Category Archives: Ownership

How Ford broke down silos and reinvented itself

Ford reported a loss of more than $14billion in 2008 at the height of the financial crisis. Like many businesses at the time it was caught off guard by the speed and severity of the collapse. However the US car industry had been under pressure from overseas competition for many years leading up to that point.

Their strategy of focusing on big SUVs and Trucks was unwound quickly by a consumer stung by high gas prices and the economic collapse. Fuel economy had suddenly risen up the list of consumer preferences. Ford responded quickly by placing bets on smaller cars like the new Ford Focus and Ford Fiesta, the Focus recently becoming the number one selling car in the world.

The key to the turnaround

A major part of the Ford turnaround was CEO, Allan Mulally’s strategy known as “One Ford” launched in 2006 when he took the reigns. By many accounts, toxic divisions in the executive ranks were ripping Ford apart. Like so many political partisans, they cared little for the success of the company — only for winning themselves and beating their internal opponents. The silos that developed competed in a way that was destroying employee engagement and dragging the company into the abyss.

Mulally even insisted that all workers be issued laminated cards with the turnaround motto: “One Ford, One Team, One Plan, One Goal.” He recognized the need for Ford to focus on a common constituent, the customer, and stop the internal naval gazing and drive towards this common goal.

Customer centric companies rally around a single goal, creating maximum value for their customers. This focus eliminates silos and requires high levels of cross functional collaboration, transparency and accountability.

Last year the company earned $8.8 billion, the outcome of the strong leadership of Mulally and his ability to transform Ford’s culture to once again focus on creating the best value cars in the world.

Below is a video on how we see customer centric transformations, it is “the story of one”

What GM Couldn’t Learn From Toyota and Why

GM has been losing market share for more than 50 years. It has known about its reliability and quality problems for many years and has not been able to do anything about them.

The source of this story is “This Amercian Life”, here is a quick summary:

“A car plant in Fremont California that might have saved the U.S. car industry. In 1984, General Motors and Toyota opened NUMMI as a joint venture. Toyota showed GM the secrets of its production system: how it made cars of much higher quality and much lower cost than GM achieved. Frank Langfitt explains why GM didn’t learn the lessons – until it was too late.”

There were 16 high potential managers that were sent to NUMMI to learn the lessons and take them to the other GM plants around the country. What they found in the other plants was a corrosive culture so embedded and change resistant that most of them decided to leave GM, the challenge was just too great.

Some of the culture related issues they faced included:

Change resistant – the workers liked things they way they were, they were well paid and did not necessary have to work hard for their compensation, why change?

Seniority – the managers like things the way they were, compensation was linked to a hierarchy and many workers had waited years to be moved into management. When they became managers they did not want to accept any change that may reduce their seniority. More people reporting to them meant more power, Toyota’s team based approach would undermine these hierarchical structures.

Team Work meant telling on each other – there was a perception that team work meant calling out under performers and this was seen as unfair and negative.

GM was very departmentalized (silos) – there was a lack of ownership and connection between individual department success and overall success. When plants tried to implement “Toyota” methods they were not supported by the broader GM organization. GM simply did not understand the deeper system Toyota had developed around the factory floor.

Combative nature of relationships with suppliers. GM was used to aggressively competing with suppliers to get the best terms not working on collaborative solutions where both parties maximized their benefits from the relationship.

GM’s Market share went from 45.5% to 22% over the past 30 years – it was a significant but slow decline that did not generate real urgency. Complacency had set in.

GM’s decline is an incredible example of a corporate culture so internally focused that decline was an inevitable and it seems almost unstoppable.

Was this inevitable? What could have been done to turn the situation around?

The short answer is strong leadership that connected everyone’s role with customers and clearly articulated the individual benefits of being customer focused and market-driven.

Why ownership is key to customer experience

I have had a very interesting start to the new year with great progress on a number of fronts mixed in with a reminder of why the work we do is so important…….

Last week my Sony Laptop crashed for the 2nd time within 3 months, as usual it could not be more poorly timed as we ramp up for the new year….

My customer experience has been nothing less than appalling, I have been trying for a week to get someone to take ownership of my problem. I have called 4 different numbers, used chat and tried to complete an online support form but have failed to get anyone to care enough to take ownership of my problem….. everyone keeps sending me somewhere else.

For companies to really prosper and grow they have to be market-driven and being market-driven from a personal point of view is taking ownership of issues that impact customer value and experience. It is so fundamental that any company that cannot meet this basic hurdle has a long way to go on their journey to being truly customer centric.

Have you seen Sony’s results lately? Unfortunately I am not surprised by the experience. See below their share price over the last 5 years, the chart below compares them with a truly market-drive company, Apple……

Sony Versus Apple