Alan Mulally’s Management Secret: Peer Accountability

by Rod Collins

 

With the retirement of Alan Mulally last month, Ford’s new CEO, Mark Fields, has a big set of shoes to fill. If he follows the lead of his predecessor and continues the management system that Mulally introduced, Fields is likely to take the automaker to even greater heights. In business, there are few things more powerful than a good management system. Fortunately for Fields, he has inherited a great management system.

When Mulally accepted the offer to become Ford’s chief executive in the summer of 2006, the carmaker was in the midst of a steady decline. Over the previous five years, Ford’s stock price had plummeted by more than half from more than $16 a share to less than $7. To solve its problems, Ford’s board of directors made what many auto insiders considered a bold move when they reached outside their industry and convinced Mulally to leave Boeing to become the carmaker’s new CEO. As the leader of Boeing’s Commercial Airplanes Group, Mulally had successfully taken on the formidable challenge from Europe’s Airbus Industrie by transforming the company into a lean and profitable enterprise. Ford’s board hoped Mulally would do the same for their ailing company.

Upon assuming the leadership of Ford, Mulally brought a sense of focus that had been missing from the dysfunctional management team he inherited. Although his new board has given him carte blanche to revamp the leadership team, he advised them that he didn’t think he would need to replace many people. Mulally’s initial assessment of Ford’s failed management was that it was the system—not the people—that was the problem. His solution was to use the peer accountability system that worked so well for him when he was at Boeing. At the heart of this system was a weekly leadership meeting he called the “business plan review.”

In these sessions, each member of the leadership team presents a concise color-coded update of his or her progress toward meeting key company goals. Projects that are on track or ahead of schedule are colored green, yellow indicates the initiative has potential issues or concerns, and red denotes those programs that are behind schedule or off plan.

Color-coded status reports provide a level of transparency that is sometimes absent from the usual numerical reports, and processing these visual updates as a team instills a discipline of peer accountability that is often lacking in leadership teams. The cadence of frequently gathering the whole team in one place to review all key initiatives helps to create a shared understanding about the most important issues of the business. But more important, as happened in the case of Ford, it provides critical opportunities for the team members to synchronize their activities to help create extraordinary performance.

In implementing this practice, Mulally was very careful to maintain an environment where it was safe to candidly report the actual status of key activities. Mulally impressed upon the team that there was no value in status meetings where everyone reports that all is well—even when things are not—because people are more concerned with maintaining an image than dealing with reality. When members of a team have a process where it is safe to tell the truth about the actual state of their projects, they provide themselves with the opportunities to assist each other to more quickly resolve critical issues when they occur. The primary purpose of peer accountability is not to create more pressure for individual performance but rather to identify opportunities for the team to leverage its collective strength. That’s the fundamental dynamic that defines a great management system.

 

Rod Collins  (@collinsrod) is Director of Innovation at Optimity Advisors and author of Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World (AMACOM Books, 2014).