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“I’ve been through it, and I think we can do it here,” Mulally assured them. “Here’s what we have to do: We have to deal with the reality of today and then develop a growth plan for the future.”

He told them that he was still working out the details of his plan but had already concluded that Ford needed to simplify its brand
lineup and product offerings. The company needed to focus on the things its customer really wanted, not what the engineers or bean counters wanted. And Ford needed to develop a point of view about the future instead of just reacting to its competitors.

As he left, one family member after another shook his hand and told him how happy they were to have him in charge of the company.

B
efore heading back to Seattle to wrap things up at Boeing, Mulally sat alone in his new office at the top of World Headquarters and took in the view. To his right he could see the futuristic Ford-built tower in downtown Detroit that now housed General Motors’ world headquarters. On the horizon in front of him was the hazy outline of Chrysler’s copper-colored edifice in Auburn Hills.

“I’ve got them right where I want them,” he told a visitor with a laugh.

The men in charge of those companies were having a good laugh of their own at Mulally’s expense. The conventional wisdom in Detroit held that outsiders were incapable of understanding the complexities of the automobile business. Bill Ford’s decision to hire an aeronautical engineer to save his car company spawned plenty of jokes during those early weeks. There was a lot of snickering about flying cars and the return of tail fins. “He has no idea how we do things in Detroit” was the common refrain at Ford’s crosstown rivals, as well as within Ford itself. And Mulally knew it.

They’re right. I don’t know how they do things in Detroit
, he thought.
But I do know it doesn’t work
.

The Revolution Begins

W
hen Alan Mulally returned to Dearborn the following week, he took one look at his crowded schedule and shook his head.

“That doesn’t work for me,” he said.

It was “meeting week” at Ford Motor Company, the time each month when Ford’s senior executives sat through one agonizing caucus after another, each devoted to a different issue or facet of the company’s operations. There were meetings to discuss Ford’s finances, meetings to discuss sales, meetings to discuss new products. Mulally thought about canceling them all on the spot, but decided to endure one complete cycle to better understand the pathology of Ford’s illness.

During the sessions he attended, Mulally asked probing questions and demanded yes-or-no answers. He brooked no equivocation and was not interested in the long-winded explanations that most of his managers felt compelled to offer. What he did demand was transparency and honesty. Mulally found both in short supply. It did not take long for him to realize that the truth came in many flavors at Ford.

Even when he tried to focus on the data, he found that different sources offered different numbers for different audiences. For example, when estimating demand for a new product, inflated figures were often given to suppliers to help win lower prices while a more conservative figure was offered to analysts so that Ford would look good when it exceeded their expectations. The same thing happened
internally. Executives offered exaggerated sales estimates for proposed products to the finance staff in order to win approval for their programs.

Mulally was not officially due to take over as CEO until October 1, but this was just too much for him. Since Ford’s executives seemed to like meetings so much, he asked his secretary to schedule one more. When he had them all together, Mulally started laying down his law.

“There are too many meetings,” he told them. “When do you have time to think about the customer?”

Nobody answered. From now on, Mulally continued, there would be only one corporate-level meeting—his “business plan review,” or BPR. It would be held every week on the same day, at the same time, in the same place. Attendance would be mandatory for all senior executives. All would be expected to personally deliver succinct status reports and updates on their progress toward the company’s turnaround goals. This would not be a forum for discussion or debate. Any issues that required more in-depth consideration by the entire leadership team would be taken up in a “special attention review,” or SAR, immediately following the BPR. The idea was to keep the main meeting focused on the big picture. And Mulally stressed that, when there was discussion and debate in the SAR, it would be based on business realities, not politics or personality. That was the old Ford, he said. The new Ford was all about the numbers.“The data sets you free,” he said with a smile.
^*

Mulally had developed this business planning process at Boeing. It was based on the system the aircraft manufacturer used to manage product programs, but he had evolved it into a framework for managing the entire organization. All of the data from every business unit and function was distilled down to a set of tables, charts, and graphs and presented in a series of PowerPoint slides. Mulally was still an engineer at heart. He had approached the task of running Boeing’s
commercial aircraft division as an engineering exercise. The BPR process was the algorithm he had developed to solve it. He believed the same system could be used to run any complex, global enterprise. Ford would be the test of that hypothesis. He gave each executive a set of slides from Boeing to use as templates until they understood the process and could develop their own. He told them to fill in the blanks with the real data and be ready to present it the following Thursday. And he told them to be ready for action.

