Bill Ford had some questions of his own, of course. He asked about Mulally’s background, his experiences at Boeing, how he coped with crisis. He asked Mulally to describe his management style. Mulally explained how, at Boeing, his entire leadership team was expected to participate in a lightning-fast analysis of the entire business every Thursday morning. Each of his direct reports delivered a brief update on the status of his or her division or function, highlighting anything that had changed since the previous week’s meeting. It was the centerpiece of his management philosophy, and he would use it in Dearborn if he came there, too.
“This is going to be a culture shock,” Ford cautioned.
What does that mean? Mulally wondered.
Still, as the afternoon shadows lengthened, Mulally found himself becoming increasingly enamored with both Ford the man, and his company. The automaker faced huge challenges, but Mulally thought he knew how to overcome them. And there were at least a few bright spots, as Bill Ford was quick to point out.
“We have good people,” he told Mulally. “They just need a leader who can guide them and inspire them.”
As the conversation continued, the two men found themselves finishing each other’s sentences. By dinnertime, Mulally noticed that he had started to use the word we instead of you in reference to the automaker. He tried to stop, but found it harder and harder not to become personally invested in it all. But he had one more question. Mulally said he believed that nothing short of a sweeping restructuring of the entire corporation could save Ford Motor Company. If Bill Ford was going to retain the position of chairman, Mulally needed to know he had the stomach for what lay ahead.
“Are you absolutely committed to this?” he asked.
“I am,” Ford assured him. “And so is the Ford family.”
Ford had a similar question for Mulally.
“Can you tell Jim?” he asked, referring to Boeing’s CEO, McNerney. “What will Jim do?”
Mulally did not answer.
That night, Bill and Lisa Ford took Mulally out to dinner in Ann Arbor at Eve, a nouvelle French American restaurant that was a favorite of area foodies. Mulally was impressed by the cuisine and by the royal treatment he was afforded as a guest of the Fords. He was even more impressed by the fact that Bill Ford, who had a squadron of drivers at his disposal, drove himself. Everyone seemed to recognize the Fords when they walked in, and many of the other diners stopped by their table during the course of the evening to pay their respects.
The experience was a little more harrowing for Ford, who spent much of the night worrying that someone might recognize Mulally and wonder why the two men were dining together. But he was also becoming more convinced by the minute that this was the guy who could save his company. Mulally was clearly a born leader with an innate charisma that Ford found inspiring. He had been through hell at Boeing and came out smiling. He was not a car guy, but he knew enough about manufacturing to grasp the complexities of Ford’s situation. And he seemed to agree with Ford’s own assessment of what the company needed to become. Lisa Ford was impressed with Mulally, too. When their guest excused himself for a few minutes, she leaned over to her husband and whispered, “He seems too good to be true.”
“I know!” said Ford, certain he had found his man.
Mulally was pretty convinced himself. He had long since given up his struggle to avoid the we word. As they drove back to his hotel, he could not help noticing how many of the cars on the road were Fords.
When they reached the Campus Inn in Ann Arbor, the two men shook hands. Ford asked Mulally if he wanted to continue the discussion.
“I do,” Mulally said eagerly.
Ford suggested he meet with some of the board members next. Mulally agreed. Ford told him the company’s vice president of human resources, Joe Laymon, would handle everything from here on out, but he also gave him his personal cellphone number.
“Call me if you need anything,” Ford said.
By the time Mulally got back to his hotel room, his mind was buzzing. He sat down at the desk, took out a blank sheet of paper, and started writing down everything he could remember in a long stream of consciousness, starting with his arrival in Michigan. He noted the temperature—95 degrees. This was definitely not Seattle. Then he moved on to his impression of the Ford family (“Bill, Lisa … great kids … two dogs … a tutor”), their residence (“Elegant house … two stories … wood paint … gated … woods”), and his host’s lifestyle (“Detroit Lions … drives himself … sports with kids”).
Then he moved on to the company.
“Stock at $6,” Mulally noted. “Great opportunity.”
He jotted down what he could recall from the discussion of Ford’s challenges: “UAW … product development … global production … Mexico … insular industry … CFO has own plan … need to save cash … need acceptance of reality.”
Next to Bill Ford’s name, Mulally wrote just three words: “Not tough enough.”
As he scanned the rapidly filling page, Mulally thought about how similar all of this was to the issues he had faced over the years at Boeing. The automobile industry might have its quirks, but it was fundamentally similar to the aerospace business. Mulally had dealt with unions before. He knew how to globalize product development and production. He had ridden out more than one business cycle. It was all familiar territory, and he knew he could navigate it as well as anyone else. Maybe better. Mulally could lead Ford just as surely as he could have led Boeing—if he had been given that chance. He had only two real questions left, ones Bill Ford could not answer.
Is there enough money left to save Ford Motor Company? he asked himself. Can I still make a difference, or is it too late?
He picked up his pen again.
“Want to take the next step,” he wrote.
In his mind, Mulally already had.
“We must change to grow and survive … we are not competitive,” he continued. “We have to take action … take down production … get back to profitability … embrace the future.”
