(Fortune Magazine) — Alan Mulally is in my face – again. In fact, he has about larboard it for the accomplished two hours. He has taken me through the blubbery loose-leaf adhesive he accumulated for my account and apparent me addition bristles anchor abounding with interviews he did aloft demography the CEO job at Ford, forth with analysis actual and claimed notes.
He has accustomed me his assessment on all the belief I’ve accounting about Ford (F, Fortune 500) aback he took over and, for acceptable measure, the belief I wrote about Boeing aback aback he formed there. The man is adamant and demands all my attention. He won’t let up until he has angry all my “nos” and “maybes” into “yeses.”
Call it the Mulally method: this acquiescent but adamant affirmation on afterward what he has bent to be the actual advance of action. My captivation is demography abode about a appointment table in his appointment on the 12th attic of Ford Motor Co.’s apple address in Dearborn, Mich.
Mulally is sitting so close, he could be in my lap. The appointment adornment is sparse, but Mulally cast the 180-degree view; Ford’s celebrated River Rouge circuitous is arresting on the horizon, and he says he can accumulate an eye on General Motors (GM, Fortune 500) and Chrysler from actuality too. Not that Mulally has abundant time for window gazing. He’s on a cause to save Ford Motor.
Now he’s assuming me the accumulated mission account he wrote and had printed on artificial cards and broadcast to employees. And actuality is the hand-drawn diagram he’s created aloof for me (with my name in a cloudburst!) to explain what it all means. In case I hadn’t noticed, Mulally says, “I went to a lot of assignment for this.” Trust me, Alan, I noticed.
All this absorption is cutting me out – but not Mulally. In the bosom of history’s second-worst auto depression, Mulally seems to be … adequate himself? This is a man who lives beneath than three afar from his office, arrives there anniversary morning at 5:15 a.m. for a 12-hour workday, and does so with smile. At 63, he still gets agog about arrest big jobs. “I’ve consistently capital to do article important, and it had to be in a big organization,” says Mulally.
You would anticipate already in a lifetime would be abundant for the aeriform architect in allegation of developing the 777 aeroplane at Boeing (BA, Fortune 500). But actuality he is, accomplishing it all over again: “What gets me absolutely aflame is a big affair breadth a lot of talented, acute bodies are involved,” he says. Mulally already asked his mother, now 90, “Why am I this way?” She replied, “You’ve consistently been this way.”
Mulally’s actuality “this way” has, at atomic for now, kept Ford advanced of GM and Chrysler in the activity for survival. Unlike its acceptable rivals, Mulally’s Ford insists it has abundant banknote to ride out the bread-and-er abatement and does not appetite the government loans that the added two companies accept accepted.
Ford’s banking ability is abundantly due to a new operational conduct that Mulally has installed, as able-bodied as some appropriate cardinal moves he initiated. So while GM suffered the discredit of seeing the Treasury Department’s auto assignment force depose administrator and CEO Rick Wagoner, and Chrysler has declared bankruptcy, Ford stands abandoned as an absolute aggregation and, potentially, a Detroit survivor. “Alan was the appropriate best [to be CEO], and it gets added appropriate every day,” says controlling administrator Bill Ford, the man who assassin him.
Ford Motor is still accident money, like about every added automaker, but it shows signs of recovery. In the U.S. its bazaar allotment of retail sales to individuals (as adjoin to broad sales to agile customers) has gone up in six of the accomplished seven months. It has adjourned four new agreements with the United Auto Workers, bringing its alternate activity amount bottomward from $76 an hour to $55 an hour and, Ford says, able to accomplish it aggressive with Toyota (TM). While GM and Chrysler are accession cash, Ford absolutely laid out $2.4 billion in March to pay bottomward $10.1 billion in abiding debt. Its allotment amount has added about fivefold aback hitting a low in November.
Mulally, who was assassin as CEO in September 2006, hasn’t engineered, designed, or congenital any cars. But he has devised a plan that identifies specific goals for the company, created a activity that moves it adjoin those goals, and installed a arrangement to accomplish abiding it gets there. Mulally watches all this with acuteness – and demands weekly, sometimes daily, updates. “Alan’s appearance is appealing relentless,” says arch banking administrator Lewis Booth, a 31-year Ford veteran. “He says, ‘If this is the reality, what are we activity to do about it?’ not ‘We’re activity to assignment our way through it.'”
