Ford Replaces CEO Mark Fields With Jim Hackett Amid Pressure on Profit; Move comes amid a significant decline in share-price value during CEO's three-year tenure

 

Mark Fields spent a quarter of a century preparing to run Henry Ford's company, but it took Silicon Valley less than three years to force him out.

Jim Hackett, an industry outsider who the board of Ford Motor Co. considers a visionary capable of mending what some senior executives say is the auto giant's fractured and listless culture, now takes over as chief executive.

Mr. Fields, 56 years old, was let go Friday after delivering record profits and jump-starting Ford's businesses in Europe and China. He had risen to the CEO suite on the 12th floor of Ford's Dearborn, Mich. headquarters after executing a series of repair jobs within the company and becoming known as its hard-charging fix-it man.

Mr. Hackett's promotion Monday was the clearest indication yet the conventional auto industry is feeling pressure from tech giants and young startups edging in on a business long dominated by Detroit and its foreign rivals. Mr. Fields struggled to answer the threats posed by electric-vehicle maker Tesla Inc., ride-hailing service Uber Technologies Inc., or Alphabet Inc.'s Waymo autonomous-car unit.

"We have to move faster and we have to trust people to move faster," Chairman Bill Ford said in a news conference Monday. The great grandson of the company founder and a former CEO of the company, Mr. Fordsaid in an interview "we need speed" and the new boss "needs to take hard actions."

Mr. Fields, who spent 28 years at Ford, couldn't be reached for comment on Monday. Mr. Ford thanked the outgoing executive and longtime ally for taking bold steps during his career, including drawing up a Way Forward restructuring plan that slimmed down Ford's U.S. operations more than a decade ago.

Ford, selling more than 6 million cars globally each year, earned a record $10.8 billion in operating profit in 2015 and another historically high $10.4 billion last year.

But when the c ompany's stock market valuation fell behind Tesla's in April, it highlighted Mr. Fields' inability to persuade Wall Street he was ready to reinvent an industry anchored for a century in gasoline engines and steering wheels.

Ford's share price fell nearly 40% during Mr. Fields's tenure. The share price closed Monday at $11.10, up 2.12% from Friday's close.

Ford on Monday announced a series of other management moves, including the firing of a longtime public relations chief, Ray Day. According to people familiar with the matter, the communications department was seen as a liability late in Mr. Fields' tenure, fumbling Ford's response to President Donald Trump's criticism of Ford's Mexico production plans and failing to clearly articulate a technology strategy. Mr. Day couldn't be reached for comment.

Jim Farley, a Toyota Motor Corp. recruit, credited with turning around Europe, will become the head of Ford's global markets; Joe Hinrichs, an energetic executive known for manufacturing expertise, will oversee operations.

A relative newcomer to the auto industry, Mr. Hackett, 62, is a bit of throwback to Alan Mulally, a career Boeing Co. airplane engineer who took Ford's helm in 2006 in the twilight of a celebrated management career. Mr. Hackett's reputation was built by modernizing office furniture giant Steelcase Inc. He then took over the University of Michigan athletic department, recharging the campus's vaunted football team by hiring NFL coach Jim Harbaugh.

Mr. Hackett joined Ford's board in 2013, but was asked last year to run Ford's new Smart Mobility innovation unit. That group has grown, though it has struggled to show how multiple experiments and investments will transform the 114-year-old auto giant.

Mr. Ford referenced similarities between Messrs. Hackett and Mulally, saying Mr. Hackett can "capture the hearts and minds of our employees" and get the company's 200,000-strong workforce rowing in the same "One Ford" direction set by Mr. Mulally.

Messrs. Fields and Mullaly worked closely on repairing the balance sheet, restructuring United Auto Worker deals, updating the portfolio and selling off unnecessary brands and appendages, such as Volvo and Jaguar-Land Rover.

As a result, Ford avoided the bankruptcy filings that claimed General Motors Co. and Fiat Chrysler Automobiles NV's Chrysler unit in 2009. Ford therefore had a head start in rebuilding after the financial crisis. It created more innovative products including a more efficient aluminum-bodied F-150 pickup truck that delivers a big portion of Ford's $10 billion in global operating profits.

Mr. Hackett's to-do list, however, departs from Ford's previous leaders. In an interview, Mr. Hackett said Ford's list of successes and the pressing need for change presents a balancing act: "All the profits and capability are one side and all of the promise is in another."

Ford recently announced investments in ride-sharing companies, a company that makes laser-detection units needed for autonomous vehicles and an artificial intelligence company with a handful of employees, but none of those efforts return profits.

The moves resemble actions taken by GM Chief Mary Barra, who took over a crisis-plagued company six months before Mr. Fields got his job. GM's stock price has languished under Ms. Barra, but people familiar with the company said she has won the board's confidence through the purchase of San Francisco autonomous-car development startup, Cruise Automation, the launch of an in-house car-sharing service and by making a big investment in Lyft Inc., an Uber rival.

GM unveiled a long-range electric car, the Chevrolet Bolt, at least three years before its crosstown rival. Fordintends to pump $4.5 billion into electric-vehicle programs through 2020, but it has been slow to introduce vehicles to combat Tesla's growing product line.

Mr. Fields often referred to a company with "one foot in today and one foot in tomorrow." Mr. Ford said he fears that led to a splintered approach with a company culture that had too much concern about hierarchy and a myopic focus on either the current product line or moonshot bets.

"We don't want competing groups," Mr. Ford said. "We don't want one group to feel like they're the cool group and the other group is left out. It's not that way at all."

QUESTIONS: 
1What had Mark Fields accomplished as CEO at Ford? Which highly positive accomplishments can he point to?

2. Why did Ford nonetheless replace Mark Fields with Jim Hackett? Which weaknesses did Fields evidently have? Where does the strength of Hackett lie?

3. Fields often referred to the company as having "one foot in today and one foot in tomorrow." What does this mean? What does this quote tell you about the nature of strategic management?

4. Jim Hackett said of Ford: "All the profits and capability are one side and all of the promise is in another." What does this mean? What does this quote reveal about the nature of strategic management?

 

5. What are the strategies you would recommend to Ford? (Turnaround Strategies)

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