What Other Automakers Can Learn from Alan Mulally
By JD Rucker
In the last few months, the majority of news in the automotive industry has been bad. Recalls, arbitration, dealership closings - the automotive sections of most publications have very little good to say about the industry.
The exception has been Ford Motor Company. They seem to have cornered the market on positive automotive news with much of the credit going to the man at the top: President and CEO Alan Mulally.
As much of the competition struggles with challenges that have followed one of the worst years in the industry's history, Ford has its eyes forward. The choices that Mulally and his team have made over the last 3 and a half years are a model for how struggling automakers and their CEOs should handle adversity and do what few in the business are expected to do today.
Mulally expects to succeed. Here are a few things his counterparts should learn if they want to have the same expectations.
Making the Right Moves at the Right Time
Much can be gleaned from Mulally's first few months. Just prior to being announced as CEO on September 6, 2006, Ford had announced major layoffs and cuts in production. As he stepped into office, Ford announced an unprecedented financing offer, extending 0% financing to 72 months.
While the timing of these moves and Mulally's hand in them are up for debate, one move is not.
"I arrive here, and the first day I say, 'Let's go look at the product lineup.' And they lay it out, and I said, 'Where's the Taurus?' They said, 'Well, we killed it.' I said, 'What do you mean, you killed it?' 'Well, we made a couple that looked like a football. They didn't sell very well, so we stopped it.' 'You stopped the Taurus?' I said. 'How many billions of dollars does it cost to build brand loyalty around a name?' 'Well, we thought it was so damaged that we named it the Five Hundred.' I said, 'Well, you've got until tomorrow to find a vehicle to put the Taurus name on because that's why I'm here. Then you have two years to make the coolest vehicle that you can possibly make.'?"
The early move that truly marked his understanding of business, trends, and the economy came in his first couple of months when he mortgaged all of Ford's assets for $23.6 billion. At the time it was widely criticized as desperate and he was called an alarmist when he said the money would help in both development and as a cushion to protect for a recession or other unexpected event."
Two years later, the critics were silenced as his desperate move paid off.
Taking Criticism and Acting on It
Many good leaders know what they know and fight forward despite criticism. The ones who recognize which criticism is warranted and should be acted upon have a chance to be great leaders.
When the first round of Congressional hearings regarding a proposed bailout for Ford, General Motors, and Chrysler were punctuated with headlines such as "Big Three CEOs Flew Private Jets to Plead for Public Funds [2]", the public outrage was deafening. Mulally heard the cries, understood the reasons, and took action.
He immediately ordered the sale of 5 out of 6 of the company's corporate jets and drove to the next round of hearings in a Hybrid. While it didn't stifle all of the complaints with many saying it was more of a PR move than genuine interest in saving money, the sentiment faded quickly based upon Ford's actions at the hearings.
Mulally made a promise both to his company and the American people. If Ford accepted a bailout, he would reduce his salary (currently at $2,000,000 a year) to $1. Luckily for him, his company, and the American people, they did not accept a bailout and are the last of the Detroit Big 3 who stands as an independent company not in bankruptcy.
Being Fearless in the Face of Adversity
The decision to sell Jaguar and Land Rover to Tata Motors in 2007 was symbolic of the turmoil the company was going through as they received $2.3 billion, much lower than what was paid for the companies.
Jaguar and Land Rover sales subsequently plummeted due to high oil prices in the summer of 2008 and Tata had to request a bailout from the British government.
Volvo is on the chopping blocks and will likely be sold this year. Aston Martin is out. Mercury is slowly vanishing.
These moves are difficult to make as they are often perceived as signs of weakness, but Mulally has one focus: Ford. His vision of building the company through solidarity rather than diversity appears to be paying off as Ford was profitable ahead of schedule and has recently surpassed GM and Toyota in monthly sales.
Embracing Innovation
There are many instances of Ford being "ahead of the game" in an industry that is often slow to embrace trends, especially on the Internet. SYNC has been instrumental in pulling the younger generation into Ford's camp while a focus on building greener cars without sacrificing performance (see the 2011 Ford Mustang) has helped to separate them from the "green at all cost" mentality going thought the industry, but there is one move that stands out in helping to establish Ford's innovative mindset.
When Ford hired Scott Monty in July, 2008, they were already attempting to embrace social media as a way to get the word out. Monty and his team aggressively pursued different methods that took advantage of social media's greatest marketing strength: conversation.
The Ford Fiesta Movement was an example of the success Ford has had in social media. Rather than push-marketing where they spread their message in a one-way conversation, they instead opened up engagement and allowed real people to converse back and forth about the launch of the car itself.
They did not take control of their dealerships' social media message but they did offer support in the way of resources.
Now, Fiesta Movement Chapter 2 is launching and the focus is allowed to change. Because Chapter 1 was geared around exposure and buzz, Chapter 2 can focus on increasing the potential for sales and pre-orders. Monty and his team "earned" the right to sell because they engaged from the start. This distinction is what separates good automotive social media from failed attempts by the competitors.
Looking Ahead
The automotive industry is due for a rebound. We may be in the middle of it right now despite setbacks for some as people can only go so long without buying a new vehicle. The coming months will tell a lot about who will survive and who will falter, but one thing is certain. Those who embrace the styles and techniques used by successful leaders such as Alan Mulally will have a stronger chance of coming out on top regardless of what happens in the economy, the world, and the industry.
They just have to keep pointing towards their future.
