Creating Opportunity Out of Turmoil
Fortune Magazine recently anointed its “Businessperson of the Year.” The winner of this impressive accolade was Reed Hastings, the founder and CEO of Netflix. While I can’t argue at all with the selection of Mr. Hastings (he continues to confound the naysayers who love to predict Netflix’s imminent demise), what really caught my eye was the criterion the Fortune editors used in choosing their outstanding businessperson:
That is as succinct a way as I have seen to describe what it is really going to take for corporations and their leaders to succeed and grow in today’s increasingly complex and challenging business environment. As Fortune correctly stated, out of times of change – and yes, turmoil – emerge great opportunities. This is especially true for those forward-thinking organizations and business people who are open to the opportunities, and prepared to do what it takes to capitalize on them.
The first runner-up to Mr. Hasting’s Businessperson of the Year was Alan Mulally, the CEO of Ford Motor Company. (Interestingly, Alan Mulally was the #1 choice of Fortune’s readers.) Mr. Mulally’s turnaround story at Ford is a perfect candidate for a future Harvard Business School Case Study. Here is a seasoned executive who built his success and reputation at Boeing, managing the development and launch of the critical 777 model. However, he had zero auto industry experience.
When Ford scion and former CEO Bill Ford, Jr. announced that Mulally was his choice to succeed him as CEO, the long knives came out in Detroit. Many industry observers did not think Mulally could succeed in the unusually clubby world of auto manufacturing. The further rap on Mulally was that he was not even much of a “car guy.” Sure he liked cars, but could he strip down a V8 engine and put it back together again?
A Massive Jolt of Change
Of course, an industry outsider who could take a completely fresh and transformative view of Ford’s problems – and opportunities – was probably exactly what the famous American car company desperately required. With his name on the door (and his family’s billions literally hanging in the balance), Bill Ford knew that brand Ford needed a massive jolt of fundamental change if it had a prayer of getting back on the road to market relevance, growth, and ultimately profitability.
Top to bottom change is exactly what Alan Mulally brought to Ford. By listening, following his finely honed instincts, and advancing courageous strategies (like eliminating under-performing brands), Alan Mulally drove significant new opportunities for a hundred-year-old industrial brand that was about as mired in business turmoil (and decline) as a company could get.
Delivering the Goods…and the Numbers
The proof of Mulally’s breakout success lies squarely in the numbers. Against a backdrop of a still shaky economic recovery (e.g., “turmoil”) Ford’s sales have been up virtually every month during the past couple of years. And, the company is regularly beating Toyota and even Honda in terms of brand preference and perceptions of quality. Finally, the true financial test: This past October Ford posted an astounding 68% increase in quarterly net income, the company’s sixth straight quarterly profit.
Don’t forget, it was just a few short years ago that Ford, and the other major US car manufacturers, were pretty much left for dead. They could not compete with the Japanese and European manufacturers (even Hyundai was eating their lunch). When the recession hit full force, Ford was the only American car manufacturer that did not have to rely on US Government intervention to survive.
Reflecting the company’s Phoenix-like business resurgence, it was very fitting that Ford (including the company’s world-class CMO Jim Farley) was named “Marketer of the Year” by Advertising Age this past fall. A truly well deserved recognition.
Spurring New Opportunities
As we look toward a New Year and decade (including what we all hope will be a stronger economy), the example of how Alan Mulally was able to bring Ford roaring back is a great one for business executives to study and emulate as much as possible. Many companies are today facing their own steep challenges. These challenges are often the result of major external forces such as the Great Recession.
But, they also arise from internal factors. For example, many corporations have not adapted quickly or effectively enough to the seismic changes that are occurring in the way revenue is created in a world where the free flow of information and exploding social media usage has put the buyer in control of every stage of the marketing and selling process.
To create profitable new opportunities to spur growth and market leadership, half measures and incremental changes are not going to cut it in 2011 – and beyond. Ultimately, it’s much better to throw out the existing dysfunctional revenue strategy, than to try to tinker with it and hope for improvements.
Big challenges call for big ideas. Alan Mulally knew that instinctively and acted on it. Ford is a market leader again, one that is relevant, vibrant, and growing strongly. I don’t know about you, but I am pretty inspired by that story.
As I write this, breakout growth and reinvention opportunities are there for the taking. In the year ahead it will be very exciting to watch who and which corporations will have the foresight and initiative to seize those opportunities.