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“We love you,” they mumbled.

“No!” Mulally cried. He knew that many of the dealers hated dealing with the company. They felt like no one in Dearborn cared about them or their businesses. Mulally said that was going to change today.
For Ford to prosper, its dealers needed to prosper. From now on, it was going to be a partnership.

“Look at them and say it like you
mean
it,” Mulally insisted. “If you do, it will become a self-fulfilling prophecy.”

“We love you!” the Ford employees shouted in unison.

A few weeks later, he did the same thing with Ford’s suppliers.

I
n January, Mulally made his first visit to Ford’s European headquarters in Cologne. European group chief Lewis Booth and Ford of Europe president John Fleming were eager to show off their latest products and brief their new boss on the progress they were making in the region. Ford’s European operations were a poignant contrast to North America. While most of its products were being panned in the United States, the new Ford S-Max had just been named “Car of the Year” in Europe, while a redesigned Ford Transit had taken the “Van of the Year” title. For 2006, Ford of Europe had posted a profit of $469 million, while North America had lost $6.1 billion. This was why Mulally had been in no rush to get over there; he had bigger things to worry about closer to home.

Now that he was in Europe, Mulally worked his usual charm. During a town hall meeting with about 150 German employees, Mulally brought them to their feet with his effusive praise for their products and performance. During the question-and-answer session that followed, one of the engineers asked Mulally if he could get a Blue Oval lapel pin like the one the CEO was wearing.

“You
should
have one,” Mulally said. “In fact, you can have mine.”

He stepped off the stage, went over to the man, and pinned it on his chest like a medal. German employees were still talking about it a year later.

Booth and Fleming organized a deep dive into the company’s European progress, showing Mulally how they had already right-sized the organization there and remade the product lineup. They were careful not to draw too sharp a contrast between themselves and their counterparts in the United States, because they knew Europe had
been in the same dire straits only a few years earlier. Mulally was impressed by the presentation.

“You guys have to keep it going while we sort out the rest of the business,” he told them. “What’s your better plan?”

Booth and Fleming were not entirely sure what he meant. Mulally explained how important it was for them to keep improving and not be satisfied with the success they had already achieved. They needed to keep raising their targets to stay ahead of the competition and the external business environment. That was why all of the charts they put together for the weekly BPR meetings needed to look five years out. It was not just about coming up with a plan, Mulally said, it was also about coming up with a
better plan
at the same time. He left Booth and Fleming feeling upbeat, but with the knowledge they still had a lot more work to do.

M
ulally had made his first trip to Japan as Ford’s president and CEO in December. It was something of a pilgrimage—and a surprising one for the head of America’s second-largest automaker. He went specifically to see Toyota—Shoichiro Toyoda, that is, the head of the Toyoda family and honorary chairman of Toyota Motor Company.
^*
Mulally had made no secret of his great admiration for the Japanese automotive juggernaut. He believed Toyota had become what Ford had once been: an agile, innovative manufacturer of products that made people’s lives better. Toyota was lean, well organized, and immensely profitable.

Officially, the purpose of Mulally’s visit was to find out if Toyota was willing to allow its suppliers to sell Ford more of the parts it needed to produce hybrids.
^†
He also wanted to find out if the
Japanese automaker was willing to work with Ford to develop new powertrain technologies. But Mulally also had a more secret agenda. He wanted to see if Toyota was open to even closer collaboration with Ford. Maybe even an alliance. The answer to all of these questions was a polite, but firm, “No.”

At the end of February, Mulally made a second trip to Asia. This time he stopped in Hiroshima to visit the partner Ford already had in Japan, Mazda. The executives there viewed Bill Ford’s decision to hire Mulally as a positive development. They knew that Mulally had made many visits to Japan during his years at Boeing and had a real appreciation for the nation’s manufacturing prowess. He quickly impressed them with his knowledge of Mazda, too. It was a cordial visit, but Mulally dropped a subtle hint that the relationship with Ford was not something the Japanese automaker should take for granted.

“Ford cannot continue to take care of Mazda forever,” he said. “I look forward to Mazda becoming stronger and learning to stand tall.”

M
ulally took his role as cheerleader in chief seriously. Ford’s employees had been down for so long, they needed someone to show them which way was up. But first he had to show several thousand of them the door.

