Keyword: Ford

Here’s a quiz for you: who has more retail outlets — Starbucks or General Motors (GM)?

If you listen to all the late night comics with their shtick on Starbucks and how there’s one on every corner, you think you know the answer.  Well, you’d be wrong.  Starbucks has about 6,300 company-owned stores and GM has almost 7,000 dealerships.  Wow…

Now this is just a little unfair, Starbucks has another couple thousand franchise locations inside places like grocery stores and theme parks.  And GM owns virtually none of their stores.  But the fact that the numbers are even in the same ball park is stunning to me.

I wrote a couple of months ago about what a terrible experience buying a car is, and the toll it takes on the people who have to do it for a living (see that piece here).  And about how the differences between the retail experiences can be easily seen here.

Simply put, buying a car is the worst shopping experience that you can have.  Bar none.  And people with any scruples find it impossible to work in the business for very long.  It’s a sick business that someone needs to change.

I don’t mean to pick on GM just for the excess of dealers.  A piece in the Wall Street Journal today (subscription-only link here) points out that none of the US automakers are immune from this issue.  All the “big three” have well over 2-1/2 times the number of dealers per point of market share of Toyota, for example.  Perhaps that (and this) explains why Toyota is doing so well, and eating Detroit’s lunch.

I think this excess of dealers is one good reason for the problem.  Too many dealers chasing too few customers.  And it leads to a fetid culture of sleeze-ball sales tactics, terrible service, and lousy margins.  It’s little more than vultures preying on the few customers there are.

Starbucks has nothing in their store that costs over $250, and the vast majority of sales are under $10.  I don’t know for certain, but I would have to imagine that their average transaction is in the $5 range.  This just begs for a lot of outlets, to make the impulse purchase easy.

GM, on the other hand, probably has an average transaction around $10,000.  I don’t know many people who decide on a whim to just drop by the Cadillac store and pop for a new $60,000 Escalade.  Or stop in for a quick brake job.  Why on earth do they need so many stores (or brands, but that’s another story)?

If the new purchasers of Chrysler, Cerberus Capital Management LP, want to really make an impact on the car business, they could start here.  And rumor has it, they are going to — by combining all the Dodge, Chrysler, and Jeep dealers together.  It’s a good start.

Alan Mulally

I asked the question back in September: Does Alan Mulally (the new Ford CEO) have a better idea? Recently, he has answered the question definitively, and the answer is a resounding yes.

I complained a while back that Ford had just given up, lost creativity, and was basically flailing.  In that post (here), I pointed out that Ford had had blatantly stolen the name of the Five Hundred SEL from the Mercedes Benz 500 SEL.  This kind of lack of creativity just eats away at companies.

I also suggested that Alan Mulally was a super choice for the CEO.  He’s a man who turned around Boeing’s Commercial Airplane Group and could do wonders for Ford.  In the post here, I noted how he had hit the ground running.  Well just the other day he took another great step forward.

Ford Mustang

One of the things that has just gnawed at me about Ford is how they have simply killed off brands for no apparent reason.  They stopped making the Mustang for about 20 minutes earlier this century.  This is the car that had the biggest start of any car in history, had a great following among the now aging and wealthy baby boomers, and yet some genius wanted to kill it.  Well someone got smart, they reintroduced the current retro model, and it’s one of their strongest selling cars.  Duh…

They also killed the Taurus.  In case you don’t remember, the Taurus was a truly ground breaking car in the 1980s.  It was the first car of the “bar of soap” aerodynamic shape trend at the time.  In an era where cars were quite angular and edgy (literally), the Taurus shocked the automotive world with its wind-tunnel smooth design.  The car was a huge hit, and at one point was the top selling car in the world.

Ford Taurus

But…  like so many things seem to at Ford, the car atrophied.  By the mid-1990s they had let the car wallow, refusing to choose to make the occasional radical redesign car lines require.  Few people wanted to own a car with a decade old design.  It faded into the oblivion of the rental fleets.  Eventually Ford, seemingly mystified by languishing sales, killed the car just a few months ago.  No one inside the company knew what to do with it, and no one outside the company appeared to notice.

Well Alan Mulally knew better, and he just announced that they are renaming the Five Hundred to be the Taurus.  From what I hear, this was Alan’s idea and he pushed it through.  And what a marvelous idea: capitalize on a brand name that was very strong and at the same time right the heinous wrong of the obvious plagiarism of the Five Hundred SEL name.

This appears to be just the start of Alan Mulally’s better ideas.  You go Alan!

Mulally and Ford at the Coronation Announcement

The Wall Street Journal had a marvelous article [ed: unfortunately subscription-only] about the turnaround Alan Mulally is trying to make at Ford.  I have written about this before (see this post here), but put simply, I am a huge fan of Mr. Mulally.  He did great things at Boeing, and from what I can tell from this article, he’s off to a great start at Ford too.

