But Mulally was dismayed by his first visit to the company’s Product Development Center, a sprawling redbrick campus located a few minutes from World Headquarters. There, Ford’s head of product development for North America, Derrick Kuzak, was waiting to show off the company’s lineup. Kuzak and his staff had parked every vehicle Ford sold in North America beneath the domed ceiling of Ford’s private showroom and waxed them until they were sparkling in the bright spotlights. The first thing that struck Mulally when he walked in was how big most of the cars and trucks were. There were almost no compacts, and not a single subcompact. He noticed that something else was missing as well.
“Where’s the Taurus?” Mulally asked.
The product guys looked at one another.
“We killed it,” Kuzak said.
“You killed it?!” Mulally asked incredulously. “Wasn’t it the bestselling car in America?”
“At one point,” Kuzak said. “But we didn’t maintain our investment in it. People stopped buying them. The only customers we could still sell them to were rental car agencies. The plant that made them is going to be closed at the end of the month.”
“But it was such a great brand,” Mulally said. “Why didn’t you just make a new one?”
Kuzak told him that Ford’s marketing staff had concluded the Taurus nameplate was irrevocably damaged. The car’s replacement was the Fusion. And it was selling well, he pointed out.
That may be, Mulally thought. But you don’t spend millions of dollars building a brand and then walk away from it. That is one mistake that is not going to happen again under my watch.
Mulally started driving a new Ford home every night, and showed up the next morning eager to share his thoughts about it. The Ford Fusion did impress him. Mulally had not paid much attention to Ford vehicles as a consumer, and he was surprised to find a car this good in the company’s lineup. But other vehicles, such as the uninspiring Ford Five Hundred, made him realize how much work there was still to be done. Once he had worked his way through all Ford’s cars and trucks, he asked the company’s fleet manager to start providing him with competitors’ vehicles so that he could see how they compared. His first request was for a Toyota Camry. Mulally had owned a couple before trading up to a Lexus and wanted to see how the Japanese automaker had improved them since then. He was stunned to learn that there were no cars from other automakers in Ford’s fleet. While the company purchased Camrys for evaluation and engineering teardowns, none of the executives had ever asked to drive one. Mulally told his fleet manager to go shopping, and he ordered his senior managers to start driving Volkswagens and Hondas home instead of their Jaguars and Land Rovers.
Everything Mulally did seemed downright subversive in an industry that celebrated power and privilege. In Detroit, CEOs did not dine with their employees, nor did they seem to care much about what their employees thought. And they certainly did not drive Japanese cars home. In fact, they rarely drove at all. That was what chauffeurs were for.
But Mulally was just getting started.
The real revolution began on Thursday, September 28, 2006.
At 8 A.M., Ford’s senior executives gathered in the Thunderbird Room on the eleventh floor of World Headquarters for their first BPR meeting. There, beneath black-and-white photographs of Henry Ford and his Model T, the latter-day leaders of the Ford Motor Company gathered around a large round table like knights in some modern staging of the tales of King Arthur, with Mulally in the title role. To his surprise, many arrived trailing adjutants and subalterns armed with thick three-ring binders that presumably contained the answers to every conceivable question the new CEO might ask their bosses. Mulally thought he had made it clear that executives were responsible for their own presentations.
“You’re welcome to bring guests,” he announced as they filed into the room. “But they won’t be allowed to speak or answer questions.”
Nervous glances were exchanged among the executives. They were used to deferring tough questions or demands for details to their subordinates. But Mulally reminded them that they were in charge of the company and were expected to know their areas inside and out.
“If you don’t know the answer to something, that’s okay, because we’ll all be here again next week,” he said with a smile. “And I know you’ll know it then.”
As the executives took their places in black leather chairs around the cherry table, Mulally called their attention to a list of rules posted on the wall. There were ten of them:
People first
Everyone is included
Compelling vision
Clear performance goals
One plan
Facts and data
Propose a plan, “find-a-way” attitude
Respect, listen, help, and appreciate each other
Emotional resilience … trust the process
Have fun … enjoy the journey and each other
Like the slide templates, these rules had been imported from Boeing. Yet they seemed tailor-made for Ford. As he went down the list, Mulally added a few specifics to underscore these points. There were to be no side discussions, no jokes at anyone else’s expense, and no BlackBerrys.
These regulations would prove particularly onerous. At Ford, meetings were political theater; side discussions where the real business of the company was conducted. They were where deals were cut and truths too painful to put in a PowerPoint presentation were shared. From now on, Mulally insisted, there would be no more secrets. The BPR and the SAR would shine a light into the darkest corners of the company. Everything would be illuminated.
Making jokes at the expense of others was a regular pastime at Ford—one some of the executives sitting in the Thunderbird Room that morning had spent decades mastering. They had not gotten where they were just because they were the best or the brightest, but because they knew how to dish it out and how to take it. In a company like Ford, the weak went to the wall; only the strong survived. Now they were being told they were all on the same team, and Mulally expected them to act like it.
