Was Mark Fields fired…or did he retire?
It was already an extraordinary news cycle in the early hours of Monday morning. It did not involve anything violent or tragic. It was a change of command in Dearborn at Ford Motor Company's World Headquarters.
Prior to the news conference in Dearborn, we were all lead to believe that Fields was indeed given his walking papers and told to never come back to headquarters again. However, it came out that Ford's board made the decision to switch to a new Chief Executive Officer the previous Friday. At that time, Fields elected to retire instead of a more inhumane form of departure. Fields has put in 28 years at Ford and is eligible for a company pension.
Either way, we do know who replaced Fields. Jim Hackett came with a solid history before he took his position as chairman of Ford Smart Mobility. He was the CEO at Steelcase, the Grand Rapids-based maker of office furniture made with high quality and care. After his stint at Steelcase, Hackett was the Interim Athletic Director at the University of Michigan. He was responsible for bringing Jim Harbaugh back to Ann Arbor as head football coach.
What was the reasoning behind Fields' departure? Sales were good, despite a slowdown in recent months. Profits were solid, even though last fiscal year results were down. It was due to stock devaluation. Ford's stockholders were upset that their shares dropped 40% in value prompting a push to usher Fields out of the CEO position in Dearborn.
These fiscal and residual results were due to many factors beyond just slower sales. There were charge-offs due to warranty and recall notices that affected Ford's bottom line. Once you factor in all of these fiscal challenges, stock values are affected. If stockholders find that they lost money on their shares, they will seek responsibility at the top. In this case, Fields was at the mercy of Ford's stockholders and the Board of Directors.
Then, there was the issue of where the investments within Ford were going. For example, Ford wants to turn itself from just a manufacturer of automobiles. They were pushing the notion of mobility. That meant investing in autonomous driving technology and company-sponsored ride share initiatives. Billions were poured into these programs that were too far off from implementation.
These initiatives came from the top of the corporate ladder. It was a key point that company Chairman Bill Ford cited in his press conference introducing Hackett as the new CEO. The question has to come whether there will be a further shake-up of Ford's corporate governance and decision making process? After all, Fields was the one campaigning Ford's want to be on the level of Silicon Valley and other players in the technology industry more than anyone with a voice loud enough for us in the automotive media to hear.
Now that Fields has retired, what's next in Dearborn? Good question. My concern is that Hackett, Bill Ford and the rest of the board will have to find a way to restore confidence to get everything back to an upward trajectory in terms of revenue and fiscal valuation. It sounds simple, but it will not be a task that requires a keystroke at a computer or a mark on a whiteboard.
It takes people and motivation to ensure that the fiscal part falls into place. They will drive the work to meet Ford's vision of its future. Will it be a mobility powerhouse? Or, will it simply just build automobiles worldwide? And how? With what propulsion systems and vehicle technologies?
Ford's driver towards innovation is the want to meet or exceed Elon Musk's Tesla. We get this. Tesla is not a player in this old and traditional automotive industry, but a Silicon Valley-bred tech firm that drives at the speed of data riding through a fiber-optic cable. Is this achievable with Hackett
Hackett is seen as similar to former Ford CEO Allan Mulally – innovative, personable, but results-driven. Despite the changes he initiated within Ford, Mulally had issues with the speed of the company's decision making process. The only caveat has to do with what Chairman Ford said about the decision making process of corporate hierarchy – if you want faster results and equally fast returns on investment, you have to find a way to make decisions at the same speed. If Ford wants to compete with the tech industry, they have to move fast – like data through fiber-optic lines.
A few things I must observe in light of this transition between two CEOs at Ford. One, I was never a fan of Mark Fields. His ideas drew a mix of validity and concerns about execution. The “Way Forward” actually worked, despite some questions on whether it would yield larger profits and margins. Yet, there seemed to be a lack of confidence by the investment community – i.e. Wall Street – even as praise was given to Fields during his transition as CEO.
This lack of confidence was not based on what Fields' most positive accomplishments – the revolution in the F-Series production to aluminum cabs and boxes and the restart of Lincoln as an autonomous entity within Ford. It simply came down to concerns over the future fiscal health of the company and its ability to fulfill its promises on future products. Perhaps the investment community did not buy into Ford's want of being a technology industry-influenced mobility company.
When the investment community lacks confidence in a particular company, those stockholders feel the pinch. They, too, will lack confidence in the direction a company is taking. It makes me wonder whether this lack of stockholder confidence has to do solely with Ford's aspirations towards providing mobility options on top of automobile manufacturing.
Let's ask this question: What would a Ford under Jim Hackett look like? Forget about all of Fields' grand plans for a moment and maybe look at this with fresh eyes. Should it become a technology industry-influenced mobility company? Or, should it just concentrate on delivering automobiles to global markets as they have done since 1903? I know some people would rather see the new Ranger and Bronco arrive in showrooms sooner than 2019 rather than wait for an electrified F-150 or a self-driving Ford vehicle.
What Hackett, Bill Ford, the Ford board and its management team decides what it wants to be, there is now a glimmer of hope. Could this be a replay of the Mually days? Or, could we see a different Ford in the end? I am hoping for the latter. If Ford wants to be the Southeastern Michigan answer to Tesla, the decision making process and execution of products and projects must be done quicker. Otherwise, the shareholders will turn on Hackett, as they did to Fields.