So Bill Ford has shown himself the door. While Wall Street is busy analyzing the merits of his replacement as CEO of Ford Motor Co.--Alan Mulally, a 37-year veteran of Boeing--it is well worth spending a moment to examine the spectacle of a well-known American CEO voluntarily handing the reins to somebody else.
The move at Ford was not a planned succession-Mulally has practically no experience in the auto industry-and Bill Ford, at 49, is hardly due to retire. And the announcement comes as Ford Motor has been spinning its wheels to regain a competitive edge in the marketplace. Was it a striking act of humility by Bill Ford to reach out and seek some help? Or a no-confidence vote in himself?
Here are a few hints. First, Ford Motor under Bill Ford's leadership has been bleeding cash and losing market share, like cross-town rival General Motors. In the first half of 2006, Ford lost $1.3 billion. That's a huge number. Through 2005, the company's lending arm had more than offset losses in the core automotive segment, but no more. The stock, after running up to about $16 a share in 2003, has been on a steady slide and now trades at about $8.
More telling have been Ford's fits and starts-mostly fits-in terms of turning itself around. The current "Way Forward" reform plan is at least the third revitalization effort under Bill Ford's tenure. There have been plant closures and job reductions, each advertised as the solution, only to be followed by more of the same. And this year Wall Street has been clamoring for very scarce details about exactly how the Way Forward plan is going to work. Trust us, has been Ford's general answer. Wall Street hasn't.
It was also disappointing to hear the company backpedal from its ambitious goal-announced personally by Bill Ford, a self-described environmentalist-to sell 250,000 hybrids a year by 2010. For a brief shining moment, it sounded like some determined, visionary leadership was emanating from Detroit. But then Bill Ford began whimpering about building other kinds of fuel-saving technology instead (technology that would also be cheaper), and the company backed away from its hybrid commitment.
Strong leaders underpromise and overdeliver. Bill Ford has done the opposite: made commitments he hasn't been able to fulfill. Investors have been relatively kind to him, considering the hang-the-CEO ethos that has followed the Enron-Tyco-WorldCom fiascos, probably because there is something vaguely quaint and reassuring about family involvement in a company as big as Ford. But Bill Ford, simply put, has not been effective.
The smartest move of Bill Ford's five-year tenure as CEO may have been putting somebody else in charge. When Bill Ford took over the top job in 2001, the company was reeling from the Firestone tire scandal and a series of missteps by the CEO at the time, Jacques Nasser. Bill Ford, great-grandson of Henry Ford, was seen as a steady guiding hand who would help return the company to its roots.
Now it's up to his successor, an aeronautical engineer who drives a Lexus, to return the company to its roots. Bill Ford remains executive chairman, a job that will allow him to focus on strategic issues but get him off the hook for quarter-to-quarter performance. Yet for the hand-wringing that is surely underway at Ford-one of America's most notoriously insular big companies-Mulally seems to be a good choice. He helped turn around Boeing's core business, its commercial airplane unit, and has deep experience in the kind of heavy manufacturing that Ford must once again master.
Nonetheless, Ford's turnaround will continue to be slow and grueling for investors. The Way Forward plan may very likely be put on hold, as Mulally does a top-to-bottom review and puts his own stamp on it-or starts over. Steep production cuts already announced for the second half of 2006 will cut into revenues and lead to a further dip in market share. And Ford's core problems-an overdependence on trucks and big SUVs, and overgenerous labor contracts-will take years to reverse, no matter who is in charge.
It is courageous for Bill Ford to recognize that he is not the man destined to implement the tough changes Ford desperately needs. But historians should ask whether he was qualified in the first place.