Ford

In 2006 Ford Motor Company was in tough shape and had lost 25% of its market share since 1990. They had lost $12.7 billion, its worst performance ever. They held a portfolio of brands that require major capital infusions like Jaguar, Land Rover, Aston Martin, and Volvo. Labor costs were as high as $76/hour and was making the company’s operating margins uncompetitive here in the U.S. and overseas. Japanese automakers development of new automobiles were months ahead of Ford’s at the time also leading to their struggle. Ford knew they had to do something to turn this tough time around for the company to survive and be profitable again. On the brink of bankruptcy the company made drastic changes. William Clay Ford, Jr dismissed himself as Chief Executive Officer in September of 2006. Ford named Alan Mulally Chief Executive Officer and President of the company to replace him. This was risky because he had no automotive experience and past efforts of hiring outside for this role for Ford had failed. He previously served as Executive Vice President of the Boeing Company and then President and Chief Executive Officer of Boeing Commercial Airplanes, Inc. from September 1998 to September 2006. There were many problems within Ford before Mulally arrived that needed to be corrected in order for the company to become successful and profitable again. They were notorious for their caustic corporate culture. Executives put their own advancement and the success of their own department ahead of the bottom line. This caused little to be accomplished beyond self – preservation. Mulally created weekly “Business Plan Review” meetings and made them a safe environment where data could be shared without blame. Before this executives would enter meetings eyeing each other for advantage, looking for weak spots in each other’s armor and vulnerability. Mulally encouraged them to help each other with problems and work as a team. He tied each executive’s performance to the