The new movie, FORD v FERRARI, chronicles the true story of how American car designer Carroll Shelby built a revolutionary race car for Ford to challenge Enzo Ferrari at the 1966 24 Hours of Le Mans.
While the movie chronicles the rivalry between these two historic brands, both are exemplar companies. In fact, they are two of fifty featured in my new book, Drive One Direction – How to unleash the accelerating power of alignment.
Let me start with FORD. Alan Mulally was the CEO of Ford (NYSE: F) from September 2006 to June 2014. During his tenure, Mulally led a highly successful alignment initiative called ONE FORD. Mulally’s turnaround of Ford is now legendary. Business “Hall of Fame” legendary.
The ONE FORD plan had several components that were so simple that Mulally had them printed on the back of business cards he would hand out. Here’s what they said:
People working together as a lean, global enterprise for automotive leadership, as measured by:
Customer, Employee, Dealer, Investor, Supplier, Union/Council, and Community Satisfaction.
Aggressively restructure to operate profitably at the current demand and changing model mix; Accelerate development of new products our customers want and value; Finance our plan and improve our balance sheet; Work together effectively as one team.
An exciting viable Ford delivering profitable growth for all.
In addition, Mulally created sixteen “expected behaviors” that formed the basis of the cultural transformation.
Mulally also instituted a new management process known as the Business Plan Review. Every Thursday, Ford’s entire global leadership team was required to attend. This provided a very practical and hands-on way for Mulally to add management discipline to the ONE FORD plan.
“The expected behaviors and the Business Plan Review created the culture and management system to align everyone around a compelling vision, a comprehensive strategy, and a relentless implementation plan” said Mulally. “Everyone knew the plan, the status against that plan, and all the areas that needed special attention. Everyone was working together to change the reds to yellows to greens.”
In 2014, FORTUNE magazine named Mulally the third best leader in the world, following Pope Francis and German Chancellor Angela Merkel.
The ONE FORD plan produced amazing results. During Mulally’s tenure, Ford rebounded from a $12.7 billion loss in 2006 to a $6.3 billion pre-tax profit in 2014. The stock price roughly doubled during his 8 years as CEO and rose an astonishing 1,640 percent from the low during the financial crisis.
Now, let’s talk about FERRARI. Ferrari (NYSE: RACE) might be the ultimate fast-lane company. (When your stock ticker is RACE, you better be fast.)
Ferrari began competing in the Formula One World Championship in 1950, the year the competition was established. Ferrari is the only constructor to have raced in every Formula One season—and they have won more championships than any other team.
Ferrari invests roughly $600M per year in their Formula One racing program. While the majority of this is recovered through sponsorships and Formula One’s profit sharing, the net investment is believed to be in excess of $100M.
In 2003, they started Corse Clienti, which enables a small group of people to buy and race Ferrari Formula One cars. Here is how they describe the privilege, “Corse Clienti makes the car’s owner feel like a real Scuderia [Italian for “stable”] Ferrari driver. Owners don’t have to worry about anything except putting on their gloves and helmet, driving, and having fun, Corse Clienti does the rest.”
In 2010, Ferrari also started the Ferrari Driver Academy to develop young Scuderia drivers. “I’d like to think that Ferrari can create drivers as well as cars,” explained Enzo Ferrari.
A recent trip to a Ferrari store was a testament to the amazing power of Ferrari’s investment in racing.
The store’s prominent feature was a red (of course) Ferrari Formula One car on display. The store sold T-shirts, scale models of Ferrari cars, Ferrari sneakers, Ferrari hats, Ferrari luggage, Ferrari gloves, Ferrari pens, Ferrari sunglasses, Ferrari flags, and more.
There is even a children’s section that sold Ferrari onesies, Ferrari baby shoes, and all sorts of other items to indoctrinate your child into the faithful.
Several years ago, I was in Italy on the weekend of the Formula One race at Monza, Italy—the home of Ferrari. The Ferrari Scuderia won the race, and the entire nation went wild.
Very few brands achieve iconic status. Fewer still achieve the kind of fanatical evangelicalism among their customers that Ferrari does. And the most fascinating thing about Ferrari is that most of its passionate fans will never own one of their cars. (They only sell 9,000 cars per year!)
Think about that. How many people who will never be your customers are nonetheless fanatical ambassadors for your brand?
For Ferrari, it all starts with racing.
Ford and Ferrari are rivals on the racetrack, but both companies exemplify the amazing impact when you unleash the accelerating power of alignment.