INTRO :

Heres an all-too-typical scenario: An organization achieves a comfortable lead on the

competition. Its media coverage is highly favorable, and shareholders are very satisfied.
Believing that everything is and will continue to be great, leaders start reading their own press
clippings. Complacency sets in, which undermines the continuous improvement necessary for
growth. The inevitable result is mediocrity. In the worse cases, the company completely loses
sight of its vision. The most talented people leave first. When panic sets in on how to fix things
(slashing costs, compromising quality), brokenness soon abounds.

Turning around an organization means more than improving the numbers. Declining sales,
slumping profit margins, negative cash flow, and rising debt levels, by themselves, are not the
problem. Rather, they are symptoms of a company that has gotten off track. The only way to
restore what is now broken to become the best is with values-based leadership.

ALAN MULALLY

Alan Mulally arrived at Ford Motor Co. from Boeing in 2006 as the company faced a $17 billion
loss and an apparent culture that had a crippling fear of admitting to problems that did not have
immediate fixes.

When Mulally took over as Fords CEO in September 2006, the company was clearly broken: Its
stock price had fallen precipitously (the low was $1.01 a share in 2008), its debt was at junk
status, and 2006 would go down as the worst year in its history with a $12.7 billion loss. It was
widely expected that Ford would eventually file for bankruptcy. However, by the time Mulally
retired on July 1, 2014, Ford had achieved a turnaround, becoming a history-making
revitalization.

He also revived employee morale, turned a backstabbing culture into a collaborative one and
replaced secrecy with openness. Oh, and the stock? It generated annualized returns of 10.4
percent during his eight-and-a-half year tenure.

Mark Fields, Mulally's successor at CEO, said that at Ford, you never talked about problems,
because it was seen as a sign of weakness.

Taking the proverbial fear-of-failure bull by the horns, Mulally implemented a color-coding
system for business plan charts that executive leaders would report on in weekly meetings.

If developments were going well, they'd be highlighted on the charts in green, while new issues
would be yellow and problems with no immediately known solution would be red.

"This was very hard for the Ford people, because they just didn't do red."
In the initial meetings after the color-coding system was implemented, all of the charts were
green. Mulally responded by saying that sure there must be some issues, seeing as the automaker
faced a $17 billion loss.

Alan Mulally was always going to be a hard act to follow.

HOW DID HE DO IT?

The means of achieving this transformation are also simple sounding: collaboration;

communication; content; critical thinking; creative innovation; and

confidence. These 6Cs may seem obvious ingredients of success, but without a business leader
who practices them and facilitates and supports them in others, they are surprisingly difficult to employ.

Returning to founding values: Collaboration

As Mulally examined Fords history, he saw that the company Henry Ford founded had changed
the world and created prosperity for generations.

And leading by example, Mulally lived collaborativelyhe ate with employees in the cafeteria and
regularly conversed with secretaries and assembly line workers.

De-bureaucratizing and creating One Ford through

communication
Mulally made difficult decisions. He sold off glitzy and high-profile makes of cars, including
Land Rover, Jaguar, Aston Martin, and Volvo. He brought back the Taurus and focused on
One Ford.

He also restructured the fragmented organization, integrating the regions and functions making
each business unit fully accountable, while ensuring that each key functionfrom purchasing to
product developmentwas managed globally. This structure facilitated critical and integrated
thinking. Mulally wanted to create One Ford to have one team communicating and working
together while serving each market in a unique fashion.

Every Thursday, Mulally held his business plan review, or BPR. Attendance was mandatory
for all senior executives. Each was expected to communicate succinct status reports with a
distilled set of tables and charts updating each other on progress toward the companys goals.

In his first BPR, Mulally stopped the meeting halfway through. Were going to lose billions of dollars this
year, he said, eyeing each executive in turn. Why is every line green? Isnt there anything thats not
going well here? The executives later admitted they hadnt believed Mulally when hed promised that
honesty would not be penalized. Thats why all their lines were green.
Mark Fields, president of Ford Americas at that time, stared at the line for the new Ford Edge, as
he prepared his slides for the second BPR meeting. Production had already begun on the car, but
a grinding noise coming from the suspension had been reported.

Fields knew that delaying the launch might bring down the as-yet-unfathomed wrath of their new
CEO. It was the end of the year, when Ford executives traditionally pulled out all the stops and
cut whatever corners necessary to hit their sales targets. But, that was the old Ford.

At the second BPR, Fieldss slide showed red. There was dead silence. Dead man walking,
thought one of his peers. I wonder wholl get the Americas, another mused. Suddenly,
someone started clapping. It was Mulally. Mark, thats great visibility, he said, beaming. Who
can help Mark with this?

Thus was born new collaboration at Ford, born of honest communication.

When that meeting ended with Fields still in charge of the Americas, most of his peers had
reached the same conclusion: They needed to communicate honestly. A week later, everyones
slides were splattered with more red than a crime scene. Mulally thought, Now I know why
were losing so much money! But, they trust me. They trust the process. We finally have it all
out in the open. Now we can start fixing it.

From this point, confidence bloomed, communication flowed, collaboration grew, and critical
thinking was unleashed.

Rewriting the model for doing business

Mulally understands that people truly want to come to work at a company they can believe in.
Hes given Fords employees more reasons to feel good about themselves and proud of their
company. He defined a straightforward mission: Build higher quality, safer, more fuel-efficient
carsthat employees can rally around. The more each of us knows what were really
contributing to, the more motivated and excited and inspired we are, he says.

When Mulally took over as CEO of Ford in 2006, the company was in tough shape, losing a whopping
25% of its market share since 1990. Holding a huge portfolio of brands, such as Land Rover, Jaguar,
Aston Martin and Volvo, the company was not faring well, where each brand needed major capital
infusions to compete. Fords cycle time for the developing new cars lagged Japanese automakers by
months, and adding to Fords worries were the high labor costs within his companys unionized
workforce, making operating margins uncompetitive.

One Ford innovation plan depended not only on visionary thinking and new products, but also
on the ability of a company to propel new thinking from one team to another, one function to another
and one partner to another. The innovation platform consisted of 4 main points, including bringing all
employees together as a global team, leveraging the companys unique automotive assets and
knowledge, building valuable cars and trucks, and arranging the necessary financial support to pay for it
all.

Servant leadership is a blend and balance between leader and servant. You dont lose leadership
qualities when becoming a servant leader.

A servant leader is one who:

1. Values diverse opinions.

A servant leader values everyones contributions and regularly seeks out opinions. If you must
parrot back the leaders opinion, you are not in a servant-led organization.

3. Develops other leaders.

The replication factor is so important. It means teaching others to lead, providing opportunities
for growth and demonstrating by example. That means the leader is not always leading, but
instead giving up power and deputizing others to lead.

7. Thinks you, not me.

Theres a selfless quality about a servant leader. Someone who is thinking only, How does this
benefit me? is disqualified.

Mr. Mulally did away with Ford's employee ranking system in favor of rallying employees
around a cause. He collaborated with the United Auto Workers union, as well as suppliers and
dealers. By eliminating rank, Mr. Mulally eliminated competition, but helped establish an
environment of collaboration.

9. Acts with humility.

The leader doesnt wear a title as a way to show whos in charge, doesnt think hes better than
everyone else, and acts in a way to care for others.

Mr. Mulally chose to eat in the cafeteria rather than the executive dining room so he could talk to
employees at all levels of the company, Mr. Hoffman notes. He personally responded to employee
emails and frequently acted on their ideas and concerns.