Ford's New CEO: Pros and Cons

Yesterday, Ford announced that its Chairman and CEO, Bill Ford, is relinquishing his CEO title to Alan Mulally, late of Boeing.

It looks like my prediction of last October has now partially come true. I thought that one of the companies would be gone within 5 years. Instead, one of the CEOs among Detroit's auto producers is gone. Oddly, in this case, by his own hand. So, technically, while there is not "one less CEO in Detroit," one of the sitting CEOs is gone.

From what I've read about Mulally, he is quite likely a good choice for Ford. Whether even he can save the company is anybody's guess. However, as noted in my post in June on Boeing v. Airbus, here, Boeing's commercial aircraft division, with the 787 Dreamliner, executed fundamentals and out-designed Airbus. Mulally gets the credit for that.

It's easy to see why Ford wants Mulally. He successfully turned Boeing's commercial division around. Bill Ford badly needs to save his family's company, and he's not too proud to fire himself and hire the best senior exec he can find to do it. Mulally led a decidedly marketing-oriented resurgence at Boeing, and Ford is no doubt hoping there is enough time left for a similar magic act at the auto maker.

It's not too hard to see why Mulally will jump to Ford, either. He did the heavy lifting at Boeing, only to have McNerney flee 3M and replace Harry Stonecipher as CEO. Talk about ingratitude. Whether Mulally can succeed at Ford is almost immaterial. Like Lou Gerstner at IBM, or Art Ryan at Prudential, he'll get credit if he turns it around, but the company's bad shape will be blamed if he doesn't. And he'll doubtless still be handsomely rewarded. Most importantly, though, is that he is now a "CEO." And regardless of Ford's outcome, he's in the major leagues now.

It's a very interesting end to a musical chairs game that began with Jack Welch's retirement 5 years ago. As the linked post about McNerney, contained in the prior post about Boeing and Airbus, notes, McNerney hadn't really done anything to write home about while leading 3M. Now, at Boeing, the guy who rescued it prior to his arrival is gone.

So, Alan Mullaly gets to be CEO of something, if not a healthy company. Jim McNerney has to show he can stay in one place and actually create superior shareholder value. And Rick Wagoner can breathe a sigh of relief that he isn't the first automotive CEO to get canned this year. He was noticeably smug about the Mullaly news on an interview with CNBC today. Wagoner's probably just happy everyone's focusing on the other ailing Detroit-based auto company for a while.

In the final analysis, Mulally is probably as good a choice to lead Ford as anyone else, and better than most. Despite many pundits crying for a "car guy" at Ford now, Mulally has actually succeeded at producing a customer-focused new product, the Dreamliner, and then beating the hell out of his competitor, Airbus, with it. And he wants to lessen Ford's dependence on trucks and SUVs, returning to designing and building compelling cars.

I'm not at all sure Mullaly has the time and resources to pull it off, but I will enjoy seeing if he can. And I'll enjoy seeing how much more consolidation, CEO change, etc., continues to occur in the auto industry in the months ahead.