I’ve spent the last couple days trying to digest the pros and cons of Ford naming Boeing’s Alan Mulally to replace Bill Ford as CEO and have come to the conclusion that there are more pros than cons. Let’s do a quick run-down:
- An industry outsider, which will help remove the NIH blinders endemic to American automaking.
- Strong knowledge of manufacturing, and lean manufacturing in particular. He turned aircraft manufacturing, which should traditionally be the poster child of batch, into a very strong lean operation… with a couple caveats I’ll point out in the cons section below.
- He has made very tough decisions before, and quickly.
- He has a history of investing heavily in R&D.
- He has the cohones to cancel huge projects, such as the next generation supersonic passenger jet, in favor of projects actually desired by customers.
- Part of the "leanifying" of Boeing included outsourcing a large part of the manufacturing, with a majority of the work going overseas.
- He has made dramatic force reduction decisions, driven primarily by traditional accounting thought. Although I’m not discounting the reality that reductions were required in the end, a vast amount of knowledge left Boeing during those times.
Mr. Mulally is going to have the challenge of a lifetime. Some words of advice:
- Draw on your experiences at Boeing, but realize that Ford isn’t Boeing. You aren’t competing with just one major company, but several… and some you may not even know of yet. The competitive landscape isn’t based purely on efficiency per seat-mile, but also on quality and design perception as well as sometimes single-minded brand loyalty by widely divergent consumer segments.
- Keep your suitcase packed and get out. Visit dealers to hear them and also experience what customers experience. Visit parts suppliers to experience the pain and antagonism of arbitrary and unilateral price reductions based on "China price" theory. And especially…
- Really visit the shop floors of your factories. Show up unannounced, without an entourage, and tell the UAW and plant management to pound sand if they try to filter and spin what you’re hearing and seeing. Visit a factory floor at least once a week. Remember your lean floors at Boeing. Talk to the people one-on-one. Feel their knowledge and ideas, but also sense where more training is necessary and where structural/union issues are hindering efficiency. Think about that knowledge before you execute non-selective force reductions.
- Understand your true costs. Not your standard GAAP and Wall Street reports, but your true costs. Pick up a copy of Rebirth of American Industry (ok ok… shameless plug for Bill’s book…).
- Spend quality time with your engineering and purchasing groups… you’ll see multiple sides of many stories. Such as engineering being frustrated with aggressive purchasing practices hindering valuable technical relationships with vendors, but also purchasing’s frustration with engineering creating ten different hinges for virtually identical vehicles. Bringing me to…
- What’s the point of many virtually identical vehicles? Slim down your offerings, then drive laser focus on those offerings to create true value from the customer’s perspective. Are they targeted correctly? Just as you had the guts to cancel a multi billion dollar aircraft program, have the guts to stop the cash drain on designing cars not suited to today’s market.
- Trust but verify. A company like Ford has lots of self-protecting bureaucracies, which can sometimes distort data or interpretation. Make sure you have confidence in what you are being told.
Ford has needed to make a true "bold move" to save the company, and this is one. Bill Ford needs to be given some credit for realizing he needed someone stronger than himself, and having the guts to go outside to find that person. Now it’s up to Alan Mulally to have the guts to make the necessary internal changes.