American Icon (70 page)

O
n June 2, Ford summoned reporters to a hastily organized press conference at the Product Development Center in Dearborn. Rumors were once again circulating among dealers that Mercury’s demise was imminent. This time the rumors were true. Mark Fields explained the rationale behind Ford’s decision to kill the seventy-two-year-old brand. Mercury sales were declining and now accounted for less than 1 percent of the U.S. market. Ford was not spending much on the brand, but what it was could be better spent on Ford’s luxury marque.

“We are very proud of [Mercury’s] history, but we are now looking forward,” Fields said. “We’ve made a lot of progress with the Ford brand. Now’s the time to do that with Lincoln.”

Privately, Ford executives acknowledged that the only reason they had kept Mercury alive for this long was that the company lacked the resources to revive Lincoln. Jim Farley had been plotting a top-to-bottom transformation of Lincoln ever since he was hired away from Toyota’s Lexus division in 2007. Now he finally had the money to do it. His goal was as ambitious as any Ford had set. Having bested Toyota on the quality front, Farley wanted to out-Lexus Lexus in the luxury segment. Ford began spending big on a major makeover of its luxury lineup. But Farley knew that new products would not be enough. Toyota had entire assembly lines dedicated to Lexus production where cars were put together to the most exacting standards in the industry. Lincoln was too small for its own factories, so Ford would have to raise the bar at its existing plants. It would also have to convince dealers to invest in their showrooms. Farley wanted them to exude luxury, just like the products he planned to fill them with.

Ford’s previous attempts to restore Lincoln’s lost luster had made little headway. Under Mulally, the brand’s products had improved. Some of them, like the Lincoln MKS sedan and MKT crossover, could already compete with the best in the world in terms of styling and features. But they were overpriced—particularly for a brand that still had a lot of explaining to do. Mulally was still not convinced that Ford needed anything but the Blue Oval, but he was willing to give Farley one more shot at Lincoln.

O
n July 23, the company reported earnings of $2.6 billion for the second three months of 2010—its best quarter since 2004. Ford’s stock closed above $13 a share four days later. But some on Wall Street began to suspect that they were being played. Quarter after quarter, the company was beating analysts’ estimates. Some were now wondering if Ford was purposely managing down expectations so that it could exceed them. The truth was that everyone inside Ford
was just as surprised. Each quarter was coming in ahead of the company’s projections. At lower levels of the company, there may have been some fudging going on: Some regional managers had figured out that, in Mulally’s Ford, it was better to lowball their estimates than risk being held accountable for missing their targets. That was the downside of his insistence on accountability. But after years of overpromising and underdelivering, it was better for Ford to err on the side of restraint.

The changes Mulally had made to Ford’s culture were no longer limited to the upper echelons of the organization. At each level of the company, managers tried to emulate his inclusive and data-driven approach. Every department now held its own weekly BPR meeting, and similar sessions were held regularly at the national and regional level. Morale soared to an all-time high as Ford employees saw their work recognized and found managers increasingly willing to listen to their ideas and concerns. Reporters noticed the change, too. Ford had stopped leaking.

The press still had plenty to write about, though.

Ford’s success had made its CEO a celebrity. On January 15, Mulally was named “Industry Leader of 2009” by the Automotive Hall of Fame, which called him “the overwhelming and obvious choice.”
Automobile
magazine had already named Mulally “2010 Man of the Year.”
Barron’s
added him to its annual list of the thirty most-respected CEOs in the world, while
Automotive News
lauded him as “Industry Leader of the Year.” Mulally was voted “Businessperson of the Year” by the readers of
Fortune
and “CEO of the Year” by those who followed
MarketWatch
. The
Detroit News
named him “Michiganian of the Year.” Even the president of the United States jumped on the Mulally bandwagon, naming Ford’s CEO to his Export Council on July 7.

But Mulally’s biggest fan was Jim Cramer, host of CNBC’s
Mad Money
.

“[Mulally] is the greatest turnaround artist of all time—not
our
time,
all
time,” the hyperactive host declared on June 30. “The guy has already worked his turnaround magic at Boeing, and now at Ford he’s taken a laggard and turned it into an industry leader!”

Cramer did not stop there. He had an enormous hundred-dollar
bill printed with Mulally’s mug replacing Benjamin Franklin’s and emblazoned with the motto “In Mulally We Trust.” When he was done using it on his show, Cramer sent it to Mulally, who displayed it proudly in his office.

On August 4, Mulally turned sixty-five—the unofficial retirement age at Ford. In Dearborn, few executives ever made it that far. But Mulally insisted that he was not going anywhere yet. Though he had brought Ford back from the brink in the middle of the most serious crisis to confront the automobile industry in eighty years, his work in Dearborn was not yet finished. Mulally still wanted to redeem Ford’s mortgaged assets. And once he had done that, he wanted to give the Ford family and the rest of the company’s shareholders their dividends back.

Bill Ford seemed inclined to let him.

“He’s staying until 2025,” the executive chairman joked when asked if he had thought about a successor.

With all the press Mulally was getting, it was the sort of joke Ford found himself making a lot. But his laughter masked some real concerns about who would replace the man some were beginning to regard as one of the greatest CEOs ever.

Bill Ford saw no reason to bring in another outsider. He was convinced that each of the company’s top executives had internalized Mulally’s revolution and made his precepts their own. Because of Mulally’s matrix organization and Thursday-morning BPR meetings, they each knew everything there was to know about every aspect of the business. Vice President of Human Resources Felicia Fields could rattle off the names of the three bestselling Ford cars in China just as surely as quality czar Bennie Fowler could detail the latest debt action.

