Ford’s turnaround under Alan Mulally was seen nothing short of spectacular, posting record multi-billion-dollar losses in 2006 to 5 consecutive years of annual profits. In fact, it was so impressive that he became a leading candidate to take over at Microsoft after CEO Steve Ballmer left, due to his unique elements of his management leadership and management style that have helped change Ford’s culture. According to him, a turnaround is not just about executives at the top of their brilliant strategies, but it is about figuring out a way to get every employee to understand the vision of the company. If people are optimistic, they are going to make sacrifices and do the necessary work to turn things around. Commenting on his starting point as a leader, he says, “It is an honor to serve.”
Innovating Ford from Tough Situations
Mulally’s turnaround of Ford is being studied by business students as an artful combination of the needed financial belt-tightening and a cultural shift that took the automobile manufacturer from the brink of bankruptcy to the forefront of growth in the automobile industry in the US. The cultural shift he put in place had made a huge impact on how teams were structured, how they collaborated and how innovation ultimately flourished under his guidance, making Mulally one of the most significant corporate leaders of the last decade.
When Mulally took over as CEO of Ford in 2006, the company was in tough shape, losing a whopping 25% of its market share since 1990. Holding a huge portfolio of brands, such as Land Rover, Jaguar, Aston Martin and Volvo, the company was not faring well, where each brand needed major capital infusions to compete. Ford’s cycle time for the developing new cars lagged Japanese automakers by months, and adding to Mulally’s worries were the high labor costs within his company’s unionized workforce, making operating margins uncompetitive.
The “One Ford” Innovation Plan
This was a solution to restore a leadership position to Ford, which integrated all the necessary components in any major enterprise-wide innovation effort. The “One Ford” innovation plan depended not only on visionary thinking and new products, but also on the ability of a company to propel new thinking from one team to another, one function to another and one partner to another. The innovation platform consisted of 4 main points, including bringing all employees together as a global team, leveraging the company’s unique automotive assets and knowledge, building valuable cars and trucks, and arranging the necessary financial support to pay for it all. This was a plan that required the company to work on any angle, including strategic vision, workforce competitiveness, financial health and product development, which are all no easy tasks.
The “Mobility Company” Vision
Realizing the future of Ford resting on the technology inside it, not only on its vehicles, Mulally developed products and partnerships with powerhouses in the consumer electronics industry to turn their cars and trucks into mobile entertainment and communication centers, going with the fast advancement of social media and smartphones. Today, all major auto manufacturers are following Ford’s lead to make personal technologies a core component of vehicles.
Collaboration and Accountability Across Leadership Structures
Perhaps, the most interesting change Mulally spearheaded at Ford is the culture transformation that laid the company’s foundation to innovate. Early in his tenure, Mulally said “We have been going out of business for 40 years,” a shocking but accurate statement that served as a burning platform that every employee could relate to, allowing Mulally to change the company’s cost structure by negotiating lower labor rates with the United Auto Workers.
Significant as this was, Mulally also made executive meetings a safe environment, where information were shared without blame, improving collaboration and allowing for innovation success.
Practices of the Alan Mulally Leadership Style
The remarkable turnaround of Ford under Mulally, without the financial aid from the US government, has provided an outstanding example of how to gain competitive edge through organizational culture. Following are practices that helped Mulally save Ford by transforming its culture into one that pulls together as a team:
1. Making Values Known
Under Mulally’s leadership style, memorable phrases are used to communicate the leader’s values or how he expects people to go about making progress toward the company’s vision. Frequently, Mulally uses phrases as “One Ford”, “the power of teams”, “one team” and “working together always works” to show how much he values team players.
2. Communicating an Inspiring Vision
Mulally often communicates a memorable vision phrase of Henry Ford, “opening the highways for all mankind”, to express how the company is serving humankind and making the world a better place. Also, he describes the company as giving people freedom of mobility so they can access opportunities for growth, uniting his people around a shared vision and concentrating them on a cause greater than self.
3. Thinking Win-Win Situations
Instead of thinking of other organizations and individuals as competitors, Mulally uses a “win-win” approach and mindset when it comes to relationships, which helped him forge an agreement with the United Auto Workers union to make certain changes that are necessary for Ford to make profit in return for bringing production back to the US and helped him consolidate the company’s purchases to suppliers that were willing to partner with them to reduce costs in return for receiving a greater share of the company’s business.
4. Living It
During meetings, Mulally was a facilitator and coach, rather than a dictator, prohibiting humor made at the expense of others and expecting leaders to openly share obstacles they are facing. Also, he celebrates and enthusiastically praises leaders who are helping each other, rather than solely focusing on individual problems they are facing.
5. Taking a Positive “Can Do” Attitude
Mulally leads with positive comments rather than criticism, with a plan in place, good people to implement it and continuous improvement of the plan. All the while, he maintains an optimistic attitude that his company will continue to make progress toward its vision.
6. Getting Everyone on the Same Page
Knowing the importance of a collective point of view, Mulally created a weekly meeting attended by the global leadership team, together with al functional and business leaders, who would present updates on progress to achieve their goals. When problems are identified, follow-up meetings were scheduled to dig deeper into them and identify solutions. He also achieved alignment through feedback which gave his people a voice and helped decision-makers identify optimal solutions. This approach moved his people toward consensus, rather than coercion, making excellence and alignment in execution more likely.
7. Being Results Oriented
As results and task excellence are always important to Mulally, he often talks about relentless implementation and letting data to set his people free. Also, he follows a set of metrics in assessing progress and results, which are tracked and analyzed regularly in meetings, which grounds his team in reality and provides a way for assessing where the company stands.