HOW DO YOU DRIVE PERFORMANCE IN YOUR ORGANISATION?
Every Thursday at 8am, in a room at company headquarters in Dearborn Michigan known as the Thunderbird room, the executives of the Ford corporation gather around a circular darkwood table fitted in the centre with three video screens. There’s seating for 18 executives. Eight clocks – one for each of the timezones in which Ford operates – are mounted on the wall.
It is at this weekly forum, known as the Business Plan Review, that CEO Alan Mulally reviews performance with his direct reports at Ford. ("I live for Thursday mornings at 8 am” he says). No Blackberrys are allowed; and nor are side conversations.
A Rainbow of Reports
Fords’ four profit centres report on their performance first, after which there are presentations from 12 functional areas including product development, human resources and government relations. Reports are colour-coded by their presenter: green for good; amber for caution; red for problems.
At the first few meetings after Mulally took over the reports were all green, but Mulally drew attention to the ‘few billion’ dollars Ford had lost the previous year. After this the process loosened up, and Americas boss Mark Fields admitted some technical difficulties with the Ford Edge. After a deathly silence in which all present must have held their collective breath waiting for the new CEO to chew him out, Mulally clapped and applauded Fields for the clear visibility he had given.
The following week, the reports were all rainbows.
Staying on Track
Mulally’s view is that every functional discipline has to be on his team, so on arriving at Ford in 2006 he expanded his executive from the six or seven direct reports that he inherited. This ensured that everyone was involved and on the same page. As the Chief Financial Officer Lewis Booth commented ‘If something is off track, we are much better at identifying it and resolving it.’
Mulally also focuses relentlessly on analysing facts, using these to make decisions (one of his favourite sayings is ‘Data will set you free’) and then winning over support with his persistence.
Building Performance into an Organisation
The management expert Peter Drucker observed that management is about performance and results, and setting goals to accomplish those results.
My observation is that to do this there has to be some mechanism, some vehicle, through which to drive performance. Performance has to be built into an organisation. Mulally’s Thursday morning Business Plan Review is one such mechanism.
Mulally has a plan that identifies specific goals, a process that moves it toward those goals, and a system (of which the Business Plan Review is a key element) to make sure it gets there.
It’s this intentional, evidence-based, and inclusive mechanism where candour and openness are valued – and blame is avoided – that animates these meetings and brings them to life. This combination of factors – a perfect storm of management – is what differentiates the Business Plan Review from being just another meeting with colour-coded reports.
Improving Performance Rather than Explaining it Away
Performance forums, performance reports, benchmarking and the like – all worthy things and valuable in their own right – too often lapse into groupthink, collective deflections from the truth, and concerted efforts at explaining away results rather than milking the latter for their insights, in order to improve them.
In Ford’s case, the performance culture that Mulally has instilled, in combination with some smart strategic moves, business acumen and operational discipline, has paid off. Ford has won out, big time. It was the only one of the big three automakers (the others being GM and Chrysler) to avoid bankruptcy or the 2008 taxpayer funded bailout. In 2012 it posted an $8 billion profit, against the backdrop of economic softness in Europe.
What are your organisation's goals?
What’s your plan for accomplishing them?
What mechanisms do you have in place to stay on track?
If you’d like to talk with me about your answers to these questions, call me on 0414 383 374.
What Mulally has accomplished at Ford provides grounds enough to at least pose the questions, if not craft clear answers to them and drive them through your organisation with clarity, rigour and persistence.
I look forward to hearing from you.
With best regards,
Director | Michael Carman Consulting
Reference: Alex Taylor III ‘Fixing up Ford’ Fortune 25 May 2009.
© Michael Carman 2013