03 Mar 2015

Ford's Escort

Renowned executive shares leadership lessons from a long career

Alan Mulally, former president and CEO of the Ford Motor Company, likes to make sure things are headed in the right direction. He has made a career of it, in fact.

After spending the bulk of his professional life contributing to or overseeing the manufacture of every Boeing airplane from the 727 to the 777, Mullaly took the wheel at Ford in 2006. As CEO, he helped the company pull one of the more remarkable financial U-turns in recent memory, guiding it from a $17 billion loss at the end of 2006 to profitability by 2008, and then deftly through the financial crisis as the only one of the “Big Three” U.S. automakers to avoid bankruptcy and a federal bailout. When Fortune issued a list in 2014 of the world’s top leaders, Mulally finished third, right behind Pope Francis and German chancellor Angela Merkel.

Though he left Ford in 2014, Mulally remains a paragon of American leadership and is now a member of Google’s board of directors. He visited Harvard Business School on Feb. 26, a guest of Professor Robert Kaplan and the students’ Transportation, Infrastructure, and Logistics Club, to speak about his experiences and lend advice to current MBA students.

“One of the most important lessons I’ve learned throughout my career is the power of a compelling vision,” Mulally began. “Coming together around a comprehensive strategy. It is so important to have a network of talented people working together toward a common goal.”

This was a common refrain for Mulally throughout the discussion. He stressed the importance of inclusionary leadership and dealing with things directly and told of his “red, yellow, green” approach at Ford. When he began there, Ford’s capacity was geared for a 28 percent market share. Instead, it had only 9 percent of the market, meaning the company had almost twice the assets necessary for production and was losing money on every model. So Mulally began gathering his top executives for a weekly meeting in which each had to present on their part of the business, including 300-some-odd charts colored red for problematic, yellow for caution, or green for all systems go.

At all of the initial meetings, he said, every chart was colored green, a curious thing for a business losing $17 billion. But eventually a young manager named Mark Fields (MBA 1989) displayed the first red chart. (Fields succeeded Mullaly as Ford’s president and CEO last July.)

“And you know what I did? I stood up and I clapped,” Mulally said. “The following week the 320 charts looked like a rainbow. That’s when everyone understood why we were losing $17 billion, and the key became trusting the process—identifying the problems and helping each other find solutions.”

Mulally has a calm, positive demeanor that bears little hint of stress, a characteristic he maintained through one of the most trying economic times in American history during the 2008 financial crisis. Asked about dealing with fear and stress, he again touted a direct approach.

“Stress comes when you’re dealing with unknowns,” he said. “Do what you can do. Then go home, get a good night’s sleep, and come in the next morning and try to turn a red into a yellow. It’s when you’re trying to do things alone, with no vision, that it gets bad.”

Through that consistent approach, Mulally has established a personal legacy that reaches around the globe, literally and figuratively. The airplane fleet he helped build at Boeing now accounts for 70 percent of the world’s air traffic. Ford, once a brand mired in debt and an identity crisis, reinvented itself under Mulally’s leadership as a streamlined brand known for quality and poised for growth. Both are legacies he is proud of and thankful for.

“What I’ve had a chance to do for 45 years is to make a difference for a lot of people around the world,” Mulally said. “I’m happy because I have done and continue to do what I love to do and have worked with so many talented people along the way.”

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