The rule on BlackBerrys struck several of the executives as particularly condescending. They all carried them, and most spent the better part of any meeting glued to them—reading e-mails, checking sports scores, or playing BrickBreaker. This was disrespectful to whoever was speaking, Mulally told them. The whole point of the BPR was to maintain a laserlike focus on the facts of the business, and Mulally meant that literally.*
Those facts would be displayed on a large screen that dominated the western wall of the room. Mulally took his place at the table directly opposite the screen and looked around the table. There was Chief Financial Officer Don Leclair, Ford Credit CEO Michael Bannister, Ford Americas president Mark Fields, and the head of the company’s international operations, Mark Schulz. Human resources and labor affairs boss Joe Laymon was there, as well as Charlie Holleran, the vice president of communications, and Ziad Ojakli, head of corporate affairs and government relations. Also present were marketing director Hans-Olov Olsson and Ford’s general counsel, David Leitch. The “guests” were given chairs along the northern, southern, and eastern walls.*
A microphone was mounted in front of each executive. In future meetings, those unable to attend in person would be connected through Ford’s teleconferencing system at its European or Asian headquarters. A camera would broadcast the image currently being displayed on the main screen or the face of whoever was speaking to those remote facilities. When people there spoke, they would appear on smaller screens set into a circular opening in the center of the table in the Thunderbird Room. Blinds, flanked by light blue curtains, were shut to keep out the glare.
“Okay, Jackie, let’s have the first slide,” Mulally said, addressing the woman who ran the show with two assistants from a control booth behind the eastern wall. The agenda for the meeting was displayed on the screen. Mulally would go first. He walked the other executives through the rest of the schedule.
“Next slide,” Mulall
y said.
What followed was a series of projections that outlined the purpose of the meeting and detailed Mulally’s emerging plan for the company. One of the first was titled “Our Creating Value Road Map.” In its center was a blue oval marked “Vision.” Mulally defined this vision for those in the room as “People working together as a lean, global enterprise for automotive leadership.” By leadership, he said, he meant being viewed as second to none by customers, dealers, suppliers, employees, and investors. Mulally pointed out that there were plenty of ways to measure Ford’s standing with each of these constituencies. Right now it was dismal. Together they were going to change that, he told his executives. The central oval was surrounded by three more ovals, labeled “Business Environment and Opportunities,” “Strategy,” and “Plan.” Arrows connected these three, as each one depended upon the other two. The external environment represented by the first had to inform Ford’s strategy. That strategy would provide the foundation for the company’s actual plan, which would be made up of measurable goals. That plan would in turn help Ford understand how to react to the challenges and opportunities of the business environment.
The mechanism for monitoring all of this was the BPR itself, Mulally explained. Each week, the entire team would review the business environment, examine the company’s progress against the backdrop of the plan, and make whatever adjustments were necessary in the SAR.
“This is the only way I know how to operate,” he said. “We need to have everybody involved. We need to have a plan. And we need to know where we are on the plan.”
It was a lot to take in, and the idea of doing it every week was more than some of the executives could take. They began plotting end runs around Mulally before his presentation was even finished.
When Mulally was done, he asked Leclair to go over Ford’s finances. The company was facing a projected loss of more than $12 billion for the year, Leclair told the room. It would be the worst loss in Ford’s history. And 2007 was not looking much better. Mulally was not surprised. Bill Ford had warned him that the situation was dire. He was reminded of a quote he had read from the Grateful Dead’s Jerry Garcia: “Somebody has to do something, and it’s just incredibly pathetic that it has to be us.”
In this case, “us” was Mulally himself.
This company has been going out of business for thirty years, he thought as he studied the numbers. These guys did study after study that showed that something had to be done, and yet they chose not to do it. None of them was ever going to stand up and say, “This is how it’s got to be.”
One by one, the assembled executives stumbled through their slides. It was clear that several sets of numbers were still in play, despite Mulally’s admonition. He told them he expected all of them to get their facts straight by the next BPR meeting. As in the other meetings he had already attended, Mulally hammered home his twin themes of honesty and accountability. He was affable enough. He never stopped smiling. He did not argue. He preferred to listen and let people dig their own graves. Much of what Mulally heard during those first few meetings was nothing but bovine scatology. But he had a built-in BS detector and a knack for exposing it. Mulally knew that once people had embarrassed themselves a couple of times in front of their peers, they would think twice about lying to him again.
When it was Mark Schulz’s turn, the president of Ford’s international operations asked if his chief financial officer could do the presentation.
“No,” Mulally told him. “I expect each business unit leader to do their own.”
Schulz frowned. He did his best to muddle through a presentation for which he was obviously unprepared. After a few minutes Mulally had heard enough.
“Okay,” he said.
Schulz kept on talking.
“Good,” Mulally said. “Check.”
Schulz continued.
“Okay,” said Mulally.
Schulz still did not get the hint. Several other executives could see that Mulally was turning red, but Schulz was not one of them.
“Okay!” Mulally snapped.
Schulz stopped mid-sentence and looked around the table. The other executives looked down, intently studying their printouts.
