Unconventional CEO pushes Ford ahead


Investors watch with caution

By Phoebe Wall Howard - Detroit Free Press



Ford Motor Company President and CEO Jim Hackett speaks in May at the Ford Motor Company World Headquarters in Dearborn, Mich. Ford said Thursday third quarter profits were $1.6 billion, a 63 percent increase from a year ago, but investors are still curious and sometimes confused about the futuristic language the company’s leader uses.

Ford Motor Company President and CEO Jim Hackett speaks in May at the Ford Motor Company World Headquarters in Dearborn, Mich. Ford said Thursday third quarter profits were $1.6 billion, a 63 percent increase from a year ago, but investors are still curious and sometimes confused about the futuristic language the company’s leader uses.


Elaine Cromie | Detroit Free Press/TNS

DETROIT — Ford CEO Jim Hackett, eight months into his role, brings an unconventional approach to the auto industry, which leaves colleagues inspired and observers sometimes a bit confused.

He has said publicly the company can do better, including after Wednesday’s earnings report: “Clearly, I and my team are not satisfied.”

Ford’s stock price is flat over the past 12 months, while competitors have shown strong growth.

Investors say privately they wish Ford officials talked with more clarity and confidence.

Within Ford, though, many see their new leader, a former Michigan Wolverine football player who was regarded as a visionary as CEO at Steelcase, as “pushing” and “coaching” the team.

“You need to know where you want to go. I’m not talking about around the corner,” said CFO Bob Shanks, who put himself through school working the Ford assembly line.

Internally, Ford refers to being guided by a “North Star.”

“Jim is certainly a very deep thinker, no question about that. He can think in a way that can be abstract,” Shanks said. “What we have to do a better job of, and I take this personally, is the need to connect the results of today with that North Star. What is the bridge that enables the investors, employees, stakeholders to understand the journey we’re going to be on? We are working on that.”

Auto industry competitors, Shanks said, “are further along in terms of refining that … narrative that helps investors understand the walk from today to the further future.”

At the start of the 2018 Detroit auto show, a French journalist noted the unusual phrases used by Ford executives in recent months and wondered if the approach was atypical or simply a language barrier.

The answer: The talk is more typical for Silicon Valley than the industrial heartland.

Bob Wiseman, senior associate dean at the Eli Broad College of Business at Michigan State University, is a Ford shareholder who wants the company to thrive. Hackett’s public remarks about forming a vision and the challenge of persuading others to come along are jarring, he said.

“To get others to follow your vision, you first need one, and it should be clear and inspiring,” Wiseman said. “The market is looking at leaders of the company and assessing. Does this guy know what he’s doing? If they say, ‘I’m not sure,’ well, they’ll price that in.”

When Hackett delivered the keynote address last month at the CES tech show in Las Vegas, he shared his stage with a Harvard ethicist who conducted a Socratic exercise with the audience. It isn’t what the crowd expected.

Hackett outlined how autonomous vehicles present the opportunity to reshape mobility and cities in a way that connected infrastructure better serves people’s needs.

“Ford’s vision for the smart city is an interesting premise, but at this point, it’s not too much more than that,” said Jessica Caldwell, senior analyst at Edmunds. “Bringing this smart city to reality will require significant municipal cooperation and investment, and it remains to be seen if local governments share Ford’s ambitions.

“It’s admirable that Ford is taking a philosophical approach and is looking at how connected vehicles can change society for the better, however, this future is a long way off,” she said. “In the meantime, Ford has an opportunity to better articulate how they’re going to improve the lives of car shoppers today.”

‘Needs to have a clear vision’

Tesla CEO Elon Musk gets away with a more provocative approach because he comes from tech, “a different industry,” Wiseman said. “People see Elon Musk dabbling in advanced and futuristic kinds of markets. He wants to go to the moon. Hackett has a legacy to take care of. He just, I mean, he needs to have a clear vision.”

Adam Jonas, Morgan Stanley auto analyst, has said Ford’s road map is “vague and unstructured” compared with that of General Motors.

