Mark Fields is replacing Alan Mulally as the head of Ford in a couple of months and I have heard some concern about that. Lean folks predict gloom and doom as a result of a hard core manufacturing guy like Mulally turning the reins over to a sales guy with a Harvard background – Fields. I don’t share that pessimism because of one incident at Ford.
Early on his tenure at Ford Mulally implemented a process in a weekly review meeting whereby the execs color coded their status reports – green for those on target, yellow for those running behind and red for any project in serious trouble.
No one had ever brought a red project to the meeting when Fields learned that there was a serious defect in the roll out of the first Edge cars. Customers and dealers were anxiously waiting for the Edge and it was a critical part of Ford’s strategy.
According to “Once Upon a Car” – a great book about the crises in the auto industry when the economic bottom fell out in 2008:
“Fields had two choices, neither one of them good. He could ship the Edges that worked, restart production, and hope the glitch could be found and fixed on the fly. Or he could delay the launch and be the first executive to go into Mulally’s Thursday-morning meeting with a big fat red dot on his weekly progress sheet. He sat down with his team in Dearborn and made the call. “We are not going to ship a vehicle before it is ready,” he said. ‘We just can’t . We have to delay it. I’m going to have to call it a red.’ His staff members looked at him. He could almost feel their pity.
At the next business review, Fields took his seat, right next to Mulally. As luck would have it, he was the first executive to present. His mind raced. I’m going to get killed here , he thought. Then he took a deep breath and showed everyone the launch page with a large red dot on it. ‘The Edge launch is red,’ he said. ‘And we’re delaying it.’
Fields thought he felt people moving their chairs away from the table, away from him. Bringing bad news to senior management at Ford was typically avoided at all costs. Nobody wanted to even be near the culprit. The Thunderbird Room got very quiet. Everyone looked at Mulally, waiting for his reaction. A few seconds passed. Then Mulally turned toward Fields, stood up, and started clapping. Fields was momentarily stunned. Then Mulally really started clapping, as though Fields had just hit a home run. ‘Thank you, Mark,’ he said, ‘for the transparency.’ At that moment, the atmosphere in the review room changed for good. Someone had had the guts to put a red out there— and survived. Not only that, Mulally liked it!
‘Mark, that is great visibility,’ Mulally said. ‘Now, is there any help you need from any member of the team?’ All of a sudden, people started to speak up. Bennie Fowler, head of the quality department, said he’d seen that type of problem before and had some ideas. The head of procurement weighed in about the parts on the Edge. The manufacturing exec promised to send some extra engineers to the plant. Fields couldn’t believe it. A crucial launch was delayed, and somehow he was a hero.”
In Jon Miller’s outstanding book “Creating a Kaizen Culture” he lists the essential dimensions of companies with strong, lean cultures including that it “creates an environment in which the exposure of problems, abnormalities, and inconsistencies is not only allowed but encouraged” and it “treats failures as learning laboratories.” That is exactly what Mulally did.
I am more and more convinced that this is the most important aspect of a lean culture. Managing by measuring outcomes and attempting to improve them by accountability, fear for folks’ jobs and career success is so easy, but so intellectually lazy. Being supportive of people and looking to the process in the face of disappointment with a major outcome is hard to do. It is the truest test of managerial understanding and commitment to lean, however.
In that incident, Mulally demonstrated why he was such a great leader at Ford. And Fields was on the receiving end of a great piece of management, and hopefully a management lesson he learned well. Assuming he did, Ford will be just fine under the Fields regime.