Squaring the Oval
Just how did affable, aw-shucks mid-westerner Alan Mulally manage to turn around Ford Motor? There’s no doubt that he has been the driving force behind the transformation of an old wreck into one of the world’s most profitable auto companies. Witness the Motown manufacturer’s first-quarter results: $1.4 billion of net income globally while its North America auto business cranked out its best showing in over a decade, a pre-tax profit margin of 11.3 percent. Five years ago, such numbers would have been considered a pipe dream for any U.S. carmaker.
On first meeting, Mulally just doesn’t seem the type. He’s smart, no doubt about that. His good humor is infectious and he clearly wants everyone to be able to have their say. He’s an expert glad-hander and knows how to get his point across to virtually any audience in simple terms. Those are all talents cultivated by politicians, a similarity that isn’t lost on Bryce Hoffman. In his new book “American Icon: Alan Mulally and the Fight to Save Ford Motor Company,” the journalist for the Detroit News describes how the carmaker’s newly appointed chief executive descended on his paper’s newsroom in late 2006 “like a veteran campaigner looking for an endorsement.”
But behind that politician’s exterior hides a managerial expert. Hoffman captures Mulally’s strength of purpose as well as his adaptability – willing to tweak his plans as he learns more or as the situation changes. He’s a great long-term planner – of numbers, car marques and people. He early on looked several managerial layers below the top to identify potential replacements for key posts.
Still, Mulally’s genial nature is also one of his greatest strengths, for it lulls potential opponents into a false sense of security, if not superiority. Hoffman tells of Mulally’s first meeting with Ford’s senior executives, a group which exemplified the firm’s dysfunctional culture – internecine warfare and intolerance for change. Chief technical officer Richard Parry-Jones condescendingly pointed out the complexity of the carmaker. With his customary smile, Mulally the former aircraft engineer and Boeing executive replied: “The typical passenger jet has four million parts, and if just one of them fails the whole thing can fall out of the sky. So I feel pretty comfortable with this.”
Of course, clever quips don’t restructure struggling industrial franchises. Hoffman’s enviable list of contacts allows him to tell how Mulally got the company back on track – and won over his new team – by demolishing the silos walling off Ford’s various units and regions.
The transition can be color-coded. Mulally introduced mandatory weekly meetings at which senior executives were supposed to mark good news in green and problems in red. Since bad news had often previously led to internal ostracism, if not dismissal, at first there was no red to be seen. Then North America head Mark Fields, assuming he was for the chop anyway, gave it a go. It took two weeks before the rest believed that Fields wouldn’t be punished, but then the presentations all came with liberal splatters of red. That, for Mulally, was the “defining moment”.
Of course, that merely marked the start of three years of pain before the company was back on the road. And it wasn’t all Mulally’s doing.
Bill Ford had the sense, and the courage, to park any ego at being the boss of the family company and recognize he needed to cede control to someone like Mulally. And both Bill Ford and then-finance chief Don Leclair had already started work on borrowing the $23 billion that kept the company out of bankruptcy in 2009 – all of which Hoffman covers well. But it was Mulally’s gift for refashioning Ford’s dysfunctional management structure that released the brakes.
Mulally deserves a little more criticism than Hoffman gives. Ford’s savior was guilty of more than “a bit” of hypocrisy when he ordered Fields to stop commuting from Florida to Detroit by corporate jet after the press got wind of it – Mulally was doing the same to Seattle. And Hoffman’s glowing moral portrait jars with Mulally’s mercurial use of some executives, until he felt he could get rid of them.
These, though, are minor quibbles. As a study in how to manage a rusting company back to success, “American Icon” hits the spot.