Ford’s New CEO Hints at Ambitious Plans: ‘We Don’t Want to Cede the Future to Anybody Else’
Some companies take a cookie-cutter approach to selecting their CEOs. They might favor home-grown talent, for instance, or engineers steeped in the company’s products, or salespeople who excel at spinning a corporate yarn. The next CEO tends to look like the previous CEO, and will be followed by someone cut from the same cloth.
The Ford Motor Co., on the other hand, follows no discernible pattern at all. In the past two decades alone it has toggled from an operations whiz (Jacques Nasser) to a young scion of its founding family (Bill Ford) to an exec who was an automotive neophyte (Alan Mulally) and back again to another true-blue insider (Mark Fields).
With the unexpected sacking of Fields this spring and the appointment of 62-year-old former Steelcase CEO Jim Hackett, Ford has once again zigged where before it had zagged. Hackett isn’t a car guy. And unlike Mulally, who had previously piloted Boeing’s commercial airplane business, he hasn’t run a giant industrial concern. Instead, Hackett is as close to an intellectual as the executive suite is ever likely to see, a strategist obsessed by so-called design thinking as a blueprint for doing business. As a young CEO, Hackett traveled annually to the chin-stroking TED conference long before it was cool. Over the years he has drawn inspiration from thinkers as diverse as “complex systems” theorist Geoffrey West of the Santa Fe Institute and the late University of Michigan football coach Bo Schembechler. (Hackett was a reserve offensive lineman for the Wolverines in Schembechler’s heyday.)
Having led Steelcase from cubicle purveyor to designer of sleek open-plan offices, Hackett has a similar transformation in mind for Ford. Mulally kept Ford out of bankruptcy during the financial crisis and invigorated the automaker, but lately the company’s momentum has stalled. Its profits have been in decline, it is behind on electric vehicles and self-driving cars, and its overreliance on the standout F-150 pickup truck leaves Ford a laggard in cities as the world becomes more and more urban. While rival GM’s stock has soared 18% over the past year, Ford’s share price has fallen 8%.
At a high level—a level where Hackett frequently dwells—his plan for Ford revolves around focusing the company on revenue sources other than making vehicles with internal-combustion engines. These include producing electric and autonomous cars as well as offering services like the Ford-owned Chariot “micro-transit” system and “curb-management” software that eases congestion in cities. In an interview, he refers to the opportunities in front of Ford as a “mobility smorgasbord”—mobility being a catch-all phrase for nontraditional revenues at Ford. Says Hackett: “We don’t want to cede the future to anybody else.”
As for specifics, Hackett is purposely vague for now. This summer he instituted a 100-day review of the company. And shortly before coming to San Francisco in mid-August for a Ford-sponsored conference on the future of cities, he presented his preliminary findings to a group of 300 top Ford executives in Michigan. Hackett talks in terms of corporate “fitness” and says he wants to speed decision-making at Ford. “I have some things that are going to be coming out in the fall,” he promises.
One of the closest business relationships of Hackett’s career is with the design firm IDEO, and specifically with its founder, David Kelley. Steelcase for years owned a controlling stake in IDEO, and Hackett and Kelley were so close that they constructed what they called a “worm hole” between Kelley’s office in California and Hackett’s in Grand Rapids, Mich. Using matching Cisco TelePresence systems, the two had cameras focused on each other’s desks all day long. “I could engage him very efficiently,” says Kelley, who also founded Stanford’s famed d.school, ground zero for the study of human-centric design thinking. “It was all rather Jetsons-like,” says Kelley. “I didn’t have that with my wife, but I had that with Jim Hackett.”
Creepiness of 24/7 workplace cameras aside, the Kelley-Hackett relationship speaks volumes about how Ford’s new CEO intends to approach his job. Design thinking is something of a religion among its adherents, and Ford execs would do well to brush up on the gospel. At Steelcase, Kelley helped Hackett understand how contemporary office workers wanted to work. “They were building cubicles,” says Kelley. “And it just hit Jim that the future was going to be about ‘we’ space as much as ‘I’ space.” Kelley believes design thinking, properly applied, represents nothing less than the changing of the culture at an organization like Ford. “The old way was about disciplines. The new way will be about projects and understanding what people want.”
