Ford & The Strategist’s Six-Pack


We dedicate this Field Guide to Alan Mulally with much admiration.


The Strategist’s Field Guide #02


Are you a leader defining your company’s roadmap? Is your firm undergoing a turnaround?

Consider The Strategist’s Six-pack — the building blocks of your concern’s Strategy Journey.

These mindsets and actions will help you move in the right direction. Read on to learn more!

The Strategist’s Six-pack


Editor’s Note

Bryce Hoffman wrote a detailed edge-of-your-seat account of Alan Mulally’s exploits at Ford Motor Company and its resulting revival in his bestseller American Icon: Alan Mulally and the Fight to Save Ford Motor Company.

We highly recommend it.

A summary of Ford’s fortunes under Mulally’s leadership is available here via the New York Times.

Table of Contents

It’s been a year and a few days in change since Jim Farley took over the reins of the Ford Motor Company.

On October 01, 2020, the day he ascended, he unveiled The Plan, a strategic blueprint to turn Ford around from a position it is all too familiar with — stock market rut, flip-flopping profits, and products that lagged behind the competition.

One year on, a lot more details are available on The Plan, and we have a lot that we want to discuss regarding Ford’s journey and its future from the lens of our frameworks.

With incumbents facing challenges from each other, Big Tech, EVs, adverse market conditions, and supply chain issues, there’s a lot to be said about the US and Global Auto Industry in general as well.

However, before we unpack all of that, we thought about starting with the last time Ford underwent a turnaround. That was back in the late 2000s and early 2010s.

That case epitomizes our framework on the building blocks of any organization’s Strategy Journey. That’s the subject matter of this post — our Field Guide #02 on Strategy.

Our story begins in 2006 with a master strategist by the name of Alan Mulally.


Ford & Alan Mulally

When Jim Farley took over as the CEO of Ford last year, he became the fourth person to lead the famed American behemoth in less than a decade.

That list includes Alan Mulally, a Boeing veteran who famously ‘piloted’ Ford through the hard times of the Great Recession and returned it to profitability before retiring in 2014.

Mulally joined Ford in 2006. Bill Ford, the great-grandson of company founder Henry Ford, had vacated his position as the company’s President & CEO in September that year to make way for Mulally.

The Troubles

At the time, Ford was heading towards disaster*.

Bill Ford had taken over as the CEO in 2001, and despite his best intentions and efforts, he had been unable to turn the tide for his family’s company. Here’s a timeline of Ford’s troubles —

Ford’s troubles leading up to Mulally’s joining in 2006 | WSJ


During this time, the company lost market share, and its quarterly profits were mainly unenviable.

Ford’s slipping market share and net income, 2001 – 2006 | WSJ


To Bill Ford’s credit, he set aside his ego and looked to revive the company by bringing in the right talent at the top from within and outside Ford.

That’s how Mark Fields, one of Ford’s internal turnaround specialists, came to develop The Way Forward (see sidebar) turnaround plan for Ford’s North American Operations.

And that’s how Mulally, an aerospace engineer, and a Boeing lifer, ended up the President & CEO at Ford.

Sidebar: The Way Forward

Even before Mulally’s arrival, Ford had been working on executing a turnaround.

That plan, which largely focused on North American operations, was the brainchild of Mark Fields. At the time Fields was the newly minted Head of Ford’s operations in the Americas.

He had successfully turned around the operations at Mazda where Ford had a controlling stake at the time.

He was in the midst of turning around Ford’s premium operations in Europe when Bill Ford called him back to the US.

Once there, Fields, who later succeeded Mulally as Ford’s President & CEO in 2014, created The Way Forward — a turnaround roadmap that Mulally will later adopt, adapt, and expand.

Ford’s Way Forward, Jan 2006 | WSJ

* Like it was in the mid-1970s, at the beginning of the 1980s, and the 1990s. Some differences notwithstanding, Ford had been here before. Its perpetual cycle of crises and the never-ending need for a turnaround will be the subject of a future post. Stay tuned!

