Our Blog

When Bad News Is Good News

Posted November 14, 2012 8:30 PM by Mark Cutler

Ted’s blog from Friday reminded me of one of the key moments in Ford’s turnaround as Bryce Hoffman described it in American Icon – and, no, we aren’t that nerdy that we have an Ascendant Book Club – not yet anyway.  When new Ford CEO Alan Mulally began holding his weekly management reviews with the executive leadership team, he was always getting good news – which was a bit suspicious as he had assumed leadership of a company trying to stay out of bankruptcy.

Mulally’s management reviews went on for weeks – maybe even months, I don’t completely remember – while he continued to receive rosy reports from his leadership team.  Until, that is, Ford Americas chief Mark Fields, who wasn’t sure if he was going keep his job at Ford under Mulally’s regime anyway, decided that he would “go out in a blaze of glory” and see if “this guy is for real” and true to his word that all he wanted was honesty.

Fields was the first executive to report out at a management review that everything wasn’t “green,” but rather that the launch of the Ford Edge was “red” and that they had to hold up the launch.  According to Hoffman:

There was dead silence. Everyone turned toward Fields. So did Mulally, who was sitting next to him.

Dead man walking, thought one of his peers.

I wonder who will get the Americas, another mused.

Suddenly, someone started clapping.  It was Mulally.

“Mark, this is great visibility,” he beamed.  “Who can help Mark with this?”

People started raising their hands and saying how they could help.  At the next week’s review, Fields was still the only one not reporting all green, most thought he was going to be fired after the previous meeting or would be at this one, but he wasn’t.  The following week, “everyone’s slides were splattered with more red than a crime scene.” And, incidentally, the problem with the Edge was quickly resolved.

According to Hoffman, Mulally would later call what happened the “defining moment in Ford’s turnaround.”  The point being that as the CEO, Mulally needed transparency from his team so he could see what was wrong and help the team start to fix it. 

In Mulally’s eyes, the bad news was good.  And, this is one of the hardest issues in trying to change an organization’s culture while implementing a strategy and performance management system. People immediately become defensive when you start talking about developing measures and what those measures are going to be used for.  They fear they will be used to judge them rather than help manage the organization.  This can lead to the gaming of measures and targets so that they don’t provide the necessary transparency.

Communication and leadership are key to building the trust necessary to combat this behavior.  If the executive director, president, or CEO can convince his team of the measures’ true purpose and he can demonstrate it through his behavior at review meetings, she will build the trust necessary among the leadership team to have candid, strategic conversations. 

If Mark Fields hadn’t stepped forward and truthfully shared his bad news, there would have been a point at which Mulally's team could no longer hide the facts from its CEO and by then it would have been too late to do anything about it. After all, the only thing worse than bad news today is bad news tomorrow.

*A side note on the Ford turnaround: On Nov. 1, the Wall Street Journal reported that Mark Fields, "who has been widely seen as the likely successor to Mr. Mulally," was assuming the position of Ford's chief operating officer.  So, it turns out, honesty didn't hurt his career much at all.


Ascendant Book Club? YES!
# Posted By Angie | 11/14/12 9:12 PM
add comment »