The 2015 NMHC Annual Meeting closed with an inspiring discussion about leadership by Alan Mulally, the former CEO of Ford Motor Company and the man credited with saving an American icon.
Mulally left what he calls a fantastic job at Boeing to take over Ford when the firm was facing a $17 billion loss, the brand had been severely diminished, the nation was about to enter an economic freefall and the company had 100% over capacity of all its product lines.
“We were losing money on every car we sold,” said Mulally.
Fast forward to today, and the company is #2 in car sales behind Toyota, they escaped the Great Recession without requiring a taxpayer bailout and the stock price has increased by 1,837 percent. And perhaps even more impressive, despite (or more accurately because of) the massive changes Mulally undertook, 89% of Ford employees rate the company as a good place to work.
Mulally shared his formula for the turnaround:
- Create a compelling vision;
- Determine a strategy for achieving it; and
- Engage everyone in the company to pursue implementation relentlessly.
Mulally completely restructured the company, expanded the senior management team and accelerated production of all the cars the company makes today.
But his biggest achievement was changing the culture from a secretive and defensive one to a safe, but accountable environment.
He instituted a weekly meeting to review business plans of every unit and he charged the leaders with color coding their plans with green, yellow and red to indicate their status.
“We started our first business plan review and all the charts were green,” said Mulally. “I stopped them and said ‘we’re losing $17 billion. Is there anything, one little thing, that is not going well?” Once employees saw that owning up to red lights resulted in collaborative solutions and not punishment, the dialogue changed quickly.
And he was relentlessly transparent, ensuring that everyone in the company worldwide knew why they were facing such massive losses and what they were doing to address them.
“Do you really trust your team and employees?” he asked the audience. “We do and we share everything with them, all the financial and performance data, so everyone knows what you are doing. Our job is to work together to move the red lights to yellow and then green.”
Mulally shared that his “oh s#*” moment was when he arrived at the Ford headquarters to interview for the job and he saw that not one car in the executive parking lot was a Ford, and they weren’t even their direct competitors’ cars.
Mulally immediately ordered his competitors cars and required his executives to drive them, but not until he convinced the parking lot attendee that it was, indeed, ok to park a Camry in the Ford lot.
His advice to the audience? Ask yourself “Is the plan authentic, are you dealing with reality, do you believe in all the stakeholders, are you including everyone?”