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Cultures Clash at Ford Ford Motor Company revolutionized the auto manufac- saving profits ten years earlier, but Hackett wanted to turing industry more than 100 years ago with the inven- make the point that old approaches only continue to tion of the assembly line, but lately the company is work if the past and future were identical. The space struggling to remain attractive to investors. Ford has on the wall became dedicated to drawing, mapping, experienced costly recalls and lost hundreds of millions and diagramming out Ford's strategy for competing in of dollars from its international businesses in recent its new reality.136 years. 129 New tariffs on steel and aluminum have eaten Hackett favors collaboration over traditional top- up $ 1 billion of Ford's profits, and Moody's has down- down management. Many of his efforts to change the graded the company's credit rating to one level above culture inside Ford's corporate offices have centered "junk" status. By the fall of 2018, Ford's stock price hit a around removing hierarchies to generate creative dis- nine-year low. 130 Meanwhile, rival manufacturers are cussions across functional areas. 137 For example, inching closer to delivering on new technologies like Hackett launched "Team Edison" to focus exclusively fully autonomous and connected automobiles, and on electric vehicles. The cross-functional team occu- Ford needs to reinvent itself to have any chance of sur- pies an open space inside one of Ford's former Detroit viving, let alone thriving, in its rapidly shifting competi- factories and, according to director Darren Palmer, tive environment. But can a massive, entrenched, knew that to succeed they needed to "be willing to 116-year-old company change itself? Executive Chair- challenge every truth and every process we had man Bill Ford believes it can, and in May 2017 he developed over the course of our careers." Hackett brought on CEO James Hackett to make it happen. has encouraged the team to generate ideas from mul- Hackett planned to drastically alter the way Ford tiple viewpoints. According to Palmer, "On any given operated. 131 Specifically, he wanted to change Ford's day you can find yourself sitting next to someone culture to one that was more open-minded, creative, working to market our electric vehicles, someone and adaptable so that it would be better equipped to looking at the profit potential of our electric vehicles, respond to rapidly shifting market demands.132 Stake- or be on a coffee break with someone involved in our holders had high expectations for Hackett's ability to charging strategy."138 deliver. In the two decades he spent as CEO of Steel- case, Inc.-an office furniture company-Hackett was a strong proponent of "design thinking." This FRUSTRATIONS WITH HACKETT approach to problem solving focuses on the By mid-2018, approximately one year after Hackett customer-what goes through their minds and how took over, Ford's profits were down around $1 billion, they experience a product.188 At Steelcase, Hackett's Key stakeholders were growing increasingly anxious teams of sociologists, anthropologists, and technol- and impatient with the fact they still didn't unders ogy experts used design thinking to transform the exactly what was going on or how Hackett planned to company from a cubicle designer to a trailblazer in change the company. 139 today's open, collaborative workspaces. 134 Hackett Analysts began criticizing Hackett for failing to artie was hired to bring design thinking to Ford, overhaul ulate a compelling vision for exactly where he planned its culture, and reinvent the approach the automaker to take Ford, Morgan Stanley analyst Adam Jonas sald took to creating its products, what little Hackett had communicated was "vague and Hackett made some noticeable changes right away. unstructured" compared to Ford's industry competis He reduced the number of people reporting directly to tors. One Journalist said Hackett used fuzzy terms him from 18 to 8 and decreased the frequency of more common to urbanists and businesspeople, and meetings with them to allow them more time for cres talking with him can feel like taking a college philoso- ative thinking and decision making. Ide hired 28-year- phy seminar after a few bong rips."140 Issues with old Clare Braun as his chief of staff, calling her a Hackett's communication were present inside the "reverse mentor who would help him understand how company as well, where executives were often calling people under 30 were thinking. Hackett also made upon Braun, Hackett's chief of staff to translate Hack waves by removing a plaque that commemorated for ett's diagrams and cryptic messages after meetings.141 mer CEO Alan Mulally's "One Ford" plan. Mulally's pian Ford dealership owners also expressed concerns had been credited with repairing Ford's culture and about communications from corporate headquarters. Jack Madden, owner of a Ford dealership in Norwood, industry leader, which he sees as particularly important Massachusetts, said "There's been a lot less exposure in Ford's situation. Ford's competitors are no longer to senior management ... There's just not enough limited to other auto manufacturers and now include information flowing down to dealers about where the Silicon Valley. Hackett thinks Ford's best shot is to start company's headed."142 thinking like a tech start-up, saying, "Corporations tend One thing Hackett did make clear was that reorga- to reward action over thinking ... But the truth is... nizing and reinventing Ford would require that the you'll find the companies that didn't do the deep think- company become leaner in both its product offeringsing and acted quickly have to redo things 1150 and its workforce. Hackett moved quickly and explicitly Hackett acknowledges that it has been difficult for to slash Ford's unprofitable vehicles and ventures. He his executive team to adjust to him and his penchant announced in early 2018 that the company would dis- for design thinking, but he believes they are starting to continue five of its sedans to focus on SUVs and see the method to his madness. 151 One member of his trucks.143 Ford also announced in 2019 that it was team said recently that they believe "People will look closing its oldest factory in Brazil and pulling out of its back in a few years and say, 'I understand now.' V"152 South American commercial truck business. 144 Hackett has been less transparent on how and when he plans to trim Ford's workforce. While the need for some job cuts with Ford is not disputed, the manner in which Hackett has communicated about the impending lay- offs has been heavily scrutinized. Experts believe that vague statements about layoffs, along with a long pro- cess, have the potential to negatively impact employee morale. Employees may feel undue stress and begin job searching and underperforming if they worry about losing their jobs.145 IS FORD TURNING A CORNER? Ford reported first quarter earnings in 2019 that far out- paced investors' expectations.146 Around the same time, Hackett gave what some felt was his most straight- forward statement to date. He told analysts that Ford's two previous CEOs had allowed the company's costs to incrementally increase so much that the company had to, as one article put it, "stop the bleeding before It could start showing gains from herculean efforts to turn the company around." Hackett reported that by the end of 2018, the company had finally been able to put a stop to the spending and level off structural expenses, Hackett said the company would be able to move much more quickly to deliver new products to the market now that this problem had been solved.147 Ford has announced it will make substantial investments in elec- tric vehicles, and Hackett recently told CNBC that driv- ers should expect a "big surprise" on the horizon.148 Still, it's likely that Hackett will continue to mystify Ford's stakeholders. In an industry looking for a savior with a clear, concise plan of action, Hackett operates more like a coach. He favors using things like TED talks and Socratic exercises to slowly draw creativity and organic solutions from his people, rather than handing down personal dictates. Hackett's quirky style is closer to that of a tech CEO than an auto