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T
he executives at Ford tried to learn everything they could about their new CEO.

Fields started calling friends who knew Mulally, or at least knew of him. Everybody told him the same thing: He was an excellent leader who believed strongly in teamwork, execution, data, and delivering on commitments. One of them sent Fields a video—a clip from the PBS documentary that showed Mulally’s team stress-testing the wing for the Boeing 777. When it passed, a jubilant Mulally hugged all of his coworkers. He looked like he might kiss a couple of them. The scene raised the eyebrows of the tough, Jersey-born product of Detroit’s macho car culture.

I was right
, Fields thought.
This is definitely going to be different
.

Other executives did their own research. E-mails from Boeing
executives describing Mulally’s management style made the rounds. Some Ford executives found out that Mulally had written the introduction to a book on teamwork called
Working Together
and ordered copies. More than a few updated their résumés and waited for the guillotine blade to fall. No one was willing to acknowledge that he had been part of the problem. But most feared they would be found guilty by association and sent packing with the rest of the old guard.

It did not take long for the first executive to “self-select” out, just as Mulally had predicted.

Anne Stevens had grown tired of bickering with Fields. She was already headed for the exit before Mulally’s hiring was announced, but this was her last straw. The highest-ranking woman in the automobile industry was determined to be CEO herself one day. She was fifty-six and already behind Fields in the queue, so she decided that was never going to happen at Ford. The automaker announced Stevens’ retirement on September 14.
^*

The world outside Ford was trying to figure out what to make of Ford’s new CEO as well. Holleran’s media plan had worked. The coverage of Mulally’s hiring was overwhelmingly positive. But not entirely.

“
Ford and the Detroit auto industry have a history of expelling outsiders the way the human body expels foreign objects,” wrote Daniel Howes in a column in the
Detroit News
that appeared the following morning. “Things get all furious, nasty and infectious until the interloper leaves or is removed, while those who remain vow to ‘never again’ make the same mistake.”

After Bill Ford read it, he called and canceled his subscription. It would be months before he would renew it—or talk to Howes again.

Ford’s factory workers did not take the news well, either. The talk on the assembly line the next day was about all the machinists who lost their jobs under Mulally at Boeing.

As it turned out, they had reason to worry.

L
ess than two weeks after Bill Ford announced that he was stepping down as CEO, reporters were again summoned to the Glass House. This time the news was grim. But in keeping with Mulally’s new spirit of transparency and honesty, it was delivered without the customary spin. Though Fields was still sporting his infamous mullet, his usual Jersey-boy swagger was noticeably absent when he took the stage. His Way Forward plan had not worked. It had been derailed by the collapse of the truck market and rising raw materials costs. The original plan was supposed to restore Ford to profitability by 2008. Now he conceded that goal was unreachable. The company would not be able to return to profitability until 2009, and then only by making even deeper cuts.

“The fundamentals of our Way Forward plan have not changed. It’s our timetable that has changed—and changed dramatically,” said a chastened Fields. “It is now clear that we were too optimistic in January about our ability to stabilize our market share given the quicker than expected shifts in the marketplace. The simple fact is that the business model that served us in North America for decades no longer works. We must change to a new business model that delivers greater bottom-line contributions from cars and crossovers, continued leadership in pickups, new products that drive revenue and actions that more rapidly reduce costs to achieve profitability.”

With that, Fields announced his Way Forward acceleration plan. It called for shuttering two more factories, bringing the total number of plants now slated for closure by 2012 to sixteen.
^*
In addition, all of the factories Ford took back as part of the 2005 bailout of Visteon would be sold or closed by the end of 2008. A third of the company’s North American salaried workforce would be eliminated, translating into the loss of another 14,000 jobs on top of the 30,000 already cut. Ford had reached an agreement with the United Auto Workers
to offer voluntary buyouts and early retirement packages to all union members. Fields said the company now hoped to eliminate between 25,000 and 30,000 factory jobs over the next two years. Ford would also suspend dividend payments indefinitely.

“These actions have painful consequences for communities and many of our loyal employees,” Bill Ford said. “But rapid shifts in consumer demand that affect our product mix and continued high prices for commodities mean we must continue working quickly and decisively to fix our business. Mark Fields and his team deserve credit for the accelerated Way Forward strategy, which puts us on an even faster product-driven path to success. Alan Mulally’s experience in turning around a major industrial company will help guide the implementation of these measures as he assumes leadership of the company.”

