Allan Mullaly's leadership strategy and transformation of Ford Motor Company

CEO Ford Motor Company

In 2006, Bill Ford hired Allan Mullaly as the CEO. The reason why is because he realized that the company was facing severe challenges from: their high cost structure and they were losing market share to foreign competitors. (Hill, 2010, pg. 454) These two factors pushed the company to begin undergoing a major transformation. At the heart of this strategy, was a process known as strategic planning. This is when Mullaly created a plan that would help the company to: mitigate the losses that it was experiencing and introduce changes to help turn it around. To fully understand how this took place we will examine: the kind of leadership style that was utilized, how others are involved in the process, the way this occurred over the long-term and the strategy itself. Together, these different elements will provide the greatest insights as to the underlying challenges facing the company and how they were able to adapt to the changes that were occurring inside the industry.

The Leadership Style

There were several different traits that Mullaly was using to help address the issues facing Ford to include: he was systematic, driven and decisive. These three elements were a part of a larger plan that he had created when he first became CEO. Where, he studied the company for several months and figured out what were the biggest factors that were contributing to its failures. At which point, he began to implement massive changes inside the organization that would have an impact upon how quickly he was able to stop the hemorrhaging. (Lutz, 2009, pg. 281)

A good example of this can be seen with Mullaly traveling to Toyota to: understand how they were successful and then determining the way these principals could be applied to the company. As, he began to: have massive layoffs and closed 16 plants to increase the profitability of the organization over the long-term. This meant that there would be short-term challenges experienced that would help the company to reduce its costs structure. Once this occurred, it allowed Ford to be able to adjust more quickly to changes in the marketplace and respond to the needs of consumers. This is important, because it is showing how the systematic, decisive and driven approach that was taken by Mullaly helped Ford to be able to transform itself over the long-term. (Lutz, 2009, pg. 281)

How others are involved in the Process?

The way other individuals were involved in the process is Mullaly sought out executives who supported the changes that were taking place. While at the same time, he was eliminating those positions that were considered to be a major stumbling block for the corporation itself. Evidence of this can be seen by looking no further than the strategic management changes that were implemented immediately after Mullaly's arrival. As, he eliminated a number of different positions that were considered to be bureaucratic and slow to include: the President of International Operations. He then streamlined the communication process by having all of the department heads reporting directly to Mark Fields (the President). At which point, Fields provided Mullaly with an accurate assessment of the situation and the effect of these changes that were taking place in real time. These different elements are important, because they are illustrating how Mullaly would seek out individuals that shared a similar kind of vision as himself about: the underlying changes that were taking place at the company. This is the point that a major transformation began to take place, as the organization had individuals who shared a similar kind of mindset, which helped make these changes successful over the long-term. (Hill, 2010, pp. 454 -- 460)

The Strategy Itself

Clearly, the basic strategy that Mullaly was using to achieve these different objectives involved the company utilizing: cutting costs over the short-term. This meant that the underlying costs began to increase from: shutting down these facilities and laying off employees. At the same time, there would also be a major transformation in how they were restructuring their debt. Over the long-term, this helped the company to be able to adjust to the changes that were occurring in the industry by reducing their underlying costs. This is the point that Ford was able to design models that were competitively priced and offered a product that consumers were demanding. As a result, the strategy that was embraced by company executives meant that there would be short-term pain, so that they could have long-term success. In many ways, one could argue that this is what helped Ford to avert bankruptcy when both GM and Chrysler experienced a similar fate. (Doyle, 2011, pp. 139 -- 146)