Jim Hackett's big moment
CEO's vision for Ford will become clearer this(next) week
AutomotiveNews - Michael Martinez - Sept 25, 2017
DETROIT — Ford Motor Co. CEO Jim Hackett likes solving big problems. He did just that at Steelcase, a century-old Michigan furniture maker that had struggled to keep up with the times, and then at the University of Michigan, where the storied football program he played for had faded.
Now, at the nation's No. 2 automaker, he may face his most daunting challenge: ensuring a 114-year-old manufacturer that has traditionally made its profits selling trucks can quickly pivot to an age of self-driving vehicles, shared ownership and new mobility services, all while trying to stave off new competition from the technology industry.
After keeping a low profile in his first four months on the job while he evaluated the business, Hackett is expected to offer at least some initial solutions when he briefs analysts and investors Oct. 3 in New York.
Since his May 22 appointment, Hackett has visited line workers at some of the company's assembly plants, taken multiple trips to Ford's Silicon Valley offices and traveled to meet with joint venture partners in Russia and Turkey. He has already made some big decisions, including reshuffling Ford's senior management team, moving Focus production from North America to China and exploring a strategic partnership in India with Mahindra to help share costs there.
"Jim has an incredible opportunity to lead Ford into its next chapter," Jim Keane, who succeeded Hackett as CEO of Steelcase in 2014, told Automotive News in an email. "He made significant contributions while at Steelcase and we are excited to see how he'll bring his energy and strategic thinking to Ford in this important role."
That next chapter must include shoring up Ford's bottom line after several quarters of earnings declines and making money on products beyond pickups, SUVs and crossovers, analysts and industry observers say.
Morgan Stanley analyst Adam Jonas said Hackett could "effect profound cultural and structural change" at the automaker. One example he floated in a note to investors last week was a potential partnership with Google's Waymo unit, because Hackett has deep Silicon Valley ties and could succeed where former CEO Mark Fields failed after talks between Ford and Google broke down in 2016.
Other potential moves could include axing some slow-selling sedans, localizing production of its Lincoln luxury brand in China for that market, partnering with technology companies and clarifying its electric vehicle strategy.
"There's a lot of low-hanging fruit," said Dave Sullivan, manager of product analysis at AutoPacific. "They need to be able to react faster to consumer demand."
Quicker reaction time was one of the key reasons the company's board of directors decided to ditch Fields in favor of Hackett.
"The clock speed at which the world is moving, and our competitors, really requires us to make decisions at a faster pace," Executive Chairman Bill Ford said when Hackett took over. "And we have to trust our people to move fast. It's not command and control."
If his previous management style is any indication, Hackett may encourage more of what he calls "design-thinking" at Ford.
"Simply put, we made the same mistake that most organizations make when they undertake an ambitious project — having come up with a fine notion, we put all our energy into execution before we had thought the idea through," Hackett wrote in the April 2007 Harvard Business Review, when he was at Steelcase. "When people told me that the one thing they could use more of was time, what they were really saying was that they needed more time to think."
While the concepts of faster decision-making and more thinking time may seem to contradict one another, Hackett's philosophy is that asking the right questions early allows the later steps in creating a product or making other decisions to move faster.
That could mean significant changes to Ford's product lineup.
In recent years, Ford stood idle as rivals introduced products in hot segments such as midsize trucks and compact crossovers. It plans to launch the EcoSport compact crossover in 2018 and the Ranger midsize pickup in 2019, years after the competition.
"Ford missed the market and didn't realize where consumers were going," Sullivan said. "A decision to bring [those vehicles] here should have happened a long time ago."
Future vs. present
Hackett's faster decision-making could also spell the end of some lower-margin vehicles, such as the Fiesta subcompact car, Taurus large car and C-Max hybrid and plug-in hybrid hatchback. Automotive News and others have reported that those vehicles won't survive another product cycle in the U.S.
A Ford spokesman declined to comment on any actions Hackett will take after conducting a 100-day review of the business. Hackett agreed to meet with UAW leaders to privately explain some of his plans before meeting with Wall Street next week.
Another reason Fields was ousted is that Ford's board of directors had apparently begun to doubt his vision. Although he often talked about having "one foot in today and one foot in tomorrow," the company had offered little concrete proof of future revenue streams, even after spending billions to acquire a handful of Silicon Valley startups. At the same time, Ford's earnings had started to fade, and the company's stock fell precipitously during Fields' tenure.
