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Ford: The Way Beyond 2000

Ford is changing—again. But this time, things are different.

In 1995, Alex Trotman, then chairman and CEO of the Ford Motor Company, announced an initiative called “Ford 2000.” The objective of the program was, in part, to “combine the power, resources, and reach of a world company with the immediacy, intimacy, agility, and spirit of a small one.” Fast forward to January 2006, when then chairman and CEO of the Ford Motor Company, Bill Ford, Jr., announced the “Way Forward Plan,” which, in part, is to “deliver the innovation customers demand and create a business structure for us to compete—and win—in this era of global competition.”

Derrick Kuzak joined Ford Motor Company in 1978. So he’s been through Ford 2000 and is involved in the Way Forward. His involvement is significant as he is group vice president of Product Development for the company, and his brief includes Global Ford—the “world company.” The “global” competitor.

So how is the Way Forward approach to product development—which he said encompasses aspects from design to launch to life cycle support—different from that which was part of Ford 2000? Kuzak answered, “What’s different is that today we have business units that have a responsibility for profit and loss and for their markets and customers, which we didn’t have with Ford 2000. So from a product development perspective, I view our role in product development as serving two customers. The first and foremost is the end customer, who spends his or her precious dollars on our vehicles. The second is the business unit. Providing products that meet their market needs, as well as helping to deliver their business objectives. The second difference is that we are totally focused on brand; we didn’t have that in the Ford 2000 timeframe. The third is that we are building on a number of different competencies and processes that we demonstrated work.” Among the competencies he enumerated are a global product development program and the ability to develop platforms that address the needs of varied brands (e.g., the C1 platform that encompasses the Mazda3, Mazda5, Volvo S40, V50 and C70, as well as the European Ford Focus).

Kuzak continued, “From an engineering and purchasing perspective, we use global commodity business plans now to really develop commodity strategies for weight reduction, cost reduction, technical strategy, sourcing strategy; we’ll extend that to much more global impact than we have to this point.” In other words, he’s looking globally and locally to meet customer demands.

The question arises, then, is how he will know that it is working, and what metrics he’ll be applying to determine that. When we talked with Kuzak, he’d been in the global position for two weeks. But he said he and his team are focused on “developing a better product portfolio, one that’s more exciting for our customers and doing that more efficiently, and at lower material costs. So the metrics clearly will be around product competitiveness perspective, customer satisfaction, the freshness of the portfolio, and share.” He went on to explain that the metrics would be at the commodity level, platform level, and full vehicle level. They will be looking at efficiency. Engineering cost. Capital. Material cost. “We’ll be looking at it at an enterprise level and global brand level.”

Cost is a factor that is fundamental to the fortunes of Ford. As important as product in some ways. Kuzak acknowledged, “That’s what our whole Way Forward strategy is about—competitiveness in terms of cost structure and product. We certainly recognize that we have to be competitive in terms of cost. We are tracking that at two levels. One level is the structural cost.” This is being addressed via the restructuring, which Kuzak said includes everything from manufacturing plants to salaried workers in product development. The second level is material cost. He explained that they’re deploying commodity business plans and team value management. They’re working with suppliers to improve the value stream from raw materials all the way to parts.

Kuzak added, “The last point that I’d make is that we have a team that’s worked together.” Kuzak, Mark Fields, Ford president of The Americas; Lewis Booth, chairman, Ford of Europe; John Parker, group vice president, Asia, Pacific and Africa, have all worked together in the past. What’s more, he said, the senior people within the product development organization have also worked together on cross-brand, cross-market programs. “You can’t underestimate the importance of having worked together and trusting each other.”

“In sum: I think there’s a lot that’s radically different from Ford 2000.”

 

Kuzak File

Derrick Kuzak, a native of Detroit, a graduate of the University of Detroit (B.S. and M.S. in Electrical Engineering), joined Ford in 1978 as a research engineer. As vehicle line director for the Compact Pickup and SUV vehicles from 1997 to 1999, he was involved in the development of the Ford Escape. He was moved to Europe where he was executive director for medium car programs, including the European Focus, in 2000. He was later made vice president, Product Development, Ford of Europe, before moving back to The Americas, when, in August 2005, he was named vice president, North American Engineering. He was subsequently named group vice president, Product Development, The Americas. On December 14, 2006, Ford president and CEO Alan Mulally announced a global corporate realignment in which Kuzak was given responsibility for global product development.