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What Mulally wanted was a dialogue between Dearborn and the rest of the company that would create consensus. Mulally understood that Ford’s global operations were too complex to be run centrally out of Dearborn, but he also appreciated the tremendous cost savings and efficiencies that could be gained by eliminating duplicate efforts around the world and creating real economies of scale.
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During one of his first press conferences, Mulally was asked if Ford was considering a merger.

“Yes,” he said. “We’re going to merge with ourselves.”

As an aeronautical engineer, streamlining was as dear to Mulally as pork to a politician. He had spent his entire professional life figuring out how to reduce drag and improve aerodynamics. Now he began applying these same principles to Ford’s product portfolio. He asked for a chart showing every car and truck the company made around the world. To his dismay, none existed. So Mulally went to the websites of each of Ford’s divisions and printed out pictures of all of their offerings. Then he asked his secretary for scissors and glue. When she brought them, she found Mulally sitting at his conference table with printouts spread all over it. He took the scissors and started cutting out pictures of each vehicle made by Ford and its subsidiaries. Then he divided them by region and started pasting them together on pages like a kid working on a school project. When he was finished, Mulally counted them all. Ford and its subsidiaries were making and selling ninety-seven different nameplates around the world.
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Way too many
, Mulally thought as he studied his handmade charts.

He picked up the scissors and started cutting again.

Mulally would later share his charts with Ford’s board of directors.
Before their December meeting, he commandeered a conference room and mounted blowups of them on the wall. When the directors had gathered at World Headquarters, he ushered them into the room. Mulally stood there silently as they studied his handiwork. As he expected, they were as overwhelmed as he was by the dizzying array of cars and trucks. Mulally had no trouble convincing them that Ford needed to radically simplify its global lineup.

Mulally also wanted to streamline Ford’s organizational chart.

It was clear to him from the start that too few people reported directly to the CEO. He had already removed one level of bureaucracy by getting rid of Steve Hamp and eliminating the position of chief of staff. But that still left Mulally with a convoluted management structure riddled with overlapping responsibilities and tangled chains of command. The head of communications for Ford of Europe was a good example: He reported directly to the vice president of communications in Dearborn, which meant the president of Ford’s European group had little knowledge of what this key subordinate was doing or why. On the other hand, the head of product development for Ford of Europe did report to the head of Ford’s European group, but he had little contact with his counterpart in the United States.

Mulally wanted to replace this confusing command structure with a matrix organization like the one he had employed at Boeing. It divided the company neatly into business units and functional areas. Boeing had a matrix organization in place for engineering when Mulally was coming up in the company. He was quick to appreciate its value as a young engineering manager because it kept him informed of what was going on in other aircraft programs. When he was promoted to president of the commercial airplane division, he extended it across the entire organization. At Boeing, Mulally’s matrix organization had divided functions by aircraft program rather than region, treating each model as its own business unit. That meant that, in addition to a director of human resources for the entire commercial aviation division, there were separate HR chiefs for the 777, 767, and 747 programs.

As Mulally figured out how to make this system work at Ford, he studied the automaker’s past attempts at creating a matrix
organization—particularly Alex Trotman’s ill-fated Ford 2000 initiative. Trotman had created global functions without mirroring them in each business unit or making them all direct reports to the CEO. That meant that there was a global head of information technology, but no head of information technology for Europe. And the chief information officer did not report directly to the CEO. At the same time, the business units were stripped of their responsibility for profit and loss, effectively eliminating regional accountability. After the failure of Ford 2000, the pendulum had swung back in the other direction. The company that Mulally inherited had once again divided itself regionally. A few functions, such as human resources and legal affairs, were still organized globally, but most of the global positions had been eliminated. Responsibility for things like manufacturing had reverted back to the regions.

Mulally believed his system offered the best of both approaches. It made each business unit fully accountable, but also made sure that each key function of the organization—from purchasing to product development—was managed globally in order to maximize efficiencies and economies of scale. Mulally wanted to create one Ford and fully leverage the company’s global assets, but he also wanted the business units to remain in place to stay on top of the unique challenges and opportunities presented by each market. His approach was designed to break down the barriers to communication that existed inside the automaker and involve all of the company’s leaders in the task of fixing Ford.

