Alan Mulally Transformation of the Ford Motor Company - Case Study Example

Alan Mulally Transformation of the Ford Motor Company Affiliation Ford Motor Case Study Introduction Henry Ford established Ford Motor Company in 1963 in Michigan. Mulally set in as the CEO of Ford in 2006 when the company was in desperate shape. The company had lost up to 25% of its market shares since 1990. Despite the enormous portfolio of brands such as Land Rover, Volvo and Jaguar, the progress was not impressive. Each needed massive capital infusions in order to compete with other brands. The company was to make an annual loss $ 12.7 billion (Hoffman, 2012). This was the biggest loss ever for a 103 years history of Ford. Mulally also had a terrible time to pay the workforce. These were the challenging circumstances that engulfed Mulally, who had come from Boeing. Despite these challenges, he successfully led the company to great heights. Mulally`s leadership strategy Mulally laid out an innovation plan called One Ford (Hoffman, 2012). This approach helped to integrity all components necessary to lead the company to prosperity. He believed that changes were not just based on visionary thinking and new products. But the ability of the entire company to push forward the new thinking from the team to team, partner to partner and function to function. In the innovation plan, there were four main ideas. Firstly, was bringing all the employees together as a team. Secondly, to leverage the unique automotive knowledge and assets of Ford. Thirdly was to build cars and trucks of people`s choice. Finally was to arrange the necessary finances for the process. These components would be the basis for the success of the company. Mulally recognized that the future of the company not only relies on the trucks and cars, but also with the technology inside them. The Ford products and partnership with powerhouses in the electronic consumer industry turned the cars and trucks into entertainment and communication mobile center. This was paralleling with the fast growth of social media and smartphones (Hoffman, 2012). MyFord Touch innovation allowed the drivers to engage safely with technology through unique apps, music, verbal command and syncing with smartphones. This innovation was aligns with the consumer wants and demands. Nowadays, all major automakers borrow from Ford innovation in making personal technologies in vehicles (Hitt et al., 2008). The integration and acknowledgment of the role of technology in the automobile industry was a visionary thinking that put Mulally ahead of others. Accountability and collaboration strategy Mulally laid down the corporate culture transformation that was the basis for the company to innovate. He changed the cost structure of the enterprise by negotiating lower labor rates for the workers of United Auto. This led to about $20 per hour cut from the prior rates (Hoffman, 2012). This lessened the financial burden that the company was facing when he started his tenure. The workers collaborated since they were incorporated in the talks. This approach from ethical perceptive used the utilitarianism concept. Where the reduction of the cost will enable the company to survive and at the same time, the employees would be paid. The outcome was for the interest of many. Through this approach, the company had the capital to compete effectively with other firms in the market. Financial constraints were a major challenge that Mulally faced as he started his tenure in the enterprise. The collaboration technique boosted the company because it ensured that employees were treated equally. Executive meetings became a safe environment where information would be shared without blame shift. This did not only improve collaboration but also set the stage for innovation success. He instituted a traffic light system as a mechanism to build his teams` ability to navigate complexity. He held weekly management meetings where reports indicated the progress of Ford on the main initiatives that were given. In the traffic light system, green showed all was well; yellow meant some attention was required, and red signified a critical situation. When the light system showed yellow, they would review the system and encourage the employees to work harder (Hitt et al., 2008). The critical situations were addressed by their urgency and the root problems uncovered. Mulally established a high code of conduct of its employees. The code of conduct handbook focuses on ethical issues provided a framework on how to handle ethical issues (Hoffman, 2012). Additionally, it provided policies to report ethical ensures, and it created a culture of accountability and honesty. The handbook readers were encouraged to report comments or questions to the Legal Access website, which was a clear show that feedbacks were supported and employee participation was regarded. Mulally emphasized the importance of ethical conduct of all the employees, and it had full support of both the Executive Chairman and the CEO of ford. This changed the organization that had a history of misconduct. It won four times awards that were based on code of conduct of employees (Hitt et al., 2008). Product quality strategy Mulally encourages the employees to maintain high standards of product quality. He employed many mechanisms to minimize mistakes and maximize production. He used Six Sigma as a quality control measurement. The process focused on training, quality, and continuous improvement. Three main criteria were used in