USE THE SAME BUSINESS MODEL AS FORD

Quarter after quarter for almost two years, the news out of Ford Motor was astonishingly good. Under Chief Executive Officer Alan Mulally, who'd joined the company from Boeing in 2006, Ford had not simply avoided bankruptcy and a federal bail-out, it had turned itself into the world's most profitable automaker. It beat analyst estimates for seven consecutive quarters and drove its stock to a nine-year high of $18.79 on Jan. 27, up from $1.26 on Nov. 19, 2008. Last year, hits such as the Fusion family car and Fiesta subcompact propelled sales of Ford models upward at twice the rate of the overall market. And the 65-year-old Mulally, a gifted and relentlessly upbeat salesman, wasted no opportunity to look into the eyes of analysts and reporters, squeeze their forearms, and remind them how "fabulous" Ford had become.

Late in 2009, Mulally began to see some new signs of trouble. Inside the Thunderbird Room on the 11th floor of Ford's Dearborn (Mich.) headquarters, the windowless conference chamber where Mulally meets around a circular table with his 15 top executives every Thursday at 7 a.m., some of the news suddenly wasn't good. At these 2 1/2-hour meetings, known as BPR (Business Plan Review), he requires his direct reports to post more than 300 charts, each of them color-coded red, yellow, or green to indicate problems, caution, or progress.

At the BPR, Ford Chief Financial Officer Lewis Booth might give an update on debt reduction, or Americas chief Mark Fields might go over the mix of red, yellow, and green on new model launches. (Fields is famous for being the first Ford executive to put up a red light four years ago when he delayed the launch of an SUV because of a balky tailgate, earning him applause from Mulally for his honesty.) Afterward, the adjoining Taurus and Continental rooms are papered with these charts so Mulally can study them. As the CEO likes to say, "You can't manage a secret. When you do this every week, you can't hide."

The Ford executive who couldn't hide in December and January was European chief Stephen Odell. His slides told Mulally that heavy discounting was going on in the European Union, a market where there were too many car factories and too few buyers. Mulally had assured analysts that Ford would make money in Europe, but the risk of a fourth-quarter loss was rising. As the rectangles on Odell's slides turned from green to yellow to red, Mulally decided not to follow his competitors into the bargain basement. He was trying to elevate Ford's reputation; unloading cars at just above cost might have helped his quarterly return, but he was certain it would hurt his brand.”

The Rockefeller Habits

Interestingly enough, Ford adopted the Dashboard concept of Red, Yellow Green in the prioritization of their reporting systems.  This concept was originally authored by Verne Harnish, in the book, Mastering the Rockefeller Habits.  Here is the simple explanation . . .

   Green = Define Your Goal

 

   Red = Decide on the Minimum level of acceptable performance

 

   Yellow = Between Minimum and Goal

 

   Super Green =  Exceed Goal by a Significant Margin

 

Every business owner can adapt this reporting method, with minimal time investment and resources.  When you take a quick glance of your Dashboards, each category tracks critical areas of your KPI’s (Key Performance Indicators).  From this, you get a 5 second visual check of the critical areas of your business. 

Much like your car, when the Oil light is flashing Red, you know that something is happening in your engine (or in the case of your business) that needs your undivided attention and immediate action.

When you have a Dashboard, which tracks all of your KPI’s  . . . . "You can't manage a secret. When you do this every week, you can't hide."