Where Jacques Nasser went wrong

NEWS ANALYSIS
Nasser's 6 mistakes


Ford's CEO

1. Lost the company's focus as an automaker

2. Fell under spell of the Internet

3. Tried to go it alone

4. Neglected William Clay Ford Jr.

5. Underestimated John Lampe, CEO of Bridgestone/Firestone

6. Spent too much time on the Premier Automotive Group

As Ford Motor Co. struggles financially, the No. 1 guessing game in Detroit is: How long can CEO Jacques Nasser keep his job? Rumors swirl daily that Nasser will be gone by year end.

The pressure increased last week when the board of directors cut the stock dividend in half. But that was just one more turn of the screw. The company has lost 1.5 points of market share this year. Quality slipped below General Motors, and Ford posted a $3 billion pre-tax charge to cover the cost of the Firestone tire recall.

A company spokesman declined to comment on speculation about Nasser's future.

Whether or not Nasser holds on, the question has turned a spotlight on his 3-year-old administration, revealing wrong turns, misjudgments and mistakes.

Nasser lost his footing on six fundamental issues:

1. Ford lost its focus as an automaker.

Under Nasser, Ford did not define itself as an automaker. Instead Ford became a consumer company providing automotive goods and services.

The result: Ford began struggling in its core business of engineering, manufacturing and selling cars and trucks. Product quality slipped below GM and DaimlerChrysler. Product launches were botched.

The fix: Ford's turnaround specialist, Nick Scheele, arrived from Europe Aug 1. This month, he signaled a change in course. "We are going back to the basics," Scheele, the new head of the Ford brand in North America, said. "Let me repeat that. First and foremost, we are going back to the basics. The company with the best cars and trucks wins."

2. Nasser fell under the spell of the Internet.

In the late 1990s, the Internet bubble rose on the economic landscape, enticing companies with the lure of profits from e-businesses trading at huge price-earnings multiples. Nasser envisioned taking public various units of a newly created Ford e-commerce group, capitalizing on the phenomenal market value of Internet stocks and vaulting Ford into the Internet age.

The result: The strategy collapsed with the Internet economy. The fallout spilled over to Ford's relations with a core constituency, its retailers. Dealers today still smart from Nasser's experiments in e-retailing, viewing attempts to sell and service vehicles on the Internet as a threat to the franchised dealer network.

The fix: Last week, Ford's top-ranking Internet executive, Brian Kelley, was moved to an old-economy job, president of Lincoln Mercury. Ford Division executives are meeting in Orlando, Fla, Wednesday, Oct. 17, through Friday, Oct.19, in an attempt to repair dealer relations.

3. Nasser attempted to go on his own too much.

Nasser tried to oversee personally too many aspects of running a global corporation.

The result: As many as 16 executives reported directly to the Ford CEO. Bent on single-handedly wielding power at the top, Nasser failed to create a strong operating executive to back up the CEO. Nasser's micromanaging slowed decision-making and created a company in organizational limbo awaiting direction.

The fix: In July, the Ford board of directors moved to circumscribe Nasser's role and cultivate a new group of decision-makers. By the end of this year, only 12 executives will report to Nasser. Lines of authority were drawn more clearly. Ford granted Scheele autonomous power to rebuild the Ford brand in North America. The company also vested more power in manufacturing boss Jim Padilla to tackle the core problem of shoddy vehicle quality.

4. Nasser neglected William Clay Ford Jr.

Nasser failed to develop a sensible working relationship with Bill Ford when the Ford scion became nonexecutive chairman in January 1999.

The result: The company had an uneasy balance of leadership. Nasser's hands-on style failed to accommodate Bill Ford's growing influence.

The fix: In July, the Ford board created an Office of the Chairman and CEO, increasing the authority and decision-making voice of Bill Ford. Bill Ford also has more face-to-face dealings with company executives. Bill Ford and Nasser meet regularly, relying on a formal agenda.

5. Nasser underestimated Bridgestone/Firestone Inc. CEO John Lampe.

Nasser compounded the Firestone tire recall by underestimating Lampe, who refused to back down when Ford fingered 13 million additional Firestone tires as potentially faulty.

The result: Nasser and Lampe engaged in corporate mudslinging and finger-pointing before the press, Congress and the public. The spectacle of Firestone blaming the Ford Explorer and Ford blaming the tire maker for road deaths damaged the reputations of both companies. Meanwhile, the enormous amount of time that Nasser spent on the crisis left other important tasks undone.

The fix: The debate is not over. Bridgestone/Firestone is standing behind its tough tactics, despite the company's decision to recall more tires labeled defective by the federal government. Ford has yet to be exonerated in the court of public opinion.

6. Nasser spent too much time on Premier Automotive Group.

As part of a lofty vision, Nasser acquired Volvo and Land Rover, hoping to leverage the big-name brands into a global luxury powerhouse under the Premier Automotive Group umbrella.

The result: Core brands such as Ford in North America stood in line for management time, talent and money. Nasser's strategy made Ford more vulnerable in North America, the company's chief source of profits.

The fix: The company empowered Scheele to rebuild the Ford brand. But overhauling product quality, enriching product offerings and re-establishing rapport with dealers will take time.

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