204 CASE STUDIES IN WORK, EMPLOYMENT AND HUMAN RESOURCE MANAGEMENT executive presentations. The numbers had to speak for themselves, and only the performance itself was important. Mulally reports that a breakthrough was achieved after a few months of the senior executives constantly presenting positive figures. During one meeting, he addressed the group and asked, "if we are doing so well, how come we are still losing USS1 billion a month?". After that meeting, one executive decided to show numbers that indicated they had a problem with a workflow that was costing Ford money at a specific plant. Rather than berate this executive, Mulally asked if there was someone else at the meeting who could help and praised both parties when an executive from another division was able to provide a solution. At that stage, others started to reveal both positive and negative reports. The key to this change was a focus on evidence-based management with accurate and honest figures required to understand the performance of the company. Linked to this was an acceptance of risk and potential failure as a part of the business. The key was the acceptance that every com- pany makes good and bad decisions, and the important thing is to understand what decisions work and what decisions do not work and to rectify these before they become a problem. Failure in the old Ford was an opportunity for "sharp elbows" to emerge and for other executives to promote their abilities. Under the new Ford, failure was seen as a learning opportunity for the entire company. INCREASED FOCUS: MANY IDEAS AND DIRECTIONS BUT NO FOLLOW-THROUGH The analytical, direct and follow-through approach to his leadership in practice is best described by Mulally himself (Taylor III, 2009): I arrive here, and the first day I say. "Let's go look at the product line up." And they lay it out, and I said, "Where's the Taurus?" They said, "Well, we killed it." I said, "What do you mean, you killed it?" "Well, we made a couple that looked like a football. They didn't sell very well, so we stopped it." "You stopped the Taurus?" I said. "How many billions of dollars does it cost to build brand loyalty around a name?" "Well, we thought it was so damaged that we named it the Five Hundred." I said, "Well, you've got until tomorrow to find a vehicle to put the Taurus name on because that's why I'm here. Then you have two years to make the coolest vehicle that you can possibly make." The 2010 Taurus is arriving on the market this spring, and while it is not as startling as the original 1986 Taurus, it is still pretty cool. There were several situations at Ford that had similar characteristics. The company was no stranger to changes and developing plans. Every year, there were now strategies and actions implemented to address the shortcoming of the previous year's strategies. The outcome of this was a distinct lack of follow-through to prior commitments and a short-term focus that caused significant financial ramifications. In addressing this, Mulally established an overarching plan that he would talk about in every meeting, town hall session, analyst meeting and press conference. A four-step plan, part of the mission statement he labelled the "One Ford".LEADERSHIP AND CHANGE AT FORD MOTOR COMPANY 203 meetings, everyone would present figures that focused on positive achievements and neglected to present information that indicated poor performance or problems within the company. The result of this practice led to an excessive number of meetings with few decisions being made, as executive self preservation held a higher priority than finding good solutions (Kaipa and Kriger, 2010). Toxic workplace practices between its executives had plagued Ford. By prohibiting the practice of ridiculeng others and persuading the executives to work together, Mulally started his progress by changing the culture of the company. Executives were required to grade their own progress against targets honestly, and when problems arose, they were told to face this head-on. In meetings, Black- berries were banned, and Mulally acted initially as an active mediator facilitating the process be- tween presenting issues and encouraging others to come up with solutions to problems. In particu- lar, he encouraged his executives to seek solutions from unrelated parts of the company and told his executives from different divisions to take responsibility to solve issues together. This strategy was enhanced by a change in the incentivization process from individual performance target bonuses to overall company performance bonuses. These changes quickly established a foothold within the company and executives saw cooperation being in their best interest. Despite initial reluctance, the executives eventually embraced Mulally's plan for changing the culture at Ford (The Associated Press, 2011). As Bill Ford noted of the company culture since Mulally took over, "At the old Ford, you had heroes and villains, now, it's, 'OK, where do we have issues and how do we solve them?" Mulally also made changes to the portfolio of the company. Prior to Mulally joining the com- pany, Ford owned many other car brands. Indeed, when Mulally started at Ford, the first thing that be noticed was that most of the executives were driving Aston Martin, Jaguar and Land Rover cars. His view was that if his executives did not want to drive a Ford vehicle, how could they convince the American public to drive one? A quick decision was made for Ford to sell these other brands, as well as Volvo and other investments, including their partial ownership of Mazda. These assets had been acquired during better times, and Mulally saw the need for Ford to focus on the core of the company's own vehicles, before investing in other places. The sale of these 'non-core assets had a positive benefit in terms of providing additional capital for the company. Removing these other (often competing) car brands meant less fighting for resources and management time, and an opportunity to establish the central values of Ford. Even though these actions applied a short- term solution to the financial problem at Ford, the organizational culture was the primary target that Mulally wanted to change with this new