Culture eats strategy for breakfast

Run, don't walk to your recycling bin and read the article on Ford's planned renewal in the Wall Street Journal from January 23, 2006.  This article is one you'll want to cut out and keep as a record of the apocalypse.  This is a story of a firm trying finally to do a lot of the things that have needed to be done over the years, but in a manner that I think won't get them very far.

First, a disclaimer.  I hate to see Ford go through what it is about to go through.  I have relatives who have worked for Ford, and was a loyal Ford (Explorer) owner.  But when I went back in August 2005 to replace my 1996 Ford Explorer, I found that my 1996 edition was better equipped and better built than the 2005 model.  So I looked elsewhere for my transportation.

The quote in the headline - "Culture eats strategy for breakfast" - comes from the war room of the new Ford makeover.  The people behind the strategy makeover have called the strategy rethink the "Way Forward".  They've done the classic things - gather people who aren't afraid to challenge the status quo, created cross functional working teams and thought hard about the reasons people aren't buying Fords.  The article sums it up in one paragraph.  Allow me to quote:

" Mr. Fields says he is now trying to rouse and create a sense of urgency in a corporate culture that has withstood repeated efforts at overhauls, ranging from former CEO Alex Troutman's sweeping Ford 2000 globalization effort, to former CEO Jacques Nasser's dot-com era campaign to remake Ford into a diversified consumer-products company with a strong internet component."

So, the last three CEOs (Troutman, Nasser, Ford) have taken a US car company and 1) bought Volvo and Jaguar (firms losing money and market share in other countries), 2) worked to diversify Ford as a more consumer-products company and 3) introduced a marketing message about Ford as an innovator (remember that oh so brief marketing message from just a few months ago?)  What the management teams seems to have forgotten is that it is a primarily US-focused CAR company and should have been working with its potential customers to find out what they want and need in transportation.  Additionally, the management teams of Ford and GM have known for years that they have too many people in too many plants with too little utilization.  It is only now, in the dire hours of desparation, that Ford will cut 30,000 people it has had on its payroll far too long.

This is NOT a failure of culture, it is a failure of management teams to decide what their focus should be.  Wall Street rewarded Troutman's plan and Nasser's plan back then, and will probably shrug off Ford's plan now.  Management at Ford has been asleep at the switch for 10 years and has not released a successful a successful new car (excepting maybe the Mustang, a trip back to the halcyon days) in almost 10 years. The entire senior management team should be drawn, quartered and forced to watch their last 10 powerpoint presentations over and over again in purgatory.

The description of the "Way Forward" is almost heart-rendering.  A tough, wily manager from outside the establishment (but still a long time Ford employee) has been brought in to shake things up.  He says things not said before at Ford, like "fear is a motivator".  He has assembled cross functional teams that have met deep in the bowels of Ford, consisting of people from all across the organization.  My favorite part of the story?  "Members were sworn to secrecy, told not tell their bosses what decisions they were reaching and expected to keep up with their normal jobs."

Where to begin?  Keep secrets from your boss and from others.  Number one, won't work.  People in the know can't help but tell others.  Number two, continues to feed a culture of information power.  Number three, in this situation, people will only tell you what they think you need to hear.  There is no rationale, no benefit to laying everything on the table when you can't know how it will be used.  Besides, most of the problems are well-known.  Next?  The teams were working 20 to 30 hours a week, but told to keep up with their regular jobs.  So, this reorganization is important, but not important enough to sacrifice a new report for a manager or some other humdrum work.  When you are changing the very fabric of the company, a few people should put in their 40 hours on top of the ground-breaking work they are doing???? Do people in lifeboats only work part-time?

Another thing I liked is that the Brand Manager showed the team images of Americana - Bruce Springsteen album covers and cotton fields.  Yet, when I left Ford as a customer, no one asked why.  No one has ever followed up to see why I left or what I want.  I was a perfect Ford prospect - a dedicated SUV driver seeking a new SUV, and already loyal to Ford! 

What's all this got to do with anything?  Ford has it's intentions in the right place, but is re-arranging the deck chairs.  Asking people who were present at the creation what's wrong, and looking at album covers without talking to customers, is endemic and solves nothing.  The culture starts at the top, so fix it at the top.

Fire a few senior mangers.  Totally restructure the compensation for senior executives.  Change the compensation and motivation of the folks who design and build cars.  Become a CAR company again and focus on what's important to your customers.  This ain't hard!

What the Ford managers can't see is that culture is not only eating strategy for breakfast, it has already started to consume this strategy before it's even baked.  Ford's culture has been consistent for over 50 years, since the "Whiz Kids" were dominant.  It's going to take a lot of cultural change, expectation change and refocusing to get to where the car buyers are.  The existing culture is evident in the way the Ford managers are approaching the problem, and right now they are so entwined in the culture that they can't see the culture is already wrapped around the solution like a python.

I wish Ford the best luck in coming out of its crisis.  But it has to demonstrate a willingness to eliminate the problems in its culture before it is going to be successful creating a new company with a new focus.

Comments

[Will]

"Do people in lifeboats only work part-time?"

Actually, yes: in the UK, lifeboat crews are local volunteers with full time jobs. Works for us.

[laurence haughton]

Two thirds of all corporate turn-a-rounds fail. Why? Organizational resistance to change is one of the top three reasons.

Fear can help overcome resistance but the unintended consequences of fear are many and often debilitating.

Bottom line: Ford needs a sophisticated 21st century battle plan to overcome organizational resistance. Here's my first contribution. http://www.theinnovationinsider.com/2006/01/outmaneuver_the_cave_people.php

[james peckham]

so what you're saying is, "Ford sucks and they won't ever change"

I will agree with that. Such a ragtag bunch of garbage that they've put out over the years. The f350 is the only product i've ever liked of theirs. My step dad has alwas had a diesel ford pickup and we've never had much trouble with them. Good solid trucks.

Despite that, they have reall fallen behind and made huge mistakes. The quote "Culture eats strategy for breakfast" is so true though. We have a really hard time in the banking industry with the 'ol boys club. That sort of buddy-buddy handshaking means that ROI or value means nothing... it comes down to pet projects and best friends.

In the end, make sure you're working on the right person's project and you get into the club.

[Miriam]

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Miriam

http://www.craigslistposter.info

[Kent Stephan Jensen]

Just discovered this post (3.5 years later!). To my knowledge Ford is still having a really, really hard time.... Go figure.

Anyway, I just reblogged this post. It's quality stuff. Resurfaced.

Kind regards,
Kent

http://workworkwork.tumblr.com

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