Alan Mulally: The Outsider at Ford

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Mulally has imposed discipline on a company that veered from one strategy to the next. Brands such as Lincoln and Mercury changed their positioning every year. Today the plan, hashed over with dealers who have been given more say, is locked: Lincoln will focus on premium sedans and SUVs, while Mercury will sell premium small cars and crossovers.

Now that Ford's far-flung fiefdoms are starting to collaborate, a once wasteful and balkanized vehicle development system is beginning to cohere. To make sure it all runs smoothly, Mulally tapped a Ford veteran, Derrick Kuzak, as his global car development chief, a first for Ford. Kuzak has pushed his people to improve interiors, sold management on small gas-sipping engines that won't cost consumers as much as hybrids, and created huge cost savings by making sure SUVs and trucks share more parts. "He has the confidence of management and people working for him, so he gets the right projects through and the wrong ones stopped," says design consultant Jim Hall of 2953 Analytics. Kuzak's big test comes next year, when the U.S. starts getting the same acclaimed Ford vehicles sold in Europe, rather than the dumbed-down versions of the past.

Ultimately, it's the cars that Mulally will be judged on.

Mulally, in part, has staked his reputation on the 2010 Taurus sedan. When he became CEO, the Taurus name had been relegated to the museum of dead brands. Ford had so botched successors to America's best-selling car of the 1980s that it had decided it was a lost cause. Mulally saw things differently. He believed the Taurus name had value and before long challenged his team to deliver a new car in 24 months using the existing platform but with a whole new look.

The Taurus that will roll into showrooms this summer looks nothing like the old model, which Mulally compared to "a deflated football." Sleek and chiseled like Ford's European sedans, it already has wowed critics. The question is whether $35,000 for a fully loaded model will fly in a recession. After all, the previous incarnation sold for a discounted 16 grand.

Before the downturn upended many assumptions, Team Mulally figured Americans would buy 14.5 million cars this year and that Ford would sell 15% of them. Now, as it idles factories and contemplates more employee buyouts, Ford has cut its estimate to a worst-case 10.5 million. JPMorgan analyst Himanshu Patel believes Mulally may have to tap a $13 billion government credit line by Christmas. That wouldn't be fatal—but it would be a setback for the outsider who has fought so hard to distance Ford from its Detroit rivals.

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