Alan Mulally Remortgages, Repositions and Saves Ford


About to retire after eight years Alan Mulally, Ford Motor Company’s CEO, is leaving on a high note. When he was passed over to run Boeing after taking a big part in the reorganization of that company, he accepted Bill Ford’s offer to become CEO. At the time, Ford was severely challenged with some of the same type of old-school corporate philosophy that we often rally against.

When isolated and insulated governance gives rise to misplaced perceptions of job security, the result is a counterproductive culture. If the reports going to top management aren’t rosy, executives think it can only be a reflection on them and their management abilities. Even though the problem may be structural or completely outside their department, they still feel defensive enough to send an everything-is-fine report. But it’s not. We saw this recently at General Motors over the faulty ignition issue.

When Mulally first took charge of the company, his executives presented him with the standard glowing reports. They evidently believed a great report would imply that they were doing a stellar job, thus improving their chances of advancement.  Mulally’s answer, “Guys, we’re losing billions!”

Over the last century, too many CEOs have clung to the if-you-make-a mistake-you’re-fired philosophy from the first days of the early industrial revolution. But not Mulally. He did just the opposite. He rewarded his executives for honesty even when the news was bad, and he punished cover-ups. This sent the disruptive message to staff that job security is now based on coming forward with problems, not hiding them. He saw this as essential to productive teamwork.

Executives who thought they could just keep their heads down had a wakeup call. Now participation was valued. Turf battles suddenly had to take a back seat to the real business at hand: identifying the problems and cooperating to fixing them.

He actually created a “war room” to encourage executives to work together. He’s quoted as saying, “Everyone is part of the team. And everyone’s contribution is respected, so everyone should participate.” A big part of leadership is the message you send to your people. By repositioning his people’s concept of job security, he repositioned the company itself, and ultimately the perception of the Ford brand by the general public.

The Ford Focus, once a different car in Europe and America, became a single international vehicle. The Mustang was redesigned to appeal to an international market. The popular F-150 Pickup was redesigned with a more efficient and lower cost all aluminum body. The Lincoln was redesigned and repositioned to compete with the best production luxury cars in the world.

Mulally will be known for his foresight and daring. Even before the great recession, he mortgaged everything, including the famous logo, to raise the funds to make these changes. Ford was the only major American auto company to avoid a government bailout. But we think his lasting legacy will be the refreshing new spirit he brought to Ford Motor Company’s culture that will pay off long after the mortgages are retired.

Company culture starts at the top. The expectations of CEOs, along with their wisdom, values and clarity, telegraph themselves throughout the organization. Building a team means breaking down old obsolete concepts of job security and silo protection. It means that information can no longer be used as currency but must be used as a necessity for team victory.

As Alan Mulally says, “When people feel accountable and included, it’s more fun.”  Our favorite three letter word!