The Plane Maker

Mulally wasn’t new to the turnaround game when he took Ford’s helm. Bryce Hoffman described Mulally’s last decade at Boeing, before joining the Ford Motor Company, thus —

As the head of the Boeing Company’s Commercial Airplanes Group, Alan Mulally had spent the past ten years fending off one disaster after another while somehow managing to transform its divisive culture into a model of corporate collaboration. 

Under his leadership, Boeing had survived an unrelenting assault by Europe’s Airbus Industrie, a difficult merger with rival McDonnell Douglas, and the collapse of sales that followed the terrorist attacks on New York and Washington, D.C., in 2001. 

Mulally turned what could have been a fatal blow to the aerospace giant into an opportunity to fundamentally transform the company into a leaner, more profitable enterprise. 

By 2006, Boeing’s commercial jet division was well on its way to record sales, revenue, and earnings. Mulally credited it to a team-based approach he called “Working Together.”


Because of his time at Boeing, Mulally knew all about managing complex product lines and their manufacturing. His experience would come in handy in solving the challenges facing Ford.


The Plane Maker’s Plan

While he officially joined Ford on October 01, 2006, Mulally had been surveying Ford and the industry since before July 29 — the day Bill Ford pitched him the top job.

Between then and December that year, Mulally drew the roadmap for Ford’s revival. Like Jim Farley in 2020, he too called it The Plan.

Mulally informed his plan with perspectives from the auto industry who’s-who the inside view provided by Bill Ford and others and his research of Ford’s history.

In diagnosing Ford’s problems, he drew parallels with the challenges at Boeing’s commercial aircraft division, where he had led a successful turnaround in the late 1990s.

Mulally also co-opted many ongoing initiatives at Ford. E.g., the restructuring plan for North America (see sidebar: The Way Forward) and the plan to mortgage Ford’s assets for liquidity.

The Revival Roadmap

When Mulally presented The Plan to Ford’s Board in December 2006, he had distilled everything down to four priorities —

  • Aggressively restructure to operate profitably at the current demand and changing model mix
  • Accelerate development of new products our customers want and value
  • Finance our plan and improve our balance sheet
  • Work together effectively as one team


Mulally successfully sold the board on his Strategy.

Then he began infusing it into Ford’s collective consciousness by hammering it home in every board meeting, every weekly review with his lieutenants, every town hall speech, and every media interview.

Making An Impact

As we will see later, Mulally made some tough and bold decisions on the back of his vision. When he backed every word with actions, however small, people understood that he meant business. They either joined him or got out of his way.

Mulally’s plan helped Ford navigate the Great Recession and its aftermath. Ford was the only major American automaker that avoided bankruptcy and a government bailout during the 2008—2010 Automotive Crisis.

Ultimately, Mulally successfully returned Ford to profitability and revived its stock prices.

Ford’s Stock Performance under Mulally | Source

I’ve Seen This Movie Before

If Mulally’s story sounds familiar, that’s because it is.

A straight-talking CEO rises to the occasion with a clear set of strategic priorities, hammers that strategy home, and backs it with the right team, vital resources, and real action.

We may as well have been talking about Bob Iger’s three-point Strategy that changed Disney’s fortunes — we did, in our Field Guide #01.

Apple’s turnaround in the late 1990s followed a similar script, and so did that of Chrysler in the 1980s. You can also draw parallels with Lou Gerstner’s handiwork at IBM in the 1990s.

Don’t get me wrong. I agree that under the hood, the details of large parts of corporate revitalization are unique by companies’ circumstances, complexity, leadership, and industry.

The specifics are different, yes; sometimes in sharp contrast, sure. And yet, there are common threads. There’s something fundamental that connects these great revivals.

The Strategy Journey

We call this fundamental connection a firm’s Strategy Journey.

While companies will have Strategy journeys that are unique in their details, the building blocks are always the same.

You will recall these building blocks from the closing of Field Guide #01. I have reproduced the image we used there below.

