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An Insider's View of the Ford Story

2/21/2013 --

Ford COO Mark Fields details the turnaround of an iconic American automaker during inaugural Handleman Lecture.

ANN ARBOR, Mich. — Ford Motor Co.'s turnaround from losing $12.7 billion in 2006 to a profit of $5.66 billion in 2012 didn't happen by chance. As COO Mark Fields explained, the to-do list included critical decisions around brand focus and product excellence, but also the simple-sounding concept of "working together."

"That sounds strange," Fields told a packed Blau Auditorium at the inaugural Handleman Lecture, Feb. 11. "Why would you need to make that a priority?"

Chalk it up to 109 years of history with a top-down culture, where reporting bad news made you vulnerable. In 2006, Alan Mulally left Boeing Co. to become CEO of Ford and worked to change that culture.

At a weekly business status meeting early in Mulally's tenure, charts from top executives didn't indicate the company was in any trouble. Ford uses a color code for topics — green for good, yellow for a potential issue, red for a problem — and everything was green. Mulally thought that odd for a company losing billions.

Meanwhile Fields, then president of the Americas, had an issue with a product launch that year. The new Edge had a liftgate problem that threatened to delay its critical debut.

"I said, 'Code it red,' and they said, 'Are you sure you want to do that?'," Fields said. "I said, 'This is what Alan wants. Let's go for it.'"

Finally it was Fields' turn — Edge launch: bright red.

"I could feel the chairs move away from the table," said Fields. "I said we have a problem, and I'd love to have help from manufacturing and quality to help resolve it. Alan turns to me and starts clapping. The next week, everybody's chart was like a rainbow. Working together has been so crucial for us to get through a very difficult time and work through our issues on our own."

The turnaround took a number of other hard decisions, some of which involved closing plants and laying off employees. Fields outlined the steps to Ford's recovery:

  • Shift focus on the Ford brand. In 2006, Ford had a large brand portfolio that included Jaguar, Volvo, and Land Rover. Great brands for sure, but difficult to manage, especially since the company had to invest more in Ford-brand products. Ford found willing buyers for those brands. "Focus is a wonderful thing when you walk through the doors every day," Fields said.
  • Offer a full lineup of best-in-class vehicles. In 2006, Ford was strong in trucks and SUVs in North America, but weak in cars. It was strong in small cars in Europe and just getting started in Asia. Management decided to make sure Ford had top vehicles in every class.
  • Act globally. Fields said Ford was global in name only in 2006. Its thinking and actions were regional.
  • Find a few things to be the best at. Ford decided to focus on quality, fuel efficiency, safety, and smart technology.
"You can make a laundry list so large that you're mediocre in three-quarters of them and good in one-quarter," Fields said. "We did some research with consumers, and that's what mattered to them. We also looked at how Ford rated in those categories with consumers. From then on, the mission was to be consistent year over year in those four areas."

The culture change and the new strategic direction also were aided by a major financial decision — mortgage the company's assets, including its iconic blue oval logo, to borrow $23.6 billion. Fields said the automotive business is a cash glutton — every product launch requires a massive capital investment. Fortunately, Ford's turnaround started before the financial markets melted down in 2007 and 2008.

The culture change and strategy decisions paid off. In addition to better products, higher sales, increased profits, and better consumer ratings, Ford also got its investment-grade rating back last year.

The lesson, Fields said, is to be "relentlessly dedicated to knowing the reality of your business."

Ford still has some hurdles. For one, it's trying to re-image its luxury Lincoln brand, which Fields admitted will take some time — years, not months.

"We worked on the Ford brand, improved the lineup and reputation, and we want to do the same for Lincoln," he said. "To be a successful global automotive company, it's important to have a global luxury brand. If you look at the successful companies, they have a healthy mass market brand and a luxury brand. So we're investing capital to revamp the lineup."

— Terry Kosdrosky



For more information, contact:
Terry Kosdrosky, (734) 936-2502, terrykos@umich.edu