Although you might assume we are about to discuss that new Ford Focus automobile, that is the resultant of what we really want to talk about.
The word focus is what Peter Drucker felt so strongly about that he emphasized it three times: focus, focus, focus. Although it is clearly essential advice for small and mid-sized companies, it is equally applicable in mega corporations too.
According to an article in the Wall Street Journal, that is what Ford’s Renaissance Man is now pushing.
Alan Mulally, an engineer from Boeing, arrived three-and-a-half years ago when Ford seemed on death’s door. It suffered a $12.6 billion loss in 2006, when industry-wide car sales were strong. But in 2009, Ford became the only U.S. car company to avoid bankruptcy, and posted a $2.7 billion profit. After plunging below $2 a share a year ago the company’s stock is now bumping $12.
“Improve Focus, Simplify Operations,” is for Mr. Mulally a sacred mantra. Soon after his arrival Ford began shedding brands – Jaguar, Land Rover and Aston Martin among them – that the company couldn’t afford to support. Volvo will be next to go. Meanwhile, the core Ford brand got an investment infusion to replace aging cars and revive a model lineup that had been heavily tilted toward gas-guzzling trucks.
In the process, Ford cut its number of global platforms, or chassis, to eight from more than 20, and the number of nameplates to 25 from 97. Each platform and model involves hundreds of millions of dollars of engineering costs, which translated to billions of losses when Ford couldn’t sell enough of each model.
Product-development chief Derrick Kuzak is methodically implementing the “One Ford” strategy of developing cars in a single region (say Europe, or North America) and selling them globally, instead of developing slightly different cars in each region at enormous extra cost. The first of these, the subcompact Fiesta, was engineered in Europe and will arrive in the United States this summer. In 2011, we will see a new version of a slightly larger car, the compact Focus, also engineered in Europe and designed as a global car from the start.
It’s all another triumph for that KISS principle. As Albert Einstein said, “Everything should be made as simple as possible, but not simpler.”
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- Ford’s Bet: It’s a Small World After All (nytimes.com)