Mulally took another piece of paper and drew a table. He made columns for each of Ford’s four business units: the Asia Pacific, European, and Americas groups, as well as Ford Credit. Above these, Mulally wrote “Customers” to signify that these were the parts of the organization that faced the outside world. Down the left side of the table, he created rows for each function, from finance and product development to human resources and information technology.
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The
heads of each of these would report directly to him, as would the heads of each of the four business units. Each function would have a regional director in each business unit as well, and these individuals would jointly report to the head of their division and the head of their function. Under Mulally’s system, the head of communications in Ford of Europe would report to both the president of Ford’s European group and the vice president of communications in Dearborn. This system significantly increased the number of people who reported to Mulally directly and eliminated additional layers of bureaucracy, such as Mark Schulz’s position—president of international operations.

The board was impressed by Mulally’s new organization. Now all Mulally had to do was decide who should head each group or function.

He also had to deal with Ford’s brands. Mulally thought there were too many of these, too. Ford had not been able to manage the Blue Oval, let alone the seven other brands that made up the company. Each of these brands faced unique challenges. Coping with them was spreading the automaker’s already weak bench even thinner and consuming precious working capital the company could no longer spare. It had already pumped billions into these brands, and most were still losing money. As he was putting together his plan for the board, Mulally had listed each one: Ford, Mercury, Lincoln, Aston Martin, Jaguar, Land Rover, Volvo, and Mazda. Then he drew a line through each one of them except for Ford.

Getting rid of the rest would be a tougher sell than streamlining the product portfolio and organization chart. He could not get rid of Lincoln or Mercury yet, because too many dealers in North America depended on them. The European brands presented a different set of challenges.

Owning legendary marques like Aston Martin and Jaguar had been a source of pride for the company and the Ford family. These European brands lent an air of worldliness and sophistication to what had always been a midwestern company that produced more utilitarian products for the masses. Many of the descendants of Henry Ford also drove them. So did many Ford executives, as Mulally had noticed to his dismay when he first arrived in Dearborn. That was one more reason he wanted them gone. But Bill Ford and other directors were
fond of the European subsidiaries. They had approved massive investments in these brands because they were convinced Ford needed world-class luxury vehicles to truly compete in the global market. Land Rover was profitable, they reminded Mulally. Some also believed that Jaguar was poised to turn the corner. It took a while, but Mulally was able to convince the board that his strategy of focusing on the Blue Oval made sense, given the company’s finite resources. By the end of the year he was able to persuade the board to sell Jaguar and Land Rover and consider a sale of Volvo. Bill Ford still wanted to keep it, but said he would not stand in Mulally’s way if the new CEO could put together a compelling case to sell the Swedish brand. Lincoln was staying, at least for now, because Mulally had been persuaded that Ford needed at least one luxury marque. Mercury would get a temporary reprieve, but only until the company could make Lincoln strong enough to stand on its own.

The rest was easy. The board fully supported Mulally’s desire to better leverage Ford’s global scale, negotiate a competitive contract with the UAW, and redouble its efforts in Europe and Asia. In the past, Mulally explained, Ford had been overly dependent on big trucks and its U.S. business. He wanted to change that. He showed the directors a slide with two pie charts. The first represented Ford’s global product offerings, and it was divided into three equal slices labeled small, medium, and large. The second represented Ford’s global revenue. It, too, was divided into three equal segments, representing Asia, Europe, and the Americas.

“We need to offer a full family of vehicles—cars, crossovers, and trucks,” Mulally told the directors, explaining that this was the surest hedge against fluctuating fuel prices and changing consumer preferences. “We also need to split the business evenly among each of the three regions so that problems in one part of the world no longer threaten the entire organization.”

This was the essence of Mulally’s plan, which he summed up with just two words: “One Ford.” As Mulally watched the directors nodding in agreement, he knew he had found what he was looking for—a catchphrase that summed up everything his revolution stood for, a rallying cry. But there was more. On November 14, as he was finalizing
his presentation for the board, Mulally finally managed to distill everything down to four simple points, which he now shared with the directors:

These were the four nails that Mulally would hammer home in every meeting, every speech, and every interview. Fields’ accelerated Way Forward plan would take care of the restructuring, at least in North America. Smaller cuts would be needed in Europe and elsewhere. Mulally’s Thursday BPR meetings were making his executives work together as a team. He was still looking for the right person to lead the development of new products, but that could wait. His next priority was point number three: He had to figure out how to pay for it all.

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