Case Study: How Alan Mulally Got Ford “Ford Tough” Again by Revamping its Culture

394223278_797f30ae09_oFord was in dire straits in 2006. The company was preparing to announce its biggest loss in the history of the 103-year old company—a deep hole of $12.7 billion—and was on the brink of bankruptcy. That was when Alan Mulally stepped in as CEO. The former executive VP of Boeing and CEO of Boeing Commercial Airplanes instituted a fundamental revamp of Ford’s culture.

In 2006, The Washington Post described Ford’s management culture as “very much the top down, militaristic institution created in the 1950s…” What this meant practically was a “play-it-safe” approach, such as having pre-meetings before actual executive meetings to minimize surprises. Investors and analysts were not impressed. Standard and Poor’s as well as Moody’s both downgraded Ford’s debt, and analysts were skeptical about the management team’s ability to turn the automaker’s performance around.

When Alan Mullaly was introduced as chief executive officer in the fall of 2006, he sought to ignite the company’s engines once again. Central to his vision, the CEO wanted to reinforce “the idea that everyone is included. Everyone is part of the team and everyone’s contribution is respected, so everyone should participate.”

At the heart of Ford’s new culture, then, was a move away from the top-down organizational structure, and a move towards a more collaborative culture. How did this manifest within Ford? Mulally explains, “say, for example, an employee decides to stop production on a vehicle for some reason. In the past at Ford, someone would have jumped all over them: ‘What are you doing? How did this happen?’ It is actually much more productive to say, ‘What can we do to help you out?’”

Why was this shift in tone so important? Mullaly says, “If you have consistency of purpose across your entire organization and you have nurtured an environment in which people want to help each other succeed, the problem will be fixed quickly. So it is important to create a safe environment for people to have an honest dialogue, especially when things go wrong.”

The new culture helped free employees from the harsh reprimands that marked Ford’s culture in the past, and instilled a supportive and safe environment where rather than employees placing blame, colleagues were encouraged to help one another, creating a context where they had the freedom to be honest, to learn from their mistakes, and to grow. It’s in this way that Ford’s new culture gave employees the freedom to truly collaborate, respecting everyone’s participation and contribution as they banded together around a sense of shared purpose.

At the core of Ford’s new culture is the “One Ford” plan that takes to heart the ideas of ”One Team,” “One Plan,” and “One Goal.”  Mulally says “those are more than just words. We really expect our colleagues to model certain behaviors. People here really are committed to the enterprise and to each other. They are working for more than themselves. There are so many people around the world involved in our daily operations that it has to be about more than a single person—it truly has to be about the business.”

Another important aspect of Ford’s revamped culture, then, is the freedom of employees to pursue a goal larger than themselves, banding together, committing to one another, rising as a team in their work to move the enterprise forward—in short, the culture now inspires the freedom to pursue significance.

So what are the results at Ford? The company has posted an annual profit since 2009, and its stock price has rebounded dramatically. In fact, it has outperformed main rivals Toyota and GM in the last 5 years—Ford has thrived whereas its peers have struggled. Indeed it seems the company’s embedding of freedom through its “One Ford” initiative has helped the company become “Ford Tough” once again.

The freedoms emphasized in Ford’s revamped culture are the kinds of freedom that have been found in the Freedom Report to give companies a competitive advantage over their peers, such as the freedom from retaliation, the freedom to make mistakes, and the freedom to collaborate. Ford’s new-found freedoms and their resulting financial benefits are consonant with the Freedom Report, which indicates that organizations that get their freedoms right can gain a tenfold advantage in financial performance, innovation, and sustainability.

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 9,368 other followers

%d bloggers like this: