Global Crisis/ Innovation Management

A Rainbow of Honesty: How Alan Mulally Rescued Ford

 by Shlomo Maital



Alan Mulally  


After a 37-year career at Boeing, during which Alan Mulally helped design and build all the great Boeing aircraft – 707, 727, 737, 747, 757, 767, 777, 787 —  Mulally was asked to become President and CEO of Ford, in 2006.  In 2007, even before the onset of the global crisis, Ford was drowning in red ink, losing $17 b.!  Mulally’s leadership kept Ford out of bankruptcy, when GM and Chrysler were going bust, despite the fact that the global crisis came on top of Ford’s earlier problems —  and restored Ford’s profitability.  Here is a short excerpt from Peter Day’s (BBC Global Business) interview with Mulally, done at the Paris Auto Show.   Remember his phrase:  “Rainbow of Honesty’.

   ”   “The only way to change attitudes is to pull everybody together – engineering, manufacturing, product development,   We started meeting every Thursday, 7 a.m., everybody around the world, all netted in.  Details of the plan – then expectations; everyone would say where they are relative to the plan. Every Thursday.  Compelling vision. Stick to the plan.  Relentless implementation.  On the back of the card:   Foster   technological excellence,     Own working together, Role model Ford values,  Deliver results, [by coincidence, it spells FORD]…  everybody worldwide, color coded,   RED YELLOW and GREEN,   we say, you’re not red,  the issue you’re working on is red, so everybody can help….  Everyone on the same screen, color coded.”

   “Nobody would admit there were problems, even though we were losing billions.  We have all the data flowing.  All color coded, every issue, every launch, quality, productivity.  Up on the wall.   All netted around the world.  We lost $17 b. But — every chart is GREEN! I stopped the meeting, and I said to our team, is there anything that’s not going well?  We’re losing $17 b., is anything not going well?”  Eye contact, but– eyes to the floor!   Trust me. How’s it going?  Tell the truth. Reflect the reality. 

   “The next week, Mark Field, who runs the Americas, getting  ready for launch of an Edge model in Canada, up comes the launch, everything about it, everything is RED!  RED!  The room goes silent.  Everyone thinks, now we’re going to see what Alan the new leader will do. He said it was safe to tell the truth. Let’s see.

   “I started to clap!   Now all the eyes turn to me, that’s the sign, Marks’ gone!  He’s gone!

   “I said, Mark,  that was fantastic!  Fantastic.  Is there anything we can do to help you? Because we know you’re working hard.  Derek says, Mark I’ve seen that issue (actuator on tail gate),  Benny says, “I saw that months ago”,  manufacturing pipes up… etc.,      The team made suggestions!  That interchange took 12 seconds. And we moved on. That was absolute key to One Ford.

   “Next week it’s RED still. Everybody is helping. Next week it’s YELLOW. Next week it’s GREEN.  2,000 vehicles start shipping.  Next week:  The entire 320 charts look like a rainbow!  Everybody knew everything, everything for the first time. A RAINBOW OF HONESTY.   RED, YELLOW, GREEN, now we’re managing the business, because when everything was GREEN it was secret, and people were managing the secret, now they are managing the reality.”

  “You never want to let a crisis pass you by.  The real philosophy is, continuous improvement, every year, every quarter, is our commitment to improve the business, to improve the products, to improve our capability, quarter after quarter after quarter.”