How Mulally Is Making the Complex Simple at Ford

Alan Mulally truly is a transformational CEO. And it’s very informative to learn how he’s doing it. He is trying to change Ford forever by embracing the concept of complex adaptive systems.

Beehives and ant farms are classic examples of complex adaptive systems. Every morning, 50,000 bees in a typical hive wake up and go to work. They don’t need memos, meetings or emails to be told what to do; they just know what has to be done.

Of course, human beings are not mindless insects that are genetically predisposed to perform routine functions. But we can learn a lot from systems in nature that can adapt to ever-changing situations on their own.

You may have heard of Mulally’s famous 7 a.m. Thursday morning business performance reviews, in which all top officers in the company, including him, have to gather in the Thunderbird Room of Ford’s World Headquarters. All 17 must be there, no excuses, and anyone out of the country is brought in via video feed. No cell phones or side conversations are allowed.

Each of the 17, seated at a round table, has a few minutes to give an update on what’s going on in their region or department. Each presentation uses simple graphics and charts, making all information very visible.

Any data change from the prior week is printed in dark blue, and the status of every program, project or goal is depicted in green (all good), yellow (there is an issue) or red (we have a problem).

It’s a deceptively simple procedure, yet powerful. First, it keeps all the top officers completely aware of everything that is going on in the company everywhere in the world. Think how much easier that makes it to move or promote officers into different regions or different departments, when this info is drilled into their heads every week.

Second, by printing any changes in dark blue, everyone instantly sees those changes. And the red-yellow-green status brings them up to speed at a glance. It’s complex information, presented in a simple format.

If an issue arises that needs further discussion, it is tabled for a follow-up session immediately afterwards. That avoids having the meeting bog down and run beyond its 2-hour schedule. Plus, only those needed in the follow-up session need be there, cutting everyone else free to get on with their work.

To generate a “one team” mentality, all the different disciplines within the company such as product development, manufacturing and purchasing present updates along with the four different business units: Americas, Europe, Asia/Pacific and Africa, plus Ford Credit. This ensures every region uses the same business processes and metrics.

And where the matrix charts intersect, such as between the Americas and product development, those two executives must get together to decide which part of their presentations are red, yellow or green. It forces co-operation.

Most impressively, each of the 17 officers invites an employee to attend this special meeting. At the end, each invitee introduces himself or herself and is invited to share comments or ask questions.

Imagine how these employees feel, being invited to sit in at the pinnacle of power within the corporation and see how the top officers work first hand. You just know they go back to their work areas, bursting with pride, telling everyone they work with what they’ve seen.

Mulally says the best part is that most of them start adopting the same kind of business performance review in their work areas.

They’re not ordered to do this, nor given a procedure manual of how to do it. They simply do it on their own. It’s a self-created process that is nurtured by example, not dictate. About 5,000 people have been through those meetings over the years, creating the basis of a complex adaptive system.

This is just a whiff of what’s going on at Ford. There are many more layers to Mulally’s process. But for anyone who wonders if Ford will revert to its former, highly politicized culture when Mulally retires, the odds are good the company is changing forever.