Mulally’s advice: Stay on the One Ford plan

Alan Mulally is in India on a farewell visit as he gets ready to hang up his boots as President and Chief Executive Officer of Ford Motor Co. This is after an eventful eight years at the helm of the American carmaker, a period when some of his competitors took taxpayers’ money to stay afloat.

He recalls with pride that Ford was the only company that did not seek assistance from the US government. He has met employees at Ford India’s plant to the south of Chennai and has been having townhall meetings with scores of others , to bid them all farewell and thank them for their contribution to the company.

After his brief opening remarks, when he talked about his career – first at Boeing when he was involved in all the planes that it developed and then at Ford – and the Indian market, Mulally in typical fashion says “this is my report to the committee.”

What plans after Ford, you ask him? That is a really creative question, he says and goes on to say that his immediate priority is to ensure an orderly transition. Mark Fields, now Chief Operating Officer, takes over him from Mulally on July 1.

What is the biggest difference at Ford in the last eight years? There are actually seven, says Mulally and goes on to list them. “They were big decisions we made. The reason Ford is doing well today is because of these seven things,” he adds.

One, it decided to serve markets around the world. “We wanted to be one of the most respected automobile companies world-wide. We always were, but we didn’t serve all the markets.” Two, to focus on the Ford and Lincoln brands. Which is why Ford sold all the other brands in its portfolio. Third, “we are going to commit to the customers that we are going to have a complete family of vehicles when they walk into a Ford showroom – small vehicles, medium-sized, large cars, utilities, pick-ups.”

The next one, according to Mulally, is the company’s commitment to the consumer that every Ford vehicle, no matter what the size, will have the best quality, best fuel efficiency, lowest CO2, the very best in safety features and also the most connected.

The fifth important change was Ford’s decision to operate as one global company, which gave rise to the One Ford plan. “We didn’t have scale. Now, we are operating as one company. We are using all our resources around the world. For example, in India, this is the centre-piece for small cars. The input from the Indian team and customer is going to be such an important one for global Ford,” he said.

Mulally said Ford also decided to always match its production with real demand and never over-produce. “Very few companies do that and they get into real trouble.”

The last one was financing the plan. After he took over, Ford took a “small home improvement loan,” in Mulally’s words to restructure the business to become profitable again. The company also accelerated development of new vehicles. The company had repaid all the loans it took, had reinstated dividend and also doubled it and, more importantly, funded its product development plan for the next five years.

On the changes in the global automobile industry in the last eight years, Mulally says the most significant one is that people appreciate what a fantastic business the automobile industry is and its contribution to the economy. It is a growth industry; it is high-tech and employs lots of people. In general, around the world, 70 per cent of all R&D investment is associated with manufacturing. “Most economies, if they are successful long-term, have a laser focus on manufacturing.”

What would be his advice to his successor? “I have given my successor my advice. And I would like to share that with you right here. This is the news flash,” he jokes. But, the advice is simple: Stay on the One Ford plan. It sounds so straightforward, he adds, but points out that the transformation that Ford has gone through is one of the biggest such in history. It has worked and the team has experienced it. “I have all the confidence that Mark Fields and his team are going to stay absolutely focussed on serving all the markets around the world with a complete family of best in class vehicles,” he adds.

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