Now that the Cash for Clunkers program is over, the results are coming in and it looks like the big winners from the program are Hyundai and Ford with year over year monthly sales increases of 47% and 17% respectively. The number three selling new car during the Clunkers program was the Ford Focus with the Ford Escape showing up in the top 10 as well. The other two American car companies actually showed declines in sales during August with GM down almost 20% from last year and Chrysler sales down 15%.
What’s the difference between the three U.S. auto makers? Obviously, there are a lot of factors, but I’d argue the most important is leadership. As I wrote in this blog back in August of 2007, my money was on Ford CEO Alan Mulally to lead a turnaround at Ford and it looks like that’s what he’s doing. I spent some time earlier today reading some recent articles about Mulally and watching some video interviews with him to try to determine what he’s done right since arriving at Ford from the Boeing Corporation in 2006. (My sources include articles in Fortune magazine, Business Week, and the U.K. Guardian along with video interviews from Time magazine and the New Yorker
Based on that research, here are five Mulally success factors I’ve come up with that I think apply to any leader charged with leading a turnaround in their organization.
Preparation: Before he took the job at Ford, Mulally spent a lot of time with Chairman Bill Ford and every member of the senior management team to learn as much as he could about the culture of the firm and its competitive position. That time spent up front allowed him to come to the table with a clear sense of what he needed to do from day one.
Clear Plan: Upon his arrival at Ford, Mulally’s intent was to focus the company on its core brand, Ford, and to divest other brands they owned such as Volvo and Jaguar. His plan was to invest in the long term future of the core brand and, sensing the recession that eventually came, he established $23 billion in lines of credit within 90 days of taking the CEO job. Those credit lines have enabled Ford to invest in new product development while avoiding the government assistance that GM and Chrysler both had to take.
Clear Point of View: As the video interviews cited here show, Mulally is a very effective communicator. He speaks in a down to earth tone with a very clear point of view on his business and his plan. As an example, he says in the New Yorker interview that fuel efficiency, safety, quality and value are going to drive consumer decisions on car purchases. That’s the kind of clear, concise, easily repeatable point of view that an organization can use as a guidepost.
Align the Culture with the Plan: Mulally is pushing for consistency of purpose, transparency and collaboration in the management culture at Ford. He has put an end to calendar based rotations of executives into new assignments so that they have enough time to prove themselves in the jobs they’re in. He is insisting that managers put their cards on the table in weekly update meetings so that everyone has the opportunity to help solve small problems before they become bigger ones. For an example of this, listen to the story that he tells in the New Yorker video starting around the 11:00 minute mark.
Focus and Follow Through: Mulally has set up clear systems that keep himself and his team accountable to their plans. Every initiative and its major tasks are color coded as green for on target, yellow for questionable and red for a problem. Charts are left on the conference room walls and updated weekly for all to see the changes in status. In his first meeting using this method back in 2006, all the charts were showing up green. Mulally asked the obvious question, “How can everything be green when we’re losing billions of dollars a year?” The next week one of his managers showed up with red status codes in his report and Mulally literally applauded him in front of the group. His point was that the only way problems can be solved is if they’re identified, tracked and discussed.
Who else would you nominate as a role model for leading a turn around? What other leadership characteristics do you think are important in a turn around situation?
Sott, great post - especially #5 - Focus and Follow Through - " His point was that the only way problems can be solved is if they’re identified, tracked and discussed." I'm convinced that "silent problems" - problems that are being avoided, neglected or going unnoticed are one of the greatest challenges to business performance - I've written extensively about it over at blog - "Do Silent Problems Impact Business Performance?"
And yes, turnarounds. Anne Mulcahy at Xerox. Same philosophy. She once stated: If you have a tough decision to make, don't wait, because it's not going to get any easier. In fact, it will only get tougher.
Similar philosophies - Similar results.
Posted by: Rodney Johnson | September 04, 2009 at 12:11 AM
In case you didn't see it, there was an excellent interview with Alan Mulally in Sunday's New York Times. Here's the link: http://tinyurl.com/ktlabc
Posted by: Scott Eblin | September 07, 2009 at 12:06 PM