By the end of 2010, it was Mark Fields’ job to lose. Mulally initially had high hopes for Jim Farley, but the marketing maven had turned out to be something of a mad scientist—a true genius who was capable of coming up with big ideas, but who had demonstrated some serious shortcomings in the people-skills department. Mulally also saw a lot of potential in Joe Hinrichs, but he was a generation behind Fields. There was still time for him to hone his skills in Asia. More
important, Bill Ford himself made no secret of the fact that his money was on Fields. The chairman was impressed with the way Mark Fields had swallowed his anger at being upstaged by Mulally, embraced his cultural revolution, and become his keenest student. Ford was equally impressed with Fields’ loyalty.

“It’s my decision,” Ford reminded me when I asked about it.

A much bigger concern for Bill Ford was complacency. He had seen Ford become a victim of its own success before, and he was determined to break that cycle.

“It’s something that I think about all the time,” he confided. “How do we not go back to where we were? How do we stay lean and hungry? And how do we continue to foster innovation? A lot of that does fall to me. I am the institutional memory around here.”

I
n September 2010, Alan Mulally marked his fourth anniversary at Ford Motor Company. With the automobile sales slowly recovering around the world and the worst of the supplier crisis subsiding, there was no longer a need for daily meetings. But Mulally and his team still gathered every Thursday in the Thunderbird Room for their weekly BPR and SAR meetings. By now the entire process had been refined to the point of routine.

The first meeting in September was typical. The team convened at 7
A.M
. sharp, taking their places at the round table. There were now fourteen black leather executive chairs—one for each of the regular attendees: Chief Financial Officer Lewis Booth, President of the Americas Mark Fields, Ford Credit CEO Mike Bannister, Vice President of Global Product Development Derrick Kuzak, Vice President of Global Manufacturing and Labor Affairs John Fleming, Vice President of Global Purchasing Tony Brown, Vice President of Quality Bennie Fowler, Vice President of Sustainability, Environment and Safety Engineering Sue Cischke, Chief Information Officer Nick Smither, Vice President of Human Resources and Corporate Services Felicia Fields, General Counsel David Leitch, Vice President of Global Marketing, Sales and Service Jim Farley, Vice President of
Communications Ray Day, and, of course, Mulally himself.
^*
He took his usual seat directly opposite the big projection screen. Joe Hinrichs was at Ford’s new Asian headquarters in Shanghai but participated through the company’s teleconferencing system. Steve Odell did the same from Cologne, while Vice President of Government and Community Relations Ziad Ojakli tuned in from Washington. There were chairs for each of them off to the side for the times they were present in Dearborn.

Thirty more utilitarian chairs lined the perimeter of the room—ten on each wall, except for the western one, which was dominated by the projection screen. These were for guests. Each executive was allowed to invite a couple of guests to each meeting. A few were there because they needed to hear what was being discussed, but for most it was a big honor—the reward for some special service or outstanding achievement. There were mid-level managers, engineers, even a factory worker. Most looked nervous and uncomfortable as they filed into the Thunderbird Room, but Mulally quickly put them at ease.

“We’re glad you’re here,” he said with a big smile. “We hope you enjoy the meeting, and we’d also like to hear what you think of the meeting at the end.”

The guests served two important purposes. First, they were expected to take what they learned back to their workplaces, allowing that information and the experience of the BPR process to cascade down through the organization. Second, Mulally believed their presence kept everyone on their best behavior, just as the documentary film cameras had at Boeing on the 777 program.

Once everyone was seated, Mulally called for the first slide. There were now 320 of them, though not every slide was shown every week. Many of them rotated according to a fixed schedule. Mulally went first, going over the agenda, explaining the point of the meeting to the
guests and providing his own high-level assessment of the state of the company.

“On plan,” it read this week. “No change.”

Mulally went over the current cash, sales, revenue, and profit projections for the next five years. They all showed steady increases.

“It’s going up because we’re making products and services that people want and value, using less time and resources than the competition,” Mulally explained. “That creates value for the company and all its stakeholders.”

Then he went over the current business environment, listing geopolitical developments that might impact Ford, looking at the state of the global economy, energy issues, environmental concerns, labor issues, and top-level news about Ford’s competitors. He went over the two pie charts showing the regional distribution of Ford’s business between the Americas, Europe, and Asia and its split between small, medium, and large vehicles. These were still not evenly divided into thirds, but they were getting more balanced all the time. Mulally reminded everyone that this was the goal. He also went over the four-point plan again, just in case anyone had forgotten it. Mulally closed by listing the issues that would be discussed in that day’s SAR meeting.

Booth was up next. He presented a more detailed report on the company’s finances. Things were looking good for the third quarter, and Ford’s cash and debt would be close to parity by the end of the year. Booth also went over the latest data from Ellen Hughes-Cromwick. The global economy continued to strengthen, albeit slowly. The car and truck market in the United States was improving, too, though demand for new vehicles remained well below historic highs. The four business unit leaders—Bannister, Fields, Hinrichs, and Odell—were each given ten minutes to go over their slides, which covered the business environment in their areas, their financial forecasts, and their progress against the plan. When they were done, the function leaders each got five minutes to present an overview of the latest data from their departments. The color-coding system was now well understood and employed by everyone. There was a lot more green these days, but
still some red and yellow, too. That was okay; as long as problems were highlighted, the team could deal with them.