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Excellent Pilot, Exceptional Driver!
Few believed in the ability of Alan Mulally to do Justice to his Appointment as Ford CEO. But the Airline industry veteran proved them wrong; not merely by words, but also via results. Pawan Chabra brings out three key lessons from the 'Mulally School of Leadership'
Pawan Chabra | Issue Date - 03/02/2012
When Alan Mulally took charge as the President & CEO at Ford Motor Company in September 2006, critics weren't convinced that he'll be able to run operations at the iconic automaker; and neither were Ford's employees. Despite Chairman Bill Ford's strong backing, Mulally ran into plenty of internal resistance, In fact, one of the inherited managers asked a very straightforward question at one of his first meetings, “How are you going to tackle something as complex and unfamiliar as the auto business when we are in such tough financial shape?" Holding the bull by its horns, Mulally looked straight into the manager's eye and replied, “An automobile has about 10,000 moving parts, right? An airplane has two million, and it has to stay up in the air.” Over time, doubters have only changed sides, keeping in mind the resounding comeback that Mulally has crafted for Ford.
After posting a loss of $12.7 billion in 2006 and $14.8 billion in 2008 (the most in Ford's 105-year history), the company earned $6.6 billion after tax at the end of 2010, its biggest profit since 1999 and reported a net income of $20.2 billion at the end of 2011; the second most profitable year in the automaker's history. “Alan Mulally has done an outstanding job... he improved the leadership of the company and most importantly, left key leaders in their roles for a longer period of time to allow them to make a significant impact,” said Laurie Harbour, President, Harbour Results Inc. His signature 'One Ford' strategy – an idea that focuses on selling the same model, built the same way, in all markets – made a huge positive difference to the company's global operations. During both his visits to India , we had a chance to talk to Mulally about why he does what he does and how he has been able do it so well. DTDIY brings to you the three most important lessons that managers can learn from his outstanding leadership skills.
Being an authoritarian pays but not always
Mulally has been following an authoritarian management style ever since he took charge at the corner office at Ford but he has been flexible enough to take feedback from consumers and industry experts into account. For instance, during his first field trip to an auto-testing facility in February 2007, his Falcon single-aisle jet landed on the airstrip of a 330 acre facility in East Haddam in Connecticut. With him were two engineers from the company. Mulally spent four hours at the facility, gathering feedback about his company’s cars from third-party experts. One complaint that was thrown across to him was that the new Ford Edge SUV not only lacked an electronic opener, but also a handle on the rear hatch. His engineers put forward wise arguments on why the company made what it made, but Mulally asked his engineers to find a notepad and start taking notes rather than arguing. Today, the Ford Edge SUV not only comes with an electronic keypad enabled opener option, but also with a universal hatch door opener.
Your gut-feel is the best consultant you have!
As a CEO, he has never hesitated to take decisions that he's been completely convinced about. When he stepped into office, Ford announced an unprecedented financing offer by extending 0% financing for 72 months and decided to bring the Taurus brand back on the roads. The years that followed only proved how Mulally was all about gut-feel. From pledging all of Ford’s assets in November 2006 (including the logo for $23.6 billion) to dumping famous brands (Volvo, JLR & Aston Martin), to postponing his plans to launch the new version of the record-selling F-Series in early 2009, this former Boeing veteran has never been bothered by the disgust-filled grunts of his management.
Staying conventional isn't necessarily good
A year after he had taken over at the company, Mulally decided to place his bet on small cars; and in the year that followed, he burnt 61% of the company’s cash reserves in the process. Ford was by then considered a champion of the trucks and pick-ups category, and so this move was considered illogical. Mulally didn’t care. The result: Ford bounced back as the second-largest car seller in US and EU in 2009 and 2010 – thanks to its changed small car strategy. Call it unconventional, but this CEO taught a money-losing maker of gas-guzzling-trucks to focus more on small cars and make profits! Today, 48% of Ford’s global sales are accounted for by compact cars.
All three lessons just discussed are relevant for any business willing to touch new skies. But what waits for Mulally is the biggest challenge during his stint at Ford. Even at 66, he doesn't talk about his retirement or choosing his successor. “I love working for Ford and I am not going anywhere anytime soon,” he tells us with a smile. But on a serious note, this is one particular challenge that he would want to address at the soonest.