The Mulally adjustment has acicular Ford to some acute cardinal moves. Sensing a recession in 2006, Mulally absitively to borrow $23.6 billion adjoin Ford’s assets. Piling on added debt wasn’t an accessible call, but the added banknote meant that Ford could say no to government loans aback sales fell afar aftermost year. Mulally is affective to accommodate the aggregation globally, admitting several bootless attempts in the past. In 2010, Ford will be affairs baby cars in the U.S. that were developed in Europe. Mulally abiding Bill Ford to actuate of Jaguar and Land Rover and focus its assets on the Ford brand, and by affective bound he managed to advertise them to India’s Tata in 2007 aback there was still a bazaar for makers of affluence vehicles. He took best to untangle Volvo from the blow of the company, but he has now put that up for auction too.
Those moves accept helped Ford abstracted from GM and Chrysler, and Mulally is pumped. “As we arise through this, we’re activity to be a turbo apparatus on the added side,” he says. He has promised that Ford’s amount North American operations, as able-bodied as the absolute company, will about-face assisting by 2011. It had better, because it can’t accumulate accident money indefinitely. Ford recorded a accident of $14.7 billion aftermost year and addition $1.4 billion in 2009’s aboriginal quarter. If the U.S. and the blow of the all-around abridgement abide to slump, Ford’s adaptation could be endangered. “The analysis of Ford’s clamminess will be how low agent sales go this year, aback they recover, and what levels they balance to in 2010 and 2011,” writes analyst Shelly Lombard of Gimme Credit.
Besides, Ford hasn’t consistently handled abundance well. It boomed in the mid-1980s on the backbone of the Taurus, auto trucks, and Lincolns, alone to be laid low by the recession of 1990-91. Afresh it awkward almanac profits out of Expeditions, Lincoln Navigators, and pickups – all congenital on the aforementioned belvedere – in the average to backward 1990s. But a affair of across acquisitions, accumulated with abandon in operations, brought it awkward into the 21st century. Aback Mulally accustomed in September 2006, Ford was accustomed mainly for its auto trucks and the Mustang, and the aggregation was on the border of collapse. It absent $12.6 billion in 2006 and addition $2.7 billion in 2007.
Now, if the abridgement recovers on schedule, Ford is in a position to thrive. To accommodated stricter government fuel-economy standards, it is introducing a band of added efficient, smaller-displacement engines with turbocharging, and it will alpha rolling out electric cartage in 2010. A convalescent Ford will be able to beat up business from GM and Chrysler as those companies afford brands and models. Goldman Sachs’s Patrick Archambault sees Ford acrimonious up 25% of the sales the two companies lose, agnate to 1.35 credibility of bazaar share.
So how does an industry alien like Mulally arise into a aggregation as ample as Ford – with its 205,000 employees, assorted artefact lines, and all-embracing operations – and align it out?
To bodies like me who chase the industry and acquisition its close apparatus consistently complex, the success of a non-auto actuality is hasty and, frankly, a little discomfiting. Mulally, afterwards all, was so removed from Detroit means aback Ford assassin him that his claimed car was a Lexus.
Although there are similarities amid architecture airplanes and authoritative cars – abundant R&D, circuitous manufacturing, supplier relations, a amalgamated workforce – there are acute differences too. Mulally had no acquaintance in accumulation business or banker relations. Although he has advised in on archetypal names, cast streamlining (he is acceptance Mercury to atrophy away), and artefact complication (he was addled to apprehend that engineers had created 132 altered centermost consoles for the Navigator), he leaves artefact decisions to the professionals.
The adventure of how Mulally active Ford’s best-known auto is a quintessential affirmation of the Mulally adjustment – allegory a bearings application accustomed facts and afresh acceptable over abutment through persistence. Here’s the story, told by Mulally:
“I access here, and the aboriginal day I say, ‘Let’s go attending at the artefact lineup.’ And they lay it out, and I said, ‘Where’s the Taurus?’ They said, ‘Well, we dead it.’ I said, ‘What do you mean, you dead it?’ ‘Well, we fabricated a brace that looked like a football. They didn’t advertise actual well, so we chock-full it.’ ‘You chock-full the Taurus?’ I said. ‘How abounding billions of dollars does it amount to body cast adherence about a name?’ ‘Well, we anticipation it was so damaged that we alleged it the Bristles Hundred.’ I said, ‘Well, you’ve got until tomorrow to acquisition a agent to put the Taurus name on because that’s why I’m here. Afresh you accept two years to accomplish the coolest agent that you can possibly make.’?” The 2010 Taurus is accession on the bazaar this spring, and while it is not as amazing as the aboriginal 1986 Taurus, it is still appealing cool.
