Friday, October 2, 2020

Jim Farley, Ford's New CEO Will Accelerate Change


On his first day as Ford’s new President and Chief Executive Officer, Jim Farley outlined key goals for the company which is centered around one thing: turn around its automotive operations. Farley drills down and identifies three things of urgency: improve quality, reduce costs, and accelerate the restructuring of underperforming businesses.

Farley, who succeeds Jim Hackett, is known for his dedication, desire to learn, and get better. Whereas Jim Hackett was appointed in 2017 to offer a sense of stability, Farley is seen to accelerate change.

“During the past three years, under Jim Hackett’s leadership, we have made meaningful progress and opened the door to becoming a vibrant, profitably growing company,” Farley said. “Now it’s time to charge through that door.”

“We are going to compete like a challenger—allocate capital to higher growth and return opportunities to create value—and earn customers for life through great products and a rewarding ownership experience.”

With that, Farley and his team concentrated decision-making and accountability around product and customer groups in three regional business units: Americas and International Markets (which includes the Philippines), Europe, and China.

Moreover, he says Ford is targeting a more consistent operating performance that includes adjusted earnings before interest and taxes (EBIT) of 8 percent. This is a far cry of an EBIT loss of 4.7 percent (negative 5.9 percent in the IMG which includes the Philippines).

To do this, Farley says he will be adding more affordable vehicles to the line-up. However, instead of relying on low-speced vehicles which offer almost no profit, they plan to place a larger spotlight on commercial vehicles and pickup trucks, while also leveraging their alliances with Volkswagen, Mahindra, and Rivian.

This sounds like an uphill challenge for Farley, and it is. It’s a company often not easy to lead; the only CEOs to hold the job for more than eight years were both named Henry Ford. However, he does bring to the table something that no Ford CEO has provided: experience at another automaker. Before his 13-year stint at Ford, Farley served as Toyota’s head of marketing, and also steered Lexus for a time. Above all, he listens.

Personally, I happened to meet Farley at the 2010 North American International Auto Show. During a dinner with then President and CEO Alan Mulally, Farley, who was still vice president for marketing and communications, chatted with the international media. And while everyone else was commenting how they liked the Focus’s design, I happened to point out a design detail I didn’t like. Instead of coming up with excuses, Farley actually pulled me aside and chatted with me a great deal. There was no pride that limited him from talking to somebody; if he thinks he can learn something, he’ll go out and talk to anyone he thinks has value to add.

Making Ford stand out will be among Farley's many challenges as he leads a company he grew up revering (his grandfather worked for the company). As he steers Ford through the most consequential change in its 117-year history, Farley has led discussions that prioritize customer experience.

“I believe the industry is focused way too much on the curiosity around the machine driving itself,” Farley said in 2019. “We've not spent enough time asking about the customer-facing aspects. That's what we're equally motivated to solve, not just the technical problem.”

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