THE NINJA GOES INTO BATTLE WITH FEW WEAPONS AND FEW RESOURCES. He cannot rely on greater numbers or superior firepower because the enemy will have him beat in spades on both counts. He holds no hope for rescue or mercy if things go wrong and he is captured. Of all the rules that governed the use of ninjas in feudal Japan, one was paramount: Spies would not be tolerated. Each operation had only two outcomes: you either completed it or you died in the effort.
But the ninja was not without advantages. In a one-on-one fight, the ninja had the edge with superior training. If trapped, the ninja had the skills and the tools to escape. Above all, the ninja was a master of his surroundings. Only in very rare circumstances would a ninja find himself in a hopeless situation. He had the cunning, creativity, training, and tools to use anything and everything to his advantage. The ninja might make mistakes, but he would not be defeated by them. The ninja had no choice but to live by the words innovate or die.
Following the 2008 financial meltdown, “innovate or die” was the same simple message I had for my members. As an industry, we could either be dragged down with the rest of the economy or we could do what no industry does better: We could innovate. If we didn’t, then we would have accepted that the situation was hopeless. I’m proud to say that almost all CEA members innovated, and, as I pointed out in the introduction, the U.S. economy in many ways has been propped up by the consumer electronics industry.
Admittedly, to observe that an industry like consumer electronics must innovate is a bit like saying the oil industry needs to produce gasoline. It’s what we do. Our customers expect remarkable new products and ideas from us—and at a pace that few other industries can rival. We tend to forget, but only in the last twenty years or so has innovation in the CE industry proceeded at such a hectic pace. The VHS platform had a run of about thirty years before the mass adoption of the DVD player. That’s nothing compared to the seventy years that the vinyl record dominated the music industry until the coming of the CD in the 1980s. As for printed books, well, I doubt they’ll ever disappear—certainly not like the VHS tape—but Amazon’s announcement in 2011 that its e-book sales had surpassed printed-book sales was surely a turning point.1 Meanwhile, our lives are dominated by new technologies—smart phones, social networks, mobile apps—that did not even exist ten years ago.
But now, no one would place a bet that DVDs will last as long as the VHS tape. Indeed, DVD sales have declined for seven consecutive years, as consumers turn more to streaming platforms like Netflix.2 The CD is already in a museum, and the product that helped put it there might soon be too. After peaking in 2008 with 22.7 million in sales, Apple’s iPod has been on a downward trajectory.3 Though that isn’t so much a change in the format—digital music—but a shift in the preferred device (smart phones, for instance).
Which means that even in consumer electronics, the need to innovate is more necessary than ever. Manufacturers simply cannot be certain that a given platform or device will dominate the industry for longer than a few years before something else comes around. Twentieth-century economist Joseph Schumpeter famously called this process “creative destruction.” You know the drill. Just when you’ve finally converted all of your home VHS tapes to DVD, you’ll need to start the process all over again. It can be frustrating for consumers, and yet we gobble up the new devices, media, and platforms each and every year.
Throughout my tenure at CEA, I have watched dozens of companies dwindle and die—taking with them thousands of employees. Some of them were once powerful behemoths in their trade but became nearly forgotten footnotes in history. Changes in format, technology, and media can render any company—or even industry—obsolete. And while we should regret their loss, particularly the pain experienced by the now out-of-work employees, we cannot look back.
As for the companies that succeed, either as new start-ups or decades-old corporations, there is nothing magical about them. Which is not to say that what they do—or how they do it—is easy. The many successful companies profiled throughout this book—IBM, eBay, Amazon, etc.—have all stayed on top because they know that if they don’t innovate, then they will die.
But the phrase “innovate or die” should not be exclusive to my industry. I believe it must be the national rallying cry to restore our economic prosperity. It shouldn’t just be on the lips of every CEO in the United States. It ought to be on the lips of every member of Congress, heard in the halls of each federal agency, and repeated ad nauseam in the White House. It should be the rote Washington response to any company that calls to beg for a handout, a subsidy, an antitrust suit, or a self-serving bill.
Whenever the farmers call asking for yet another agricultural subsidy, the answer should be: “Innovate or die.”
Whenever the electric car industry just needs a few hundred million dollars, the government should respond: “Innovate or die.”
Whenever a steel company asks for tariffs on imported steel, it should be told: “Innovate or die.”
