Mulally-Microsoft buzz seen as overshadowing Ford vehicle introductions in busy 2014

Ford CEO Alan Mulally's candidacy to become Microsoft's CEO has faded in recent weeks.
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DETROIT (Bloomberg) -- Alan Mulally’s candidacy for the top job at Microsoft Corp. threatens to overshadow vehicle introductions at Ford Motor Co. and raises the risk of internal strife among his deputies at the automaker.

Keeping the focus on autos rather than management will be paramount as Ford plans to introduce 23 vehicles in 2014, the busiest year on record for the 110-year-old company, said Michelle Krebs, an analyst for auto researcher Edmunds.com.

“It is a distraction at a time when they need to focus on plants, products and people -- not one person,” Krebs said.

“They are launching more products next year than any time in the history of Ford Motor Co. They need to focus on the business.”

CEO Mulally, Executive Chairman Bill Ford and other company leaders have frequently reiterated a 13-month-old plan that called for Mulally to stay at the helm of Ford through at least next year.

While Ford has established a successor in COO Mark Fields, questions over timing risk a return to the executive infighting that afflicted the pre-Mulally Ford, said a person at the company with knowledge of the matter, who asked not to be identified discussing managers’ roles.

Collaborative culture

Mulally is renowned in Detroit for cultivating a more collaborative culture at Ford, which had long been characterized by backbiting and dysfunction. With his weekly planning meetings and friendly yet firm personal style, he made it a place where executives helped solve each other’s problems, rather than sabotage each other for personal gain, Fields and other Ford executives have said.

While Mulally is among a handful of internal and external candidates being discussed as Microsoft’s next CEO, his lack of computer industry experience detracts from his track record as a successful manager, people with knowledge of the matter have said. Steve Mollenkopf, another candidate for the Microsoft position, was all but eliminated last week when Qualcomm Inc. promoted him to the top job from COO.

Ford is less than a month away from the Detroit auto show, where the company will show cars and trucks that are crucial to its future. Among them will probably be a new F-series pickup, the top-selling vehicle line in the U.S. among all cars and trucks for each of the last 36 years, said Krebs.

Media swarm

The Detroit auto show attracts thousands of members of the media, the most among all auto shows. Without clearer resolution of succession at Ford, executives are likely to be peppered with questions about Mulally rather than the models, as was the case during the introduction of the new Mustang this month on four continents.

“As far as I know, Alan is staying through the end of 2014, and that’s all I know,” Edsel Ford II told Bloomberg News at an event in Dearborn to show off the sports car.

The automaker can ill afford diversions as it introduces F-series pickups that are being redesigned to take on recently updated trucks from General Motors and Chrysler Group, said Maryann Keller, an auto industry consultant.

“There is an obligation on the part of the board to get this resolved as quickly as possible,” said Keller, who was a director at Dollar Thrifty Automotive Group Inc. and Lithia Motors Inc. “You can’t ask Ford to wait for Microsoft to make a decision that may or may not involve their CEO. That’s not fair to Ford.”

Rocky history

COO Fields, 52, is the heir apparent to become just the 11th man to run the company since it was founded by Henry Ford, who created the moving assembly line a century ago.

The company’s history of transitions has been bumpy. Henry Ford overstayed through poor health and mounting losses in the 1940s. His oldest grandson, Henry Ford II, in the 1970s feuded with and pushed out Lee Iacocca, who became an icon at Chrysler Corp.

Alex Trotman in the 1990s avoided preparing multiple successors. His heir, Jacques Nasser, attempted to remake Ford into a consumer products company, efforts that were undone by Bill Ford and Mulally. Nasser’s tenure ended after crises with SUV rollovers involving Firestone tires.

Mulally is the third-longest serving CEO of Ford, behind Henry Ford and Henry Ford II, he told reporters last week during the company’s annual holiday reception for the media.

Seamless transition

Bill Ford, 56, in October predicted that succession will be smooth.