By the time he turned out the light, Mulally had filled the entire page. At the bottom, he added one more line: “We just need to act on the reality. We’ll be back.”
Mulally continued his meditation on the plane ride home, sketching the broad outlines of a plan to save Ford. He started with his goals. On a piece of a notebook paper, he wrote, “Make the best cars in the world” and “Profitable growth for all.” Then he listed what he would later call his “Four P’s”: “performance,” “product,” “process,” and “people.” Beneath that, Mulally wrote, “Leadership counts.”
Next he outlined the business environment as he saw it. He noted that Ford had too much capacity, was struggling against downward pricing pressure and “great competitors.” He also identified “auto culture” as a problem he would have to overcome.
On another page, Mulally listed the key metrics he would want tracked in his weekly business plan reviews: revenues, expenses, research-and-development costs, operating costs, earnings, and cash-on-hand.
When he was done, he wrote, “Wow! What fun!”
Once he got back to Seattle, Mulally called John Thornton.
“Why do you want me?” he asked the Ford board member.
“We need somebody with vision,” Thornton told Mulally. “But we also need an operating guy who can drive it home.”
As they talked, Mulally wrote two phrases on his notepad: “compelling vision” and “ruthless execution.”
Those were what Ford needed. Those were what Thornton thought Mulally could deliver.
Thornton invited Mulally to Aspen, where fellow board member Irv Hockaday had a home. It would be a discreet place to meet for a more in-depth discussion. Thornton was going there for an Aspen Institute function and no one would think anything of Mulally jetting off to the trendy vacation spot for the weekend.
They met for lunch on August 6. Mulally peppered Thornton and Hockaday with questions throughout the meal, just as h
e had done with Bill Ford. They fired back with questions of their own.
They were particularly keen to learn how Mulally intended to better integrate Ford globally. Mulally pulled out a copy of the organization chart from Boeing and slid it across the table. It was a matrix that divided the commercial aircraft division into regional business units and functional departments. Mulally told them he would implement the same management structure at Ford.
Both men studied the chart and nodded.
If Hockaday and Thornton had any doubts that Mulally was the right man for the job, they evaporated over lunch. By the end of the meal, they had switched to selling mode.
“Alan, if the board offers you this job and you take it, you need to understand that there are no sacred cows,” Hockaday told Mulally. “Any friends of Bill that are in the wrong positions or you conclude are not the right guys, you can get rid of them—and Bill will confirm that.”
Mulally shook his head.
“That’s not an issue, because I’m not going to have to get rid of many people,” he replied.
Mulally’s response was a little worrisome to Hockaday and Thornton. They believed the time had come for a little bloodletting at the top of the house in Dearborn. It was concern about the weakness of Ford’s bench that had prompted them to look outside the company for a CEO in the first place.
“How do you come to that conclusion?” Hockaday asked.
Mulally responded by outlining his system of weekly meetings for them, just as he had for Ford. He told them this approach enforced extreme accountability on a weekly basis and left no hiding place for anyone who was not entirely committed to executing his part of the business plan.
“It’s likely that a lot of people at Ford aren’t used to that, and they will self-select out,” Mulally said. “I won’t have to do it.”
Hockaday was impressed and offered Mulally one more enticement.
“If you think, Alan, that you need the chairman title to get the job done, Bill is willing to consider that,” he said.
Once again, Mulally shook his head.
“I won’t take the job unless Bill stays as chairman,” he said to the surprise of both directors. “Bill has the name. I’m sure he has the magic with the employees, and probably with the dealers. He can do things that I wouldn’t be able to do because of who he is and the way he is. I’m going to be so busy if I take this job that I’ll need him in that job.”
Mulally left Aspen confident that he would have the board’s support if he came to Ford. Hockaday and Thornton just hoped Laymon could seal the deal.
As he flew out to Seattle, Laymon was not sure he could. The steely-eyed HR chief had done his homework. Mulally was nothing if not loyal. Prying him away from Boeing would be hard. He also had a lot invested in the local community. Mulally and his wife were part of Seattle society. They were in the process of creating their dream home on Lake Washington’s tony Mercer Island, and Mulally had not given any indication that they were willing to relocate to Michigan.
The challenge, he thought, will be extraction.
Laymon was prepared to do whatever was necessary to bring Mulally back to Dearborn, but he also wanted to make sure he was worth the effort. He knew Bill Ford and the board were already convinced, but as the head of human resources, he felt he had an obligation to vet Mulally himself, just as he would any other candidate.
The two men met for the first time in Laymon’s suite at the Four Seasons Hotel. Laymon took an instant liking to Mulally. Like everyone else, he found his charisma irresistible. But he was determined to put Mulally to the test. Laymon bombarded him with questions, poking and prodding to see if he could raise his ire. Ford’s World Headquarters could be a shark tank, and the last thing he wanted was a CEO who would crack during his first staff meeting and set off a feeding frenzy. Mulally never lost his cool. Laymon threw curveballs, knuckleballs, and sliders, but Mulally hit them all out of the park. They talked about his management process. Laymon said he was not sure it was transferrable to Ford. Mulally convinced him that it was.
