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Marginal: Facing Reality

He may not be a “car guy.” Which may be an illuminating thing.

Alan Mulally had them from the start.

Alan Mulally had them from the start. The president and CEO of Ford Motor Company, speaking to a packed house at the Center for Automotive Research’s Management Briefing Seminars (www.cargroup.org), couldn’t have had a more receptive audience even if the venue was in Dearborn, not Traverse City. There he was on stage, recalling when he was working on the Boeing 777 (he was Boeing’s vp and general manager of the program; he also participated in the 727, 737, 747, 757, and 767 developments), and how he spent a few days with Lew Veraldi, the man who was behind the original Team Taurus, when Ford truly broke the mold for what American cars could be . . .

Unlike other CEOs or execs that make presentations in front of suppliers, customers, employees, journalists, researchers, academics, and other interested parties, Mulally was working without PowerPoint. That’s right. No bullet points. No videos showing cars with hard-driving music. Just a man in a blue blazer and a tie, who walked away from the podium and the Teleprompters, who asked for the house lights to be brought up so that he could see the members of the audience as well as they could see him. He was working without a script. He didn’t even have a handful of index cards. He just talked about what they are doing at Ford to sustainably turn the company around. One of the points that he made in more than one way was, essentially, that it is important to deal with reality. While it might seem that that is what everyone does all the time, had people at Ford—as well as many more companies in this industry, OEMs and suppliers alike—been doing that, the company probably wouldn’t have had to go out to the financial community in search of $23.5-billion for funding its restructuring plan (which he charmingly described as “the biggest home improvement loan”). That’s because it might not have needed a restructuring plan. Those dealing with reality would have recognized that the vehicle manufacturer—ditto other OEMs and suppliers—has, in Mulally’s words, “tremendous overcapacity.” They would have recognized the profound over-reliance on trucks and SUVs.

Mulally said that every one of the planes that he’d had the opportunity to work on had one thing in common: “A point of view about the future.” He explained that it wasn’t that it was a case where the 747 would be a big multi-row plane and the 757 would be a long single-row plane, that one would carry X passengers and the other Y passengers, but that the point of view about what they would do would be things like transforming transoceanic travel or providing greater range and efficiency. They were meant to do something. And he suggested that that is what companies need to have when developing products. Which explains, in part, why Boeing is able to compete with its foreign competitors in a way that the domestic vehicle manufacturers haven’t, or at least haven’t done as well.

While Mulally spelled out in large strokes what they are doing at Ford (dealing with overcapacity and restructuring in order to get to the state where they can effectively deal with “real demand”; accelerating the development of new products and services; creating value; and working together within the organization, as well as with suppliers and dealers), what is more telling about Mulally’s approach to organizational effectiveness came when he talked in a more generic sense about what needs to be done—1. Understand business demands; 2. Develop a plan; 3. Include everyone; 4. Review continually—which sounds suspiciously like the Deming cycle of Plan-Do-Check-Act. Whether it is or not doesn’t matter as much as the fact that it is a methodology that can serve all of us well.

Mulally spoke of the need to sustain manufacturing in America, which is a somewhat refreshing thing to hear in the context of all-to-many-people talking about a “low-cost country” strategy, which is essentially not-too-cryptic code for “sending the work to China.” He talked about how when he spoke to Congress on the subject of Corporate Average Fuel Efficiency standards and pointed out that what was being proposed was not an arithmetic average increase but a harmonic average increase, the response was puzzlement: Was Mr. Mulally talking about math? He said that while they acknowledge that energy independence and security, as well as environmental stewardship are of concern, he also stated that he was afraid that some people in Washington could, through what he described as a “market-distorting policy” (a.k.a. CAFE), “destroy a phenomenal industry in the United States.”

If Mulally’s past is prologue, then perhaps he will be successful in leading the needed transformation at Ford. Given his freshness and candor, his belief and passion, I, like many in the room in Traverse City, as well as throughout the country, certainly hope that he will be. 

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