What do we get instead? Each of the industries I just mentioned got what they wanted from Washington. The usual refrain from economically illiterate politicians is that this subsidy, that loan, or another tariff will “save jobs.” It might—for that industry. But whenever Washington sticks its nose in the workings of the free market, there’s always a loser. And the loser is usually the one who doesn’t have the direct line to the committee chairman’s office because they’re too small to notice.
In today’s political environment, “innovate or die” has been modified to “innovate or beg.” The fact is that we’ve let it become too easy for companies and industries to cut a deal with government when their backs are up against the wall. The ninja company fights its way out through innovation, not backroom deals.
Even then, Washington has a tendency to discount innovation as a force for economic prosperity. President Obama has cited ATMs as a symbol of the negative consequences of automation. The thinking is that an activity that gave someone a job has been handed over to a machine. So, goes the logic, that’s one less job in the economy.
Apparently, no one was hired to build those ATMs, which must have just magically appeared. And similarly, the erstwhile teller must have no other discernible skills other than cashing and depositing checks. It would be funny if this was not how Washington actually conducted its economic policies.
One should wonder what Washington will say when consumers start using ATM-inspired machines for their health care needs. This isn’t a hypothetical. A start-up venture based in Ohio, HealthSpot, is reinventing the way we receive health care. Taking the idea of the ATM, which satisfies nearly all of your basic banking needs, HealthSpot has created kiosks called Care4 Stations that would do the same for your basic health care needs.
According to its creator, Steve Cashman, a thirty-six-year-old electrical engineer from Ohio, the Care4 Station could solve the problem of health care access for millions of people. Traditional health care requires travel, spending a lot of money, and waiting to get the valuable time of a doctor. With four children, Cashman realized just how much time he spent getting basic health care for his family. Combine that with Cashman’s love for solving problems and his passion for technology, and you come up with an innovative idea. Cashman’s solution solves this problem because it allows access to doctors anywhere.
It works like this: You go into a HealthSpot Care4 Station, which has a chair and video screen and some neat-looking fixtures. When you sit down your weight is taken. Through a few deft moves, your temperature, blood pressure, and other vitals can be recorded. You use the touch video screen to indicate any other symptoms. Soon you’re linked up by video with a doctor, who will ask you questions and can unlock cabinets to get other medical devices that can help assess your condition. Within minutes, the doctor can issue a diagnosis and, if necessary, prescribe medicine. If the kiosk is in a drugstore, the prescription can be filled immediately.
This is a big ninja idea. It is out-of-the-box thinking (although in-the-box medicine). It satisfies a demand for easier access to care, it is cheaper than the average doctor visit, it would relieve overworked nurses and receptionists, it is clever, and it can work. Cashman has attracted considerable investment and plans to deploy more than a thousand Care4 Stations in 2013.
Should we criticize HealthSpot for taking the jobs of receptionists and other health care practitioners? That seems to be the answer coming out of Washington, if President Obama’s views on ATMs is any indication. Or should we applaud a company whose product seeks to make health care more accessible for everyone? We need to rid ourselves of the notion that businesses exist only to provide jobs. If they did, then we would have millions of broom pushers, bank tellers, travel agents, town criers, wheat cutlers, and cotton pickers. Technology has replaced many of these jobs and consumers have benefited.
Businesses exist to provide a service or product people want—and that helps the larger economy. Their task is to continue to meet customer demands through innovative solutions. If they can’t or refuse to, then propping them up through artificial means both delays the inevitable and hurts otherwise profitable companies and industries.
In other words, “innovate or die” isn’t just sound advice for any company. It should be a rule that guides our national economic policies. Some might call it coldhearted. I’d counter that it’s worse to sacrifice other companies or entire industries to prop up a dying venture. It’s coldhearted to force consumers to pay more for something because of Washington policies that artificially raise prices.
Ninjas innovate. They might still die, but if they do, then they go down fighting.
The Bigger They Are, the Harder They Beg
THE AMERICAN BROADCASTING INDUSTRY, COMPOSED OF RADIO and television stations, is an example of a monopolist industry that long ago gave up innovating. But, by virtue of its government protection, it hasn’t died—at least not yet. For years, TV and radio broadcasters had a monopoly on how Americans received their news and entertainment. They both played a monumental role in shaping not just American society, but our entire modern age. Then, starting about thirty-five years ago or so, the society they helped to forge began to change. And for the last several decades, the broadcasting industry has been dragged into accepting this change. And it’s still kicking and screaming as loudly as ever.
