Cultural Change Under Way, Ford CEO Says, With More to Come

Stay tuned, says Ford CEO Jim Hackett, who promises to reveal a detailed strategy this fall to transform the automaker into a fast-moving, cutting-edge company that will rival Silicon Valley startups in terms of product ingenuity and speed to market.

Speaking to stock analysts and media in addressing Ford’s second-quarter earnings, Hackett begs for some indulgence, given his tenure as CEO has been only 64 days, but he says changes made since he took over the helm from Mark Fields already are beginning to pay dividends.

He points to a streamlined management structure that has given Hackett only eight direct reports, down from 19 under Fields, and has cut down on staff meetings, freeing up 30 minutes per day for the automaker’s top executives. That has sped up decision-making to a pace that rivals smaller, less top-heavy disruptors that are eager to enter the automotive market, Hackett says.

“That’s found money,” the Ford CEO says of the 30 minutes of saved time daily. “We’re speeding up decision-making; we’re speeding up the way choices are clarified. And the (improved) body language (of top executives) is now translating down to the team that works for these folks. So we have some early momentum here.

“A company that has lasted 114 years is rare,” Hackett says. “And it doesn’t get there…by sticking with the status quo. We have the opportunity to be extraordinary in the way we relate to and deliver value to our customers. And in this way, we can deliver much more value to our shareholders.”

As part of his first 100 days as CEO, Hackett says Ford is evaluating its capital spending to be “more purposeful on where to play and how to win,” as well as renewing its focus on innovation and leadership in critical technologies.

That re-examination of capital allocation already has played out in the decision to source the next-generation Focus for the U.S. from China and Europe, rather than Mexico, and the company is looking at other production shifts that will see more emphasis on the utilities and trucks growing in popularity worldwide. Ford officials stop short of confirming reports the automaker may pull the Fiesta small car from the U.S. market, but acknowledge they are studying additional potential lineup plays.

“We are in the middle of (evaluating capital allocation),” Hackett says without detailing discussions. “That’s part of management’s responsibility. And there have been some decisions that have been ‛in the air,’ so to speak.”

Chief Financial Officer Bob Shanks says Ford “will be responding to what customers want. Cars will remain important (in some markets), but we’re going to be very thoughtful about the amount of investment we make there and make sure we get the appropriate return. We will look at all the individual vehicle lines with a very critical lens.”

Meanwhile, Shanks says to expect second-half 2017 to play out similarly to the second quarter, in which Ford earned $2.0 billion on revenue of $39.8 billion. Much of its automotive profit was centered in North America, with Europe and Asia-Pacific also in the black and the rest of global operations at about breakeven combined.

[email protected] @DavidZoia