Monday, March 9, 2015
Good morning,
I came across an article about Alan Mulally, the former CEO of Ford Motor Co, and thought it deserved sharing. It is a great example of extraordinary leadership.
In 2006 Mulally took over a company that was $12.7 billion in the red and contemplating a federal bailout request. Only four years later, profits had jumped to $6.6 billion, the most in a decade. By the time Mulally left Ford in July 2014, the automaker’s first-quarter net income was $989 million, marking the 19th consecutive profitable quarter.
He asked his managers to file weekly color-coded status reports: green for good, yellow for trouble and red for failing.Given Ford’s state, you would think that Mulally saw all sorts of red in that conference room. But at his first meeting, he was inundated with green. Mulally looked at his team and asked how everything could be so good in a company that had just lost $12 billion. Surely there were a few problem areas that needed special attention. But the team refused to budge. No one wanted to report failure to the new CEO.
Still, Mulally stuck with the process. Finally, after a couple of weeks, one manager held up a bright red light indicating problems with a new vehicle launch. All of the managers at the table held their breath, waiting to see how Mulally would respond. He began to clap. Vigorously. Mulally knew he’d finally broken the culture of fear and blame that had permeated the company.
He turned to the executive and asked what the group could do to help more. The manager briefly explained his situation, and within minutes his colleagues had rallied around the problem to offer solutions and resources to get the launch back on track.
At the next meeting, the room was a rainbow of green, yellow and red, and Mulally realized the turn around had begun – not because the situation had changed, but because the attitudes had changed.
I love that story because it highlights an important truth in leadership. Most people walk around flashing green lights even when they are struggling. They keep lying to themselves and others, and they keep failing. That institutional dishonesty prevented Ford’s momentum. Mulally had the vision, honesty and commitment to get people on his team. The shift in attitude and new feeling of corporate safety is what got the company chugging again.