Feature: Ford's driving force

A group of exhausted Ford Motor Company executives had just returned from a grueling trip to Europe and were looking forward to home and a hot shower. Suddenly, CEO Jacques Nasser brightened. "Hey, it's only the middle of the afternoon," he said. "Let's go down to the design studio. We could spend four or five hours!"

"He has boundless energy," says David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan. "The question is, can he pull everybody else in the company with him?"

Nasser has been poking under Ford's hood since his days as a student intern at Ford Australia. Now he's in the driver's seat, bent on transforming the world's second-largest automaker into "the world's leading consumer company for automotive services."

"He feels to the depth of his soul that what he's doing is right for Ford," Cole says.

To succeed, Nasser will have to jettison the company's old ways and use technology to open up communication with its customers: To listen as no car company has listened before; to know its customers so well that it can sense and respond to their needs even before they articulate them; to provide not just cars, but also all their automotive needs.

A long road

Nasser's strategy relies heavily on information technology, which he calls "the bloodstream that feeds the business process." And he acknowledges that Ford could use a transfusion. "I'd say in terms of design and engineering, [IT is] quite advanced," he says. "In terms of manufacturing process - average; in terms of logistics/supply chain - out-of-date; in terms of customer interface and data mining - out-of-date."

Nasser cites Wal-Mart Stores as a model for integrating technology - particularly in driving logistics. "I think they may not even think about it as technology, but that's probably the best of all worlds - when it's ingrained," he says.

Jim Yost, Ford's new CIO, knows what he has to do: "Get faster," he says. "It's up to us to help envision what a relationship with our consumers should look like throughout the life cycle of vehicle ownership and to deliver the process improvements and technology that enable and enhance those relationships."

Stepping on the gas

For the past couple years, Ford has been in the fast lane. As president of automotive operations, "Jac the Knife" was known for cost cutting and was largely credited with Ford's 11 straight quarters of improved earnings. (It makes about $US1,000 more per vehicle than General Motors) But car sales are down, the European and South American markets are weak and the Internet looms like the sword of Damocles over traditional marketing. Nasser can't afford to cruise.

Since taking the wheel in January, he's put the pedal to the metal. Nasser has rolled out the new Thunderbird; acquired Volvo Cars; hired Wolfgang Reitzle, former second-in-command at BMW; acquired Kwik-Fit in Edinburgh, the largest auto repair chain in Europe; acquired an auto parts recycling company with an eye to building a Web-based, worldwide network of used automotive parts; launched the 2000 Mercury Sable on the Internet, personally fielding 300 questions online; and replaced more than a dozen top executives, including the company's CIO.

Grand Prix

Nasser's furious pace reflects the industry's high stakes. Each year, Americans spend $350 billion on new vehicles but spend $600 billion more on aftermarket products and services such as repairs, maintenance and parts. That's why Nasser wants to own the entire vehicle life cycle - and the customer's loyalty - from the design table to the junkyard. "The whole industry has been very much transaction-oriented: Sell a vehicle and hope we never hear from [customers] again until they're ready to buy another vehicle," he says. "We've got to change that. This isn't a transaction; this is about a long-term relationship."

That cradle-to-grave ambition has fueled Ford's recent moves into direct car retailing, post-warranty repairs and service and even used parts. "Our dealers get about 15 per cent of [after-warranty] service work, so there's 85 per cent out there going to someone else," he explains. "That's a part of the value chain that we haven't been involved in before. We think it's important not just as a stand-alone business, but also as a means of continuing a relationship with customers."

Moreover, by hyping Ford's alleged transformation from an automotive company to a consumer company, Nasser hopes to share in the optimistic stock valuations consumer companies enjoy - which are typically 30 to 70 times per-share earnings. By contrast, Ford's valuations is only 11 times earnings.

