Alan Mulally's leadership at Ford Motor Company

Alan Mulally

Management theorists of the early 20th century envisioned leadership as a role that involved driving an organization to a set of desired results. This was done through specific means. Frederick Taylor viewed leadership as focused on goal setting and motivating. Henri Fayol outlined the six primary functions of leadership as forecasting, planning, organizing, commanding, coordinating and controlling. In essence, leadership is the means by which resources are marshaled towards a given set of outcomes.

Modern leadership study has refined these basic notions. The study of motivation, for example, has become a much broader and more refined subject today than in Taylor's day. Commanding and controlling have fallen out of favor in many organizations, with management playing more a role of facilitator or nurturer of talent, following a shift in the key success drivers of modern business. The shift in leadership theory, however, belies the simple truths about the role of leadership. Leaders turn resources (inputs) into desired outcomes. While the task may have become more complex -- or more likely our understanding of the task has become more refined -- this is the basic function of leadership.

A more modern understanding of how leadership works includes understanding the environment in which you operate; developing and executing strategies; measuring the impacts of those strategies; and developing organizational capabilities (Gandz, 2005). Leadership thus becomes cyclical, where the measures are used to set new strategies and tactics because they define in part the areas of focus for the new cycle. Leadership therefore becomes a process that is continually refined in the pursuit of multiple objectives that are subject to continual change.

2. Mulally is a transformational leader at Ford. Regardless of how he led at Boeing, he has adopted this style at Ford and his actions bear this out. The idea of transformational leadership was defined by James Burns as "stimulating and inspiring followers to achieve extraordinary outcomes and in the process develop their own leadership capacity" (Bass & Riggio, 2006). His actions from the time of his arrival illustrate that this is the style he has chosen to lead Ford back to profitability. For instance, he made a point about the value of the Taurus brand and then asked that a new Taurus be developed. He did not, as a transactional leader would, discuss specific details. He simply knew that one of the company's strongest brands should be a flagship product.

Mulally also challenges the established norms. Where a transactional leader would focus on doing the same things better -- such as developing a new line of light trucks -- Mulally issued a challenge to his managers to "figure out how to make money (on small cars)." Challenge is one of the strongest motivators for individuals, especially ones with a high talent level, so issuing such a challenge creates motivation for the managers to overcome the obstacles that they face. Mulally's own personal approach to these obstacles has also been a source of inspiration for the other managers within the company. For example, he eschewed the highly political aspects of the corporate culture in favor of obtaining results. This approach can inspire other managers who would like to leave the politicking behind to do so. An outsider was required to help transform this element of the company, and Mulally has recognized this and performed the role well.

Overall, Mulally has approached Ford's problems with the understanding that the company has a substantial amount of resources but was not using them effectively. His leadership style not only has him using the company's resources more effectively, but has also found ways to inspire and motivate his managers to do the same.

3. Goal-setting has helped Ford to improve its performance in a couple of key ways. The first is that it provides a specific orientation for managers towards outcomes. Prior to Mulally's arrival, the corporate culture at Ford was driven more by politics than it was by any orientation towards results. The outcome of that was that Ford managers were tough, experienced politicians and the company was losing both money and market share. Mulally began demanding reports on a regular basis, sometimes daily. These reports provide quantitative output that can be analyzed by the Ford workers and managers. If the workers and managers are measured in terms of their performance against this quantitative output, then they will be oriented towards the quantitative goals that are set along with the outputs. This helps to cut through the politics, because it orients managers towards more efficient means of achieving outputs and away from practices that are obstacles to achieving the desired outputs.

In addition to orienting workers and managers away from destructive or obstructive behaviors, goal-setting is also used as a strong motivator towards results. A wealth of empirical research has shown that goal-setting is an effective motivator, to the point where achieving the goal can become almost obsession (Barsky, 2008). Mulally mirrors this approach, with his simple, uncomplicated management that style that has become oriented towards specific product line and profitability goals. By breaking down the objectives over time, managers are able track their own results, and they understand that their results are also being tracked by their superiors.

4. Mulally's ability to transmit his message is relatively high. He believes strongly in communication, and is willing to communicate openly with his staff. He posted a message about his own leadership style so that Ford employees would know what to expect. He has also posted the goals, expected behaviors and definition of the company so that the employees understand the basics of his vision.

Mulally has performed well in terms of trust. Because he was an outsider, he could expect to have been mistrusted, but he learned about the corporate culture and took the time to understand the company before starting in his post. Indeed, his emphasis on understanding exhibits a strong orientation towards fostering trust among his workers. Mulally is transparent and does not appear to behave in a hypocritical manner, which again helps to foster trust.

Mulally has been relatively up front with his agendas. He immediately stated that he wanted to bring back the Taurus, that this was one of the tasks he was going to do for Ford, so when he requested that this be done, it was understood to be part of the agenda. His actions have flowed from his agendas, which lends credence to the broad agenda within the company. In addition, his agendas are realistic and optimistic.

Mulally emphasizes quantitative goal setting. By demanding reports on a regular and frequent basis, Mulally shows a strong indication that he wants the company to operate on the basis of quantitative goal-setting. He also sets realistic goals, for example wanting a new Taurus by 2010 instead of "tomorrow" or other vague, unrealistic timeframe. Mulally's use of goals can be expected to be a strong motivator for Ford managers. Overall, his use of these simple management techniques has been strong thus far.

5. Mulally has utilized a transformational leadership style to help turn Ford around. There comes a point when the transformational style should give way to a more transactional style, such as when the basic turnaround objectives have been reached. To evaluate whether this time has come for Ford requires consideration of the core objectives of Mulally's transformation. The corporate culture is a non-quantitative measure. It has improved, it appears, but it should be noted that overhauling a corporate culture can take many years -- Burke and Litwin (1992) spent five years working on change at British Airways before authoring their model of organizational change. Within the next few years, it will be more evident whether the cultural change program at Ford has truly been effective.