Alan Mulally's Ford Initiatives

I read the Wall Street Journal's recent piece entitled, "Changing Gears.... Inside Mulally's 'War Room': A Radical Overhaul of Ford."

I am so glad that I have not been a Ford stockholder. It's a good news/bad news sort of thing. The good news is that Mulally is smart, experienced, determined and energetic. I think it's great for Ford that Mulally is so talented. He does seem like a very competent, capable guy.

The bad news is that his boss, Bill Ford, let things get this bad. Tolerated crony pals mismanaging the firm, and that the board let it happen on their watch.

Now they all want Alan Mulally to work magic and fix the mess.

For example, the article mentions that Mark Schulz,

"Ford's 54-year-old head of international operations...would be changing jobs to a different role, with direct business responsibility...Mr. Schulz, a longtime fly-fishing and ice-hockey buddy of Mr. Ford, retired instead....(and) couldn't be reached for comment."

Sounds too precious, doesn't it? You can almost see Schulz mugging it up with Bill Ford over eggnog at the proper Gros Pointe country club holiday parties, wearing pleated slacks festooned with little ice-hockey sticks poking through Christmas wreathes, or fly-fishing rods catching Christmas stockings. This sort of thing drives employee morale into the toilet, I kid you not. Nothing infuriates capable lieutenants more than seeing the Boss socializing off-premises with also-ran managers who clearly curry favor and retain their positions thanks to friendships with the CEO, rather than their own performance or talent.

Meanwhile, Bill Ford let this continue as part of his "management" and "leadership" of his family firm.

In another part of the piece, Mulally is quoted as saying that, when he asked Bill Ford

"why he hadn't integrated the company....every time Ford had considered forcing integration, a new hit product- such as the Explorer, Taurus or F-series truck- would come along and propel profitability without tough changes, explained the fourth-generation Ford leader."

So to cronyism we can add lack of focus and discipline. The board and Bill Ford are hoping to God that Alan Mulally can do the dirty, harsh, odious work of firing loyal, trusting employees, redesigning bloated, dysfunctional corporate processes, and identifying new, hit products. Because for five years, as CEO, and six as a board member, Bill Ford failed to do all of these.

In fact, the Journal article related this exchange between Chairman Bill (Ford, not Gates) and board member John Thornton, former President of Goldman Sachs,

Ford: "Alan's the perfect guy for our situation."

Thornton: "I couldn't agree more. Thank God for that, we don't have a second chance. This is it."

What is it with Detroit auto company CEOs? Must they wait until they teeter on the edge of bankruptcy before shifting gears (pun intended)?

Is there time for Mulally to save Ford? Who knows? Is he doing some right things? Unquestionably. For instance, he drives each model of the firm's product line, the better to give it a personal, objective going-over. His comment about the lack of a standard "feel" for Ford cars is absolutely true. My father was a "Ford man" when I was growing up. In models of similar years, the controls were typically located in the same place. You knew you were in a Ford, not a GM car, just by the layout of the dashboard and knobs.

The WSJ piece lavishes much print on Mulally's rather unremarkable, if very effective, use of colors and graphic displays to track product-management issues in his 'war room.' That this technique, and his insistence on the divulging by managers of complete and true performance data, is more than shocking. It's disgraceful. Consider what it says about the lack of respect these managers have had for Mulally's predecessor.

Oh, wait....that's the sitting chairman......Bill Ford!

Will Mulally's sensible initiatives matter? Truthfully, I doubt they have the time. Still, oddly, I can't but help root for the guy. Maybe in 3-4 years, Ford will make my equity portfolio selection list. Although, my hunch is, not as an independent company. Perhaps as part of an alliance with Nissan. If it merges with GM, I would lower the probabilities of its performing sufficiently well to make my selection list.

Either way, 2007 will be exciting for lots of reasons, and Mulally's activities at Ford are just one.

Happy New Year!