The title of today’s blog is an equation I use in my Strategic Management course. As we progress through the semester I will continually return the this equation to make sure the students see the importance of good planning, in other words applying a thoughtful engaged planning process to the needs of the organization. During the semester discuss planning tools such as PESTEL, Porter’s Five Forces Model, VRINE, SWOT and others that help leadership make sense of the environment and industry within which they compete. VRINE and SWOT are tools that help leadership understand their own capabilities and resources and properly apply those resources and capabilities within their chosen markets.
But a good plan is nothing unless it is expeditiously implemented. Execution of said plan will determine the sustainability of their economic or social endeavor, while ensuring the business model is effective and efficient. This means the company is being well managed. There are many examples of companies that are well led, poorly led, or just plain lucky, but today I want to focus on one leader who has done a great job planning, organizing, leading and controlling a company. Alan Mulally, an ex-Boeing person, has done an excellent job leading the Ford Company, but will be retiring soon, but not before he has “shifted Ford to a stronger course.”
Neal Boudette, Christina Rogers, and Joann Lublin wrote about Mulally this week in the Wall Street Journal, reminding me what good leadership looks like. “Alan Mullaly arrived at Ford in 2006 with no experience in the auto industry. After eight years at the helm, the 68 year-old Kansan is preparing to retire with a reputation as one of the best chief executives the industry has seen in a generation.” Wow, pretty high praise. So my question, what did he do?
Well, obviously profitability must be a part of the measure. Ford is doing better economically than it ever has in its history: $42 billion in profits over the last five years. Not bad! With that much in profit the return to investors is probably good. What about long term growth measured by market value of the company? In other words, how much is the company worth based on its stock price? “Its market value is more than $63 billion, and increase of $48 billion since he arrived.” If I am an investor in Ford; then I am pretty happy because I am getting income and growth from my investment.
Whenever I look at leadership effectiveness, I look at what happens after the leader leaves. In other words, what has the leader done to ensure the company is better off after they leave? What kind of succession plan is in place? Is the business healthy and will it continue to be healthy after the leader leaves? In the case of Mulally he is leaving the business healthy and with a good successor following in his footsteps.
The company’s streamlined product mix sells well throughout the world. The combination of cars and trucks are popular, and the Ford truck is the number one seller in the world. But what about people? How did he do in this category?
“When he arrived at Ford after 37 years at Boeing, Mr. Mulally broke down regional rivalries that had divided the company for decades, quietly demanding and rewarding accountability from his lieutenants.” He did what he did at Boeing, instituted weekly meetings where each manager reported progress in their area of responsibility with color-coded charts. Green is good, yellow is cautionary, and red is bad. He developed new methods of control while creating a better environment for creativity and honesty.
There is a great example of Mulally’s creation of an environment of trust and accountability at Ford. Mark Fields, who will be Mulally’s successor, confessed in one of these meetings that his sports utility program was in the red. Mulally could have berated him in public for this disclosure, but instead he applauded, reinforcing an environment of trust and innovation, instead of one that hides problems, which is what was done before.
Mulally believed in one Ford, one plan, and it appears that his process worked. He was asked if he is worried that when he leaves Ford will go back to the way it was. His comment reflects the eighth step in John Kotter’s change model, anchor the change in the culture of the organization. “Mr. Mulally said in a recent interview that he wasn’t worried about the auto maker going back to its old ways. Rather, he said, he was excited about the institutionalizing of our management system inside Ford.”
I think Ford is a better company because of the Leadership of Alan Mulally. And I believe that Mark Fields, his successor, will not only carry on the new management system, but will make it even better. Why do I say that? Because good planning, and good execution, means good management. And that is what Alan Mulally did at Boeing and at Ford.
And that is my thought for the day!