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Will Alan Mulally's Departure Shake Up Ford Motor Company?

Ford's top brass posed with the all-new 2015 F-150 in Detroit in January. CEO Alan Mulally, at left, is set to depart soon, according to reports. He'll be replaced by Chief Operating Officer Mark Fields, third from left. Photo credit: Ford Motor Co.

It looks like Ford (NYSE: F  ) is going to be getting a new CEO soon. 

Bloomberg reported on Monday (and several other news organizations subsequently confirmed) that Ford will soon announce the departure date of CEO Alan Mulally. Set to replace him: longtime Ford executive Mark Fields, currently the company's chief operating officer.

Ford stock barely budged on the news, mainly because it wasn't much of a surprise: Mulally is 68, Ford has been hinting that 2014 would likely be his last year as CEO, and Fields has been seen as his likely successor for over a year now. 

It's likely to be a low-drama transition, and I'm sure that's just what Ford's board of directors wants. But Mulally's departure will nonetheless be a huge moment for Ford.

A historic tenure as CEO of an iconic American company
Mulally's tenure at Ford will be discussed in business-school seminars for decades. A genial, charismatic, consensus-building leader with serious engineering cred, Mulally is widely credited with saving Ford from imminent ruin by simultaneously overhauling the company's cost structure, product line, and internal culture. 

That last one is especially important. I've watched Ford for years and I've talked to plenty of people inside the company (including Mulally himself). It's my view that Mulally deserves every bit of the credit he is routinely given for Ford's remarkable recovery -- which was rooted in a huge shift in Ford's culture.

Mulally often says that one of the keys to successful leadership is to make everyone in the organization feel both accountable and included, in a positive way. That's not just talk: Nearly everyone I've talked to from Ford's middle ranks has a happy story about how Mulally connected with them in some direct way, recognizing a contribution or encouraging a good effort. You can see the results in Ford's latest vehicles, or on its bottom line.

Mulally changed Ford's culture by modeling -- and expecting his colleagues to model -- a way of behaving that reflects the best aspects of teamwork. That approach was a stark contrast to the infighting, blame-shifting culture that had riddled Ford before he arrived. But that old culture had left the company close to ruin, and employees knew it: Most were ready to try something new, and the ones that weren't were encouraged to leave. 

(In fact, Mulally had his approach boiled down to a list of "expected behaviors" that are printed on little cards for Ford employees, alongside the key points of the "One Ford" plan that is Ford's global operating blueprint. You can see it here in PDF form.)

Mark Fields is a strong choice to follow Mulally
Mulally would be the first to say that he had plenty of help with the effort of turning Ford around. Fields, his apparent successor, was one of Mulally's biggest helpers. 

Before Mulally's arrival, Fields had gained a reputation as a sharp executive, but also a sharp-edged one, someone who had thrived amid the infighting that was standard at Ford back then.

But Fields bought into Mulally's approach early on. He was a chief architect of the "Way Forward" plan that served as the blueprint for Ford's North American turnaround. 

Ford Chief Operating Officer Mark Fields has increasingly been the public face of Ford in recent months. He presented the refreshed Ford Focus sedan at the New York International Auto Show last week. Photo credit: Ford Motor Co.

Fields had put together an early version of his plan after taking over Ford's North American operations in 2005, before Mulally's arrival. Fields had been a rising star at Ford for years: Before becoming president of Ford's North and South American regions, Fields had run Ford's European region, its global luxury-car business (which at the time, included the Jaguar, Land Rover, Volvo, and Aston Martin brands, along with Lincoln), and Japanese automaker Mazda, which Ford controlled for several years. 

I've met Fields on a couple of occasions. He's extremely bright, a very likable leader, and he's clearly committed to those "expected behaviors" just as Mulally has been. Time will tell, but he looks to be an excellent choice to succeed the iconic Mulally.

Ford's next CEO will have plenty of work to do
Unlike Mulally, who joined Ford at a moment of grave crisis, Fields will take over a healthy and profitable Ford that is on an upswing around the world.

But Fields will face challenges. Ford South America has been struggling with the ongoing economic turmoil in Venezuela, its Asian division is in the midst of Ford's most aggressive expansion in decades, and while Ford's turnaround plan for its money-losing Europe region appears to be on track, making sustainable profits in Europe on an ongoing basis won't be simple.

There are challenges here in North America, too. The all-new version of Ford's F-150 pickup, set to launch later this year, requires new production techniques to manufacture and assemble its aluminum body panels -- a big gamble with Ford's most profitable product.

I'm sure that Fields is also mindful of how quickly a company can go from being on an upswing to a serious crisis. Old rival General Motors (NYSE: GM  ) also looked to be on an upswing when Mary Barra took over as CEO back in January, but it has since become mired in a recall crisis that, at best, will be an expensive burden for GM for several quarters to come.

But Mulally will leave Fields with a deep executive team, and a healthy company that is on track for significant growth in coming years. As CEO transitions go, Ford's should be pretty smooth.

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Read/Post Comments (3) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 23, 2014, at 1:04 PM, SkepikI wrote:

    As a long time Chrysler guy converted to Ford, It is very concerning to me when a seminal leader, obviously transforming a moribund, shaky business into a winner, leaves. The undercurrent that it was Fields plan, Fields and team executed was a story I would not otherwise have known JR. I might have picked up elements of it in various parts, but this excellently written piece identified it front and center for me. It rings true based on other things Ive read, tho I am no ford insider. When Lee Iaccoca left Chrysler, IMHO it paved the way for a reprise of its 20th century collapse.... I have reasonable confidence, tho I intend to watch closely that Alan M was enough of a leader and craftsman to put in the groundwork necessary to avoid "The Chrysler syndrome"

    Thanks for your excellent writing JR. It helps me resist a hasty decision on F

  • Report this Comment On April 25, 2014, at 9:56 AM, TMFMarlowe wrote:

    @Skepikl: Thanks for the kind words. Mulally is a hard act to follow, but I think Fields is a very good choice. He's an extremely smart guy, he knows the far-flung corners of Ford inside and out, he has an excellent supporting cast, and he has clearly learned a whole lot from his experience as well as directly from Mulally and Bill Ford.

    John Rosevear

  • Report this Comment On April 25, 2014, at 9:58 AM, TMFMarlowe wrote:

    By the way, I've done a couple of on-camera interviews with Fields, one in January and one last week in New York. They're worth watching to get a sense of him.


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John Rosevear

John Rosevear is the Fool's Senior Auto Specialist. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

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