But before criticizing the broadcasters, I should point out that they have a unique predicament. Both radio and TV broadcasters share a common legacy: They were loaned spectrum by the federal government to provide broadcast service in defined areas. Because spectrum is a public good, owned by the government and lent to broadcasters, the government requires that broadcasters operate in the “public interest.” This vague standard empowers a federal agency, the FCC, to heavily regulate the industry and, thus, stifle innovation. Twice, when I was invited to speak to broadcasters at a meeting of their trade group, the National Association of Broadcasters (NAB), I asked the leadership if they would press a magic button to eliminate their regulations if they could. Their leaders responded, “No!” and explained that they thought regulation was fine. But later, in private, many individual broadcasters told me that these myriad rules were expensive and limited their ability to innovate and compete with other forms of media.
But while we can sympathize with the broadcasters, no one should shed a tear over the current plight of the broadcasters and their heavily regulated industry. The government strings certainly make innovation harder to achieve, but there are plenty of other industries that have similar responsibilities to the government, yet they manage to innovate all the same. With the broadcasters, it’s a different story. They have accepted that the situation is hopeless, and they’re always prepared to cut a deal with their captors.
First with the dawning of the cable age, then the satellite age and the Internet age, both the radio and TV broadcasting industries have lost market share to other media. In response to this unprecedented competition, the industry made several strategic mistakes, which only further eroded their market share. As monopolist purveyors of a “public good,” the industry has never felt the need to truly innovate their business model to bring it up to speed with our new digital age. Instead, they have exploited their government ties not just to keep things the way they are, but to also actively turn back the clock to their monopolist heyday. The industry strategy is nothing more than relying on more government regulation and forceful lobbying so they can obtain or maintain a government-mandated advantage against other industries.
Take radio music. For years, radio broadcasters had it great. I mentioned earlier in this chapter how some platforms lasted a long time before they were replaced. Radio technology is a great example. It has not changed fundamentally since the turn of the last century, when Italian physicist Guglielmo Marconi realized that radio waves could be used to transmit signals the same way a wire can carry electricity. The reason is because there was no need (or really any way) to improve on the basic concept. Sure, the phonograph and vinyl records were a competitive alternative for listening to music, but only when one was stationary, such as listening in the house. The great advantage of radio was that you could take your music on the go. But the radio broadcasters had no other industry competition for portable music listening until perhaps the introduction of the portable audiocassette in the early 1970s. That’s a long time to get fat and lazy.
Then things began to move rapidly—at least by radio industry standards. Audiocassettes made their way into cars, and next Sony blew away everyone with its Walkman in 1979. Then came the compact disc. The Walkman and its progeny offered portability, the cassette allowed customization, and the CD offered superior audio quality. By then, radio wasn’t left with much. But it would get worse.
Today, consumers have satellite radio, smart phones, tablets, and even television as sources for music and news. Radio music is fading into oblivion. Indeed, the digital audio advertising giant TargetSpot found that nearly half of eighteen-to-twenty-four-year-olds (47 percent) spend less time listening to broadcast radio in 2012 than they did in 2011.4 Not surprisingly, the steepest decline in broadcast radio listenership was among these “digital natives.” Meanwhile, research from the NPD Group found 43 percent of the Internet population listened to digital radio broadcasts in 2011—up from 29 percent in 2009.
Rather than innovating and being ahead of technological change, the broadcasters have tried to use their legislative power to smother new competition. They unsuccessfully implored the FCC to stop low-power radio, on the laughable premise that community radio stations were a threat to large broadcasting corporations. They went to the federal government and delayed the merger of the XM and Sirius satellite radio companies on the schizophrenic premise that the new entity would simultaneously be a monopoly (with no competitors) and a competitive threat to broadcasters.
Now the radio industry has turned to government to impose a self-serving idea of mandating FM radio chips in all mobile phones. The stated reason is—of course—the “public good,” because when a disaster strikes, as the broadcasters tell it, people will need radio to tell them what’s going on. Forget that consumers have a pretty good idea of what’s going on via smart phones, SMS messaging, weather apps, and other common channels of information. This is like requiring that every computer have a ballpoint pen on the keyboard.
In the 1980s and 1990s, I would occasionally be asked to address the radio industry. Time and again I would urge them to embrace digital local radio because the CD, and soon digital satellite radio, were coming, and radio shouldn’t be the inferior choice for sound quality. I also pushed the radio industry to embrace a standard called the Radio Data System, or RDS, a feature that allows a visual display of words on a radio, like the name of the song and artist. While it became popular in Europe and elsewhere in the 1990s, U.S. radio broadcasters resisted it for two decades and only recently incorporated it into radio broadcasting.
