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What Does Alan Do and Why Does it Matter?

Posted in Posts, and Syllabus Schedule

For those of us who do not have much of a business or even economics background, it is difficult to truly understand how large corporations work. One may not truly know the answer to basic questions such as: what does a CEO actually do on a day to day basis? Or: how do meetings of the board of directors work? These questions become even more difficult to answer when dealing with massive – and thus complicated – corporations such as Ford or General Motors.

One of the big take aways, as I see it, from Bill Vlasic’s Once Upon a Car, is the massive effect a CEO is capable of having on a company. Given my lack of business knowledge, it was difficult, before reading the book, to fully grasp how a CEO is fully able to either run a company straight into the ground or save it. Through learning about all that Alan Mulally did for Ford, one learns not just what a CEO of an enormous corporation is responsible for, but also how one runs such a corporation correctly. Many of the necessary qualities a CEO must have, or not have, are on display in comparing Mulally to Richard Wagoner, whether it be ability to motivate people, or the ability to put one’s ego in check in order to fully grasp a situation. In short, Once Upon a Car is a book about competence and incompetence in running a business, focused within one industry.

An interesting side-story of sorts, which occurs mostly towards the end of the book, revolves around Sergio Marchionne. Marchionne clearly has a very different style from Mulally, however he also seems to work effectively as CEO. Perhaps it is a relentless drive towards accomplishing an effective goal, and an ability to convince other people to also want to accomplish that goal is what links the two men, even as their styles of leadership vastly differ.

One Comment

  1. We need to ask additional questions:

    1. is the person in a turnaround situation is the best person for normal times?
    2. would Mullaly have been able to do anything at GM? he had absolute support from the board of directors (Bill Ford) and a coterie of exceptional senior managers (Lewis Booth as CFO, Mark Fields in several roles) plus there was a sense of crisis and a restructuring in progress (the “Way Forward”), both lacking at GM
    3. the decision to mortgage the company was made before Mullaly arrived; absent that, Vlasic suggests Ford would not have been able to stave off bankruptcy
      Let’s rephrase this with the jargon of formal logic (or proofs in mathematics): something can be necessary but not sufficient. We’re attracted to personalities, we’ve been imbued with the idea that leadership matters. I’ll accept the premise that Mullaly (or someone similar) was necessary. (If I wanted to be a devil’s advocate I’d argue that what really mattered was splitting the CEO and the Chairman function in two, but I personally believe that was necessary but not sufficient.)

      However, I do argue that Ford was ready for someone like him. GM wasn’t. And because it was bereft of new product, Chrysler was beyond saving.

    May 1, 2013

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