The document outlines the challenges and recovery of Ford Motor Company under various leaderships, particularly focusing on Alan Mulally's tenure. After significant losses and a weakened market presence, Mulally implemented a collaborative culture, streamlined operations, and emphasized product quality and transparency. By 2009, Ford successfully returned to profitability without federal bailout assistance, marking a significant turnaround for the company.

1. AMERICAN ICON:
ALAN MULALLY AND THE FIGHT TO SAVE FORD MOTOR COMPANY
KEVIN O’BRIEN, PMP

2. BACKGROUND
• Company started in 1903
• First major auto company, controlled 61% of market in 1921
• Hurt by Great Depression like many other companies
• Ralph Nader brings in Government regulation
• Japanese imports create competition in 1970s
• Ford rebounds in 1980s
• In 1990s, Ford sells more trucks than cars, and lots of SUVs

3. BILL FORD
• Henry’s great-grandson
• Installed because Ford family has Class B shares that guarantee control.
• He was only 41 when he became Chairman in 1999
• So the Board split off CEO duties and brought in Jacques Nasser

4. JACQUES NASSER
• Internal candidate
• Reputation for cost-cutting
• Worried that only a few products produced most of the profits
• Went on a diversification buying spree
• Authoritarian

5. MISTAKES
• Morale starts to suffer
• Quality goes down
• Ford Explorers start to roll over, kill people in 2000
• Dealers and suppliers fighting back
• 2001 loss of $5.45 B, credit rating downgraded
• In October 2001 Nasser is ousted, and Bill Ford becomes CEO in addition to
remaining chairman

6. STARTING RECOVERY
• Costs cut, 5 factories closed
• Renewed focus on quality and engineering
• Back in the black in 2002

7. STILL PROBLEMS
• Weak executive team
• Infighting among executives
• Subordinates would say yes, then do what they wanted
• Ford not strong enough to discipline them
• A new CEO is needed

8. THE SEARCH
• Carlos Ghosn – the “Rock Star” – wants to be Chairman and CEO
• Dieter Zetsche
• Wolfgang Bernhard
• Meanwhile Ford sales are down in 2002,2003,2004, and losing market share
• Only profitable because of Ford Credit

9. THE ROT CONTINUES
• Still a weak executive team
• Bill Ford getting snow jobs from subordinates
• By 2005 Ford credit rating was “junk bond”
• Bill Ford knows they are starting to circle the drain
• Brings in Mark Fields to run North America
• His “The Way Forward” plan relies on more cuts, announced in early 2006

10. A NEW CEO IS NEEDED
• By 2006, Ford now trailed Toyota in US Market
• Stock had fallen more than 50% in 5 years
• Ford makes one more attempt at signing Ghosn
• Then they turn to Alan Mulally

11. WHY MULALLY?
• At Boeing had successfully faced strong foreign competition from Airbus
• Had transformed a similarly divisive culture at Boeing into one of collaboration
• Made Boeing leaner and more profitable in the face of a difficult environment
post 9/11
• And he got a lot of his ideas from Ford Motor Company

12. CHALLENGES
• Mulally not a “car guy”
• Viewed as a threat by many Ford executives
• Dismissed by his competitors
• The way things have always been done doesn’t work so do things differently

13. HOW TO CHANGE?
• Cut back on meetings
• Institute Business Plan Review (BPR)
• Demands transparency and facts as the basis for making decisions
• Start listening to employees
• Eat in cafeteria
• Pop in to offices
• Stop people in hallway to converse

14. BETTER PRODUCTS
• Simplify product line
• Check out competition
• Make executives drive competitor vehicles, particularly Japanese
• No more “Taurus” decisions

15. STREAMLINE MANAGEMENT PROCESS
• Executives to personally report
• Assistants could watch, but keep their mouths shut

16. RULES
• 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

17. THE BPR PROCESS
• Standardized reporting on agreed data
• Still essential part of how Ford operates
• Happens at various levels
• Employees invited to be observers

18. EXECUTIVE CHANGES
• Many executives not competent in their roles
• Frequently the ones that are competent are the first to leave
• Many threatened by Mulally’s changes

19. EVERYTHING GREEN?
• Each week all statuses were good in BPR
• Yet Ford was losing money?
• Reporting honestly was seen as acknowledging personal failure
• Finally, Mark Fields delays launch of Edge, and reports it as Red in BPR
• It takes a few more BPRs before other execs start acknowledging the problems
they have

20. MODELS OF HOW TO DO IT
• Toyota
• Making products people want, with less resources and in faster time
• Continual improvement
• High quality
• Opposite of Ford
• Mazda – then a Ford subsidiary, used similar process to Toyota
• Ford’s past – Ford got to be the first big auto company by doing a lot of things
right, but had gotten away from it

21. SIMPLIFY!
• Too many products
• 97 different vehicles being produced
• Bad reporting structure for executives
• Implement Matrix structure
• More people reporting directly to Mulally improves his information

22. THE PLAN
• Aggressively restructure to operate profitably at the current demand and
changing model mix
• Accelerate development of new products our customers want and value
• Finance our plan and improve our balance sheet
• Work together effectively as one team

23. CASH IS THE KEY
• Secure line of credit from Wall Street
• Credit conditions already starting to tighten in 2006
• Secured up to $23B
• Had to mortgage nearly every asset, including the blue oval logo
• This is why Ford did not need a Federal bailout

24. FOCUS ON CORE BUSINESS
• Selling off
• Mazda
• Aston-Martin
• Jaguar
• Volvo
• Land Rover
• Closing
• Mercury – right now you will get in trouble if you park a Mercury in the Ford-only lot

25. BACK TO 2 BRANDS
• Ford
• Lincoln

26. UNION NEGOTIATIONS
• Ford losing money on every car built in North America
• Insurance was a major expense
• $23B retiree health care liability on Ford’s books
• Voluntary Employees’ Beneficiary Association (VEBA) negotiated to transfer this to
UAW
• In return. Ford committed to build the Focus in US instead of Mexico

27. 2008 – THE CRASH
• Ford announces that it will not be profitable in 2009 either, despite earlier
projections
• But will not stop investing in new vehicles
• JD power says Ford only full-line automotive company to show consistent quality
improvement
• Operating costs cut by $5B in 2008
• And because Ford started sooner, it was in better shape than GM or Chrysler

28. TURNING DOWN THE BAILOUT
• Ford had a cash cushion now
• The UAW wanted them to succeed
• So in late 2008 Ford refused to take a bailout

29. FORD SUCCEEDS
• By the end of 2009 Ford did actually show a profit for the year, and has been
profitable since then
• Toyota hit a purported quality problem in 2009 involving acceleration that would
not stop
• In 2010 Ford began paying back borrowing and rebuilding its balance sheet
• New cars like the Focus and Explorer were a success
• Alan Mulally steps down in July 2014, and is succeeded by Mark Fields