Leadership | April 6, 2012
leadership to love: how CEO alan mulally changed ford’s culture and transformed its business
What does it take to transform an iconic company on the verge of bankruptcy? Visionary leadership. Ford Motor Company CEO Alan Mulally used it to move his company forward.
In November 2008, Ford was in desperate need of a lifeline. He joined executives from Chrysler and GM on Capitol Hill, testifying before Congress about the predicted collapse of the U.S. auto industry. It was in definite need of help, and the “Big Three” automakers hoped government assistance would keep the industry from folding during the greatest economic decline since the Great Depression.
When Mulally returned to Michigan following testimony in Washington, D.C., he made a decision: Ford would go it alone. The company used existing assets to get bank loans and made tough changes necessary to not only to survive the Great Recession, but to make a comeback.
How did he do it? He took some big risks and conquered the big obstacles to get the company back in the fast lane:
Following his congressional testimony, Mulally concluded it was time to “create one Ford”. He gathered company executives together, and told them weekly meetings were no longer a blood sport. They were now a safe place to share information and get help to get ideas off the ground. He also brought Ford of Europe, Ford of Asia and several other subsidiaries and divisions under one name. At the height of the economic meltdown, when reporters asked Mulally if Ford was interested in a merger, he said: “Yeah. We’re going to merge with ourselves.”
A “no-fail” attitude
Mulally joined Ford in 2006 following a storied career with Boeing. (He’s credited with saving Boeing when the airplane industry was floundering after the September 11th attacks in 2001.) Mulally’s then-new co-workers at Ford expected his smile would quickly fade when learning the extent of the company’s dire financial straits.
But, his attitude never changed. He knew Ford could make a comeback and made sure to instill that attitude in his people. It was key in boosting the company’s culture. Author Bryce G. Hoffman chronicled how Mulally’s attitude helped transform Ford in his book American Icon: Alan Mulally and the Fight to Save Ford Motor Company. Hoffman told NPR: “He always saw one of his key roles as kind of being the cheerleader-in-chief, keeping everybody motivated and focused.”
Refining the company’s brand to invest in the future
Mulally understood true change went beyond his people; it was also about the company’s products. He knew the company had to make big changes to its product lines, cutting its offerings down from 97 to just 20. Mulally also realized it also wasn’t just about the cars and trucks consumers bought, but the technology inside them.
He also decided it was time to change Ford’s vehicles from the inside-out, and that meant developing products and partnerships with powerhouses in the consumer electronics industry. It began with Ford SYNC in 2007, voice-activated technology that basically turns a car into a smartphone. The communications system is wildly popular, and there are now four million cars with SYNC. The latest version of the platform, called MyFord Touch, appeared at SXSW in Austin last month.
The company has also made great strides when it comes to fuel efficiency, delivering its best-in-class EcoBoost engine. Ultimately, Mulally helped Ford make integral changes to lead the industry in innovation, producing cars and trucks people wanted to buy.
These steps saved a global, iconic brand. Over the last three years, Ford has earned close to $30 billion. Ford stock that once sold for $1.96 a share in 2009 goes for just over $12 a share today. (In case you were wondering, that’s a 500% increase!)
When Mulally first joined Ford, he didn’t have any experience in the automotive industry. But, he did have the expertise and track record needed to turn a company around. He understood the importance of changing a culture to grow people, a brand, a business. In the end, Mulally and Ford delivered great work that revolutionized an industry.