developing Six Sigma project. First was relation to customer satisfaction. Secondly was reduction of deficiency by 70 percent in quality. Finally, ability to save $ 250,000 in production costs (Hoffman, 2012). Through this process, there was continual analysis and improvement in the company. Mulally believed that with better product quality, he would gain an advantage in a competitive environment. The strategy to increase product quality has worked. This is based on the company plan of increasing vehicles in 2013 and increasing its capacity (Hitt et al., 2008). This led to changes in operational process and hiring more employees. For instance, due to increased capacity, during the summer the factories shut down for one week instead of the traditional two weeks. The number of shifts also increased in order to handle the increased capacity. This increase in production demonstrates the satisfaction of the consumers in Ford`s quality and belief on their philosophy of One Ford seemed to grow. The company growth was based on increased product quality. Despite the mission and vision statements of Ford, Mulally did gain reputation for caustic corporate culture that led to quality products (Hitt et al., 2008). He improved communication of different areas of the company. The leaders withdrawal from calling attention to problems and started to solve problems harmoniously. This removed the competition that existed at workplace and led to employees working together. Unprofitable brands were replaced with a new life brands. As means of corporate culture, the regional divisions of the company were integrated into a single global Ford that embodied One Ford concept. Through this, the company was working on the unit to ensure that they innovatively produce quality products that the consumers were satisfied with (Hitt et al., 2008). This also led to employee satisfaction because their progress was recognized, and the way they were treated had changed. Nobody was now pointing to mistakes of others instead the Ford family worked to solve the identified errors. Other Strategies that would have worked The company would apply consensus decision-making strategy as part of its developmental efforts. Before the entry of Mulally, the executive in the boardrooms made the decisions and less communication was made to the employees. Applying the Consensus decision making would allow all members to have their opinion and references expressed openly and discussion of any disagreement. This makes the members worth, and they believe in working towards better alternatives in the company. This approach would be combined with shared leadership where leadership roles such as collaborator and controller would be given some individuals. This would rejuvenate the employees who felt that they were left behind in management (Schermerhorn, 2012). Another leadership strategy that would be employed is style diversity and listening approach. The CEO of the company would be ready to listen from both the internal and external environments of the business. This would help determine the challenges, threats, opportunities, and the strengths of the organization. This style makes the leader accessible and the employees feel free to share with them. Additionally, encouraging the employees to use their differences in order to perform and develop would steer the organization to success (Schermerhorn, 2012). Each employee has unique talents that can be incorporated into the innovation system. Giving the employees the opportunity to use their skills is an explicit motivator. People feel motivated when they put their skills into action. There is a need to encourage various types of teams that will meet organization mission and vision. Some examples of teams include functional work teams, cross-functional teams, self-managed teams, project teams, management teams among others. The teams then clarify behavioral expectations and modeling of desired team behaviors done. This will direct the team to mission and vision of the organization. Group decision making should be left to the group. This makes the groups to be semiautonomous. The members of the teams would take formal training in areas of deficiency. This will make the team members expertise and quality outcomes are expected. Constructive feedbacks of the teams will demonstrate the progress of the group (Schermerhorn, 2012). Conclusion Mulally came to Ford Company when it was in a crisis. Through his leadership skills, he drastically changed the company and gave it a new hope. The company took a proactive measure to improve the internal process such as test procedures and internal quality control. Mulally through his philosophy of One Ford, the employees worked as one team, and they felt appreciated, the production went up, and the code of conduct changed. He encouraged innovative measures and recognized the effect of technology on the system. He involved all the stakeholders in the management to see the success of the company. There are other leadership and team building strategies critical in company improvement. The CEO does takes the business to greater heights, but the strategic management skills. References Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2008). Strategic management: Competitiveness and globalization. Mason, Ohio: South-Western. Hoffman, B. G. (2012). American icon: Alan Mulally and the fight to save Ford Motor Company. New York: Crown Business. Schermerhorn, J. R. (2012). Organizational behavior. Hoboken, N.J: Wiley. Read More