Color coding reports: Mulal Mulally ly insti institut tuted ed a ‘trafc ‘trafc light’ light’ system system at his weekly weekly manage managemen mentt meetin meetings gs,, held held Thursday mornings at 7 AM. At these meeting sessions direct reports would indicate their progress on key initiaties. A green light meant all was well, a yellow light that some attention was needed, and a red light that a situation was critical. At his ery !rst weekly session, Mulally’s direct reports showed green lights with "ust a #ew yellow lights sprinkled $%ou guys, you know we lost a #ew &illion dollars last year,$ he told the group. $'s there anything that(s not going well)$ A#ter that the process loosened up. Americas &oss Mark *ields ields went went !rst. !rst. +e admit admitted ted that the the *ord *ord dge, due to arri arrie e at deale dealers rs,, had some technical pro&lems with the rear li#t gate and wasn(t ready #or the start o# production+e urged urged them them to roll roll up their their sleee sleees s and ask new -uestion -uestions, s, puttin putting g away away their their &oin &oing g gloes. /ots o# red lights showed up at the net Thursday morning meeting. 0y personally modelling candor and a willingness to openly speak a&out comple, ta&oo su&"ects, Mulally &uilt a sa#e operating enironment #or his direct reports. aluate Mulally’s change methods. Are these e1ectie) 2hen Allan Mulally took oer at *ord *ord in 3445, the company was losing &illions o# dollars and the company was &asically a dys#unctional organi6ation, no colla&oration and inefciency. 0ut soon a#ter taking oer, Alan started implementing some changes and was a&le to turn the enera&le automaker around, reamp the company culture and restoring the &usiness to pro!ta&ility. o what are the changes that he made) +is changes were all laid out in a plan he called ‘8ne *ord, which can &e reduced to #our simple, easy9to9understand points: Mulally kept hammering home these #our points in eery meeting, eery town hall session, eery analyst meeting and press con#erence ; Aggressi Aggressiely ely restruct restructure ure to operate pro!ta&l pro!ta&ly y at the current current demand and changing changing model mi: he restructured the organi6ation to make the organi6ation leaner 9 2hen 2hen Mula Mulall lly y took took oer oer as C8 C8 in 3445 3445,, *ord ord was was in toug tough h sh shap ape. e. 't had had lost lost a whopping 3<= o# its market share since >>4. The company held a huge port#olio o# poorly per#orming per#orming &rands including ?aguar, ?aguar, /and @oer, Aston Martin, and olo. olo. 0ut none o# these &rands was #aring well, and each re-uired ma"or capital in#usions to compete. +e &elied that these cars were a dangerous distractions #rom *ord’s core &usiness so persuaded 0ill *ord *ord to sell o1 ?aguar, /and @oer, Aston Martin and #ocus its resources on on the core &rand only.
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There was not just one Ford, but many. In addition to just plain Ford, there was Ford of Europe, Ford of Asia and a host of other divisions and subsidiaries, each one manufacturing man ufacturing different cars. They used to operate regionally And there was little coordination, or even cooperation between its many parts. Now we are leveraging our global assets, innovation, technology, and scale to deliver world class products for every maret. Moreoer Moreoer,, changes changes also also include included d massie massie cost9c cost9cuttin utting g initiati initiaties es that that included included suspension o# diidends to shareholders, closure o# 7 plants and downsi6ing 344>
It used to be that we had h ad too many suppliers and dealers. Now we!re putting in place the right structure to ma"imi#e the efficiency and the profitability for all of our partners.
$hen he too over at a t Ford, the labor costs as high as %&'(hour within Ford!s unioni#ed worforce, maing the company!s operating margins uncompetitive at home and overseas. )owever, he was able to negotiatioate with the *A$ to reduce labor costs,
3;Accelerate deelopment o# new products our customers want and alue:
approach to our customers was+ If you build it, they will come. $e produced more vehicles than our customers wanted and then slashed prices, hurting the residual values of those vehicles and hurting our customers. Now we are aggressively matching production to meet the true customer demand. After jettisoning the array of wea auto brands noted earlier, Ford went from selling & different automotive products to just -. This simpler, leaner product line enabled /ulally to drill down on manufacturing e"cellence, product development e"cellence, and customer service e"cellence. It used to be that we focused heavily on trucs and 0*1s. Now we are shifting to a balanced product portfolio, with even more focus on small cars and the advanced technologies that will drive higher fuel economy in all of our vehicles
Mulally newly enisioned *ord not simply as a car company, &ut as a ‘mo&ility company.’ +e &rought innoatie technology to *ord’s products that trans#ormed the drier eperience, realigning its product port#olio #or the 3st century. ; 2ork together e1ectiely as one team And at the heart o# the 8ne *ord plan is the phrase D8ne Team.E Feople are !rst. The main thing a&out GimplementingH a compelling ision is to include eery&ody 99 pull eery&ody together around the plan to implement a compelling ision.$ the senior leel management and heads o# regional and other diisions were hesitant in deliering &ad news during meetings &ecause it was not a part o# their corporate culture at that time This made it impossi&le to hae an honest discussion a&out the company’s many challenges, &ecause any time an eecutie admitted they had a pro&lem, their rials would pounce. 0ut Mulally had 6ero tolerance #or that sort o# nonsense.. ery week we hae a 0usiness Flan @eiew meeting, or 0F@. 8ur entire glo&al leadership team, eery &usiness leader, eery #unctional leader, attends either remotely or in person. 2e talk a&out the worldwide &usiness enironment at that momentI Mulally made his weekly eecutie meetings a sa#e enironment where data could &e shared without &lame. 't proides a #antastic window on the worldIthe whole team knows eerything that is going on. 'n his weekly meetings, he urged *ord’s senior leaders to o1er each other help. Mulally trans#ormed this short9sighted, cutthroat, careerist culture into a model o# colla&oration and efciency The entire *ord team J #rom employees to shareholders, suppliers to dealers J is a&solutely committed to implementing our new &usiness model and &ecoming a lean, pro!ta&le company that &uilds the &est cars and trucks on the road #or our customers. Mulally’s D2orking TogetherE philosophy did not stop at the ofce doorK it etended to all o# *ord’s stakeholders. +e applied this same principle to the company’s dealings with its suppliers, dealers and een the Lnited Auto 2orkers. +is message to each group was simple: 2e are in this together, and i# you help us succeed we will make sure you share in our success.