Similarly, high-definition (HD) radio has been around for many years. Although it is now almost standard in every car radio, most radio broadcasters have embraced it reluctantly and refused to put any early investment dollars into promoting it. Instead, the radio broadcast industry has spent millions in Washington advocating for silly ideas like the FM radio chip and insisting that radio should be the only medium that can use copyrighted music without having to pay the record labels any royalties. This is absurd—for example, Internet-based Pandora, one of radio’s competitors, pays about half of its revenue in royalties to record labels,5 and digital satellite radio (SiriusXM) pays them 7.5 percent in royalties,6 and yet radio broadcasters pay the labels zero. Why? Because when the stations had a monopoly on the consumer audience, they argued that the music they aired led to an increase in record sales—therefore, it was free promotion for the labels and artists. Today, there is no rationale for that argument.
In June 2012 I testified on these issues before the House Energy and Commerce Communications and Technology Subcommittee. In my prepared remarks I said:
CEA opposes not only a mandate for FM chips in cell phones, but also opposes the broadcasters’ current effort to require a government study of this issue. The marketplace has shown that Americans are perfectly capable of deciding for themselves what functions and features they want in their smart phones. Wasting taxpayer funds for something as absurd as an unnecessary mandate on innovation is the kind of special-interest-driven expenditure that frustrates average Americans.
Clearly, broadcasters have lost their historic monopoly on music transmission and now exist in a more competitive environment. . . . The correct answer for broadcasters, however, is not to beg Congress to protect their historic business model. Instead, broadcasters must do what other industries do when faced with new market entrants—learn to compete smarter and harder.
I was thrilled to see that legislators from both parties were waking up to the fact that the broadcasters’ requests for an FM-chip mandate and refusal to pay royalties to labels and artists had crossed the line from advocacy to attempted crony capitalism.
For every new media device, there are more and better ways of getting content. It is a challenge for us, getting our content out there . . .
—LESLIE MOONVES, PRESIDENT AND CEO, CBS CORPORATION, 2011 PWC ANNUAL GLOBAL CEO SURVEY
Local TV broadcasters have also seen their market share decline. When cable was first introduced in the 1960s, the broadcasters ignored it because the market was too small (every new market starts out small). They did the same thing when satellite TV was introduced in the 1980s. One notable exception was the Hubbard family, who owned a bunch of Midwest broadcasters and invested heavily in starting a satellite company that eventually merged with DirecTV. But the Hubbards are the exception to the rule.
When high-definition television was discussed as a concept in the 1980s, the broadcasters, both local stations and networks, were smarter. They engaged in the process and worked hard in pushing the United States toward the best possible system. By January 2009, when President Obama made his first big presidential decision—to extend the deadline for the DTV transition—fewer than 10 percent of American homes relied on free over-the-air broadcasting. And sure enough, as we predicted, few complained or cared when analog broadcasting ended. The broadcasters had convinced President Obama and the Democratic Congress to waste over one billion dollars subsidizing converter boxes and delaying the transition.
Broadcasters have consistently opposed any innovation regarding the way in which consumers receive their programming. Broadcasters sued to stop the technology we know as the DVR, first introduced at the 1999 International CES by the company ReplayTV. The suit was never resolved because ReplayTV filed for bankruptcy. In 2012, the broadcasters sued a follow-on product to the DVR, DISH Network’s AutoHop, which allows users to skip over commercials.
Perhaps the worst stance the broadcasters have taken was to oppose a government-sponsored auction of the underused broadband they owned. Wireless spectrum is the oxygen that sustains our mobile devices. The FCC estimates that smart phones consume 24 times as much data as traditional cell phones, while tablets can use as much as 122 times the data. Analysts forecast that mobile broadband traffic will increase 35-fold over the next 5 years.7
So we need to address the spectrum crunch. Americans rely on these miracle devices, and they are increasingly essential for the military, health care, education, and business. Government and the industry agree that additional spectrum is needed to avoid a devastating wireless traffic jam resulting in slower wireless speeds and unviewable video content in many U.S. cities.
Yet, the broadcasters just sat on their underused spectrum, waiting for the best possible deal from the government to sell off their borrowed spectrum to the wireless providers. Finally, in 2012, as part of a compromise over a larger bill, President Obama signed legislation that set up a wireless broadband auction handled by the FCC. The spectrum will be used by wireless broadband providers as demands from smart phones and tablets have exceeded our wireless telecommunication system’s ability to provide the fast, full-motion video that increasingly Americans want and rely on. For TV broadcasters this is a great deal because those that sell will be paid for an expiring spectrum license.