The article goes on to describe in detail how Mulally is analyzing a business he is admittedly new to, and how he’s working on his plan for change at the company.

The fate of this automotive icon rests on the aggressive plans of Mr. Mulally, a former Boeing Co. executive who has spent his career outside the auto industry.  His emerging agenda calls for Ford to plow through “gut-wrenching” change to achieve profitability by 2009.

From what I can see, he’s hitting all the right notes by focusing on brand overlap, silly inconsistencies and waste between brands, and overall efficiency.  Again, this is a guy who has moved mountains at one of the largest employers in the country, I’m sure he can make strides here. “‘I’ve seen this movie before,’ Mr. Mulally told his new executive team when he took over Oct. 1.”  I just wish he could teach our president a thing or two about analyzing situations and facing ugly facts, but I digress…

One of the more interesting notes in the article however, very much caught my eye.

In the executive suite he shares with Chairman Bill Ford, Mr. Mulally says he asked Mr. Ford why he hadn’t integrated the company.  He says Mr. Ford agreed that integration was desirable, but told him it was difficult.  Every time Ford had considered forcing integration, a new hit product — such as the Explorer, Taurus or F-series truck — would come along and propel profitability without tough changes, explained the fourth-generation Ford leader.

To steal from Mr. Mulally, I’ve seen this movie before too.  I have watched more than a few companies put off changes they knew they needed to make because they were blinded by their success.  And the more bright the light from the current success, the more blinded they became to the obvious issues.  It’s important to realize this not only applies to products and/or projects, but also to people.  We tend to overlook the worst part of peoples’ behavior when they are having success as well.

I saw it quite a bit at Microsoft.  It is no secret that the Windows team recently made some major changes in leadership that were long overdue.  Those changes were put off time and again by the product’s stunning profitability and the fear of killing the golden goose.  There are a dozen more, less public, examples of products that were off-target and in need of correction, but still creating revenues that would finance even the most outrageous debacles.

We also had managers who were simply terrible, and yet were continually promoted or rewarded for their results. I discuss this here too, but success postpones many needed HR actions at Microsoft and elsewhere.  I even wrote in the performance review of one jerk who worked for me that he “is being removed from a supervisor position and being returned to an individual contributor role, and should never again be allowed to supervise others.”  He was recently mentioned in a national publication as a potential future CEO of the company.

The point of all this is that, just like dental hygiene, auto maintenance, and many other things, just because you seem to be OK today doesn’t mean your gut instinct that things need to be fixed is wrong.  Don’t let success blind you to the changes you need to make.  And don’t, please, make that jerk your CEO.

My mother called it back in June.  Billy Ford wasn’t long for this world.  I grew up in the shadow of Detroit, and my family always had connections into the auto industry.  She knew the Ford family was restless, and that Billy was in trouble.

The board [family] forced him out.  In a way, that’s too bad, since he is a really nice guy, charming, bright, “from good stock” as they used to say.  But, clearly, it was long overdue.  His departure is kind of sad for the Ford family, yet nothing but good for the company.  It also says something about family leadership and the challenge of passing down a Fortune 500 company generation to generation.

Bill Ford was probably doomed from the start.  If you think about his challenge, it was simply too much to ask of anyone, let alone a nice guy like little Bill.  He grew up in this company.  He toddled around the offices for years, sat on the laps of key leaders, and cut whatever business teeth he had under the big blue oval logo.  Even if he had a great vision of how to overhaul the stodgy old company, it was simply too much to ask someone to shake up a culture that was generations old — generations of his family.

These last few years must have been a nightmare for Bill.  He must have been in countless meetings where he said emphatically “we have to change, we have to do things differently, we have to shake off these cobwebs!” [ed: At least let’s hope he did (see my post here)] Only to be greeted by layer upon layer of senior management that looked blankly at him, shook their heads marvelling at how little Billy had grown, pinched his cheek and said something like “but that’s not how Henry would’ve done it.”  He couldn’t fire some of these people, it would be like firing your uncle.  For the family to expect him to make “bold moves” was simply unrealistic.

Alan Mulally and Bill Ford

Now the Ford board has made a super choice: they have selected Alan Mulally, formerly of Boeing, as CEO.  I’m a huge Mulally fan, if only from my view outside the company.  But throughout his turn at the helm of Boeing’s Commercial Airplane group, he was a sharp, effective leader.  And since his promotion opportunities were limited at Boeing by a new top dog (see my post here), moving on makes great sense for him.