'n 3447, Mulally held a secret meeting with LA2 Fresident @on ettel!nger in which outlined his turnaround plan #or *ord. +e told the union &oss that he would &ring production &ack to the Lnited tates i# ettel!nger would agree to ma"or concessions that would allow *ord to &uild ehicles pro!ta&ly in this country. The result was a watershed contract that #undamentally changed the rules o# the game the LA2 had &een playing with *ord #or decades and went a long way toward closing the company’s la&or cost gap with #oreign automakers. The union agreed to this &ecause it could see that this would &ring &ack "o&s. Nuring the !nancial meltdown o# 344O and 344>, Mulally also won important concessions #rom &ondholders &y conincing them that taking a haircut on their notes was #ar &etter than seeing them turned into worthless paper. 'n the end, most o# them made more money o1 those &onds than they eer epected. At the same time, Mulally approed a plan to dramatically reduce the num&er o# suppliers *ord did &usiness with, &ut negotiated deeper, more lucratie contracts with those that made the cut. As a result, *ord went #rom haing the lowest supplier satis#action rating in the industry to the &est. And he worked similar magic with *ord’s dealers, conincing weaker #ranchise owners to sell their stores to stronger ones that could a1ord to inest in the customer eperience. 'n each o# these cases, he got key constituents to make important changes #or the &ene!t o# *ord &y showing them how those changes would &ene!t their own organi6ations. Think o# all the di1erent players you rely on and show them how they can &ecome more success#ul &y contri&uting the success o# your enterprise.
2/r. 3hairman, 0enator 0helby, and members of the 3ommittee. 0ince the last hearing, I have thought a great deal about the concerns you e"pressed. I want you to now I heard your message loud and clear. 4n Tuesday, you received Ford!s detailed and comprehensive business plan, and I appreciate the opportunity to return here today to share Ford!s vision and progress in becoming a profitable, growing company. 5ou were clear that our business model needs to change. I agree. And that!s e"actly why I came to Ford two years ago to join 6ill Ford in implementing his vision to transform our company and build a greener future using advanced technology. 7et me share with you what we have done to change from how we used to do business to how we do business now. It used to be that we had too many brands. Now we have a laser focus on our most important brand+ the Ford blue oval. In the last two years, we sold Aston /artin, 8aguar and 7and 9over : and reduced our investment in /a#da. And this wee, we announced we are considering a sale of 1olvo. It used to be that our approach to our customers was+ If you build it, they will come. $e produced more vehicles than our customers wanted and then slashed prices, hurting the residual values of those vehicles
and hurting our customers. Now we are aggressively matching production to meet the true customer demand. It used to be that we focused heavily on trucs and 0*1s. Now we are shifting to a balanced product portfolio, with even more focus on small cars and the advanced technologies that will drive higher fuel economy in all of our vehicles. It used to be that our labor costs made us uncompetitive. Now we have a ground;breaing agreement with the *A$ to reduce labor costs, and we appreciate the *A$!s continued willingness to help close the competitive gap. It used to be that we had too many suppliers and dealers. Now we!re putting in place the right structure to ma"imi#e the efficiency and the profitability for all of our partners. It used to be that we operated regionally : European cars for Europe. Asian cars for Asia. American cars for the *.0. maret. Now we are leveraging our global assets, innovation, technology, and scale to deliver world class products for every maret. It used to be that our goal was simply to compete. Now we are absolutely committed to e"ceeding our customers! e"pectations for >. 6ut we do support a government bridge loan because it is critically important to the *.0. auto industry. 0pecifically, Ford re
In fact, we invite you to visit us in =earborn to ic the tires, loo under the hood and tal to our employees. $e hope you will join us and see for yourself the progress we are maing to develop the vehicles of the future.?