Ford has moved a long way from the One Ford concept Alan Mulally used to lead the company out of the trough of 2008-09, when employees had business cards bearing the simple company message.

Michelle Krebs, executive analyst for Autotrader, said, “At some point, he has to create a vision that every employee understands and gets on board with. You do need to get everybody singing from the same song sheet and understanding where they’re going. I don’t know if Ford’s vision is fully formulated. GM is ahead on where it’s going and how it’s going to get there. Hopefully Hackett provides more clarity.”

As he takes Ford from a beloved maker of the bestselling F-150 pickup to a “mobility provider,” he wrote in a post for Medium, “The challenge is enormous.”

No one disagrees.

Hackett talks about “orchestrating the entire transportation network that is already woven into the fabric of our urban environments and civic life. But it is a task we must undertake because the old system is failing.”

The New York Times wrote in November 2017 the design-minded executive uses “fuzzy terms more common to urbanists than business people, and talking with him can feel like taking a college philosophy seminar after a few bong rips.”

No dumbing down

Employees at Ford have referred to Hackett as “gauzy in places” and “conceptual.” Some compare Hackett to physicist Stephen Hawking talking about black holes.

“He’s not going to dumb down because we’re not dumb. He’s not going to make it simple, because it’s not simple. People will look back in a few years and say, ‘I understand now,’” said a member of the executive team who didn’t feel comfortable publicly critiquing the CEO but authorized use of remarks.

Many on the Ford team note that investors haven’t rewarded achievements over the past seven months that include:

• Reorganizing the company at the top.

• Creating a “Team Edison” that guides electric and driverless initiatives and finding the money to pay for those initiatives

• Transforming an electric vehicle plan that “wasn’t where it needed to be.”

• Partnering with autonomous vehicle companies, increasing efficiency and cutting costs.

They say he is changing overall culture. He launched an internal series called Curious Minds, where speakers have included British management expert Margaret Heffernan, A&E network chief marketing officer Amanda Hill and screenwriter Josh Davis.

The 62-year-old who spent 30 years in the furniture business let go 12,000 employees during restructuring at Grand Rapids-based Steelcase and earned respect for his ability to transform business.

‘I thought he was crazy’

“When I first started covering Jim Hackett, I thought he was crazy,” said Rob Kirkbride, editor of Bellow Press, a magazine publisher that covers the international office furniture industry.

“He was talking about things like co-working, shared desks and people not going to work in offices anymore. And how people would collaborate. Everybody in the industry said, ‘Who is this guy? And why is he talking about these odd things?’ As time went on, the world changed. And Jim Hackett was right on about 95 percent of what he talked about.”

Kirkbride, a former newspaper and magazine reporter, ended up writing a mea culpa column after the CEO left his Steelcase post in Grand Rapids.

“He was talking about things like TED conferences before anybody knew what that meant,” Kirkbride recalled. “He’s thinking so far ahead of where other people are, that might be a source of confusion for people. It was confusing for me.”

Hackett studied the market and went out and did research and figured out what people needed instead of just making products people thought they needed.

“He really was a Steve Jobs-like character, pushing people ahead to places they didn’t know they needed to be,” Kirkbride said. “He’s got a grasp of the future that very few people I’ve ever met have. He’s got a great mind.”

While Hackett’s TED-talk style may be well received by the tech industry, auto industry observers say he can’t just hover in the clouds above the nuts-and-bolts of the core business.

In the wake of Ford’s year-end financial results, some of which were previewed in mid-January, investors may be turning up the heat on Hackett’s strategy to navigate the shoals of a declining U.S. auto market and the rapidly changing world of autonomous vehicles.

As the auto and technology worlds converge, no one knows how long it will take the mobility on-demand model to reach critical mass, let alone profitability.

Illusion of growth versus steel

Ford is expected to keep churning out robust earnings and invest in all this technology-in-progress, knowing the new frontier will lose considerable money in the near-term.

Yet in Silicon Valley, just the illusion of growth translates to value. When you make complex vehicles, and spend billions each year on robots, conveyors, employees, steel, aluminum and thousands of parts, only profits count.

