Published 2 October 2024 in Future readiness • 7 min read • 
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Everywhere we read the news, corporate turnarounds are desperately needed. Intel, the company that once put “Intel Inside” stickers on nearly every computer in America, is desperately trying to catch Nvidia in the AI chip race. General Motors and Volkswagen are scrambling to match the software prowess and battery technology of upstarts BYD and Tesla. Even Google is watching nervously as ChatGPT threatens to redefine internet search.
These corporate giants are all asking the same question: What does a successful turnaround look like?
A real turnaround takes years to fully materialize, but early indicators and subtle shifts signal that a company is on the right track. A change in organizational dynamics should be felt within months. The clarity of organizational priority should be immediate. We ask if leaders are having honest conversations. Only when trust and transparency replace fear and secrecy is there real cause for hope.
This brings us to Alan Mulally, who saved Ford Motor Company during the 2008 financial crisis. What he did wasn’t just about rescuing a car company. The blueprint he created at Ford might be the roadmap for anyone navigating 2024 and beyond.
When Mulally walked into Ford’s headquarters for the first time as CEO, the automaker was on the brink of collapse. It was losing billions of dollars and struggling to compete with foreign rivals. He toured the private showroom of the corporate headquarters and wondered where the compact cars were. The fuel-efficient models? The vehicles that Americans wanted to buy? Meanwhile, crude oil prices were about to pass $100 a barrel. Sales were in free fall. Ford had too many factories, too many workers, and too many dealers.
Mulally wasn’t a “car guy” – he had spent his career building airplanes at Boeing. He faced a wall of skepticism. “We appreciate you coming here from a company like Boeing, but you’ve got to realize that this is a very capital-intensive business with long product development lead times,” the chief technical officer lectured him. “The average car is made up of thousands of different parts, and they all have to work together flawlessly.” Yet, a typical passenger jet has four million parts. If one of those airplane parts fails, the whole thing can fall out of the sky. Mulally quickly understood: “My people don’t believe I can do this. I need to convince them that I get this.”
Mulally convinced his senior executives to believe in teamwork; to be in sync with one another, backed by ruthless execution, and committed to a plan grounded in clear data. When he looked at the data, however, he found that Ford had different sources offering different numbers for different audiences.
People routinely inflated figures when estimating demand for a new product to press suppliers to give a lower price. A more conservative figure was offered to Wall Street analysts so that Ford would look good when it exceeded their expectations. The same thing happened internally. Executives offered exaggerated revenue estimates for proposed products to finance staff to win approval for their programs. There was no truth in data points. It came in too many flavors.
Mulally began forcing his team to be hands-on with one version of truth. One corporate-level meeting – his business plan review (BPR) – would be held weekly on the same day, time, and place to identify any issues. Attendance would be mandatory for all senior executives.
Trickier still is to instill a culture of honesty in meetings. Some business leaders had been delegating details for so long that they asked divisional CFOs to present the numbers. Mulally flatly refused this as an option. Some executives didn’t want to learn to become hands-on and tried to excuse themselves from the meeting. “I need to spend time in the business unit, not get distracted,” they would say. Mulally would respond with a smile: “You can’t be part of the Ford team if you don’t come. Though it doesn’t mean that you’re a bad person.”
But old habits die hard. Mulally made a color-coding system on a shared spreadsheet, asking executives to highlight tasks in red for falling behind, yellow for being at risk of falling behind, and green for being well underway. Ford was on course to lose billions, but everything looked green on the spreadsheet. There was no disclosure of problems, nor any requests for help.
Until, that was, the head of the US operation, who wasn’t sure about staying at Ford, decided to show the top team that an imminent product launch would be delayed in shipping to dealers because of a safety issue. It was marked red. “We are holding the launch,” the executive pointed at the screen. There was silence. “Dead man walking” was what everyone was thinking.
Except someone clapped. It was Mulally. “This is great visibility,” he beamed. “Who can help him with this?” The global head of quality raised his hand, promising to send his experts over right away. The head of global procurement volunteered to contact the relevant suppliers to investigate. The matrix that Mulally had put in had started to work.
“Mulally got executives to stop making decisions based on what was best for their careers and started trying to figure out what was best for the company.”
The head of the US kept his job. There was no reprimand. Mulally didn’t even raise his voice. The executive team understood the trust was real. A week later, the slides showed up with red and yellow all over. Mulally looked back years later and realized it was the defining moment of Ford’s turnaround. He forced everyone to stare at reality without flinching or turning away. He got executives to stop making decisions based on what was best for their careers and started trying to figure out what was best for the company.
What held Ford back for too long was the infighting and turf warfare. What Mulally used to drive his team was a common objective with a shared consciousness. Each executive must know everything there was to know about every aspect of the business. The Vice President of Human Resources could rattle off the name of the three best-selling Ford cars in China. The quality czar could detail the latest debt position like a financial controller. They measured their success not by personal victories but by their progress against the overall plan. They internalized the joint mission and did not just think about their promotions.
Even Wall Street didn’t trust Mulally. He could easily have been derailed from being remembered as a star achiever at Boeing and becoming infamous as the CEO who killed Ford. But, during the financial crisis of 2008, as banks were tightening their purses on lending, consumers were pulling back on spending, and GM and Chrysler were on the verge of bankruptcy (surviving only because of a government bailout), Ford became the only American carmaker that turned itself around without direct government assistance. And it was stealing market share from GM, Chrysler, and, for the first time, Toyota.
So, how did he do it?
Union negotiations: Mulally didn’t just cut costs; he forged a partnership.
Pension overhaul: Instead of kicking the can down the road, Mulally tackled Ford’s pension burden head-on.
Dealership diet: Mulally trimmed Ford’s bloated dealership network, creating a leaner, more responsive Ford.
Factory fitness: Closing idle factories.
Product line pruning: His team cultivated a focused lineup that spoke directly to customers’ wants.
You might think that these are initiatives any third-rate industry consultant would be able to cook up. However, their implementation depends not only on top-team unity but also on cascading through the entire company. And, to Mulally, the dynamic of the BPR was the leading indicator. The financial results were important, but they would always be lagging. What Mulally sought to create was to bring evidence and transparency so everyone knew they were on the right track.
When things move in the right direction, no one panics. They persist. Once this approach creates its own breathing space, it can continue to improve and eventually pull ahead of the competition.
The saga of Ford of the last decade is, of course, just as applicable in 2024. Any backslide can be stopped. No defeat is final. Whenever a company falls behind, executives can still face that challenge, have that difficult conversation, and tackle that problem unflinchingly without the rule of fear. To endure the discomfort of all the human dynamics that it may entail is what leadership is all about. That’s the open secret of staying “future ready”.
For further reading, I recommend:
The Turnaround at Ford Motor Company, a Harvard Business School case study by Amy Edmondson and Olivia Jung
American Icon: Alan Mulally and the Fight to Save Ford Motor Company by Bryce Hoffman.
Our next Future Readiness Indicator is scheduled for the week of 15 November. Meanwhile, check out our latest findings here.
Jialu Shan, Lawrence Tempel, and Alexandre Sonderegger contributed to this article.
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