Mulally: Continuous Improvement is 'at the Centerpiece of the Entire Ford Transformation'

In Part 2 of his conversation with IndustryWeek, Ford CEO Alan Mulally discusses the leadership principles and strategies that have driven his success, as well as the importance of continuous-improvement practices to Ford's turnaround.

With a focus on communication, collaboration and accountability, Alan Mulally has led Ford Motor Co. (IW 500/6) from the brink of bankruptcy to profitability -- without government bailout funds -- and has positioned the automaker for global growth.

In the process, Mulally has become the face of the U.S. auto industry's renaissance, and has earned a spot in the 2011 IndustryWeek Manufacturing Hall of Fame.

In a conversation with IndustryWeek earlier this month, Mulally reflected on his career at Ford and Boeing, and talked about the challenges and opportunities on the horizon for America's No. 2 automaker.

IW: Which of your achievements at Ford make you the proudest?

AM: Well I think I'd start with the products.

Mulally: "We are fighting for the soul of American manufacturing."

We now have arguably one of the finest complete product lines of any vehicle manufacturer worldwide -- and we're serving the customer with a complete lineup of very safe and efficient and wonderful cars and trucks and utilities.

Another thing that we all feel very good about is the fact that we are now serving all of our customers around the world -- in the Americas, in Europe, Russia, Asia Pacific, India, China -- we're bringing all of these wonderful Ford products to so many customers around the world.

Another one is that we're really creating a strong business. We've been growing. We've paid back the money that we borrowed. We're investing for the future -- we're going to add 12,000 jobs in the United States over the next couple of years, and they're great jobs, great careers.

We are fighting for the soul of American manufacturing. We're competing with the best in the world, and we're actually exporting our vehicles now around the world based on our U.S. competitiveness.

And the third one would be that we are all so proud to be contributing to a better world.

What we are doing on petro and diesel engines and powertrains, on lightweight materials, on electrification, hybrids, plug-in hybrids, all-electric, hydrogen, natural gas -- we really are contributing to a better world.

IW: What are the core values and leadership principles that have driven your success at Ford?

Working Together

AM: I'd start with the fundamental principle of people working together.

And by that I mean the power of talented people pulling together around a compelling vision for your products, for your business, for what you're contributing your life to.

Also working together to develop a comprehensive strategy, to deliver that vision, and then working together every week to relentlessly implement that strategy and that plan.

Everyone is included, and everyone is contributing. There's accountability and responsibility. And we're using facts and data so that everybody knows the plan and everybody knows where you are in the plan -- because you can't manage a secret.

Another one is the fundamental principle of dealing with the current reality.

Whether it's the world economy or the technology, it's about dealing with the current reality and moving decisively, but also always keeping an eye on the future and having a point of view about what products and services people really do want, will want and value going forward.

And it's about having fun.

This is such a big deal. The automobile industry is so important to so many people -- the vehicles themselves, the careers -- it's just such an important thing for the United States and competitiveness, and we all need to reflect every day and just really enjoy the journey and enjoy working with each other for something so important.

Millions of people around the world are working on great products, great vehicles, that provide safe and efficient transportation -- and they're fun.

They're all working together to create a strong, growing business, and they're all working together in support of energy independence and energy security and sustainability and growing the economy. That's pretty compelling.

Business-Plan Review

IW: You've been lauded for your transparency, collaboration and open communication at Ford. How have you tried to engender these qualities at Ford? Your weekly business-plan review comes to mind.

AW: I think the weekly business plan review is a terrific example of the point that you made.

If you can imagine this situation: We're in a room in Dearborn, Mich. We're on the Internet -- networked to all the Ford operations around the world, from Australia to India to China to Europe, to South America and North America.

And all of the business leaders for each of the areas around the world are all there -- all of the skill teams, like engineering and product development and manufacturing and communications.

And in two and a half hours, we go through every element of our income statement and our balance sheet.

We look at all of the vehicles that are being designed and produced. We look at all the production around the world -- all the quality, the productivity.

And in every chart that we look at, we're looking at what the plan is to continuously improve. But also we're looking at what the status is. So we're always looking for areas that need special attention, where we can pull together as a team.

I'll give you an example. We had a launch of a vehicle and we had an issue with the tailgate actuator. And so the chart comes up red -- we color-code all the charts so that everybody can easily see what the status is -- and of course with that issue and our commitment to deliver only the finest quality, we had stopped production, to find a solution to the issue.

Within 10 or 12 seconds, everybody around the table -- networked around the world -- saw what the issue was, took a note, had a suggestion how to figure out what the solution was, how to get resources in place and get production started again.

And you can imagine that's just one little actuator on one vehicle. In two and a half hours, we go through the entire operation worldwide, and everybody then can help manage getting the operation back on the plan, because everybody knows what the situation is and everybody is there to help find a solution in a timely manner.

Continuous Improvement

IW: How big of a role do you see continuous-improvement practices playing in Ford's success today and going forward?

AM: It's at the centerpiece of the entire Ford transformation and the way that we operate the company.

And that means, from a business point of view, continuously improving the business performance every year -- continuously improving the products themselves, the quality, the fuel efficiency, the safety, the features that people want.

And continuously improving ourselves -- all of the employees, our suppliers, our Ford-store owners -- and our capabilities.

So it's this whole thought of moving continuous improvement up to managing the entire business, and year after year every element of the business continuously improving -- and to manage that with facts and data.

It's not only engineering or manufacturing. It's continuous improvement of the business itself -- the products, the production processes and the people -- year after year.

The Road Ahead

IW: What do you still hope to achieve in your time at Ford?

AM: What we're really focused is serving the customers around the world with the best cars and trucks in the world, and producing those vehicles using the least amount of resources and in the least amount of time.

And by serving the customers with the cars that they really want and value, we will be able to continue to grow the Ford business around the world and provide not only great vehicles but also great jobs and great careers and contribute to a better world.

So that's our laser focus for the entire Ford team worldwide.

To read Part 1 of IndustryWeek's two-part conversation with Alan Mulally, click here.

 

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