A Firm’s Strategy Journey


Together we call these six building blocks The Strategist’s Six-pack. I will explain the rationale behind this terminology later in the post. For now, please note the following —

  • In the image above, we have depicted the trail connecting the building blocks into a Strategy Journey as a mesh of intertwined pathways. That has some significance*.
  • While the building blocks emerge from our discussion on corporate revival, they characterize any Strategy Journey — turnaround or not.


Keeping these points in mind, let’s go back to Mulally and Ford to unpack the Six-pack.


* E.g., one may think that the building blocks in the image above fit well when considered in a clockwise sequence starting with CONTEMPLATION. However, that’s one of many ways a Strategy Journey may unfold. See the next section for more on this.


The Strategist’s Six-pack

Ford’s journey under Mulally makes for a great case study for our Six-pack framework. In this section, I will demonstrate the various building blocks using specific examples from that journey.

Here we go!

Mulally & The Six-pack


To make the narrative more readable, I have put it together like an accordion. Click on any of the headings (the accordion’s keys) below to read through.

The Journey Begins

Mulally had started researching the company when a Board Member from Ford made the first overtures.

He impressed Bill Ford with his incisive questioning of the company’s situation when they first met to discuss the role.

After Ford announced his arrival on September 05, 2006, Mulally embarked upon a mission to understand what people, inside and outside, thought about Ford.

Outsiders included industry experts like David Cole, David Champion, and Jerry Flint; rival CEOs like Rick Wagoner of GM; President of United Auto Workers, the union, Ron Gettelfinger; wall street types, consultants, and journalists of note.

Insiders ranged from Bill Ford and the executives to unsuspecting employees milling around in company offices or cafeterias and optimists who would contact Mulally directly.

As I remarked in The Revival Roadmap, he combined the knowledge gained from these agents with select initiatives at Ford, his own wealth of experience, and personal research to come up with the Plan.

His journey, therefore, started with COMMUNICATION and CONTEMPLATION.

These origins demonstrate that the building blocks don’t necessarily share a serial linkup. A strategist may look to work with them in tandem. In fact, they may very well have to.

Different Origins

Contrast the origin of Mulally’s Strategy Journey at Ford with that of Bob Iger’s at Disney. Recall from Field Guide #01 that his starting point was a combination of NAVIGATION (e.g., the Eisner ‘affair’) and CONTEMPLATION.

He brought in a political strategist friend who then helped him in ARTICULATION.

Or consider a hypothetical scenario where you are the new CEO of a company that has landed in the middle of a Human Resources and PR mess.

It is more than likely that you first start to NAVIGATE. You would also want to COMMUNICATE at this stage. Why?

  • Get a sense of where the people are with what’s going down in the firm
  • Project an essential open-mindedness
  • Assure the stakeholders — internal and external


CONTEMPLATION then seeps in before you ARTICULATE the new normal. If you don’t believe me, just look at Dara Khosrowshahi and Uber circa 2017.

Journeys are unique. That uniqueness begins with different origins. But those origins always draw from one or more of the six building blocks.

Make & Shake

Alright! Back to Ford.

It was only after the first phase of CONTEMPLATION and COMMUNICATION that Mulally crystallized his thinking into the four-point strategy we saw earlier.

That part of his journey, call it ARTICULATION, culminated on November 14, 2006, when he finalized his presentation for the Board*.

However, Mulally didn’t go about defining his roadmap in isolation.

Consider the shakeup he initiated/co-opted at Ford in tandem with his ARTICULATION of The Plan. He embarked upon ACTIVATION within the first 90 days of weeks of his arrival, before he presented The Plan to the board. Here are a few measures he took —

  • Instituted his famed weekly Business Plan Review with the executives (much to their chagrin) and acclimatizing them with the process.
  • Started removing unnecessary layers of management, e.g. eliminating positions like CEO’s Chief of Staff, President of International Operations et cetera
  • Green-lit Mark Field’s Way Forward Plan #02 (see sidebar: The Way Forward)
  • Co-opted the pre-existing plan of obtaining leveraged loan for financing Ford’s restructuring**


This example should dispel any notions about waiting for a perfect plan before starting to make changes.

