We need to drive a managerial mind shift from cost control to creating shareholder value
Ford required something beyond change. They needed their people to start caring about things the old way had taught them not to care about. Our unique approach gave their plant managers the confidence to make a total mindset shift, rooted in commercial principles, and to commit to $34m in financial improvements.
The problem to solve
Ford’s North American plant managers had historically managed the business to minimise fixed overhead costs and control employee head- count. Their reporting, their bonus systems and their culture all rein- forced the same set of behaviours around cost control.
However, senior executives realised that some of these behaviours were conflicting with a desired cultural shift toward improving quality, building customer brand loyalty and ultimately creating value for the shareholders (SVA). Driving the necessary mind shift in managers with entrenched habits and finding a solution that minimised production disruption had been proving difficult. The challenge was to get away from 70 years of “control labour and overhead” and toward “Think Share- holder Value”.
Commitment made by Ford’s plant managers in Kentucky to financial improvement
"I could not have held that meeting and gotten the resulting commitment to financial improvements I did, without the Profitability simulation. It created the understanding of long term shareholder value in my managers that I needed."
We interviewed most of the plant managers, along with sales, quality control, engineering, HR and other teams to build up an in-depth picture of the knowledge, attitudes and concerns of the managers whose attitudes we were focused on. Next, we identified exactly which of the many daily management decisions currently being taken at the Kentucky plant which, while minimising labour and overhead, were conversely destroying shareholder value. By drawing all these strands together, a simulation was created that exactly mirrored Ford’s entire business model.
Considerable detail was built in around the manufacturing process and the key plant decision processes made by managers, to ensure that the simulation was a true reflection of their daily environment. The managers could now see exactly how their individual actions rippled out through the wider business – and how they directly affected shareholder value.
Immediately after the simulation was created and rolled out across the business, the Kentucky plant manager was able to secure a commitment from his managers to $34m in financial improvements during the current financial year.