A PIV­OTAL RE­DESIGN

Ford’s new CEO, Jim Hack­ett, is pro­pel­ling the 115-year-old com­pany into the fu­ture while re­spect­ing its cel­e­brated past.

Fast Company - - Contents -

Ford CEO Jim Hack­ett is steer­ing a legacy com­pany to­ward a tech­driven fu­ture.

More than a cen­tury ago, Ford Motor Co. made the au­to­mo­bile a mass-mar­ket con­sumer prod­uct ac­ces­si­ble to all. Last May, Jim Hack­ett took over as the com­pany’s CEO and faced a chal­lenge as big as any­thing Henry Ford ever en­coun­tered: to lead the com­pany into a fu­ture de­fined by au­ton­o­mous ve­hi­cles, clean fuel al­ter­na­tives, and the con­cept of mo­bil­ity as a tech­driven mo­bile ser­vice. Hack­ett talks to Fast Com­pany’s Robert Safian about the need for agility and how it’s shap­ing his plans to re­cast Ford’s busi­ness model and cul­ture.

You were pre­vi­ously the CEO of an­other com­pany, Steel­case, which went through some tran­si­tions and cul­ture changes. This is a dif­fer­ent kind of spotlight.

I had this in­terim as­sign­ment as the Univer­sity of Michi­gan ath­letic director where I hired [for­mer star quar­ter­back] Jim Har­baugh as head foot­ball coach, so that spotlight was big.

You don’t mind the spotlight?

It’s not painful, [but] I don’t seek it. It feeds some of the wrong things about the way peo­ple think of busi­ness. The cult of per­son­al­ity as a CEO, there are some peo­ple who can pull that off. Very few. I would rather be in the back­ground and be known as a per­son who’s thought­ful, whom peo­ple love to work for, and then the team is in the spotlight. It is the way I was wired, with three older broth­ers. Roger En­rico, who helped lead Pepsi [from 1983 to 2003], said that lead­er­ship is hav­ing a point of view. The CEO can’t shrink from that. If you do, the com­pany suf­fers from con­fu­sion, lack of di­rec­tion. So in my first hun­dred days [as Ford CEO], we have de­vel­oped a point of view of the fu­ture of the com­pany: “smart ve­hi­cles in a smart world.”

“A smart world”—the en­vi­ron­ment out­side—you don’t have as much con­trol over that, do you?

The evo­lu­tion of the en­vi­ron­ment is not only needed but is go­ing to hap­pen. For in­stance, you waste more time to­day try­ing to find a park­ing place than be­ing stuck in traf­fic. Now, that’s just [about] try­ing to match the open park­ing place with where the car needs to go, which is go­ing to help fuel ef­fi­ciency, whether it’s elec­tric or gas. It’s a “smart ve­hi­cle, smart en­vi­ron­ment, smart world” kind of ex­am­ple.

Peo­ple have to be mo­bile. We al­ready know fac­tions are dis­crim­i­nated against be­cause they’re old and can’t get to a doc­tor, or they’re in a cer­tain part of the city and they don’t have enough money, or they can’t get to the bus stop and it’s cold. Mo­bil­ity has to be, as [Ford ex­ec­u­tive chair­man] Bill Ford says, a fun­da­men­tal hu­man right. It’s some­thing that we have to stand for.

There’s a myth in the press that peo­ple are go­ing to give up their ve­hi­cles. It’s an ob­ject that sits 90% of the time and you bor­row money to pay for it. What’s the psy­chol­ogy of that? We do it be­cause [cars] give a sense of con­trol, in­de­pen­dence, and free­dom. In the fu­ture, that will mat­ter too.

As we build this smart world, we think we can have you vac­il­late be­tween dif­fer­ent kinds of mo­bile sys­tems de­pend­ing on what you want. You can have an own­er­ship kind of feel­ing, and you can have a Char­iot, which is the [rideshar­ing] brand we’ve started in north­ern Cal­i­for­nia. It’s 70% oc­cu­pied by women ev­ery day. Why? They feel safe opt­ing into this trans­port sys­tem. There’s 6 to 10 riders in it. You hail it with your phone, and it plots its path based on where the crowd wants to go. That’s mo­bil­ity you won’t buy through a car dealer. But we will need car deal­ers in the fu­ture for au­ton­o­mous ve­hi­cles, too.

What’s Ford’s com­pet­i­tive ad­van­tage in this bat­tle for the fu­ture of mo­bil­ity?

It’s this blue oval. When I joined the board, I got let­ters from my friends in busi­ness and the open­ing sen­tence in all of them was, “Jim, in 2008, when Ford didn’t take the money, I bought a Ford.” The sen­ti­ment was, you know, one for the good guys here. I’m not di­min­ish­ing the other com­pa­nies [that par­tic­i­pated in the gov­ern­ment bailout of the auto in­dus­try]. It was good for the world that those com­pa­nies sur­vived. But this team of peo­ple that ran the com­pany kept it alive.

There are very few auto com­pa­nies where there’s a fam­ily pres­ence. You can’t be­lieve the ad­van­tage. It’s a pixie dust in the val­ues of the

com­pany, be­cause fam­ily own­ers have a lon­garc view of who they want to be. Bill Ford, whose great-grand­fa­ther started the com­pany, told the world that cars can’t con­tinue to op­er­ate the way they have been, be­cause we’ll kill the world if China just cuts and pastes what we do. I am proud of work­ing with a group of peo­ple who stand for those kinds of things. We didn’t take the [bailout] money, we care about the en­vi­ron­ment, we think mo­bil­ity is a ba­sic hu­man right.