“We are the decision makers,” Mulally said. “We need to make decisions and not pass the buck.”

W
hen he was not admonishing his new executives, Mulally blew through the Glass House like a Kansas cyclone, shaking hands, memorizing faces, and leaving everything changed in his wake. He would stop people in the hallway and ask them what they did and what he could do to improve the company. Instead of eating in Ford’s famously posh executive dining room, he took his lunch in the company cafeteria. He stood in line with his plastic tray and chatted up accountants. He would sidle up to a table full of sales analysts and ask if he could join them. For Mulally, an open door was an invitation to pop his head in and see what was going on inside. More than one meeting came to an abrupt halt when someone noticed him standing in the doorway.

“What are you guys talking about?” he would ask as he made his way around the table, shaking hands and squeezing shoulders. Mulally would listen in for a few minutes and then continue on to wherever he was going, leaving behind a roomful of open-mouthed employees.

Ford’s ranks were full of men and women who had tried unsuccessfully to draw management’s attention to inefficiencies in their departments, shortcomings in Ford’s business strategy, or ways its products and processes could be improved. Now they found somebody who was willing to listen. Mulally was inundated with e-mails but responded personally to every message. His own notes were peppered with smileys. If an e-mail really caught his eye, he might even
follow up with a telephone call. These quickly became the stuff of water cooler conversations throughout the company.

One Ford engineer, James Morgan, took a gamble and showed up at Mulally’s office with an armload of engineering schematics. Like Mulally himself, Morgan was a student of the Toyota product development system. He had even written a book about it, and he wanted to show Ford’s CEO just how much Ford still had to learn. Morgan unrolled drawings for more than a dozen different hood structures on Mulally’s conference table. Mulally leaned over them, studying each one closely as Morgan showed him how each was structured in a different way. They even used different latches. Mulally may not have been a car guy, but he knew how to read engineering schematics. They told him everything he needed to know about the company’s lack of engineering discipline. He asked Morgan if there was a way to reduce this complexity. There was, Morgan told him. Mulally put him in charge of that effort and asked for regular updates.

Instead of being discouraged by Ford’s inefficiency, such discoveries actually came as a relief to Mulally.

“
I look at that as nothing but opportunity,” he said. “If you were a lean machine, doing a turnaround like this would be terrifying. But this is a very complex place, and there’s a lot of opportunity to consolidate and simplify.”

But Mulally was dismayed by his first visit to the company’s Product Development Center, a sprawling redbrick campus located a few minutes from World Headquarters. There, Ford’s head of product development for North America, Derrick Kuzak, was waiting to show off the company’s lineup. Kuzak and his staff had parked every vehicle Ford sold in North America beneath the domed ceiling of Ford’s private showroom and waxed them until they were sparkling in the bright spotlights. The first thing that struck Mulally when he walked in was how big most of the cars and trucks were. There were almost no compacts, and not a single subcompact. He noticed that something else was missing as well.

“Where’s the Taurus?” Mulally asked.

The product guys looked at one another.

“We killed it,” Kuzak said.

“You killed it?!” Mulally asked incredulously. “Wasn’t it the bestselling car in America?”

“At one point,” Kuzak said. “But we didn’t maintain our investment in it. People stopped buying them. The only customers we could still sell them to were rental car agencies. The plant that made them is going to be closed at the end of the month.”

“But it was such a great brand,” Mulally said. “Why didn’t you just make a new one?”

Kuzak told him that Ford’s marketing staff had concluded the Taurus nameplate was irrevocably damaged. The car’s replacement was the Fusion. And it was selling well, he pointed out.

That may be
, Mulally thought.
But you don’t spend millions of dollars building a brand and then walk away from it. That is one mistake that is not going to happen again under my watch
.