More on Mulally’s "First Impressions"

Here's what jumped out at me from Friday's WSJ articles on Alan Mulally: his “war room” and his “first impressions.” (both articles require paid WSJ subscriptions, I believe).

Free version of the war room article is here.

In the “war room” article, reporters are taken to the command center for the Ford turnaround.

The posted pages contain charts, graphs and lists of Ford products and markets — his road map to turn around the troubled auto maker. There are also photos of Ford executives in charge of various divisions, to show who is accountable. Pages are coded in red, yellow and green, indicating the severity of the problems.

There is an element of visual management, a lean concept, in the red/yellow/green. That's not rocket science. But, later in the article, there' s a discussion about how Mulally handles the color coding (a more important point):

When one manager offered up the poor performance of his unit, some Ford executives were stunned by Mr. Mulally's reaction. He applauded, saying: “Great visibility.” Mr. Mulally coached his team on using the colored graphs and lists. “We got to the yellows and the reds pretty quickly…within a month,” the CEO says.

When a color improves, “it's a chance to celebrate,” he adds.

Mulally is trying to change a culture that traditionally HIDES its problems to one that discusses them openly, without fear of being embarrassed or unduly criticized. I like that leadership example and it's a move toward a Toyota Way type culture (a baby step, but an important one).

The article shared an example of how Ford execs don't share information openly (due to a culture that favored competition and looking good over cooperation and sharing problems, I'd guess):

After Mr. Mulally asked each business head to present his results and forecasts, he complained that the numbers didn't make sense. “Why don't all the pieces add up for the total corporate financials?” he recalls asking.

“We don't share everything,” he says one manager replied, explaining that Ford executives ran their units without meshing with other divisions, occasionally holding back some information. Mr. Mulally was floored. The next week, executives came back with complete figures.

Mulally's push for a “lean global enterprise” isn't just about manufacturing efficiency:

Mr. Mulally also scrambled to familiarize himself with Ford's vehicles. Recently, on a table in his office, he laid out 12 different metal rods that Ford uses to hold up a vehicle's hood. He wanted to demonstrate to managers that this kind of variation is costly but doesn't matter to consumers.

It's a great lesson in defining value from the customer's standpoint as opposed to the engineer's standpoint. GM used to play the game of being concerned that a Cadillac owner wouldn't want to share parts with a Chevrolet. Ridiculous. Cadillac customers want performance and styling that's better or different than a Chevy, not under-the-hood parts that they would rarely see (like windshield washer reservoir caps).

In his “first impressions” email to the company (sent around in October), Mulally emphasizes the cultural point again:

I've started weekly Business Plan Reviews with the senior leadership team. Together we look at one set of data on one screen. We talk to each other with candor and respect. We are all determined to get to one plan for our company. We will all participate, and we will all support each other's efforts to succeed. I don't yet know everything I need to know about Ford, but I do know that this is the only way I can work.

“Candor and respect” — again, that sounds like the Toyota Way. Mulally is building around a “3 P's” strategy of sorts:

– PEOPLE: A skilled and motivated work force.
– PRODUCTS: Detailed customer knowledge and focus.
– PRODUCTIVITY: A lean global enterprise.

Not bad for an airplane guy. It goes to show that leadership transcends different industry boundaries. Mulally is using the same management playbook that he learned at Boeing and from studying Toyota. That said, he's trying to learn the auto industry:

Shortly after his arrival here, Mr. Mulally and his new troops bought books to better understand one another. The new CEO read the 1926 classic “Today and Tomorrow” by Henry Ford. He also met with the Ford family at the Henry Ford Museum complex early on. Ford managers began passing around “The Machine That Changed the World,” often cited by Mr. Mulally for its in-depth story of Toyota's manufacturing operation.

As we've discussed here on the blog…. is “Machine” really the most recent and most relevant book Mulally could be passing around? What about the Toyota Way series? What Jamie's “Hitchhiker's Guide?” What advice would you give Mulally, on books or otherwise?

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