Unlike Mulally, who helped negotiate the $24 billion private loan that proved to be Ford’s lifeline through the Great Recession, Hackett is charged with pushing toward a radically changed future, but maintaining the core business too.

Hackett portrays images of a future that’s not quite here, but may be closer than most people think.

“The clarity of what the future is, is undeniable to me,” Hackett said this month before an Automotive News World Congress of about 800 attendees.

But it’s not completely clear to consumers, transportation planners, even very talented Ford employees.

“I have to create followership in addition to figuring out where we’re going,” Hackett said. “I’m humbled by how difficult that is.”

Whether it’s fair or not, since leaving Steelcase, which he guided from 1994 through 2014, Hackett has developed a reputation as a troubleshooter who gets results quickly.

First he was interim athletic director at the University of Michigan, where he once played for Bo Schembechler. His most memorable accomplishment there was luring Jim Harbaugh to succeed Brady Hoke as head football coach.

Then Hackett led Ford’s Smart Mobility venture for about a year before his friend, Executive Chairman Bill Ford Jr., elevated him to CEO.

But preparing Ford Motor for the uncertainty ahead — autonomous cars, alternatives to personal ownership, delivery fleets — is a little more daunting than saving a major college sports program.

Balancing the present and future is especially difficult.

For example, last week as Hackett prepared for another of his futuristic talks at the Automotive News conference, CFO Shanks and Jim Farley, president of global markets, were delivering bad news about fourth-quarter earnings and a softer outlook for 2018.

The prescription: Slash marketing costs, reduce the number of model variations, perhaps get rid of slow-selling products, especially passenger cars.

America’s continuing pickup truck binge has paid for the R&D with self-driving, ride-sharing, as well as acquisitions related to them.

Dealing with big unknown market shifts isn’t new to Hackett. He led Steelcase designers and marketers to see how workplaces would transform. He tapped sociologists and anthropologists to explain how people work.

Seeing the future

His longtime friends include a variety of creative thinkers. One of the most notable is David Kelley, co-founder of IDEO, a global design company that once included Steelcase among its majority stakeholders. Kelley also started what became the Hasso Plattner Institute of Design at Stanford University.

Influentials in Silicon Valley and along the West Coast keep tabs on Hackett.

Jeff Weiner, CEO of LinkedIn, tweeted a Forbes.com article about Hackett’s January 2018 speech in Las Vegas headlined, “Ford CEO says car industry has restricted some freedoms.” Weiner wrote on the post, “Given number of CEOs he’s interviewed, when Adam Lashinsky says this was one of the most compelling CEO keynotes he’s seen in years, it’s worth paying attention to.”

If Silicon Valley is charmed, Wall Street is watching Hackett closely.

“This business needs to, and should be, performing at a higher level. We are not satisfied with our performance at all,” Shanks said. “Jim Hackett is the one that triggered the whole initiative to improve our fitness, making this business perform at a level that is far better than what it is now.”

He predicted billion dollar net benefits.

“We’re not just going to improve a bit,” Shanks said, “We’ll reshape this business.”

Ford Motor Company President and CEO Jim Hackett speaks in May at the Ford Motor Company World Headquarters in Dearborn, Mich. Ford said Thursday third quarter profits were $1.6 billion, a 63 percent increase from a year ago, but investors are still curious and sometimes confused about the futuristic language the company’s leader uses.
https://www.limaohio.com/wp-content/uploads/sites/54/2018/01/web1_BIZ_AUTO-FORD-HACKETT_DE.jpgFord Motor Company President and CEO Jim Hackett speaks in May at the Ford Motor Company World Headquarters in Dearborn, Mich. Ford said Thursday third quarter profits were $1.6 billion, a 63 percent increase from a year ago, but investors are still curious and sometimes confused about the futuristic language the company’s leader uses. Elaine Cromie | Detroit Free Press/TNS
Investors watch with caution

By Phoebe Wall Howard

Detroit Free Press

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