Prior to Alan Mulally's arrival, the executive team at Ford would develop a business plan and meet two or three times a year to revisit it. Mulally brought the review of plans to weekly meetings and used a process he had created over the years to facilitate the review. Given that Ford is the seventh largest corporation in the United States and seventeenth largest in the world, you can imagine how much data the company leaders have to process. In fact, most large companies don’t do so every month, let alone every Thursday morning.
If you’re a member of the Ford leadership team, you need a system to get through everything in a 2½-hour meeting. In addition to knowing your data, you have to color-code progress in each area on a chart for all to see. If you’re off target in readying for a launch, you would use yellow or red for coding, depending on how far off you are. If all is well, you use green . . . and the team knows immediately not to linger on it because all systems are go. So how was the new process accepted? Here’s what happened, as Mulally explained in a videotaped interview with the Washington Post:
“This is a very interesting thing. When we started this process, we had gone a couple of weeks, and I just stopped the meeting because all of the metrics were green and the year before we had lost over $14 billion. And so I said in my nicest way, ‘Is there anything that’s not going well here, given that we lost $14 billion? So we had a conversation about that because it had to be okay for you to color your area of responsibility—not yourself—a yellow or a red.
“I’ll never forget that maybe it was the next week where Mark Fields, who was leading the Americas, had a launch of the new Edge. They had an issue with a hinge on the back door that wasn’t exactly right. We would need to work with the suppliers to get that ï¬xed. So up comes this chart, and it was delaying production because of the launch. And he had colored it a bright red.
“The room got silent. How would the new CEO respond to this harbinger of bad news? Here was a red. Was a hook going to come out? Was Mark going to disappear? And I started to clap. I said, ‘This is tremendous visibility, Mark, and what can we all do to help you?’ Within 30 seconds, the manufacturing engineer had an idea; the procurement leader had an idea from a supplier he was working with.
“Next week, the red turned to a yellow. The week after that, the yellow turned to a green. But the neatest thing was that following week, all of the charts had become a rainbow because it was okay and expected that each of us share where we really are. It has to be a safe environment, but also you can imagine the accountability that goes with that. What I have found is that the more you create an environment where everybody knows everything, then the faster you’re going to be able to bring help to bear.
“So it’s not a punitive thing: It’s not that you’re red. It’s your area of responsibility, and you’re sharing with us and the team that you need help.
“It was just a different culture that we were going to bring in. With all the vehicles that we’re working on at the same time, everybody really embraced this system because then they were going to get the help and visibility that they never would’ve gotten if they didn’t bring the issue forward.”
I would disagree with Mr. Mulally on one word only—culture. He was bringing in a different atmosphere, not culture. The Ford culture was ingrained long before him, beginning with Henry Ford himself. The point is that Alan Mulally is a leader who understands the power of aligning his personal truths with his actions, thus creating an atmosphere that ampliï¬es energy at the same frequency in everyone around. His leadership team was energized to bring problems forward and use the collective intellect, experience, and capability of all the resources Ford had at its beck and call to make a difference. And imagine if everyone on the leadership team was able to create a similar process within his organization? This energy, channeled through the atmosphere of Ford, was primal in turning the business around. And it all began with one energized leader, Alan Mulally, and his understanding of and commitment to communication.
A recent Towers Watson study on ROI supported the importance of communication. The study found that “companies [with leaders] that are highly effective communicators had 47 percent higher total returns to shareholders over the last ï¬ve years compared to ï¬rms that are the least effective communicators.” At Bates, we are often asked about how communication creates economic value. The answer: by marshaling the action of anyone and everyone within the atmosphere toward an end state that you envision.
David Casullo, Leading the High Energy Culture: What the Best CEOs Do to Create an Atmosphere Where Employees Flourish, copyright 2012, McGraw-Hill Professional; reprinted with permission of the publisher.