Ford CEO Jim Hackett enjoyed an extended honeymoon after he was installed as an unlikely new chief for the carmaker 18 months ago by the only force that could do it: Executive Chairman and Ford scion Bill Ford.
But with the stock price now trading at a decade low of around $8 a share, and investors and employees alike still uncertain of the exact plan for Ford going forward, Hackett’s hold on the job of running America’s iconic auto manufacturer may have grown tenuous.
And there are lessons for other manufacturing CEOs in the position Hackett occupies at the moment. Among them: Carpe diem. Or risk becoming principatu deici. (And that’s not good.)
Bill Ford swept aside Mark Fields to make way for Hackett in mid-2017 to more rapidly transform the company’s product line, operations and global footprint to make Ford a better fit for the highly competitive auto industry of today. He also wanted to position Ford better for the coming era of autonomous driving. Hackett’s pedigree as a tech-oriented outsider and former CEO of Steelcase, and also as someone who’d headed Ford’s mobility operations for a year, seemed to be the ideal fit.
Hackett has taken a number of major actions: slashing costs and promising an $11-billion restructuring; committing Ford to get rid of sedans in favor of more higher-profit SUVs and trucks; shaking up Ford’s struggling China operations; striking new alliances with Volkswagen for commercial vehicles and Mahindra for the Indian market; and announcing a millennial-friendly new tech-development headquarters near downtown Detroit. But he has frustrated investors and employees alike who have been waiting for Hackett to hatch a master plan that makes sense to them.
Recently, Hackett surprised Wall Street with better second-quarter margins than they’d expected because the process of achieving higher profitability with a richer vehicle mix is underway. But at the same time, the company disquieted investors by jettisoning its goal to reach an 8-percent profit margin by 2020, without saying when it might get there. This was just a few months after Hackett had moved up the target by two years.
“It’s not that we don’t know where we’re going or that we don’t know how to do it,” Hackett told analysts on a call to discuss earnings. “It’s that it’s a massive undertaking.”
At another point, he said, “It’s not a restructuring plan, it’s a redesign plan. First we have to identify the areas that need to be fixed, then we have to figure out how to fix them and execute.”
While candid—and Hackett is known for candor—those aren’t the kind of statements that reassure restive investors or employees nearly 18 months into the tenure of a new CEO who was supposed to come in and shake things up quickly with his diverse leadership experiences and outsider perspective. He simply can’t keep saying that he’s still figuring it out, or even Ford may run out of patience with Hackett.
Meanwhile, competitors around the world think they’re figuring things out, whether that’s in rationalizing their global operations to deal with a stagnation in many new-vehicle markets; dealing with regulatory demands for fleets of new electric cars; or accelerating development and deployment of test vehicles and systems for the coming future of autonomous driving.
At least Ford’s marketing these days includes some recognition that Americans are interested to understand what the company is up to. Under the rubric “Built Ford Proud,” a suite of new TV advertisements celebrate Ford’s manufacturing heritage, showcase iconic products such as the F-150 pickup truck and Mustang; and take shots at Silicon Valley for generating a lot of digital-tech “talk” while Ford has been actually continue to make things.
But while intriguing and even effective in its own way, a new advertising campaign can’t make up for the sort of positioning that can only come from the words and deeds of the CEO. So it’s Hackett’s move.