Jim Farley is quickly acquiring traction as CEO of Ford Motor after eight months on the job. He’s doing so by effectively implementing two tactics that reside in the quiver of most successful business leaders: recognizing when an about-face is necessary, and being able to cast visions about the future.
Farley is enjoying a honeymoon as chief of America’s second-largest automaker that was unimaginable when Executive Chairman Bill Ford nudged aside Jim Hackett last fall and made the long-expected elevation of Farley to the top job. The company now is getting acclaim on Wall Street to the tune of a closing price of nearly $15 a share this week, a stratum that Ford stock hasn’t seen in about four years – and more than double the $7 a share at which it traded when Farley became CEO. Analysts have gotten on board, and is it possible that competitors suddenly seem more wary?
What did Farley do?
First, he didn’t waste time in recognizing that Ford wasn’t following the right strategy on electric vehicles. Like everyone else in the industry, Ford paid a lot of lip service to autonomous vehicles over the last several years and is experimenting there. But rival CEO Mary Barra of General Motors recognized early that making a big bet on battery electric vehicles would be much more important to the future of a business that was steadily being bent toward a sustainability ethos. So several years ago she got GM’s technologists developing their own battery system and committed to make the company’s own batteries in a partnership. And then, several months ago, she pledged that GM would aspire to make only BEVs for consumer vehicles by 2035.
Farley watched and waited – but not for long. Under Hackett, Ford’s strategy had been to obtain any necessary batteries for BEVs from outside and not commit precious capital to unnecessarily control its own production. But a few weeks ago, Farley abruptly changed the company’s direction and signed Ford to make lithium-ion batteries with South Korean supplier SK Innovation. Ford also made an investment in next-generation battery startup Solid Power. And, with appropriate fanfare, Farley launched the all-electric version of the company’s best-selling F-150 pickup truck.
But Farley wasn’t done. Recently he launched the same kind of bombshell numbers as General Motors in declaring that Ford now plans to spend more than $30 billion by 2025 on EVs, which it expects to account for 40 percent of its global sales by 2030 – that’s a spending commitment up from a previous $22 billion.
In just a few major moves that were highly consistent with a new direction, Farley seems to have completely changed the perception of the company on Wall Street and elsewhere.
This is where storytelling comes in: As an old marketing hand – Farley is Ford’s former CMO and once headed its Lincoln brand – he well understands the importance of narrative and storytelling in changing perceptions. The thing that matters most to the ESG-crazed investment community these days, and increasingly to automotive consumers, is to be able to present a credible narrative about sustainability. No matter if the outcome won’t be adjudicated for another 10 or 15 years or more – the point is to be able and willing to tell a strong sustainability story now. And that’s what Farley has pivoted Ford into doing.
In fact, Farley is trying to change the longstanding narrative about Ford in another important way: It’s now a technology-driven growth company, not an old-fashioned automaker. In his remarks to the Street last week, his first big investor event, Farley pitched that focus in addition to the EV story, noting that the company has created a new focus on over-the-air software updates (a la Tesla) and is creating a dedicated commercial-vehicle unit to sell both EVs and traditional vehicles to businesses; business customers are likely readier to embrace new services that rely on vehicles’ data connections than consumers are, at this point. Farley foresees a $20-billion market for such services by 2030.
Farley is a car guy, a marketer, an industry lifer and other things that are helping him enjoy a strong start as Ford’s CEO. But more than that, he’s decisive – and can spin a good yarn about the future.