After several hours, they took a break and went for a walk downtown. Laymon thought it was a calculated move on Mulally’s part, to show Laymon how well loved he was by the good people of Seattle. If it was, Mulally could not have scripted it better. Every ten or twenty steps, they ran into somebody who recognized him. Laymon was not impressed by Mulally’s local celebrity: he was impressed that it was not just businesspeople who came up to him on the street but maintenance workers and students, and Boeing employees. And Mulally greeted all of them with the same enthusiasm. Laymon knew that was rare for someone of his stature. He thought it would play well at Ford, where even jet-setters like Hank the Deuce had been at ease with the lowliest line workers. But it also compounded Laymon’s concerns about getting Mulally to Detroit.
He started working on a plan as they walked.
There is no way I’m going to get this guy to leave Seattle. He’s an icon in the community. Even if he takes the job, he’s never going to sell his house here because, when he leaves Ford, he’s taking his ass right back to Seattle, Laymon mused. I’m going to have to set him up with a condo in Dearborn and aplane for him and his family. Some of the shareholders aren’t going to like that, but we can make it work. And besides, I won’t have to worry about him spending his days at Bloomfield Hills Country Club or going to lunches in downtown Detroit. We’ll park him a mile from the office and work his ass off.
Laymon stopped and turned to Mulally.
“What if we let you and your family use a corporate jet? Would that work for you?” Laymon asked.
Mulally loved the idea.
But when he returned to Dearborn, Bill Ford was less thrilled with Laymon’s offer.
“You promised him what!?” he asked. He reminded Laymon that the media was already hounding Ford Americas president Mark Fields for his personal use of Ford’s corporate jet. Fields had only agreed to return to the United States if his family could stay in Florida. His two sons had been following him around the world for years, and he wanted to make sure they spent a little time in America before going off to college. Fields had just bought a home on the water in Delray Beach when Bill Ford called and asked him to come to Dearborn. He told his boss that he did not want to have to move his family again. Bill Ford agreed to let Fields use a company plane to commute back and forth from Florida each week, but he regretted it as soon as the media found out. Now Ford was worried that Laymon was repeating that mistake. But Laymon persisted.
“I think we have a chance with Mulally,” Laymon told Ford calmly. “If he says no because of that, what are you going to do?”
“Okay,” said Ford. “Keep after him.”
The truth was, Bill Ford could not contain his excitement about the Boeing executive. Though he knew better than to say anything before making Mulally a formal offer, he started whispering to his closest confidants that he had finally found the man who could save his company.
“This guy is a turnaround expert. He’s done it before at Boeing,” Ford told his vice president of communications, Charlie Holleran. “That’s what we need. I’ve never turned around anything.”
Holleran was a heavyset, white-haired Irish American from Scranton, Pennsylvania. Give him a badge and a desk, and he could have been precinct sergeant. With a helmet and a hose, he could have passed for a fire chief. He was Bill Ford’s personal, one-man damage control squad. And that meant he knew more than most at the company just how much his boss needed help. Holleran was relieved to hear that Ford might finally be getting some.
Getting the board to green-light a deal with Mulally required little effort after Hockaday and Thornton shared their impressions with the other directors. Though they were aware of Ford’s previous, unsuccessful efforts to recruit a new chief executive, Mulally’s name was the first one presented to the board as a serious candidate. Because most of the board members were not “car guys,” none of them objected to hiring someone from outside the indus
try. In fact, some thought that made him a more desirable candidate. After all, it was the car guys who had screwed everything up in the first place.
Before Mulally would agree to talk terms, he called Bill Ford with one more question. He had been thinking about what Ford had told him about some of the board members wanting to dismantle the company. Mulally wanted to make it clear that if he came to Dearborn, it would be for only one reason.
“I’m not coming to take it apart. I’m coming to take it flying,” he told Ford. “I just want to know that that’s what you want to do. Because I want to create a viable business—not only for Ford, but for the good of the United States.”
Ford told Mulally that was what he wanted as well.
“I will back you one hundred percent,” he promised Mulally.
Once more, Mulally asked Ford if he understood what would be required. Mulally was working on a plan. It would mean painful sacrifices. As they had agreed, consolidating Ford’s global operations to better leverage its worldwide assets and achieve real economies of scale would be Job One. But Mulally also wanted to sell off the foreign brands and eliminate both Mercury and Lincoln. He wanted to trim the dealer base, close more plants, and move more manufacturing to Mexico. The latter was important, because Mulally feared the upcoming contract negotiations with the UAW might get ugly—particularly since he would reject any deal that did not make Ford competitive with the foreign transplants. He wanted to reduce the automaker’s dependency on its domestic plants ahead of a possible strike, which he urged Ford to begin preparing for immediately. Finally, he wanted to borrow money. A lot of it. The top-to-bottom restructuring he was planning would not be cheap, and Ford needed to up its investment in new products at the same time.
“You’ve been going out of business for thirty years,” Mulally said. “This is how to get back in it.”
“Let’s get to work,” Ford said. “The fourth quarter is really ugly.”
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