A total of 8,000 salaried employees had signed up for early retirement or buyout offers after the company announced that it would be eliminating 10,000 salaried positions in the United States by 2008 as part of Mark Fields’ Way Forward acceleration the previous September. On February 28, 2007, some 6,000 of those white-collar workers piled their possessions in file boxes, handed their ID badges to their bosses, and shuffled to their cars with heads hung low, a Ford security guard following close behind.
^*
A few whispered the words to a protest song written by an anonymous employee to the tune of the
Beatles’ “Yesterday” that had been making the e-mail rounds for the past couple of weeks:

The same day, Ford announced that its board of directors had voted to increase Mulally’s bonus from $5 million to $6 million for his four months of work in 2006. The timing could not have been worse. Suddenly the company’s cheerleader in chief was looking more like Ebenezer Scrooge.
^*
The United Auto Workers were already in a huff over Mulally’s insistence that some executives continue to receive bonuses, despite the company’s staggering 2006 loss. Bill Ford recognized that Mulally’s windfall would provide more fuel for that fire, so he asked Joe Laymon to call UAW president Ron Gettelfinger to give him a heads-up before it was announced.

“He was deserving of being recognized,” Laymon told the union boss, noting that the recent $12.7 billion loss was not Mulally’s fault. “We’re not talking about an average guy. We’re talking about a guy who we need to help us save the company.”

Gettelfinger did not see it that way. The two men agreed to disagree, but the union boss warned Laymon that there would be an outcry from the workers. And there was. Mulally took a few punches
in the press, too, which was already ridiculing his recent decision to revive the Taurus name.

Mulally never got over his initial perturbation at Ford’s decision to drop the once-bestselling car from its lineup and had been trying to figure out how to bring it back ever since that first visit to the Product Development Center. Ford’s marketing people had explained to him that its replacement, the Ford Fusion, was the best car the company had in North America and was already making a name for itself thanks to positive reviews in
Consumer Reports
and other influential publications. Changing its nameplate back to Taurus would only confuse consumers, they warned.

“Fine,” Mulally said. “What about the Five Hundred?”

The Five Hundred was supposed to be Ford’s flagship. But its bland styling and an almost total lack of marketing support had made for a weak launch in 2004, and sales had never really taken off. Despite its homely looks, the Five Hundred was actually a decent automobile. It was based on a rock-solid platform from Volvo with a five-star safety rating and was even available with all-wheel drive. And as Mulally had tried to convince reporters at the North American International Auto Show in January, its appearance had been improved—though one of the designers in charge of that makeover had described it as “lipstick on a pig.”

It was good enough for Mulally. But when Ford announced that the refreshed 2008 Five Hundred would henceforth be known as the Taurus a month after the Detroit show, there was a great deal of snickering among veteran automotive reporters. It seemed Mulally was the only one who still thought the Taurus name had life in it. It did not help that the new car was also significantly more expensive and a lot larger than the old Taurus. It spoke to a lack of understanding of the more subtle nuances of the automobile business. In fact, sales of the Taurus née Five Hundred would continue to disappoint. But Mulally knew what none of his detractors did: The company’s designers were already hard at work on a far better version of the automobile. Mulally ordered them to make this one count—and to get it done in record time.

Derrick Kuzak, Ford’s new global product development chief, was already making real progress with the company’s engineering and design departments. His teams continued to improve Ford’s Global Product Development System, taking the original Mazda approach to new levels. Mulally had been a big proponent of computer-aided engineering and testing at Boeing, and pushed for a more rapid migration to digital design tools at Ford. Kuzak also gave his engineers more time to actually engineer by reducing the number of meetings required at each step of the design process. By the middle of the year, he and his team were well on their way to reducing the engineering cost of a new vehicle by 60 percent and cutting the time to market by 25 percent or more. These gains would have been impressive anywhere. In Detroit, they were unheard-of.

Under Mulally, the status of engineers inside Ford improved dramatically. People in other departments listened to what they had to say, because Mulally had convinced everyone that better cars and trucks were the key to Ford’s revival. All employees at every level of the company now knew their most important job was supporting Ford’s global product renaissance.

Mulally’s new multinational approach even extended to design. Before he was hired, the company was simultaneously developing two distinctly different design languages. In North America, designer Peter Horbury was still focusing on “bold, American design,” while his counterpart in Europe, Martin Smith, was winning wide acclaim in automotive circles for what he called “kinetic design.” Unlike Horbury’s chunky, chrome-heavy approach, Smith’s style was all about curves and fluid shapes and making cars that looked like they were moving even when they were standing still.