A particular building block may be in focus at a given time, but make no mistake — you are likely to require other blocks in parallel.


*Mulally would rechristen ‘The Plan’ and call it ‘One Ford.’ It was an intentional challenge to the feudal mindset of the Ford Motor Company and a throwback to his ‘Working Together’ talisman from the Boeing days.

**On the back of Mulally’s reputation, Ford was able to up the financing it received from the initial proposal of USD 18 billion to USD 23.6 billion when the deal closed on December 31, 2006

Getting Buy-in

Many firms create beautifully articulated Strategies only for them to collect the proverbial dust somewhere.

Some firms operate without a stated Strategy. In those cases, their Culture becomes their Strategy.

Strategy, well-articulated or not, is merely an intention. In the long run, nothing works without execution. Not even dumb luck.

And execution at an organizational level requires PERSUASION — internal (board, executives, employees, shareholders) and external (suppliers, customers, consumers, analysts, media).

Please don’t confuse persuasion with earning sign-off. It is about buy-in. And that’s exactly what Mulally developed when he sold the Board on The Plan in December 2006.

Mulally’s unconventional charm and laser focus on the correct use of data served him well in doing so. Before the end of December 2006, he had convinced the Board of several big swings. Here’s a sample —

  • Replacing Ford’s insular fiefdoms with Matrix organization to reduce structural costs and improve coordination
  • Streamlining the reporting structure of global operations. The new structure was ACTIVATED via an immediate announcement.
  • Streamlining Ford’s global portfolio of nearly 100 nameplates*
  • Sell British marques Jaguar and Land Rover and consider the sale of Volvo if backed by a robust business case


Thereafter Mulally embarked upon a campaign — a veritable combination of COMMUNICATION and PERSUASION — to sell his vision, internally and externally**. He would continue this campaign throughout his tenure.

Mulally’s Handwritten Notes from 2009


COMMUNICATION and PERSUASION are not one-and-done deals. One needs to keep hammering the message to ensure a high recall & reinforcement and managing investors’ perceptions & expectations.

Consistent and constant COMMUNICATION also helps to get the inputs necessary for continuous improvement of the details of strategic plans in light of changing internal and external environments.


*E.g., when you buy a Ford Mustang, Ford is the brand, and Mustang is the nameplate.
**This part of his journey was remarkably similar to that of Disney’s Bob Iger.

Then He Set Ford On Fire

Ford ended 2006 on a sour note, having posted its worst losses in its history (at that point).

Ford’s Net Income, 1992—2006 |NYT

However, Mulally had his roadmap cleared and war chest ready for ACTIVATING the coming revival.

What followed was an incredible reversal in the fortunes of a company that was likely headed for bankruptcy even before the recession hit. Some big swings of this ACTIVATION

  • Ford negotiated favorable contracts with its union, the United Auto Workers (UAW). E.g., see here and here. It was the only American auto major to avoid workers’ strikes in preamble to negotiations.
  • It sold or killed underperforming brands or brands it couldn’t afford to invest in. E.g., Jaguar and Land Rover, Aston Martin, Volvo, Mercury
  • It significantly improved quality of its vehicles, especially the smaller models — e.g., the Fiesta and Focus — thereby putting more drivers behind a Ford steering wheel.
  • It cut its North American capacity by 25% (~a one million vehicles a year), turning the tide in 2009. That year Ford earned $2.7 billion, despite a deep drop in U.S. auto sales.
Reversal of Fortunes | WSJ


Ford’s revival came with its share of compromises. I cover some of them next.

Choppy Waters

Ford’s turnaround required NAVIGATING choppy waters.

These included a high-profile stake buildup by raider Kirk Kerkorian in 2008, labor negotiations, and of course the great recession of the times.

In negotiating contracts with UAW, Ford had to agree to scale back some plant closures in lieu of reduced wage and insurance burdens.

