Ford's financial results 'fell short of our potential,' says Farley, promising change

100 days in, Ford CEO Hackett must articulate vision

Ian Thibodeau
The Detroit News

It’s time to deliver for Ford Motor Co. CEO Jim Hackett.

The auto industry outsider hired to guide the company through an uncertain transition into mobility, electrification and self-driving cars is methodically pushing for a new mindset in Ford’s infamously insular culture. That’s exactly what Wall Street — and the automaker’s board of directors — want to see.

A strategic update set for late afternoon Tuesday in New York is raising expectations among investors and industry analysts that the Blue Oval’s new CEO will begin to deliver what one analyst called “profound cultural and structural change” to the 114-year-old automaker.

The stakes are huge. Ford’s share price remains stuck in neutral as investors favor rival General Motors Co. Meanwhile, the quickening pace of change, driven by Silicon Valley’s increasingly heavy investments in mobility and self-driving cars, is increasing pressure on traditional automakers — arguably none more than Ford — as investors seek clues to what moves Hackett will make and how bold they will turn out to be.

“What he’s going to say is Ford is prepared for a very uncertain future by looking at all of the different things that potentially could be a part that future direction,” said David Cole, chairman emeritus of the Ann Arbor-based Center for Automotive Research. “The only thing that Ford can do to be great in the future is (be) different from what they’re doing today. It has to be really evolving into a different company.”

That appears to be what Hackett, so far, is trying to do. Some of his decisions — moving U.S. production of the next-generation Focus to China and partnering with Mahindra in India to bolster Ford’s business there — look more like they’re making up for lost time.

The new CEO realigned executive ranks during his first few weeks into a more rational flowchart. He reduced the frequency of former CEO Alan Mulally’s renowned business plan review meetings held on Thursdays. He instituted a “shot clock” to quicken decision-making.

He also revised the company’s talking points on autonomous cars by taking a softer stance on how the company will bring those vehicles to market in 2021. They could be used for ride-hailing, or they could be used to transport goods.

The company this week announced a partnership to further develop autonomous vehicles with San Francisco-based Lyft. That might have been something for investors to be excited about a year ago, but it’s impossible to ignore that Ford is tailing rival companies like General Motors Co. in partnering with major technology companies.

“They’re late to the party here,” Michelle Krebs, analyst with Cox Automotive, said. “It strikes me that perhaps with Hackett in charge, they’re knocking down some of the barriers.

“I think they need to lay out a vision. One of their problems is it’s like a jigsaw puzzle. There’s a piece here, and a piece here, but you can’t see the full vision.”

The man brought in be a “change agent” by Executive Chairman Bill Ford and the company’s directors is intellectually challenging those around him — both through his actions and his persona. Hackett is a disciple of the Silicon Valley-based Ideo design process he used to change Steelcase Inc. from a staid office furniture manufacturer to an innovative supplier for the open-floorplan workspaces favored by tech companies. That design process, dubbed “design thinking,” creates products and business plans according to how customers will most easily and efficiently use them.

Hackett has been know to quote Apple Inc. founder Steve Jobs and legendary Michigan football coach Bo Schembechler in the same sentence. He repeatedly stresses the importance of outside perspectives, particularly those from Silicon Valley, to Ford’s future.

Shortly after taking over as CEO in late May, Hackett took the chairman and Ford’s top 12 executives to the Steelcase headquarters in Grand Rapids. The goal: to talk about Ford’s future, to consider different ways to lead the company in a future likely to be marked by speed and innovation.

In August, Hackett asked Microsoft Corp. CEO Satya Nadella to deliver the keynote speech at the automaker’s annual Global Leadership Meeting in Dearborn of the company’s top 300 executives worldwide. It had been postponed last January once Bill Ford and the outside directors concluded former CEO Mark Fields didn’t have a coherent strategy to share.

Under Hackett, the two-day conference on Aug. 9 and 10 shifted in tone and style. Gone were the rows of bland eight-person circular tables. In their places stood Steelcase couches and brightly colored chairs circling clustered coffee tables, signaling Hackett’s philosophical anchor to California’s high-tech industry.

Since taking over in May, Hackett has been to Silicon Valley no less than five times while taking his 100-day assessment of the company over the summer.

On one of those trips he attended a day-long symposium on mobility issues in a warehouse on San Francisco Bay. That’s where Hackett founded Greenfield Labs. The 40-person think tank, named after Henry Ford’s Greenfield Village, teams Ford engineers with Ideo designers to churn out new ideas that can be applied to autonomous cars, electric vehicles and new forms of transportation.

“We can’t stop the dialogue. There’s no gain by carving somebody out. The power of the network here is that our knowledge goes like this,” Hackett said at the symposium, spreading his hands wide. “I don’t want to own it. I just want to learn it. How can we together keep the knowledge expanding?”

It’s the outsider, open perspective championed by Hackett that has the investment community more optimistic about Ford than when Fields ran the company. All of it is reminiscent of the energy Mulally injected into Ford before he stepped down in 2014.

Hackett’s October briefing “could be an important event that could have a potentially significant impact on the market’s perceptions of the long term direction of the company,” Adam Jonas, analyst with Morgan Stanley, wrote in a note. “We see scope for shares to react very positively short term on a variety of strategic and commercial announcements likely in the weeks and months ahead.

“However, we believe cultural change required at the company is even greater than what Alan Mulally affected at Ford prior to and through the financial crisis.”

Twitter: @Ian_Thibodeau