In the early 1980s Ford Motor Company was in trouble. It was even said that â€œFORDâ€? stood for â€œfix or repair daily.â€? Indeed, the Ford story shows how a company can be turned around. The Taurus and Mercuryâ€™s Sable were the turning points for the company; they illustrate that models produced by US, carmakers can compete with the very successful Japanese imports.
Problems can become opportunities, and during the 1980 recession there were many difficulties to overcome. It became clear that Ford had to compete not only against US carmakers but against auto manufacturers throughout the world. Drastic steps were necessary: Ford invested $3 billion in its new models, made quality its number one concern, and learned from other carmakers, especially the Japanese.
One of the first undertakings was to replace the old bureaucratic structure with the team approach, or program management. Previously, it took 5 years to produce a new model. The old approach was as follows: The product planners developed the general concept of the new model, which was then given to the designers. After that engineers got involved, developing specification for manufacturing, and for the various suppliers. This process was sequential, with little communication among the various groups. When manufacturing, for example, got the specifications, little flexibility was possible, even if changing the design would facilitate assembly. If a problem was discovered at the manufacturing stage, designers and engineers had to be involved again in correcting the problem. However, if parts were already purchased or dies already made, such changes were costly; some were simply not made because of the delay involved. In this approach, the overall responsibility was not clearly defined.
Ford recognized the need for dramatic changes, which were incorporated in the project â€œTeam Taurus.â€? Rather than having each unit do the various tasks sequentially, the company established a team consisting of planners, designers, engineers, manufacturing people, and even suppliers. Thus, representatives from all units were involved in the task right fro the beginning. This way, difficulties could be resolved before they became major problems. Ford also involved assembly line workers in the development of the model. They were asked to comment on difficulties they had with assembling the parts and to make recommendations for improvements.
Rather than adopting an attitude of â€œwe know best,â€? Ford people carefully studied cars made by other manufacturers and learned about their best features. For example, Ford noted the accuracy of the Toyota fuel gauge and the good tire storage of the BMW. Ford also tested different seats on young and old, male and female, drivers. Through expensive market studies, Ford learned about other customer preferences.
The chairman, Donald Petersen, gives credit for Fordâ€™s turnaround to his team. But he took the $3 billion risk in developing the new line of cars. He delegated authority down the organizational hierarchy to the ranks of the workers. Decision making is no longer the prerogative of top management but of the team that takes action. Petersen practiced â€œmanagement by wandering around,â€? or MBWA, visiting the factories and listening to workers.