillar query, he recently had to ask what the name of the auto industry's lobby group is (Alliance of Automobile Manufacturers) and what NADA stands for (National Automobile Dealers Assn., which he will address in a keynote speech in February). He uttered the name of Lincoln's concept car for the Detroit Auto Show (which he has never attended until now), the MKR, but said the acronym very slowly and turned to Fields to see if he got it right. And when asked why Ford had the poorest corporate average fuel economy (CAFE) rating among major automakers, he asked one of Ford's public-relations managers, "Is that right?"

But the lack of experience is balanced with a refreshing frankness and plain communication that staffers appreciate. Before the company's announcement of its latest restructuring, he asked staff, "What are we saying about Jaguar?" Then-Ford Europe chief Mark Schultz rattled off a three-paragraph answer he planned to read to the media. The CEO responded: "I have no idea what you just said.…Are we keeping Jaguar? If so, let's just say that. If it changes, we'll let them know."

"Working Smarter" Business Model

And he is attacking, to the delight of many Ford executives, a system by which the automaker shifts managers as often as once a year. The company, for example, has had five heads of Ford Europe in as many years. "It's amazing," says the former Boeing executive. "There's been no accountability. Engineers have been shifted every six months and told to be entrepreneurs, each with their own agenda. I worked in the same job for nine years at Boeing."

Key to Ford's comeback is not so much making do with fewer resources than its rival Toyota, but working smarter with what it has. Consider that Ford currently has different V6 gasoline engines for the U.S., South America, Europe, and Asia. And it has had three distinctly different small cars for the South American, European, and U.S. markets. "The cost and complexity of that duplication is ridiculous," says Mulally. Ford has recently committed to building one small car for all its world markets, with slight changes in sheet-metal designs to reflect local tastes.

That's to avoid the failure of trying to sell the same car around the world, which the company did in the 1980s and early '90s with the Ford Contour compact sedan. And the car's engineering will be sourced from one recently formed core engineering center in Michigan. "We wound up with so much duplication because Europe wanted to source from Europe and South America wanted to source from South America, and so on," says Fields. "It's a business model that doesn't work, and we're paying the price for keeping it going as long as we did."

Drive and Curiosity

Mulally is coy about divulging details of his trip to Japan last month to visit Toyota Chairman Fujio Cho. Generally, he says, it was to discuss fuel-economy regulations and technology as well as "places where we could cooperate." When asked how long the meeting lasted, his almost comical attention to detail is evident. "Two hours and six minutes," says Mulally.

Mulally, who may be motivated to succeed at Ford in part because he got passed over twice for the CEO job at Boeing, has an almost kid-on-Christmas-morning curiosity about Ford. On a recent trip to Las Vegas, he rented a Ford Taurus, a car he has affection for from when he studied the car's development 20 years ago for Ford's production systems. Ford recently ceased production after turning the car into a rental fleet car. "I haven't had time to do the deep dive on why we stopped investing in it, but I'd like to," he says wistfully. "You know, Toyota used to be scared to death of Ford and the Taurus and thought we had this big plot hatching when we stopped investing in it to make it better. I wish we had."

Kiley is a senior correspondent in BusinessWeek's Detroit bureau.