Chapter 5; Case 2 - Ford

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Mapping a New Direction Topic: Strategic change, strategic planning, and strategic leadership Ford Motor Company, a global company based in Dearborn, Michigan, employs approximate- ly 203,000 people worldwide. Its 2017 revenue topped $145.7 billion. Ford is well into its second century...over 115 years! Not surprisingly, there have been significant changes dur- ing that time span, both internally and externally. After some tumultuous years following the most recent global recession, the company's board of directors felt it was time for new strategic leadership. The new CEO, Jim Hackett, was tapped to replace Mark Fields, who was fired for his inability to create a clear vision for the company. Stepping into this position, Hackett said a CEO's job is to give company employees a "point of view" so there is no con- fusion and no lack of direction.67 And that's what he set out to do. As the former CEO of Steelcase, the office furniture manufacturer, Hackett had endured envi- ronmental transitions and organizational culture changes in an industry facing many of the same issues as those in automobile manufacturing. Now, he was stepping into the chal- lenge of leading Ford into a future that was almost as uncertain as the one that company founder Henry Ford faced. No longer would a car company be simply just a car company, but more of a mobility solutions provider. After all, we don't purchase a car just to purchase a car, we purchase a way to solve our mobility problem...what's going to get me from one place to another? Looking at it this way means Ford is not only vulnerable to other car manu- facturers, but to ride-sharing services like Uber and Lyft, which have exploited technology so- lutions to the mobility problem. Hackett's first actions? He spent his first 100 days on the job gathering information on Ford's global business operations, brainstorming with his executive team on new business concepts, and paying a visit to a Silicon Valley EV (electric vehicle) manufacturer. His intense analysis led him to a point of view that would guide all future company goals, strategies, and plans. What was it? "Smart Vehicles in a Smart World"68 Strategic leader ... important to PLANNING? YES! What now? Hackett has to focus not only on the future of mobility solutions, but on opera- tional excellence. Ford will be streamlining its core business...becoming more "fit"-a term the CEO uses to describe efficiency. 69 Hackett is preparing to shake up the company's think- ing on everything from its culture to its brands. Some of the specific strategies it's pursuing include: Chariot, a ride-sharing brand Ford started in northern California. It's a transport system with 6 to 10 riders who summon it by phone. Chariot's "path" is plotted by where the crowd wantseeds to go. 70 Looking at other forms of propulsion beyond gas, with zero emissions, and that are kind to the planet.71 Committed $7 billion toward development of more trucks and SUVs. Committed some $5 billion toward cars that run on battery power. Investing $1 billion startup Argo Alto develop autonomous driving technology.72 Looking to slash costs by modernizing and simplifying Ford's vehicle lineup, factories, and product development process. Hired design firm IDEO to show Ford how to incorporate more "design thinking" into cor- porate decisions and actions 73 Entered a strategic alliance with Indian automaker Mahindra & Mahindra to explore pos- sible areas of collaboration.' 74 Looking closely at global markets to decide actions to take in the South American and European markets. 75 As Ford executives and employees move forward in the new direction, CEO Hackett intends to be right there out front shaking things up and offering encouragement. As the Ford's fami- ly spokesperson and executive chairman Bill Ford said, Hackett is somebody who can "blend big strategic thinking and operational excellence."76 Discussion Questions 5-19 How is planning illustrated in this case story? How is strategic management il- lustrated in this case story? 5-20 The new CEO stated that the CEO's job is to give employees a point of view. Ex- plain what you think he meant by this. Why is a "point of view" so important? 5-21 As the new CEO, why would you want to spend time-valuable time-gathering information? Is this similar to SWOT analysis? Discuss. 5-22 Communicating these new goals, strategies, and plans to employees is obvious- ly important for guiding employee behaviors and actions. Whose responsibility is it to communicate these things? What do you think would be the best way to do this? (Hint: It could be more than one person's responsibility!) Be prepared to discuss your ideas in your "assigned" group