Mulally’s staff quickly realized that their new boss often used code words that they ignored at their own peril. Okay was one of them. The first okay translated as “Thanks, I’ve heard enough. Let’s move on.” The second okay meant “You are starting to get on my nerves.” The third okay could be roughly translated as “If you don’t shut up right this second, you’re fired!” Check meant the same thing as okay. There were also the three levels of the question Really? The first really was Mulally-speak for “That’s really interesting, if it’s true.” The second really meant “I think you’re full of crap.” The third really—another place nobody wanted to go—translated as “Are you sure you don’t want to retract that statement before it permanently affects your status at the company?”
Much of the discussion among executives in those early weeks was devoted to deciphering these codes.
Schulz walked out of the first BPR meeting chafing at Mulally’s new order.
To him there was nothing special about Mulally’s process. It was just a different way of looking at the same data—no better or worse than half a dozen others he could think of. If anything, he thought it was overly simplistic. Schulz also worried that preparing for each week’s BPR session would be a huge drain on his time. Then there was Mulally’s mandatory attendance requirement. In their first one-on-one meeting, Schulz told Mulally that he spent most of his time away from Dearborn. He worried that these Thursday meetings would get in the way of the important work he was doing in Asia. He was spending a lot of time in China trying to secure government support for a new factory in Shanghai. He told Mulally that his weekly meetings would interfere with that work.
“That’s okay, you don’t have to come to the meetings,” Mulally said with a smile. “I mean, you can’t be part of the Ford team if you don’t—but it’s okay. It doesn’t mean you’re a bad person.”
Schulz called in sick to the next BPR and sent his controller in his place. He said he had injured his foot and required surgery, but some of the other executives thought he was really just afraid of another showdown with Mulally. Many of them were beginning to realize that they had underestimated the grinning Kansan. Mulally’s down-home persona was like a velvet glove hiding the proverbial iron fist, and they were beginning to feel its squeeze. The sort of accountability and transparency Mulally demanded was unprecedented inside Ford. And Mulally’s BPR ground rules made them feel like ill-mannered children. Ford’s senior executives were used to trumpeting their successes, not dissecting their failures. Those had been swept under the rug as quickly as possible. The executives also were accustomed to running their divisions as they saw fit. Mulally’s insistence that each area of the organization be run using common practices and principles was not only jarring, but also a direct threat to their personal authority.
Schulz was not the only one who thought the whole thing was a big waste of time. Fields, too, tried to get out of the weekly sessions.
Ever since he had been called back from Europe, Fields had jealously guarded his calendar. He thought that most of the corporate meetings he was required to attend were essentially useless. Despite Mulally’s assurances that his Thursday BPRs were the cure for this cancer, Fields saw them as one more symptom of the same disease. Fields came to his first one-on-one with Mulally armed with a printout showing how his time was divided. He handed it to Mulally and showed him how most of it was already being spent in meetings. Fields told him he needed to spend more time in the trenches.
“Listen, Alan, one of the most important things I need to spend time on is in the business unit, not getting distracted,” Fields told him. “I really don’t want to do this.”
Mulally stared at him across the desk. “Trust the process,” he told Fields.
Do I have a choice? Fields thought. But inste
ad of continuing the debate, he gave Mulally an update on the status of the Way Forward acceleration.
A few of the old guard thought they could wait Mulally out—pay lip service to his reforms, but drag their feet and bide their time. Eventually, they figured, he too would succumb to Ford’s noxious culture. But most could see that Mulally was different. He was far more interested in the details of the business than any senior executive had the right to be in the ancien régime, and he missed nothing. Executives had been accustomed to dealing only with the big picture. Now they were being asked to explain the minutest details of their divisions. They might chafe against that, but they could see he demanded nothing of them that he did not demand of himself.
Mulally’s energy was impossible to ignore. The atmosphere on the twelfth floor crackled with it, as though Bill Ford had unleashed some force of nature inside the building. Even the executive chairman was not immune from it.
Company protocol required any executive who wished to speak with Bill Ford to enter his outer office, quietly ask his secretary if he was seeing visitors, and then wait outside while she slipped into his private chambers and checked. Mulally had no patience for that. One morning, as Ford was freebasing espresso and fretting about the Detroit Lions, his new CEO simply strode down the hall, opened the glass door to Ford’s outer office, waved at his secretary, and blew past her before she could even object. Ford was slightly flustered the first time it happened, but after a while he got over it. Mulally showed up for work each morning bristling with new ideas, and Ford was often the only person he could bounce them off.
“You know what would be neat?” Mulally would say, before outlining his latest brainstorm.
It put Ford in a somewhat awkward position. Most CEOs did not stick around after admitting defeat. But this was his company, and he still had a major role to play in running it. However, Ford was also determined to stay out of Mulally’s way. As Mulally’s new order took hold, more than one executive tiptoed to Ford’s office to lodge a complaint against the new CEO’s intrusion into his affairs. Ford would cut each of them off before he could finish his lament.
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