find on a map.
One by one, high-energy upstarts overtake old-school stalwarts, which are quickly relegated to quaint “remember when” conversations: Remember when we developed film, called a cab and looked for the Union label? In a remarkably short period of time, all these have fallen easy prey to the relentless advance of technology and globalization. This central conundrum of how to cope with a different kind of competitor, coming at us from all sides with a different value proposition on a zero-marginal cost, ubiquitous platform like the smartphone, gives nightmares to entrenched leaders.
And it should.
Ultimately, the disruptive economics, capabilities and pervasive reach of globalization and the Internet give almost every industry a choice: Innovate or die. My experience shows that, given that choice, most businesses simply decide not to decide. It’s effectively a choice to waste away in a shrinking no-mans-land, to cling to a sinking lifeboat. That passive behavior is more than just paralysis in the face of shifting markets and advancing capabilities. It’s a failure of leadership that is just as entrenched as any complacent, un-evolved business model unable or unwilling to rise to the challenge. The ultimate corporate Monday morning quarterbacking for all of us in the bleachers is to wonder, “How could they not have seen it coming, and taken action before being humiliated in the market they once dominated?”
It’s a great question that we routinely ask of others, but rarely of ourselves. We notice ominous shifts in our markets, we know in our guts that transformative change must be made, but we somehow lack the courage or the vision to seize the initiative and do something about it. When we are presented with evidence that something’s going awry, that our assumptions are no longer valid or that forces we don’t understand are changing our world, why don’t we turn, face the challenge and pick a path through the minefield ahead?
It’s symptomatic of a larger trend that many of us see and experience. Our institutions are retreating under fire as our leaders focus on day-to-day challenges, pushing aside the job of creating a worthy vision for the future as irrelevant, unimportant or impractical. As the organization’s vision for the future shrinks, we are left without a flag to rally around, without a point on the horizon to guide our efforts.
As of late 2016, on the eve of an historic US presidential election, nationwide polling found that a full 70% of Americans could agree on only one thing – that the country was headed in the wrong direction. Combine that with the fact that Gallup’s annual study of workplace engagement shows the same percentage – 70% – self-described as “disengaged” at work. Consider also that US Department of Labor statistics show that an astounding 95 million Americans have opted out of the workforce entirely, and a picture begins to emerge. As a nation, we have rejected the vision presented to us, retreated to our chosen sides or safe spaces, and dug in.
Left to manage our list of short-term deliverables, we gradually disengage from the larger mission and, less confident in the future, become defensive of our value and cautious in our roles. Lack of personal commitment further weakens our organizations and institutions, feeding a downward spiral of myopic vision and active disengagement. Our belief that we work in organizations incapable of envisioning a future worthy of our engagement becomes a self-fulfilling prophecy.
An unfortunate example of this creeping mediocrity is the Metro light-rail system in Washington DC. It was conceived in the 1970s as a state-of-the-art mass transit system that would whisk the travelers of tomorrow to jobs and recreation throughout the capital city of the world’s most powerful nation.
Today, Metro is a reflection of the political dysfunction that metastasizes a hundred feet above its tunnels. It’s dirty and unreliable and has a problem with electrical arcing that’s driven the creation of a program called SafeTrack. SafeTrack’s goal isn’t excellence of any kind, but simply to reduce the likelihood that the transit system will kill its passengers by electrocution or smoke inhalation. And yet Metro expands, with new stations vacuuming up tax dollars, attempting to add more riders to an under-maintained, poorly understood system. Metro’s Vision has eroded from “Let’s build a transportation showcase” to “Let’s at least try not to kill anybody.” As of March 2017, the Washington Metro Area Transit Authority (WMATA) announced that ridership had declined by 12% in the past six months. Based on my personal experience with Metro, I'm not surprised. Another critical system in critical condition.
In the western movies of our youth, this is when the cavalry thunders to the rescue of the besieged pioneers, flags flying. This time, though, it’s apparent that no one is coming to rescue us. In the parlance of the 19th century homesteaders left to fend for themselves, the cavalry isn’t coming. It’s up to us to lead, follow, or get out of the way.
Turnaround
Ford has been a household name since the company’s namesake, Henry Ford, revolutionized the world of transportation with the Model T more than a century ago. By 2006, Ford was down and on its way out, strangled by corporate fratricide and faced by ranks of relentless, deep-pocketed competitors from Japan and Germany. It generated more than $150 billion in revenue worldwide and somehow managed to lose $590 on every car built in the United States.
Ford had no central vision, with its resources diffused across a bewildering array of well-known brands, including Ford, Mercury, Lincoln, Aston Martin, Jaguar, Land Rover, Volvo and Mazda. This roster of brands, combined with Ford’s global reach, resulted in a total of 97 overlapping, confusing, go-to-market nameplates.
Engagement between management and labor, represented by the United Auto Workers (UAW), was characterized by deep distrust and open conflict. The central bargaining points had nothing to do with production efficiency, competitiveness, growth or profitability; in fact, the single biggest area of focus was retiree health care. There was even a suggestion that Ford should be reclassified from a “motor company” to an insurance company, since that was its primary financial liability.
Execution was an afterthought at Ford, the result of the lack of a coherent brand strategy, restrictive union work rules, and the absence of any sustained focus on manufacturing excellence. At the time, Toyota assembled a vehicle with 30 hours of non-union labor, while Ford required 36 hours to build a comparable model. That’s bad, but it was made far worse by the fact that Ford also used union labor that worked within the confines of narrowly defined jobs and corrosive practices such as the “job banks,” where laid-off auto workers literally sat in an office in high-paying, do-nothing roles for years, waiting for an opening on a manufacturing line that would never come.
Bill Ford, company CEO and great-grandson of Henry Ford, knew his namesake company was in serious, perhaps fatal, trouble. He decided it was time to step aside as CEO and recruit new talent from outside the company to drive the turnaround that Ford so desperately needed. After fruitless discussions with a number of classic “car guys” from inside the industry, he decided it was time for a bold move. Bill Ford decided to pursue Alan Mullally, a leader who had turned around Boeing Aircraft, a global manufacturing giant, as Ford's new CEO.
The detailed story of how Mulally turned the mess at Ford around is told in Bryce Hoffman’s 2012 opus American Icon: Alan Mulally and the Fight to Save Ford Motor Company. What’s important for our purposes is that the turnaround was built around three central principles: Vision, captured in Mulally’s “One Ford” initiative; Engagement, driven by the redefinition of the relationship between Ford, its management team, suppliers, dealers, and the UAW; and Execution, which Mulally frequently describes as “relentless implementation.”
At first glance, Alan Mulally seems an unlikely bearer of transformative change for the auto industry. He grew up in a small town in Kansas, graduated from the University of Kansas, and by all reports has a manner and bearing that are somewhere between down-home and aw-shucks.