"This is an industry that has historically only thought as far forward as the next quarter and how things affect earnings," Sullivan said. "I think there has to be more of a blend of looking forward to the next quarter and year, but also having an understanding of what the future of the auto industry is going to look like and building the foundation for that now."
David Kelley, the founder of IDEO — a global design firm that works closely with Steelcase and is a partner with Ford in Greenfield Labs, a design think tank in Palo Alto, Calif. — told Automotive News in May that Hackett excels at balancing those two realities.
"He's one of the best at this tension between doing the future and making the present business go," Kelley said.
Hackett in 2012 told The New York Times that he thinks in terms of a bull's-eye, with "now" in the center, "near" in the outer ring and "far" in the farthest ring.
"What I've argued is that you have to train yourself to work in all three dimensions simultaneously," he said then. "It's human nature to get pulled into the now, and the reward systems are built that way. You have to think of it in terms of making good on this notion that if you're really a great leader, you're going to be noted for it long after you've been gone. That's because you actually reached out and imagined the state of things in the future."
Ford's future could hinge on autonomous cars and ride-sharing services. And that's where Hackett's design-thinking expertise could have its greatest impact.
Since taking over, Hackett has focused on the human element — how robot cars or ride-hailing apps can improve people's lives. It has been a focal point of Ford for years but has gained a little more traction in recent months.
For example, the company in August partnered with Domino's to study how customers would react to and interact with autonomous pizza-delivery cars. It also worked with the Virginia Tech Transportation Institute to discover that blinking lights on the front of autonomous cars can effectively communicate with pedestrians at crosswalks.
Ford has formed a City Solutions team to help determine the best ways to relieve congestion and improve commutes to and from urban centers.
"When you paint the robots as perfect and humans as imperfect, we've made a big mistake," Hackett said last month in San Francisco. "We don't need the robot to get around."
Comparison to Mulally
Early in his 20-year tenure as Steelcase CEO, Hackett moved out of his 700-square-foot office and into smaller, more open quarters designed with the help of a psychologist to create a "leadership community" for company executives.
Hackett said he tried to make the culture at Steelcase less stiff and more informal, and has already set a similar tone at Ford, although he hasn't made drastic changes to his C-suite office at Ford's Dearborn headquarters.
When he's at headquarters, he has made a habit of going to the cafeteria for lunch and interacting with workers, staffers say. At the company's annual leadership conference in August, Hackett invited thought leaders from Microsoft and other companies in an effort to inspire Ford's top 300 executives from around the globe.
Jim Seavitt, owner of Village Ford, a dealership just down Michigan Avenue from Ford's Dearborn headquarters, said the CEO has committed to attend a meeting of 20 dealers this year.
Seavitt's proximity to the Glass House has traditionally allowed him access to Ford's top leaders. Shortly after Alan Mulally became Ford's CEO in 2006, he visited Seavitt's showroom and acted as a salesman, greeting customers with a friendly "Hi, I'm Alan" before walking them through the highlights of Ford's newest cars. He had a hand in seven sales that day, Seavitt said.
Although he hasn't met Hackett, Seavitt said he believes Hackett has similar qualities to Mulally.
He plans to keep tabs on Hackett's Oct. 3 business update and hopes it includes more clarity on what role dealers will play in a future of autonomous cars and fewer individual vehicle owners.
He also wants to be sure the company doesn't stray too far from its roots of building and selling cars.
"I'm glad they made a directional change," Seavitt said. "But they have to remember what made the [record $10.8 billion pretax profit in 2015] — current product. It's our lifeblood."
On the agenda
Hackett's early moves:
• Visited assembly plants, Silicon Valley offices, and joint venture partners in Russia and Turkey
• Put Joe Hinrichs in charge of global manufacturing, Jim Farley in charge of global sales and marketing, and Marcy Klevorn in charge of mobility
• Announced that Focus production will move from North America to China
• Began exploring a cost-sharing partnership in India with Mahindra
• Partnered with Domino's and Virginia Tech to study consumer interactions with autonomous vehicles
• Invited leaders from Microsoft and other companies to inspire Ford's top 300 executives
Hackett's to-do list:
• Meet with dealers
• Clarify electric vehicle strategy
• Cut slow-selling, low-margin cars
• Explore partnerships with technology companies
• Reverse earnings declines
• Get stock price to rebound
- - - - - - -
snip of HatchettCon
ad for NAIAS-time...