Musthafa Ebadi
Leadership means leading by example
by Musthafa Ebadi on August 25th, 2011

Wednesday, March 24, 2010

The role of leadership in business is indisputable. Great leaders create great businesses. Being a great business leader is often a key success factor that determines how an organization will look moving forward.

The increasing rate of change in the business environment is a major factor in this new emphasis on leadership.

To me leadership is having a vision, having plan and blue print for success, ability to communicate your vision, ability to get buy-in from your people and their commitments to the long terms goals, and equally important is to have loyalty of your people, ability to communicate the achieved milestones to keep your team focused and motivated, and last but not least you leading by example.

If you have right leadership you will not only bring significant progress to any team/project/organization and you will also pave the way for long-term success.
Let’s study the turnaround of Ford Motor Company and their journey from losing billions of dollars to posting profits in less than 4 years.

Before I describe their turnaround strategy let me say that the intent of this post is not to promote one organization over the other but simply outline the importance of having a strategy, having a long term goal, having the leadership to sell your plans to your staff, and then commitment to execute on your action plans.

Over the last 18 months we have noticed significant shift in fortunes of almost every auto maker. The "Big Three" - GM, Chrysler, and Ford - as they are referred to were perceived to be on the verge of bankruptcy. In 2009 while both GM & Chrysler filed for Chapter 11 Bankruptcy Protection and received loans from the federal government, Ford on the other hand turned its fortune by taking a different route.

The seedsof Ford dodging this economic turbulence were planted in late 2005 when the Chairman Bill Ford asked newly-appointed Ford Americas Division President Mark Fields to develop a plan to return the company to profitability. Fields previewed the Plan, dubbed it "The Way Forward", at the December 7, 2005 board meeting of the company and unveiled it to the public on January 23, 2006.
On September 5 2006 Ford Motor Company hired Alan Mulally as the President and CEO, succeeding William Clay Ford, Jr. and according to me this was the most important and strategic move by Ford Motor Company.

Alan Mulally took over "The Way Forward" restructuring plan at Ford to turn-around
its massive losses and declining market share. Mulally has led a turnaround at
Ford based on a competitive business model that is capable of supporting
significant improvement in performance over time.

One of the qualities that I would mention about Alan Mulally is that he has led by example during both good and tough times. In 2009 when Ford was going through restructuring, plant closures, and massive layoffs Mulally took a 30-per-cent pay cut dropping his salary to $1.4-million, and he got no bonus for the second year in a row.

Also on February 2, 2009, WOOD-TV News in Grand Rapids, Michigan
reported that Mulally personally called Michael Snapper, a customer who recently
chose to purchase a Ford Fusion Hybrid over the Toyota Prius that he originally
intended to buy. He left a voicemail on Michael's mobile saying a personal thank
you from the CEO.

Every leader would tell you that to be successful you should earn the loyalty of your staff and have an exceptional commitment to your customer base. The above two scenarios show that Mr. Mulally is not only talking the talk but is leading by example and taking a pay cut so his financials are equally impacted like the rest of the company, and is also demonstrating his commitment to customer service by thanking a customer for their business. That is the key differentiator between a CEO and a leadership - leading by example.
Over the last four years Ford has seen some dramatic improvements
Earning $2.7-billion in Revenue in 2009
Ford also posted its first annual profit in 2009 - their first in four years
In 2009 Ford avoided bankruptcy court and didn't take government loans. As a result, Ford reaped goodwill from buyers and ended the year with its first U.S. market share increase since 1995.
Ford shares rose to a five-year high in 2010 after Moody's Investors Service upgraded the automaker's debt and said Ford has the potential to improve its finances even further.
Ford's stock recovered dramatically in March 2010 at $13.29, up from its 52-week low of $2.38

According to me this all happened due to leadership at the top and leading by example.

Thanks for Reading.

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