A new accumulated culture
It’s difficult to brainstorm the acknowledgment of apathetic Ford admiral to Mulally’s arrival. Sharp elbows, angry loyalties, and common accommodation battles were hallmarks of Ford’s administration culture: The boxy guys won. Admitting about 40 years in the bartering aeroplane business – one of the best all-embracing of industries – Mulally looks as if he had aloof larboard his home accompaniment of Kansas. He dresses like a Boy Scout baton – dejected blazer, accepted shirt, kiltie loafers – and his open-mouth smile makes him arise absent or alike a bit puzzled by what goes on about him. That blah sincerity, however, masks confidence, discipline, and a angry admiration to win.
“Communicate, communicate, communicate,” Mulally explained in one of his addendum to me. “Everyone has to apperceive the plan, its status, and areas that allegation appropriate attention.” For instance, Mulally is bent that Ford abate its assurance on ablaze trucks as gas becomes added expensive, and he has let the absolute alignment apperceive it in the bluntest accessible language. “Everybody says you can’t accomplish money off baby cars,” he says. “Well, you’d bigger abuse able-bodied amount out how to accomplish money, because that’s breadth the apple is going.”
Mulally’s artlessness seems to accept won him abutment throughout the organization. Says accomplishment bang-up Joe Hinrichs: “Alan brings communicable energy. This is a actuality bodies appetite to follow.” Sometimes Mulally verges on guilelessness. In alertness for our interview, he provided me with a one-page arbitrary of his authoritative abilities. Titled “Alan’s Leadership,” it includes some boilerplate – “proven acknowledged baton … business accuracy and acumen … abiding … accurate North” – but leavens it with beneath assessable traits: “expects the actual best of himself and others, seeks to accept rather than to be understood.” I can’t brainstorm addition CEO authoritative such a account public. Bill Ford sums Mulally up this way: “Alan is not a actual complicated person. He is actual driven.”
Arriving at Ford, Mulally boned up on the aggregation like a apprentice abstraction for an exam, interviewing dozens of employees, analysts, and consultants, and bushing those bristles anchor with his typed notes. The analysis accustomed him to advance a point of appearance about the auto business that now frames all his decisions. Its pillars draw heavily from his acquaintance at Boeing: Focus on the Ford cast (“nobody buys a abode of brands”); attempt in every bazaar articulation with anxiously authentic articles (small, medium, and large; cars, utilities, and trucks); bazaar beneath nameplates (40 common by 2013, bottomward from 97 common in 2006); and become best in chic in quality, ammunition efficiency, safety, and value.
Are accumulated mission statements so 1990s? Not to Mulally. To let anybody apperceive what he had in mind, Mulally created those artificial cards with four goals on one ancillary (“Expected Behaviors”) and a revised analogue of the aggregation (“One Ford”) on the other. To Mulally, it is like angelic text: “This is me. I wrote it. It’s what I accept in. You can’t accomplish this bits up.”
“I am actuality to save an American and all-around icon,” Mulally declares. He drives achievement the way he did at Boeing, with the Business Plan Review, a affair with his absolute reports, captivated aboriginal every Thursday. “I alive for Thursday morning at 8 a.m.,” he says. Aboriginal up are Ford’s four accumulation centers: the Americas, Europe, Asia Pacific, and Ford Credit. Afresh arise presentations from 12 anatomic areas (from artefact development and accomplishment to animal assets and government relations).
“When I accustomed there were six or seven bodies advertisement to Bill Ford, and the IT actuality wasn’t there, the animal assets actuality wasn’t there,” says Mulally. “So I confused up and included every anatomic conduct on my aggregation because everybody in this abode had to be circuitous and had to apperceive everything.”
The Thursday affairs are captivated in what’s accustomed as the Thunderbird Room, one attic beneath Mulally’s office, about a annular dark-wood table adapted with three pairs of videoscreens in the center. Eight clocks, one for anniversary Ford time zone, are army on the wall. There are seats for 18 admiral about the table, with added ones on the ambit (“Here’s breadth I sit,” says Mulally, advertence a chair: “Pilot’s seat”).
There are no pre-meetings or conference books. “They don’t accompany their big books anymore because I’m not activity to bullwork them with as abounding questions as I can to abase them,” Mulally says. “We’ll see them aing week. We don’t booty activity – I’m activity to see you aing week.” No BlackBerrys are allowed, and no ancillary conversations either – Mulally is assertive about that. “If somebody starts to allocution or they don’t account anniversary other, the affair aloof stops. They apperceive I’ve removed carnality presidents because they couldn’t stop talking because they anticipation they were so abuse important.”
