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Archive for the ‘Globalization’ Category

How Ford got its groove back

An article this week in CIO reviews how the IT transformation at Ford Motor Company helped drive, and support, the turnaround at that Company.  Before I comment and provide some personal experience from my participation, lets review some of the very impressive news from Ford:

  • Profit is back.  Ford reported its fifth consecutive profitable quarter, and $2.6B for the last period (2Q10)
  • US Marketshare has grown.  In fact, in every month of the last 2 years (except one)
  • US Brand impression is MUCH higher in the US.  For perception of quality and very importantly, innovation
  • US Vehicles now receive high ratings.  As measured by Consumer Reports, and by other consumer testing sources (and Ford’s internal research)
  • US Product Winners abound.  Taurus (especially SHO) is back in a big way and finally sheds the ‘500’ fiasco years.  Fusion continues to do very well. The F-150 is taking share and winning awards (as usual). The revamped Mustang is a hot hit, again.  The new Edge interior with Ford’s new driver UI is gorgeous. The small Fiesta has entered the market to warm reviews.  There really are few duds and perhaps the only complaint is that Lincoln is still not performing as well as one might like (but customer satisfaction, especially with dealer experience, is very high) and some vehicles like Flex are not the runaway hits one might have hoped for.
  • Europe leadership grows.  Ford is #1 or #2 selling brand in Europe (depends on period you select over the last 2 years) and its design leadership there has influenced the Company’s direction, leading to better perception, higher sales, and better US products.  KA, Transit, Focus, C-Max, Mondeo.  Numerous product hits demonstrate a strength and foundation for future success.

The article in CIO talks about IT’s actions relevant to this transformation, and quotes CIO nick Smither, who also gives due credit to the prior CIO Marv Adams.  I was at Ford from 2002 to 2008, worked for both CIO’s, and was fortunate to participate closely in much of the work done to help IT become more effective, and help drive the corporate revitalization.  That effort, which started before Alan Mullaly arrived at Ford, really took hold once he took the reigns.  But the principles were the same.  Here are a few of the key ones.

  • Reduce Complexity.  This was a key IT strategy starting in 2002.  Initially it started in areas IT could control, like infrastructure, and then moved slowly upward, towards business applications and information.  Over time, this effort helped not only shed duplicate assets, but gain greater focus on the assets that remained, so they became better. This occurred in servers, storage, and networks, but also in key enterprise wide application services like collaboration, data warehousing, and application hosting.  This IT strategy bled into the business and took hold in product development, where Ford finally began to take seriously the needless complexity in platforms and components.  The benefits IT saw also occurred in vehicles.  Product engineering costs lowered, quality rose, capability increased.  IT customers saw better service levels.  Ford  customers saw better products.  Complexity kills and focus saves.  Of course, its not just reduction.  You have to design for greater commonality.
  • Be truly Global.  Ford has always acted like a multinational, not single global company.  IT did too.  But over the last few years this balkanization of organizations finally ended.  IT started working to leverage global talent, consolidate facilities, and share best practices.  The business side of Ford has done so too.  While Ford still seems to be very skillful at providing market unique offerings when required, the ‘back office’ of IT and business functions works together much more effectively as a global entity.  But note  importantly that the reduction in complexity and greater commonization of IT and vehicle products makes this all possible.  You can’t maximize global potential if you act like a million separate entities.  You have to redesign your systems and processes to enable globalization.
  • Leverage the Community.  Ford (IT and the business) has moved more towards a model of true teaming, and using methods of enabling that.  This not only builds camraderie, it builds best practices, and it increases momentum.  A single person’s great idea can be absorbed and magnified, instead of possibly resented or ignored.  Team sport is something IT  built with Computing Patterns, Centers of Excellence and Communities of Practice.  Alan Mullaly brought it into Ford executive suite (where it had, ahem, been lacking) with his common Business Plan Review (BPR) process that encouraged open, efficient dialogue of issues, where help was needed, and a fresh attitude of working together.  The lesson here is you have to design enablers and solutions to help leverage the community, not just yell a people to work together more (like many companies often do).
  • Pursue Product Leadership.  Both IT and the Ford business rededicated themselves to building outstanding products (and in IT’s case, services).  In IT Ford led the industry in moving towards utility computing, introduced better methods of developing applications ‘like a product’, and less like one-off order taking, and helped introduce new innovations like Sync.  The business re-energized itself too.  Under Derrick Kuzak, Global VP of Engineering, new methods, along with more ambitious objectives, were employed to better define the key attributes of excellence, and aggressively design for them.

The points above could sound like motherhood and apple pie, but Ford (IT and the business) made them real by designing for them.  It was the perfect example of excellence by design.  Many IT and business leaders can talk the talk, but few have walked the walk as we did at Ford.  It was truly a transformation in leadership, strategy, tactics, and results that Americans should be proud of, I know I am blessed for having been a part of it.  I hope to share more insights soon in my forthcoming book, because the lessons learned in Ford’s successful transformation should be regularly taught in any business, and IT organization.

Designing a ‘Network’ business

Thomas Friedman is a NYTimes columnist and author of several books including The World is Flat, and Hot, Flat, and Crowded.  He has recently written about China for the NYTimes and in his most recent article describes the difference between ‘Command China’ (represented predominantly by the Communist Party and the State) and ‘Networked China’ (represented by the growing entrepreneurial businesses of China and it’s people.

Mr. Friedman is not making a political point but an evolutionary one and it is worth listening to.  He references a new research paper by John Hagel, entitled “Shift Index”. Interestingly, though the paper uses a lot of big consult speak, it very much hits the same themes I highlight as drivers for one core belief in Excellence by Design that “The world has shifted to be essentially uncontrollable and unpredictable…due to the convergence of many factors but the largest are Technology advancement, the rise of Consumerization, and Globalization and its elimination of barriers to entry.  As a result, the capability of change to occur has dramatically accelerated: innovation is quicker to arise, faster to market, and more easily adopted by wider audiences”.

Back to Mr. Friedman’s article.  He reiterates the implication of this (as Hagel points out) in saying “We are shifting from a world where the key source of strategic advantage was in protecting and extracting value from a given set of knowledge stocks — the sum total of what we know at any point in time, which is now depreciating at an accelerating pace — into a world in which the focus of value creation is effective participation in knowledge flows, which are constantly being renewed.

It’s worth rereading the above and then asking yourself (or your business) an essential question.  Are you and your business striving for ‘Command’ Excellence or ‘Network’ Excellence?  If you design at all, are you designing with the intention of becoming excellent in this more fluid, dynamic mode of business?  Are you managing the business to capitalize on knowledge you have…or the knowledge you need to have? It really can have a huge difference.  In the former, you believe you are more knowledgable, powerful, controlling than others, and seek to maintain/maximize dominance of these stock of information/capability.  In the latter, you are constantly seeking the new information, new connections, relationships, opportunities.  The former can lead to arrogance and resistance to change, the latter to a more inquisitive and faster moving sense.  Which is your business?

Think about this as you consider designing your products and services, and the systems and processes that support them, and also the competencies and information sharing means of your people and partners.  Sounds like a tall order but one that can be more systematically approached by using some the the principles of Excellence by Design.  In a future post I’ll spend more time elaborating on how to go about that.

In any case it is worth a discussion with your staff and peers about the ‘Shift’, moving from a ‘Command’ to a ‘Network’ mode, and the resulting implications on the business, its operations, and especially the people, partners, and customers that bring it to life.