What about Tesla? Is its model the one that au­tomak­ers as­pire to, even if they don’t nec­es­sar­ily as­pire to be that brand?

Who is that? [Laughs] If you’ve run a big com­pany, en­ter­prise com­put­ing is the un­der­pin­ning of how some­thing gets built. If you’re Tesla and you’re start­ing the com­pany, you go and seek some­body who has a made-for-en­ter­prise sys­tem: low cost, sim­ple, and you’re go­ing to make one prod­uct. So there is a pure ge­nius run­ning the com­pany, but it isn’t the ge­nius that drove that; it’s the eco­nomics. It’s also the waste at Ford that caused it to not evolve in that re­gard. That’s some­thing I want to fix: You should have no ad­van­tage or­der­ing your Tesla ver­sus or­der­ing your Ford. Ford’s not stupid. It’s not that they don’t get it. It’s the weight of that [older] en­ter­prise sys­tem. That’s the area where dis­rup­tion sneaks in, and I call it a thief in the night. It steals your liveli­hood.

What Tesla proved to us is that the next gen of propul­sion, elec­tri­fi­ca­tion—cus­tomers love it. But there is not one com­pany in the world, we think, that makes pure profit on elec­tri­fi­ca­tion. Tesla doesn’t. The in­vestors are happy, though, be­cause they see 500,000 or­ders for a new ve­hi­cle. That’s a con­fir­ma­tion of con­sump­tion.

We’re the num­ber-two com­pany in the in­dus­try in non-in­ter­nal com­bus­tion en­gines. We use hy­brid and elec­tri­fi­ca­tion. In Oc­to­ber, we went to Wall Street and said, “Look, propul­sion is a frame, the way a de­signer would think in the fu­ture. It doesn’t mean that elec­tri­fi­ca­tion’s won the war for the next thou­sand years, right? Hy­dro­gen’s there, there are all kinds of things.” Ford is com­mit­ted to propul­sion plat­forms that are beyond gas, that have zero emis­sions, that are kind to the planet. But our cus­tomers have to come with us. Right now, elec­tri­fi­ca­tion rep­re­sents 5% of the to­tal sales of ve­hi­cles. If you wanted to put a car in your garage and charge it, your elec­tri­cian may have to come in and in­stall some kind of al­ter­na­tive ca­pac­ity. These are things that the dis­rup­tion didn’t ad­dress well. You can go to a gas sta­tion on ev­ery cor­ner, the

price is lower than in his­tory, and [Ford’s] F-150 now gets 23 miles per gal­lon.

How do you re­spond to the cri­tique that cli­mate change and the en­vi­ron­ment are not as im­por­tant to car com­pa­nies be­cause they’re sell­ing so many trucks and SUVS as op­posed to elec­tric ve­hi­cles?

Well, you can have it all. That’s the new mes­sage. The way Ford got the F-150 from 8 miles per gal­lon to 23 is be­cause three years ago the com­pany made the sin­gle-largest in­vest­ment ever in a trans­for­ma­tion of an auto fac­tory, chang­ing the un­der­pin­nings [of the ve­hi­cle] from steel to alu­minum. We had a CEO at the time who was a bril­liant aerospace en­gi­neer, Al Mulally, so he knew how air­planes were built. It’s a big chal­lenge to put the body pan­els and that alu­minum to­gether. [You] don’t just put a screw in them and they hold.

The Ford ad­van­tage is that we know what peo­ple love about their cars. Tesla is get­ting some love. I don’t want to dis­credit them. But these plat­forms that they build on use what’s called a skate­board—that’s where all the bat­tery struc­ture is—and that’s lim­ited what could be built on top of it cost-ef­fec­tively. We’re work­ing on dif­fer­ent ways to pack bat­ter­ies and store en­ergy so you can have the ve­hi­cle that you love. Mus­tang, for ex­am­ple, is the num­ber-one sports car in Europe. Can we marry the propul­sion sys­tems of the fu­ture with the pas­sion peo­ple have for their trucks and cars? Of course.

What will be the big­gest ob­sta­cle to change at Ford five years from now?

Reg­u­la­tions. I’m re­ally proud that gov­ern­ments all over the world are mak­ing way for au­ton­omy. They’re not hold­ing back the evo­lu­tion of it. But reg­u­la­tions have got to stay apace. Reg­u­la­tions that used to pro­tect the way peo­ple were elected fairly haven’t caught up with the new tech­nolo­gies. That’s the same prob­lem we’re go­ing to have in ve­hi­cles.

As you lead Ford for­ward into this murky fu­ture, how do you stay pos­i­tive?

Oh, my good­ness. Well, you start with hav­ing a great fa­ther. We didn’t need an alarm clock. Ev­ery day, he woke us up. I don’t mean, “It’s time to get up!” I mean, his singing and the noise and the op­ti­mism, it just flowed through our home. I come to work ev­ery day with this sense that there’s some­thing I’m go­ing to learn. I’m op­ti­mistic about the way the world’s evolv­ing, and Ford’s role in that.

Hack­ett rein­vented the fur­ni­ture maker Steel­case for the mod­ern age and is now try­ing to do the same with Ford.

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