A leading company focused on virtual transformation.
No one has paid attention to Ford in recent months surprised by the automaker’s announcement Tuesday that CEO Jim Hackett will retire in October, to be replaced through the current COO Jim Farley.
Hackett was a selection from the beginning. His résumé included stints as the youngest general manager of furniture manufacturer Steelcase and interim athletic director of his alma mater, the University of Michigan. He was a member of Ford’s board of directors and spent just over a year running the automaker’s Smart Mobility arm when President Bill Ford introduced him to the large chair.
“Was I the right person? Hackett asked, recalling his appointment in a convention call after his retirement announcement.” I knew I would check the patience of the stakeholders,” he said. But he knew how to make the right story and deal with the unesusable parts of the business while reviving innovation.”
Hackett’s last question was: “Can we have some short-term static?”
“Static” was insufficient. Hackett inherited a century-old car company still heavily influenced by the participation of the founding circle of relatives (and the special movements of the election class), stored through Alan Mulally the currency crisis. Hackett’s predecessor, Mark Fields, had solidified the balance.
But Ford was ill-equipped to take advantage of new opportunities in connected cars, electrification and autonomy. As with other mature multinational car manufacturers, Ford’s European operations were fighting a flat market. VW and General Motors have fallen in the Chinese market. Even the American company, a cow of money, had problems: it relied heavily on successful F-Series pickup trucks, but was overwhelmed by slow-selling sedans and aging SUV platforms.
The game plan for Farley and some other experienced executive, Joe Hinrichs, to deal with the automotive aspect, while Hackett claimed that Ford aggressively reinvented himself, in perspective and out, telling a skeptical Wall Street a story of expansion that could simply lift up the actions. Price.
Wall Street didn’t buy it. Ford’s percentage value fell by nearly 40% of his term, however, he had slipped before his arrival. It wasn’t the only one: GM’s percentage value fell by nearly 30% over the same period, even when it made billions in annual profits. Wall Street had demanded a growth story, but not even the ambitious moves of classic automakers, spending genuine cash on new independent companies and delivering ambitious goals for Tesla, failed to impress.
Outwardly, it seemed that Hackett had been right from the start: he was not the right person. Critics think so. Aside from a detail of age discrimination (Hackett’s adulthood was not his enthusiasm at a young age and, infrequently, it seemed to have been designed to close the gap between Motown and Silicon Valley), he did not seem authoritarian enough to drag Ford into his current century. The former school football player was too attentive, his elbows weren’t sharp enough.
Objectively, this complaint is unfair. Hackett acted temporarily to remove Ford’s line of sedans, so that factories can simply manufacture SUVs and expand electric vehicles. It has eliminated nearly 20,000 jobs worldwide. And when the coronavirus pandemic hit the factories in slow motion, it prompted Ford to manufacture face masks, face shields and, in collaboration with GE Healthcare, fans. He oversaw the suspension of Ford’s generous dividend, preserving money but cutting an explanation of why investors with constant revenue sources keep inventory (and even a bargain, given the annual decline of about 9%).
The biggest challenge for any Big Auto replacement agent is that Big Auto puts a lot of cash to keep moving forward. For Ford to sell 5.4 million cars in 2019, he had to spend billions each month, generating more than $150 billion in revenue, but recording a disappointing net margin of 6%. Hackett hoped to simplify everything, however, the company would take at least 3 years and charge $11 billion, roughly part of which was spent during the time it announced its retirement.
His master plan was nothing less than redrawing Ford. And to some extent, with his thought guided through auto industry gurus, he’s done far more than any CEO in Ford’s recent history. Mulally hypothesized all of Ford’s assets to get out of the Great Recession, but it also prompted the automaker to expand smaller, more fuel-efficient cars that consumers have avoided in a fall in post-recession gasoline prices. Fields has sought to turn Ford into an automobile, mobility and high knowledge company, but has not reformed inefficient production operations and has been slow to take on electric cars and autonomous driving technology.
Hackett, on the other hand, turns out to have replaced hearts and minds.
“It’s been a great company since I’ve been here,” Bill Ford told him, as Hackett recounted in an interview two weeks ago with Business Insider.
“After being in the industry for decades as a product planner, I think he knew one or two things,” said Farley, who joined Ford in 2007 after a career at Toyota. But Hackett’s recommendation “changed us as corporate executives,” he added. “We’re all in it. What you’ll see in the next generation of vehicles. All this was reported through what Jim presented us with. I can’t believe In Ford without him.”
For Hackett, satisfying Wall Street and the media begged by Tesla’s meteoric rise is less urgent than promoting the replacement of Ford’s 190,000 global employees. “I have to involve everyone in the company,” Hackett said in an interview, recalling his reluctance to give quick answers to analysts. “That’s how you run.”
He’s been here before, Ford’s connoisseurs said. Skeptics were silent when they modernized Steelcase for a new world of collaborative workplaces that looked nothing like a 1950s building.
What probably caused his departure from Ford, which was almost planned in February, when Farley became the sole chief operations officer and Hinrichs fell apart, to see vitally vital new cars come out of the pipeline and head to a market ravaged by COVID-19. Time to redesign is up. Now Ford had to act, with a relentless concentration, and do it with his core business.
Unusually, Hackett gave himself a brief victory. “I can say with too much confidence that it will work,” Hackett said. “By a mistake. I feel a sense of quiet satisfaction at the fact that other people have clung to me.”