Increasing velocity

Nasser has used technology to push some design tasks to Ford's key suppliers via an extranet, and his enthusiastic embrace of e-mail has opened his eyes to the Internet's communications possibilities. "My 'Let's Chat' [e-mail weekly newsletter] goes out to 100,000 people worldwide, and it's unfiltered," he says. "I can put anything I want in there, and it comes back in the other direction."

Nasser reads 300 to 400 e-mail responses per week. "It's changed the velocity of our understanding of what's going on in the company,'' he says.

But it hasn't changed the style. His need to communicate through the ranks has been a hallmark, says David Murphy, vice president of human resources at Ford, who has known Nasser since his days as president of Ford Australia. "I can recall going into work on a Saturday to discover the president in jeans and a T-shirt chatting to the guys on the assembly line about the product and the business. He has carried that through to today" via e-mail, Murphy says. In fact, "He probably is prepared to spend more time one-on-one with people who send him e-mails than I would necessarily advise him to do."

Taking e-commerce for a spin

Nasser knows that the same technology that keeps him close to his people can help Ford understand its customers -- the final, all-important link in his vision and a connection that's been weak in the auto industry. "I don't see that in the car companies," says John Jordan, director of e-commerce research at the Ernst & Young Center for Business Innovation in Cambridge, Massachusetts. "They are not listening."

But Nasser has seen how the Internet can drive the customer right into the design studio. "The Mustang team has gone online and talked to customers and got direct feedback on features, likes, dislikes, what's going on with their product," he says. "To me, that's where technology can be very, very important."

He says direct interaction with customers will help Ford develop the intuition it needs to anticipate their needs.

The recent acquisition of Kwik-Fit has shown him other ways technology can tie a company to its customers. "They've probably got the best customer assistance center that we've seen anywhere," he says. "It's all tech-based. They take calls, and they know exactly what the customer profile is. They know they're coming up for a new battery or new tires. They know their insurance situation, their financing situation. It's helping connect a lot of these different businesses that previously were really separate businesses."

That's exactly what he wants to do with Ford, but it will take more than technology. Ford dealers, traditionally the custodians of customer information, will have to hand it over, and many of them feel squeezed between Internet sales and Ford's new retail business. But Nasser is convinced they will see that there's no other way. "What's threatening is that the world is changing, not that we woke up one day and decided to be involved in retail distribution,'' he says. "Longer term, I think we own the customer, frankly, because we've got the capability of having the customer database.''Anyway, he says, electronic business isn't a choice for Ford. "If we did nothing, most likely you would have a tremendous restructuring in the distribution area in any case, because consumers are demanding it. And we and our dealers would lose control of that process."

He'd rather see Ford in control of an integrated network based on customer service rather than product. "If you're going to have a long-term relationship, it has to go beyond just that one product," he says. "It's got to be services, [and] it makes sense to be able to go across the brands, as well."

Getting in gear

Nasser is clearly thinking about the technology to support his revolution, but many customer-centric aspects are barely on the drawing board. "I don't see that Ford has a real big-buck Internet effort going," Jordan says. "They have to listen [to customers]. And if Ford doesn't, you know Honda or Toyota is working on it."

And Wall Street cautions that calling Ford a consumer company doesn't make it so. "Wall Street will always perceive Ford as a car company," says Mike Ward, an analyst at PaineWebber Inc. in New York. "The prospect of Ford trying to change its perception on the stock market to a consumer company is ludicrous."

Still, Ward says there's a lot to Nasser's vision. "I think internally [Nasser's] goal is to get the company more focused on how they treat the customer and all they're leaving on the table," he says. "There's a lot more they can get from a revenue-and-earnings standpoint, so from that point of view, it's an excellent strategy."

Nasser's toughest battle may be with corporate inertia. "Large companies can't move fast," says Cole, who likens Ford and Nasser to "the classic immovable object meeting an irresistible force."

Whether Nasser's force is irresistible remains to be seen, but those who have worked with him are believers. "Jac has been training his whole career for this," says former CIO Bud Mathaisel, "and we haven't begun to see what he's capable of yet."

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