Leadership 7th Edition by Andrew DuBrin, Ann Fisher, Andrew DuBrin

Exercise 1

Alan Mulally, the CEO of Ford Motor Co., has become one of the world's most admired business executives for his accomplishments in recapturing some of the past glory of Ford, as well as U.S. manufacturing. Mulally has played a key role in two different industries. As the president of the commercial airplane business at Boeing in the late 1990s, he revitalized the company including a major thrust into digital technology. He also helped the company survive the aftermath of the terrorist attack of September 11, 2001, which heavily set back the aerospace industry.
Mulally was hired as CEO of Ford in 2006, to help turn around the company, at a time when Ford was on the verge of collapse. One of Mulally's first giant moves was to borrow $23 billion by putting up Ford's assets as collateral. The purpose of the loan was to give the company enough cash to survive until its cash-flow position improved. The huge loan enabled the company to avoid bankruptcy and a federal government bailout. As a result goodwill improved, and consumers were attracted to the brand in increasing numbers. A few years later, Mulally bought back $10 billion of the debt at a large discount. By 2010 it appeared that Ford was once again a stable, profitable company.
As part of the revitalization of Ford, Mulally had to call for some drastic action. He laid off about one-half the company workforce, and then reduced the compensation-both pay and benefits-for the survivors. Another key part of the turnaround plan was to create global heads of manufacturing, marketing, and product development, thereby contributing to a consolidation labeled "One Ford." Related to creating One Ford was the sale of luxury brands that did not carry the Ford nameplate-Land Rover, Jaguar, and Volvo. The Ford Mercury was discontinued as part of the simplification of the company. On the growth side, Mulally spearheaded the move to restore the Ford Taurus model.
Mulally's problem-solving approach includes analyzing massive amounts of data, then reducing the data to a simplified and clear plan. He presents the entire Ford strategy, including its products and operating plan, on about one-and-one half pages. The plan includes four goals or expected behaviors: (1) Foster functional and technical excellence, (2) own working together, (3) role model Ford values, and (4) deliver results. Each goal is explained in more detail; for example, a sub-goal under (1) is "know and have a passion for our business and our customers."
As part of Mulally's disciplined thinking, he does not allow distractions in meetings such as side conversations or the use of smart phones. In reference to behavior in a meeting, Mulally says, "If somebody starts to talk or they don't respect each other, the meeting stops."
Despite his good-natured demeanor, Mulally can be confrontational, particularly for the purpose of stimulating the thinking of others. During the formulation of turnaround plans, Mulally pored over the Ford profitand- loss statement, and said to his team, "You know, you guys lost $14 billion last year. Is there anything not going well here?"
To what extent does Mulally make use of his cognitive skills as a leader?