Why William Clay Ford, Jr. Failed

In October 2006, the Ford Motor Company replaced William Clay Ford, Jr. as its Chief Executive Officer.

Why did Mr. Ford fail?

His own words, reported by Micheline Maynard of the New York Times on July 16, 2006, titled “Is Ford Running On Empty” revealed the answer.

“I bowed to managers on what I knew were product development mistakes”. “I can’t delegate to anybody…dealing with unyielding managers that stymie and condescend to me.” “… would have performed better if not faced with people obstacles”. – William Clay Ford, Jr.

Mr. Ford cited as one of his victories his environmentally friendly new River Rouge assembly plant. He believed this to be a victory because “…I did it over the objections of company executives.”

He brought in a new Chief of Staff and Gatekeeper, who is his best friend and brother-in-law, whose prior experience was as manager of the Henry Ford Museum. “He helps me decide which meetings and projects deserve my attention.”

One of his priorities was examining “…everything from how we’re going to treat each other in meetings to the trappings of our job.”

All of the priorities he listed in the article were essentially ‘trivial many’ when he had vital priorities that need attention. His “River Rouge” victory was quite minor with the intractable problems Ford is facing. Crowing about it publicly was a polarizing mistake. His new Chief of Staff, his brother in-law, further undermined him.

He made the fundamental CEO error, not persuading his managers to change their position on vital priorities. If he couldn’t persuade them, he should have made the correct strategic decision. He was not leading the company. He was not in command.

One example of Ford’s bloated overhead is its executive dining room replete with waitresses, multi-course menu, and silver finger bowls. Mr. Ford would have been more successful if he had executed an operational restructuring that significantly reduced salaried headcount in 2006 – not phased in over 3 years.

Better yet, he would have been well served to adopt Toyota’s performance target of 10% improvements in salaried productivity every year. If he adopted these principals, Mr. Ford, Jr. might then have been in a position to encourage unions to voluntarily modify contracts, base wage rates, pensions, and retiree medical care.

Leadership is learned. Taking command is learned. Mr. Ford held the CEO position for five years. He did not learn.

His lack of leadership and lack of prioritized focus, as demonstrated by his poor relationship with his managers, turned into poor performance at Ford. Only increasing Ford’s low quality ratings, unimpressive new models, lack of worldwide integration in sourcing – product development, and the negative financial performance.

Alan Mulally, Ford’s new CEO, would be well served if he followed the practice of Neville Isdell when he was first named CEO of Coca-Cola. He was asked what are his plans for the company. Mr. Isdell’s memorable response: “I plan to spend the first 120 days visiting employees and managers around Coke finding out what the state of the business really is.”

Certainly the correct approach.

It is just that simple to get a company focused. Establish a rough-cut strategy, lead and motivate the team.

 

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