I first became familiar with Alan Mulally during the development of the 777 airplane.  This was a huge deal in these parts, as it was the chance for the “Lazy B” to shake its old cobwebs and really develop something new and different.  Leading up to the launch, Mulally had numerous opportunities to appear in the press, and he always managed to do it with aplomb and to show his leadership skills.  At the launch (covered as if it were the Second Coming around here), he outshined the rest of the Boeing leadership as the clear, thoughtful, and talented one of the bunch.  Then, the incessant airing of the “Making of…” video on the local PBS station allowed us an even closer look at what a solid leader Alan really is.  He had done it, turned around the supertanker, practically in its own boatlength.

Recently, Mulally spearheaded the “Dreamliner” project, an even more ambitious plane that is, if leading-edge sales are to be believed, eating Airbus’s lunch.  It was a bold move, at a time when Boeing clearly dominated the huge plane market with it’s 747, and a simple tweak to that plane could offer again the largest plane in the world, he bet on moderation.  According to friends I have on the 787 (as the Dreamliner is now called) team, and they tell of Mulally passionately arguing of the demise of the monster busses with wings, and the coming move to smaller, more fuel efficient, point-to-point aircraft.  And how right he was, as if he could see $4.00 gas from the dust of 9/11.  It has been a brilliant move, and the 787 is a bold and beautiful plane.  Now all they have to do is ship it (no small feat, I hear the carbon fiber parts aren’t fun to manufacture).

Mulally seems, therefore, perfectly suited to follow through on Ford’s “Bold Moves”.  He’s the kind of person who seeks out a vision, and can get a whole, huge corporation behind it.  To paraphrase an old Ford advertisement, maybe Mulally does “have a better idea”.  The family and shareholders are certainly betting on it

Ford Five Hundred SEL

It’s a topic I cover at length in my upcoming book.  Sometimes you can tell a great deal about a company from distance, without even crossing the threshold.  I find it often in advertisements, press releases, and especially in products.  Today I found it in the total lack of creativity in the naming and design of a product.  From a company that is losing market share hand over fist.

I pulled up behind a car today that made me do a double take.  It was a large black four door sedan, with a strong hint of styling of the large Mercedes sedans.  I saw the badging that said “SEL” on the right trunk.  I thought…  hmmm that’s one I hadn’t seen, seems like it’s off for MB.  Actually kind of ugly.  Wonder what it is?

To my complete shock, it was a “Ford Five Hundred SEL“.  A Mercedes knock-off that Ford didn’t even have the creativity to name with some imagination.  If you know Mercedes, you know that throughout the 80’s and 90’s their top of the line sedan was the 500 SEL.  As if to avoid lawsuits, Ford decided not to call it the 500, but rather the “Five Hundred”.  But I’m not fooled, and clearly calling the model the “SEL” was no accident.

Mercedes Benz S500

Of course copying styles in the automotive world is nothing new, and one shouldn’t be surprised to see a million look-alike boxes wandering the highways these days.  But this level of clear duplication is far beyond the norm.  Not only does the car copy many of the styling cues, but they blatantly stole the name.  If Daimler-Chrysler’s lawyers aren’t all over this, they should be.

But, legal issues aside, the part that is so depressing to me is the signal this sends to the world, and especially to the employees of Ford.  It says, quite loudly and clearly: “we have run out of ideas, and we no longer really care enough to be creative”.  This is a sad commentary for a company who’s marketing tag line is “Bold Moves”, and who’s young Chairman appears in their own ads stressing how hard they are working to be innovative.

Also sad is that this lack of creativity is from a company with a long heritage of innovation.  From the early days and Henry’s clear vision for the Model T, to the exciting years of the Mustang, and even later with the original “slip-stream sedan” of the 80’s in the Taurus, the company has a history of leadership in many areas.  And now this…

Perhaps the saddest part of this is that, from all accounts, the Five Hundred is a very good car.  It got strong praise from the automotive press, car buyers liked it, and the ever hard to please Consumer Reports loved it.  The engineers did a great job with this car, it was the product naming and marketing team that simply gave up.  And the sales show it.  One clear sign is that I first noticed this car almost two years after introduction.  Another is that the car is selling so poorly that Ford has cut production of the car.

All of this must hit all parts of Ford.  Think of the production team sitting there excitedly at the internal introduction of the car, and it rolls out as an exact duplicate of the world’s most prestigious brand’s flagship car.  One can only imagine how depressed they would be, how demoralizing it would be to have the Chairman talking about “bold moves”, and then send you off to make copies.  Exactly how hard would the sales force work to sell a car with the highlight being: “well, it looks and is named exactly like a car that costs twice as much”?  And how much does the public believe in Ford when their flagship sedan is so much a contradiction from their loudly stated objective of “bold moves”?

This all must just make everyone at Ford so depressed.  I know it did me, and I don’t even work there.