focus exclusively on Ford. EVIDENCE-BASED MANAGEMENT: HONESTY AND FACTS To enhance the efficiency of meetings held within Ford, Mulally established a mandatory weekly meeting for all senior executives. At each meeting, a few individuals would present comprehen sive progress updates on their department's backdrop of their turnaround plan. Mulally labeled this meeting a "Business Plan Review" Prior to Mulally arriving at Ford, executives in meetings would cherry pick what numbers to present and spend significant time presenting these with the focus on explaining their actions. Under the new regime, Mulally allowed no explanations in the202 CASE STUDIES IN WORK, EMPLOYMENT AND HUMAN RESOURCE MANAGEMENT turning the tide for the company. This decision did not go without controversy. Within the organi- zation, several senior executives found it difficult to accept that someone with no knowledge of the automotive industry could make successful changes to the practices and strategies of the company (Reed, 2012). One of the first things that Mulally did when he arrived at Ford was to arrange a line of credit of $23.6 billion in 2005. In the aftermath of the Global Financial Crisis this move was seen as excep tionally astute and clever, as their main American competitors, General Motors Corporation (GM) and Chrysler LLC both had to ask for financial support from the government because they did not have the same financial liquidity as Ford. Both GM and Chrysler filed for bankruptcy protection in 2009 during the Automotive Industry Crisis of 2008-2010. During that time all three automakers testified in front of the Congress to justify why the government had to intervene in order to protect the American automaker industry from collapsing. At those hearings, Mulally advocated that the US government should financially support the rivals, while he refused to accept any financial aid from the government, believing that Ford should work their way out of the hardship. Consequent- ly. this led to a better relationship with American consumers as Ford continued to invest in improv- ing their cars and cementing their reputation domestically as a strong American built company. MULALLY'S PERSONALITY Mulally employed the engineering approach to tackling problems, which is to solve them while acknowledging that problems in organizations are complex issues which are not solved by tech- nical expertise alone, but rather by people. His leadership was focused on having a compelling vision, comprehensive plans, a relentless implementation and bringing talented people together in efforts to achieve goals. Mulally explained that people found meaning in their work by working with others to achieve goals that are greater than could be achieved by oneself. He clarified that a vision for a company is not a hope: it is an action plan. He stated that the only way it is possible to achieve this in a company is through growing the company, improving the margins, and making products that people want and value and in a way that is more efficient than one's competitors. Mulally's method was straightforward. Understand the problem and how it came about, then determine what to do about it. In his words, leaders must "pull everybody together around a com- pelling vision, a comprehensive strategy and a plan aimed at achieving your goals." His view was that once you have the people and have developed the plan, you stick with it (Kurtzman and Dis- tefano, 2014). CULTURAL CHANGE Mulally did not fit the traditional characteristics of a senior executive at Ford. The company was widely known for its toxic culture and an endless number of meetings among executives. The common theme was a focus on short-term achievements and goals, with a cut-throat and careerist culture, where each executive would focus only on their area of responsibility. Consequently, in32 Leadership and change at Ford Motor Company Dan H. Langerud and Peter J. Jordan BACKGROUND AND CONTEXT OF THE ORGANIZATION The Ford Motor Company has an iconic reputation that all started with Henry Ford and the introduction of the first affordable automobile to the general market, the Model T in 1908. The revolutionary large-scale mechanized mass production system that Henry Ford developed is still apparent in the global automobile industry today across the spectrum of manufacturers. The Ford Motor Company has existed and maintained its position as one of the top three US automakers for over a century, but not without challenges requiring organizational restructuring to address changes in the industry and in society. In 2006, Ford reported a loss of US$12.1 million, with US$5.8 million of that loss happening in the fourth quarter of the year. At this time, Ford's market share had dropped from 25.7 percent in 1997 to 17.5 percent in 2006. At the turn of the millennium, the entire US car industry and the Ford Motor Company faced difficult times leading up to the climax during the Global Financial Crisis, which started in 2007. The car manufacturer had neglected its overseas markets and focused on American consumers who had a preference for powerful SUVs with large engines. This led to a downturn in profits globally (Legget, 2014: Taylor III, 2009). As gasoline prices recorded soaring record highs, car buyers abruptly changed preference towards more sustainable cars with smaller engines. Other issues also affected Ford, including personnel policies (c.g, generous health care to employees), increased diversification through overseas acquisitions of other car brands, and spiraling produc- tion costs (Hoffman, 2012; Taylor III, 2009). With major problems emerging around the structure of the company and operational issues, the value of Ford stocks fell to a new, unprecedented low for the proud automotive manufacturer, with its stock plummeting from $17.34 in 2004 to $1.01 in 2008. It was clear that the company was in dire need of a new direction. NEW CEO - MULALLY In September of 2006, Bill Ford Jr, the chairman of Ford, ignored internal candidates and head- hunted an external CEO from Boeing. Alan Mulally, a former aerospace engineer, who had risen to the role of chief executive of Boeing's jet passenger business was asked to take on the task of