When Jim Hackett took over the CEO position at Ford on July 1, 2014, Ford’s stock was in a dismal place, trading at $10.87. More than a 35% nose dive from $17 in less than three years during the tenure of Mark Fields.
A car guy through and through, Fields spent the majority of his career in automotive. Recruited by Ford in 1989, he moved up the ranks and finally took the top job. From the balance sheets, obviously, the traditional model for leadership was failing to work. In a pretty dire situation, Ford needed to change tactics to bring the American automaker back to glory.
A Change of Direction
In a bold and surprising move, Ford placed Hackett in the top job. A furniture maker, he led office equipment maker Steelcase for more than 20 years. As technology becomes the driving force for the transition to autonomous cars, you would think a software whiz a more natural choice. What could a man who built furniture know about steering an automotive company to success? Had Ford completely gone off the rails?
Cars move, designed to travel from one place to another in all weather and road conditions. Furniture, for most part, stays stationary in consistent climate conditions. These two different worlds don’t overlap at all, unless you count loading up your furniture in a car or moving van for relocation.
But, a closer examination of the future of mobility reveals Ford may have made a very shrewd decision in hiring Hackett. We now live in an age where user experience trumps all. When we interact with machines, we want it fast, easy, intuitive and comfortable. It’s the job of the UX (user experience) designer to figure out how to achieve that interaction – and the best of them make big bucks.
Implementing Design Thinking
While at Steelcase, Hackett changed how the company approached building bookcases, carts, cabinets, office chairs, couches and tables through the prism of Design Thinking. Design Thinking inverts the process of developing a product; instead of viewing it first from an engineer’s, marketer’s or legal department’s perspective, the product caters to the customer. Design Thinking steps into the customer’s shoes, studying her habits, learning her language and and attempting to meld seamlessly into her world. Ideally.
Now, Design Thinking isn’t new. It was first concepted in the late 1950’s and 1960’s as a way to solve problems creatively. In 1973, Robert McKim wrote the book Experiences in Visual Thinking that applied the idea to design engineering. It was this book that inspired Rolf Faste to teach “design thinking as a method for creative action” while at Stanford University. Further adapted by his colleague David M. Kelley for business purposes. Kelley went on to found the innovative design consultancy firm IDEO. We took a look at the smart jacket it created with Levi’s here.
Hackett visited IDEO in the early 1990’s when Steelcase was thinking of branching out into a new product. Blown away with its methods, Hackett got Steelcase to buy a majority stake in the company. Embracing Design Thinking, Hackett hired anthropologists, sociologists and tech people. Furniture became about how people functioned with it and not people accommodating the furniture’s design. We have Hackett to thank for team-oriented, open workspaces.
Teaching a New Language
In his article for the Atlantic, Jerry Useem discusses the time he spent with Hackett and how Design Thinking is changing the way Ford builds vehicles. At first the new design language flummoxed the different departments trying to communicate. Engineers, marketers and programmers kept clashing over reference terms. One of the first tests of the new thinking was re-designing the cockpit controls for optimal human interaction. The project nearly got stopped in its tracks because the term “feature set” meant something different to everyone.
As a last-ditch solution, team members were told to back off industry terminology and the actual cockpit design. They were instructed to think instead about what concerns they had as a driver. Through this approach of identifying human problems in their cars, they were able to speak a common language and figure out that people want easy access to their stuff. For example, you want to use your own music services, such as Spotify, and not be shoehorned into the car’s ecosystem. And, this led to another pithy insight: the smartphone isn’t an accessory to the car, but the car an accessory to the device. Armed with customer feedback, from the team becoming the customer, Ford was able to quickly prototype the “feature set” in a swift 12 weeks.
Today, modern cars are a combination of high-tech and automobile knowledge, each with its own expertise. You’ve got Google and Tesla on one end and carmakers such as Ford and Nissan on the other. The techs must learn how to master the machine and the automakers are playing catch-up with software. But, Hackett thinks there’s an even larger and more crucial element that will determine who will come out on top. In Useem’s article, Hackett says that the company who nails the interaction between man and machine will ultimately win.
The Results So Far
In May, Hackett will have been at Ford for two years. And, unfortunately, it’s money, not fantastic and innovative ideas, that determine success. As of today, Ford’s stock price stands at $9.55 per share. That’s a 13% decline from Mark Fields’s tenure, causing investors and analysts to still be skittish about his appointment by Executive Chairman Bill Ford, great grandson of Henry. Just 10 years ago Ford was looking down the barrel of bankruptcy. While Ford is nowhere near that abyss, it must show growth and position itself as a market leader in the new era of electric vehicles.
Hackett doesn’t deny 2018 was a disappointing year. Ford’s full year profits dropped more than 50% in 2018 compared to 2017. But let’s keep in mind he inherited a company already in decline. Turning a company around, especially such a large one with ingrained ideas, policies and approaches, takes time. And, Hackett has a reputation as a turnaround artist. He brought the ailing Steelcase back to life, making it into a leader in the industry. In addition, he resuscitated University of Michigan’s athletic program by hiring football coach Jim Harbaugh during his tenure as Interim Athletic Coach.
Without big risk, there can’t be great reward. Ford was in a position where it needed to revamp its whole way of thinking in order to survive in a new era. By putting Hackett in the top spot, Ford placed a big bet. From my perspective, it had to shake up business as usual, because business as usual clearly wasn’t working.
Can Hackett turn Ford around? That answer remains to be seen dependent upon many factors, including shareholders’ patience. Fields only got a few months shy of three years. Hackett is coming up on two. I, for one, am rooting for him to cast Ford as a leader in the future of mobility.