Kelley is no mere bystander observing Hackett’s efforts at Ford. Hackett retired from Steelcase in 2014 and served a brief stint as athletic director at his alma mater. (His tenure stands out for one major coup: He successfully wooed San Francisco 49ers head coach and fellow Michigan alum Jim Harbaugh to Michigan to run the football program.) Before leaving Steelcase he had joined the board of Ford, and in 2016 he stepped off it to take a job at the company running “mobility services.” One of his first acts was to set up Greenfield Labs in Palo Alto, with IDEO as the key partner. (The name is a nod to Henry Ford’s outdoor museum in Dearborn, Mich.) There, Ford and IDEO work in secret on future Ford products. After becoming CEO, Hackett hired IDEO to work on a larger engagement at corporate headquarters.
Hackett uses design thinking to inform everything he does. He is using the process of “ideation” and rapid prototyping to review everything at Ford from how it runs its parts and services organization to how capital is allocated in the product-development process.
Design thinking isn’t a completely new concept at Ford. Its Escape “crossover” vehicle, for example, is one of several that has a function that allows owners to open a hatch by passing their foot under the rear bumper, the better to off-load an armful of groceries without fumbling for a key. But IDEO’s Kelley, who won’t divulge what projects he’s working on at Ford, predicts a radical change in corporate behavior. “There’ll be a bunch of short prototyping projects,” he says. “Most CEOs want a polished presentation. Jim wants to see the work really early on so he has some say over the direction.”
If there is a clear window into Hackett’s vision of Ford’s future, it is in the downtown San Francisco offices of Chariot, the three-year-old jitney service started by entrepreneur Ali Vahabzadeh. Chariot operates a commuter service that cleverly crowdsources routes based on where riders live and work. Using 14-passenger Ford Transit Wagons, it operates in San Francisco, Austin, Seattle, and, as of August, in New York City. It caters to individuals as well as to corporations who want to offer partly or wholly subsidized transportation but aren’t big enough to operate their own “Google bus” fleet.
Chariot, says founder Vahabzadeh, employs all its drivers, just one of the ways it positions itself as the anti-Uber. “We don’t want to be a niche business for the advantaged portion of the country,” he says. “We’re for the masses.” For Ford, which bought Chariot last summer when it had just 12 employees—it has more than 100 now—the startup is a way to make money in cities without necessarily selling cars.
Hackett’s hunch is that services like Chariot, bundled together, can constitute a new kind of vehicular operating system—and that Ford can own it. “We’re working on a market basket of ideas,” he says, around the concept of services for a network of smart vehicles. “It’s going to have more applications that are really helpful. And the network that it rides on or works in is going to go from just having stop signs and traffic lights and painted lines to the Internet of things that are sensing the nature of what environments are pinging back and forth to each other. This isn’t far-fetched at all.”
Far-fetched or not, Hackett will have only so much time to prove his hypotheses. “Some of these business models aren’t currently making money even though they have tremendous valuations on the private market,” says Brian Johnson, an auto analyst with Barclays. “It’s not clear he can make money on these.” Instead, investors are looking for signs that Hackett can improve Ford’s core business by rationalizing its product line, wringing out costs, and streamlining the company’s supply chain. Hackett plans to go public with the first phase of his blueprint in an Oct. 3 meeting with Wall Street.
Already, Hackett is moving decisively. Fields, his predecessor, had maintained Mulally’s “knights-of-the-roundtable” management-team approach by having more than 20 top executives report to him. Hackett slashed that to eight, and he deputized two Ford veterans—marketing head James Farley and operations chief Joseph Hinrichs—to run two of the company’s most important traditional functions.
That leaves Hackett to think deep thoughts and also to reposition the automaker to respond to the needs of current and future customers—as opposed to simply designing snazzier cars or sturdier pickups. Ford is 114 years old, and currently has about 100 million vehicles on the road—a captive, installed base, in Hackett’s view, for selling future goods and services. “Because
we have the intersection of this magic, there’s lots of different options in the way to move people, unlike in the past,” he says. “So we’re having a broader sense of defining what our options are to move people that Ford should have a hand in.”
And he’s got to keep selling cars and trucks too.
Hacking Hackett: Three of the New Ford CEO’s Key Precepts
1. Change isn’t so much good as inevitable
Hackett played football for famed Michigan football coach Bo Schembechler, and he’s fond of quoting Bo, who believed, “we would either get better at what we do, or we would get worse. We would not stay the same.”
2. Focus on users, and products will follow
Ford sponsors Motivate’s bike-sharing service in San Francisco, and despite being in the car business, it has searched for insights, with design consultant IDEO, on self-propelled locomotion.
3. Be open-minded
Hackett says Ford needs to think beyond cars.
For example, he’s studying urban congestion woes, including parking, for opportunities: “If you fix parking you might change the way people actually move themselves around.”
A version of this article appears in the Sept. 15, 2017 issue of Fortune with the headline “Ford Finds a New Leader, by Design.”