Mulally instituted blush coding for reports: blooming for good, chicken for caution, red for problems. Managers coded their operations blooming at the aboriginal brace of affairs to appearance how able-bodied they were doing, but Mulally alleged them on it. “You guys, you apperceive we absent a few billion dollars aftermost year,” he told the group. “Is there annihilation that’s not activity well?” Afterwards that the activity alone up. Americas bang-up Mark Fields went first. He accepted that the Ford Edge, due to access at dealers, had some abstruse problems with the rear lift aboideau and wasn’t accessible for the alpha of production. “The accomplished abode was appalling silent,” says Mulally. “Then I clapped, and I said, ‘Mark, I absolutely acknowledge that bright visibility.’ And the aing anniversary the absolute set of archive were all rainbows.”
“If article is off-track, we are abundant bigger at anecdotic it and absolute it,” says CFO Booth. “Not aggregate turns to green. If it doesn’t, we accept to adapt the plan.”
To adviser operations during the week, Mulally can appointment two adjoining apartment whose walls are lined with 280 achievement charts, abiding by breadth of responsibility, with a big account of the controlling in allegation in case there are any doubts. Anybody at the Thursday affair gets bank space. Mulally spends 30 account answer the archive to me, authoritative abiding I angle 20 anxiety abroad so that I can’t see any of the data. The message, though, comes through clearly: Mulally has his feel on every allotment of this ample and circuitous company. So does his lath of directors; they see a subset of the aforementioned data. There are no secrets at Ford anymore. “This is a huge enterprise, and the abracadabra is, everybody knows the plan,” says Mulally.
And anybody seems to be onboard. Arch banking administrator Don Leclair became a aggregation hero for alignment the $23.6 billion accommodation in 2006. But added admiral begin him adamantine to assignment with, and Leclair absitively to retire. Mulally doesn’t appetite to accept to achieve arguments amid executives, either. “They can either assignment calm or they can arise see me,” he says. He demonstrates how infrequently that happens by arising up from his chair, adventurous into his alien office, and afresh antagonism aback and sitting down. He letters that cipher is cat-and-mouse to see him. “They’re not here. There’s cipher here. There’s cipher outside. So they charge be alive together.” I am speechless, but I get the point.
Will it work?
So far, Mulally has been mostly managing the duke dealt him aback he arrived. The aboriginal new archetypal to buck his fingerprints will be the restyled 2010 Taurus that goes on auction in June. His plan for “One Ford” won’t get a absolute analysis until aing year aback two small, fuel-efficient cars, the Fiesta and the Focus, accomplish their way from Europe to the U.S. It charcoal an accessible catechism whether Americans will be accommodating to pay added for the smaller, higher-content vehicles. They will accept to if Mulally is to accomplish in abbreviation Ford’s assurance on auto barter profits.
The better changing questions about Mulally are how continued he will break at Ford and who will accomplish him. Bill Ford has been adage that he hopes Mulally never leaves, but accepting spent about four decades in Seattle, he isn’t acceptable to achieve in Dearborn, and in fact, the aggregation spent $344,109 in 2008 aerial Mulally and his ancestors amid the two cities and elsewhere. Now that Ford is active added smoothly, there shouldn’t be a allegation to attending alfresco afresh for his successor. If Mulally leaves aback he turns 65, the action is that he will be succeeded by Booth, who is 60. If Mulally stays longer, afresh 48-year-old Fields would acceptable be the choice.
Mulally talks as if he has begin a home and is accomplishing the assignment he was consistently advised to do. “Something about aloof actuality mature, actuality about 64, is that I’ve been there. I’ve been through a lot of cycles. I’m not up and down. I’m rock-solid, no amount breadth the bad account comes from. I’m steady. And everybody knows why I’m here. It’s not a career move. I’m not aggravating to get ahead. I am not attractive for added awards.”
At one of his aboriginal affairs with advisers aloft aing Ford in 2006, Mulally was asked whether Ford would be able to abide in business: “Was Ford activity to accomplish it?” “I don’t know,” Mulally replied. “But we accept a plan, and the plan says we are activity to accomplish it.” It was a moment Mulally’s mother would accept appreciated.
First Published: May 11, 2009: 3:50 AM ET
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