To deal with Kerkorian, the company adopted a poison pill agreement, ringfencing USD 19 billion in tax assets. The company upgraded the arrangement in 2009 to thwart others like Kerkorian.

Ford’s leveraged loan gave it some flexibility to deal with the recession*. However, the situation kept worsening to the point that the company had to sell its stake in Japanese automaker Mazda, the source of a lot of cross-brand improvements in Ford’s vehicles.

And though the company became the only American auto major to avoid Chapter 11**, it still had to take a USD 6 billion loan from a US government program, albeit in the garb of improving fuel economy.

Mulally also asked the government to extend a USD 9 billion line of credit, just in case.

All companies go through choppy waters. ACTIVATION of every strategy requires expert NAVIGATION of evolving situations. It is impossible to think of one without the other if success is to be achieved.


*Ford’s decision to obtain the leveraged loan would seem prescient in 2008 when the recession hit the auto industry with full force.
**Both GM and Chrysler filed for bankruptcy in 2009.

Putting The Six-pack Together

Now that I have demonstrated each type of building block through Mulally’s revival of Ford, first and foremost, let’s put everything together in a crisp little slideshow.

You will find hashtags that give a sense of the considerations within each building block in the six-pack. Add your hashtags in the comments to help us improve the framework.


Making Sense Of The Six-pack

When I first started developing the idea, I thought of the Six-pack as a collection of milestones that a company crosses in its Strategy journey.

However, that type of thinking interprets the journey as something linear where one milestone follows the other.

As Ford’s example illustrates, that is hardly the case. The Six-pack components repeatedly appear during the journey and often in conjunction with others.

Their appearances differ in contexts, capacities, connections (with others), and functions in each of their appearances.

Therefore, I’ve come to consider the Six-pack as six types of building blocks for a firm’s Strategy journey. Within each of these types, there can be multiple unique instances of that type.

Founders, leaders, and innovators can deploy these instances to suit the stated goals of their firm’s Strategy and its position, degrees of freedom, and operating environment at a given time.

In that way, the Six-pack is very much like a LEGO® kit. You can also think of it as a set of actions, skills, behaviors, or mindsets needed to design a successful strategy and execute a strategy successfully.

I have called them the Six-pack after the rectus abdominis — the abdominal muscles of the human body or colloquially, the ‘abs’.

These muscles provide core strength & stability to the body and hold internal organs in place. They power all our movements and assist in breathing.

That should tell you something about The Strategist’s Six-pack.


What Now? The Unconclusion

Our Field Guides are developing the frameworks that will come together to answer two fundamental questions that keep us awake at night here at The Strategist —

  • How to design a successful Strategy?
  • How to execute a Strategy successfully?


Even though much work remains in answering these questions, I believe we have come further along in Field Guide #02.

Takeaways

We have laid out the building blocks of a firm’s Strategy journey and demonstrated them in a case study. That leads us to the following takeaways —

  • The Six-pack is a collection of mindsets or actions — building blocks of any company’s Strategy journey
  • These building blocks are Contemplate, Articulate, Persuade, Communicate, Activate, and Navigate. Every firm’s journey is unique but it shares these building blocks with others
  • The Strategy journey is not a fixed linear or circular process. It’s a veritable thicket of intertwined pathways built with multiple instances of the Six-pack components


Now that the takeaways are out of the way, what’s next?

Two Directions

Two types of questions emerge in the aftermath of our discussions in this post —

  • Questions regarding the building blocks
    • Is the Six-pack a complete set? Are the building blocks really fundamental?
    • What can the founders, leaders, and innovators do to master the Six-pack mindsets?
    • How can they apply the different building blocks in practice?
  • Questions regarding Ford
    • What caused Ford to churn through 2 CEOs and appoint a third since Mulally’s exit?
    • Why did it need another turnaround, leading to new version of The Plan in 2020?
    • Why does it need a turnaround every decade?


Let’s add these to our ever-increasing list of questions that we will answer in future posts.

Stay tuned, stay safe!

Sincerely,
Arvind