M
ulally had reviewed the plan with Fields and his team before the presentation. As Fields went over the details with his new boss, he wondered if it had all been for naught.

“Alan, we’re going to the board with this tomorrow. Our intent, once we get the board approval on this, is to announce it on Friday,” he said. “But you’re the new CEO. If you want us to put a hold on this and not announce it, that’s your prerogative. I’m perfectly prepared to do that.”

“No,” Mulally said. “You guys should go ahead. We’ll improve it as we go.”

However, he did make a few changes. Mulally pointed out that Fields’ plan was all about cutting costs and did little to address the more fundamental problem: Ford was not making cars that people wanted to buy. Mulally knew Ford had to stop losing money, but he also knew that was only part of the equation. It also needed to give consumers a reason to believe in the Blue Oval again. He told Leclair and Fields that he was working on a plan to radically simplify Ford’s global product lineup. Instead of spreading its new product dollars thin across scores of different nameplates, Mulally wanted to focus Ford’s investment on a few key vehicles and make those products truly world class. He explained how a similar approach had paid off
at Boeing. It would work at Ford, too—but only if the company was prepared to really invest in those products. Mulally pointed out that all of the buyouts and severance packages required by Fields’ plan were going to add up, and he wanted to make sure there would still be enough cash left in the company’s coffers to pay for a showroom full of game-changing cars and trucks.

“Do we have enough money to restructure ourselves, and get back to profitability and accelerate the development of new products?” he asked.

Leclair told him the finance team was already working on a plan to ensure Ford had the money it needed. Mulally told him to aim high.

T
he two-day-long September meeting was Mulally’s first opportunity to address the entire board of directors. Following the formal introduction of Mulally by Bill Ford, one board member after another told Mulally how happy they were that he had decided to join the company. But they also made it clear that they expected a lot from him. Then they asked what he thought of Ford so far.

Mulally paused for a moment before answering. Here was a chance to begin the discussion about simplifying Ford—the central theme of his turnaround strategy. At the same time, he knew he had to tread carefully, because these were the same people who had presided over the acquisition of Ford’s foreign brands and approved the hodgepodge of disparate products the company was selling around the world. Nonetheless, Mulally knew an opening when he saw one and took it.

“We have a lot of brands. We have a lot of nameplates. We’re known in the U.S. as a big truck and SUV company—and for the Mustang. We have very complex product offerings,” he told the directors. “I think there is a tremendous opportunity to simplify, consolidate, and focus Ford.”

Mulally wanted to say more but checked himself out of fear of going too far too fast. Then he noticed the smiles and nodding heads. Several of the directors agreed with his assessment. They asked what he thought of Fields’ plan.

“This is a good start,” he said. “We have the key elements in there. But we need to further develop this.”

Saving the company would require even deeper cuts, Mulally told the board. It would also require a fundamental reorganization to better utilize Ford’s global resources. He needed to come up with a new leadership structure to ensure greater accountability and force everyone to work together toward a common set of goals. And none of these steps would mean anything if the company did not accelerate the development of new products. He asked the board to pledge its support for these moves once he had worked out the details. The board agreed with Mulally’s assessment and promised to back whatever changes he felt were necessary. The directors approved Fields’ proposal with the understanding that Mulally would prepare a more aggressive plan by the end of the year.

They will back me one hundred percent
, he realized as he left the meeting.
Now I just need the support of the Ford family
.

T
he descendants of Henry Ford flew into Dearborn on September 18 to eyeball their new CEO. They met with Mulally at Greenfield Village—the nineteenth-century fantasy town their ancestor had frozen in time and later turned into an educational theme park to commemorate the world his automobiles had left in the dust.

Mulally was so excited about meeting all the Ford heirs in person that he actually printed out a family tree beforehand and brought it with him so that he could figure out who was who. He asked the family members to autograph it for him. Touched by Mulally’s enthusiasm for Ford’s illustrious past, they obliged. But they were a lot more interested to hear what he thought of Ford’s future. They asked Mulally to explain how he had brought Boeing back from the brink, and what he thought of Ford’s chances for survival.