“Whoever the next CEO is, it will be seamless,” he told Bloomberg Television in an interview. “They’ve loved working in this style with this vision since 2006,” when Mulally arrived from Boeing Co. “There is no appetite within the management team for deviating.”

Plans for executive changes behind Fields once Mulally leaves are less clear. Joe Hinrichs, 46, took over Fields’ previous position late last year as president of the Americas.

Jim Farley, 51, was bumped up to executive vice president from group vice president, and added responsibility for the Lincoln luxury brand to his duties as head of global marketing.

“Our leadership team works well together and has for years,” Hinrichs told reporters last week. “We continue to work well together. Between Bill and Alan and Mark and the whole rest of the team, we’re all working together to deliver what is an unprecedented year ahead of us.”

Fading chatter

Mulally’s candidacy to become Microsoft’s CEO has faded in recent weeks amid concerns about his lack of technology industry experience, according to three people familiar with the matter.

There are still scenarios in which the board could opt for Mulally, including one in which he takes the job for several years and helps ready an internal candidate, said one of the people. Last month, Mulally was one of the more likely candidates, along with Microsoft executive Satya Nadella, people familiar with the search had said.

Microsoft’s board is searching for a CEO to replace Steve Ballmer, who said in August he planned to step down within 12 months. The 57-year-old chief unveiled a reorganization in July that the Redmond, Wash., company called One Microsoft.

Ballmer had been influenced by Mulally’s One Ford plan, which weaned the automaker away from the costly practice of designing unique cars for disparate global regions and narrowed its focus on developing vehicles that could be sold worldwide.

Ford had been unsuccessful in prior attempts at doing this.

One Microsoft

The One Ford plan also dictated that the automaker fix its namesake brand if the company was to survive. Mulally sold off its European luxury lines -- Jaguar, Land Rover, Aston Martin, Volvo -- and raced to improve everyday Fords around four pillars. Each new or revamped car, utility vehicle or truck that Ford rolled out needed quality, green, safe and smart attributes.

Mulally, soon after he joined Ford, began hosting top executives for 2 1/2-hour meetings that started at 7 a.m. every Thursday. Known as BPR, for business plan review, company leaders gathered at Ford’s headquarters to post hundreds of charts, each of them color-coded red, yellow or green, to indicate problems, caution or progress.

“That BPR process is what has literally changed the culture of the company, and that’s what’s going to power us into the future,” Fields, a 24-year Ford veteran, told reporters in September.

Weekly meetings

In the first of these meetings, Ford’s leaders were reluctant to code their charts with red, a reflection of a company ethos to hide problems rather than take them on, Mulally has said. The first sign of change came when Fields, then leading Ford’s Americas operations, put up a red light because a balky tailgate on the Edge utility vehicle had ground its production to a halt.

Mulally praised Fields for his visibility. Ford’s heads of product development, quality and manufacturing chipped in with ways of getting the line back up and running. Within weeks, the company began shipping Edges to dealerships, and the BPR meeting charts looked like “a rainbow,” Mulally said at the Automotive News World Congress conference in January.

“It was safe, but it was accountable, and everybody across the entire Ford worldwide empire knew why we were losing” so much money, he said. “From then on, we just started helping each other and turning the reds to yellows to green. From that moment, I knew that we had broken through.”

Ford earned $35.2 billion from 2009 through 2012 after losing $30.1 billion in the previous three years.

C-Suite tussle

Ford’s pre-Mulally culture was one of infighting. Former CFO Don Leclair, who retired in November 2008, almost had a physical altercation with Fields two years earlier during an argument about cuts to an advertising campaign, according to American Icon, a 2012 book about Mulally’s time at Ford.

“It’s the Ford Motor Co., and it’s a prominent company led by a prominent person who has become somewhat iconic in American business for the turnaround he was able to engineer,” Keller said of Mulally. “He is an important person and he is important in Ford’s history.”

“Can Ford get its marketing message out when everyone is asking whether he’s going to stay or not?”

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