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The Management Myth
By Jensen, Richard
Published: June 12, 2007

You’ve seen these quotes before, you’ll see them again in the future as the sale of Jaguar and Land Rover are discussed. You’ve also seen this discussed with Mercury and Lincoln. ‘Too many brands. Not enough resources. Too many mouths to feed.’

Sounds plausible, doesn’t it? Ford lost a lot of money last year, and anyone with children, or a lot of responsibilities at work, can identify with the challenge of trying to juggle a lot of different tasks, of trying to keep a lot of people happy. It can be overwhelming at times, and therefore, it would seem that a company with six vehicle lines would have way more difficulty than a company with only two or three, right? I mean if you had 6 kids, you’d have way more trouble keeping on top of things than if you had just 2, right?

And that’s precisely where the analogy fails.

The issue with Ford is not whether or not they have the ‘resources’ to ‘feed mouths’, the issue is whether their structure is right for the tasks that it has been assigned.

Let’s start with a different analogy. When was the last time you thought about everything that’s required for your fingernails to grow? I mean it’s a pretty complex process. Same way with your hair, and that’s just the tip of the iceberg.

Your body’s various systems, most of them, work without your conscious input. Most of what is required to keep you alive from one day to the next occurs without any conscious effort at all.

With Ford Motor, insider reports reveal that many decisions are being ‘kicked upstairs.’ Decisions that should be handled collaboratively on a much lower level are being made at a VP or higher level. With such decision structures in place, it’s no wonder that Ford seemingly does not have the resources to manage its operations.

Additionally, there is a remarkable amount of duplicated effort in the Ford empire–even within Ford’s North American operations. Alan Mulally recently stated that Ford doesn’t even have a common hinge assembly for hoods.

There are other points from which to reason: Ford has, for years, successfully managed its credit arm. This radically different business has survived and generally flourished under Ford’s management, with few analysts suggesting that Ford Credit was a ‘distraction’. GE’s CEO oversees an industrial conglomerate that is far more diverse than Ford’s, as well as a sprawling capital services unit and an assortment of odds and ends (NBC, etc.), and it is not often suggested that GE lacks ‘resources’ to focus on its widely divergent enterprises. Why? Because GE is well managed. Ford Motor is not.

It is obviously not a question of whether or not Ford has the ‘resources’, it is a question of whether Ford is making proper use of the resources it has.

As to a sale of Jaguar and Land Rover, anything is possible. However, one should avoid reading too much into recent news reports, given the general failure of many journalists to do even the most basic research before rushing a story to print (how many “Ford selling Volvo to BMW” articles mentioned that Ford’s holdings in Volvo are part of the collateral in its loan package?).

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