Seeing that opposition was politically unsustainable, the broadcasters declared their public “support” for the auction legislation. Yet, the head of the NAB, former senator Gordon Smith, during his industry’s annual trade show in March 2012, delivered a speech discouraging broadcasters from participating in the auction. In response, I wrote to Senator Smith:
I write to ask that you reconsider your public (and also private) posturing on the law allowing voluntary incentive spectrum auctions. Your speech at the NAB Show appeared to be rather discouraging to broadcaster participation in these auctions. . . .
Recent statements discouraging participation in and support of these auctions are not only inconsistent with the goals of Congress, but also are not helpful to competition necessary for a successful and competitive auction.
Obviously, in large part, the broadcasting industry lacks a strategy other than to lobby hard to protect the status quo. As history has proven, this tactic only works in the short term. It doesn’t take long for yet another innovation to send the broadcasters scurrying back to Congress asking for another favor. Relying on government to protect you from competition is absurd. It’s akin to the harm inflicted on children by today’s trend that “everyone is a winner.” Failure is what educates and encourages greater effort. The federal-government protection of broadcasters has made them weak, complacent, and entitled. If you talk to the broadcasters, they will ignore their decades of declining market share and describe how wonderful and special and worthy of unique government largesse they are.
I wonder whether if the broadcasters had to do it all over again, they would choose less government protection and regulation. Perhaps instead they would create their own competition and launch cable, satellite, and Internet distribution and content companies.
Of course, it is easy for me to observe the history of declining market share for radio and television broadcasters and point out their failures. But what about going forward?
So instead of just criticizing the obvious history of declining market share of broadcasters, I instead offer the industry a strategy:
1. COMPETE IN THE MARKETPLACE.
The industry should take advantage of its lower-cost structure as a strategic strength and “own” the local geographic area. Owning the local area means going beyond broadcast. CBS is cleverly heading in this direction with push e-mails offering special local deals, like Groupon, through its local affiliates. For their local affiliates, networks should create a business model where they set up the local station and share revenue both ways. Daily push e-mails with deals can also tease the schedule and expand both viewership and revenue.
The unique selling strength of a local broadcaster is not just selling advertising. It is also engaging the local community. Some businesses may want to just buy ads. But some individuals may want deeper public exposure, and will pay to present the local news and thereby become well-known local personalities
2. THINK BEYOND THIRTY MINUTES.
No law says everything must be on the half hour. All the research that led to the uniformity of the half-hour schedule occurred before the Internet gave us Twitter, Facebook, e-mails, text alerts, and other forms of competition for your shows. Broadcasters shouldn’t be afraid to experiment and shake things up.
3. STOP RELYING ON WASHINGTON.
Finally, the industry as a whole must stop relying on Washington to protect it. Instead, it should work to free itself from the government strings that hinder its ability to compete with cable, satellite, and the Internet. Remove all the content restrictions, programming requirements, retransmission mandates, and costly requirements imposed by bureaucracy.
Above all, it’s time for the broadcasting industry to accept the fact that it’s not 1955 anymore, and it’s time to enter the twenty-first century. If they cut their ties with the government, they might finally learn the truth behind the phrase “innovate or die.”
Mr. Mulally Goes to Detroit
No matter how bad Ford Motor Company’s problems are today, they aren’t as bad as Boeing’s were on September 12, 2001.
—ALAN MULALLY8
As Alan Mulally would soon discover, he was wrong. Ford’s problems were worse.
In 2005, one of the most iconic brands the United States has ever produced was on the verge of declaring bankruptcy. The company’s chairman and CEO, Bill Ford, had exhausted all of his options. After taking over the company from its spendthrift CEO Jacques Nasser in 2001, the great-grandson of Henry Ford had discovered that the problems affecting Ford Motor Company were beyond his capacity to fix. His quest for a savior CEO had failed. None of the exciting, innovative car executives Ford approached wanted the burden of resuscitating the dying American icon—at least, not without assuming both the chairman and CEO titles. Barring a last-minute miracle, Bill Ford was going to lose his family’s company.
Alan Mulally was a top executive at Boeing. He had spent his entire career in the aeronautical industry, and most of that was spent at Boeing, the top U.S. manufacturer of commercial airplanes. Growing up, Mulally wanted to be an astronaut, but an eye exam that revealed he was colorblind dashed his hopes. So, Mulally figured if he couldn’t go into space, at least he could build spaceships. But that plan changed once again when a friend advised him that the commercial jet industry held a brighter future than NASA. At Boeing, Mulally was on hand to save the company following the September 11 terrorist attack. For Mulally, it was an opportunity to restructure the corporate behemoth into a leaner, more efficient version of itself. After four years, Boeing was back on top, a feat that most attribute to Mulally’s deft handling.
In 2005, after several Boeing CEOs were forced to resign, Mulally was assumed to be next in line. But the Pentagon was growing weary of the scandals plaguing Boeing CEOs and let it be known that it was in the company’s best interest to find an outsider as CEO. Mulally was passed over.
And that’s when Bill Ford pounced.
The history I just related comes from journalist Bryce Hoffman’s superb telling of the story: American Icon: Alan Mulally and the Fight to Save Ford Motor Company. A reporter at the Detroit News, Hoffman had a front-row seat to these troubled years for Ford, when it looked like nothing could go right for the company. He documents the terrible corporate environment Mulally would inherit, showing in gruesome detail how Ford executives battled each other for an ever-shrinking slice of the pie. It was a situation that Bill Ford knew he couldn’t handle, and so he did what a true ninja innovator would do: He brought someone in from the outside to shake things up.
To say that Mulally’s arrival at Ford was looked upon with skepticism from the old “car guys” would be an understatement. During his first meeting with top Ford executives, one tried to school the neophyte on the ways of the car industry, saying, “The average car is made up of thousands of different parts, and they all have to work together flawlessly.”
Unruffled, Mulally responded, “That’s really interesting. The typical passenger jet has four million, and if just one of them fails, the whole thing can fall out of the sky. So I feel pretty comfortable with this.”
But just because Mulally was familiar with mechanics didn’t mean he could save Ford. Indeed, as Hoffman relates, Mulally almost didn’t take the job because he wasn’t sure Ford could be saved. The year Mulally arrived, 2006, Ford was headed to a $12.7 billion loss. The Ford family, anxiously watching their stock value plummet to $6 a share, pressed Ford constantly to do something to save their inheritance. That something was Alan Mulally.
Just four years later, Mulally had remade Ford to the point where it was able to report a $6.6 billion profit. More amazing, Mulally did it all without a bailout from the government, unlike his two American counterparts, Chrysler and General Motors.
Which is not to say that there weren’t scary years for Mulally early on. Before taking the job, he had asked Bill Ford if he was prepared to do what was necessary to save his great-grandfather’s company. Ford said he was. One can only wonder whether Ford imagined that Mulally would go on to mortgage all of Ford’s assets (including its Blue Oval logo) in order to borrow the $23.6 billion he needed to begin his turnaround.
Mulally proceeded to follow all the concepts of ninja innovation I described in earlier chapters.
First, Mulally transformed Ford’s noxious corporate atmosphere, where top executives were more interested in protecting their turf and blaming the other guy, into a truly collaborative environment. Taking a page out of his Boeing days, Mulally instituted weekly executive meetings, where division chiefs had to provide progress reports. “There was nowhere to hide,” Mulally told Hoffman. Honesty would not be punished; ideas, any ideas, were valued; and, to drive home the point, he tied executive compensation to the success of the whole company, not just their individual departments.
Next, Mulally corralled all the disparate Ford divisions from around the world into one company. Instead of a Ford of Asia or a Ford of Europe, there was just Ford. And in his early days, Mulally put all his focus on rebuilding Ford’s true home in North America.
Then Mulally focused on the car. It sounds ridiculous to nonindustry ears. Don’t all car companies focus on the car? Obviously, you’re not from Detroit. The way the Big Three had operated for years was as the piggy bank for the United Auto Workers, a union whose lavish benefits for workers forced the automakers to put out cheap cars no one wanted. So Mulally got tough with the union, threatening to send all Ford manufacturing to Mexico if they didn’t play ball. The result was that Ford started building cars that Americans actually wanted to buy.
Last but not least, Mulally redefined Ford as a technology company rather than a car company. Instead of talking horsepower and RPM, he focused on the fact that consumers want the latest, best, and most useful technology in the car. He even used the International CES to highlight Ford as a tech company. The press noticed and Ford’s sales grew.
Before Mulally arrived, many believed Ford could not be saved. Many more thought he was crazy to refuse a government bailout. Cornered, cut off from reinforcements, low on supplies, Alan Mulally took the ninja way. He would innovate or die. He fought his way out. He innovated. And he saved Ford Motor Company.