This post originally ran in VentureBeat
Ford announced that CEO Mark Fields retired on Monday and will be replaced by Jim Hackett. After months of shareholder grumblings about Ford’s tumbling stock price, it’s obvious that Fields’ hand was forced, but he was allowed a graceful exit. Ford’s stock has tumbled 35 percent since Fields took the helm, so it’s no huge surprise to see him go.
Fields’ connected car dreams
Nobody ever said Fields was not ambitious. During his tenure, we saw a dramatic change in direction within Ford as it took a turn sharply toward connected car tech, autonomous vehicles, and mobility solutions. Fields was instrumental in establishing Ford Mobility LLC, a division within the carmaker specifically focused on mobility solutions and autonomous vehicles. In the last few years, Ford snapped up robotics and artificial intelligence company Argo AI and urban vanpool provider Chariot. It also invested in beefed-up datacenters to process the onslaught of data—that’s about $1.3 billion in investments and acquisitions to support connected car efforts. In August 2016, Fields even made the bold announcement that Ford will have a fully autonomous vehicle available in 2021, startling the likes of Tesla and Google. Just days before his departure, Ford also announced its first-ever Over-the-Air (OTA) updates for its cars, updating SYNC 3 with Android Auto and Apple CarPlay. Many of the big announcements from Ford in the last two years have been focused on connected car tech and autonomous vehicles, but it looks like there was not enough follow-through.
But you must build it for them to come
The problem is, in the meantime, the company has delivered little groundbreaking tech. Ford’s OTA update is huge, but falls in the too little, too late department. By comparison, General Motors has released the world-beating electric Chevy Bolt, beating the Tesla Model 3 to market by a mile. Elon Musk is still stuck saying what the Model 3 will do while Chevy is busily selling cars. It also has a hit on its hands with the growing Maven car service, launched the luxury lifestyle service Book by Cadillac, and invested $500 million in Lyft, ostensibly to further mobility solutions. Fiat Chrysler Automobiles (FCA) also leaped ahead in autonomous tech when it partnered with Google’s Waymo in late 2016.
The accomplishments by GM in particular cannot be underestimated when Wall Street is awarding Tesla higher valuations than any of the Big Three, even though Tesla has rarely turned a profit and the century-old carmakers are doing fairly well despite a down market on new cars. Getting innovative products and services to market quickly matters when you are a legacy company competing with disruptive newcomers like Tesla.
New CEO promising home runs
Ford has brought in Jim Hackett from office furniture maker Steelcase. The company is touted Hackett as a “transformational business leader” in its press release. “We’re moving from a position of strength to transform Ford for the future,” Bill Ford said. “Jim Hackett is the right CEO to lead Ford during this transformative period for the auto industry and the broader mobility space. He’s a true visionary who brings a unique, human-centered leadership approach to our culture, products and services that will unlock the potential of our people and our business.”
The three priorities laid out in the press release makes one thing very clear—speed to market is a problem, and it needs to be fixed. To wit (from the press release):
Hackett, together with Bill Ford, will focus on three priorities:
- Sharpening operational execution across the global business to further enhance quality, go-to-market strategy; product launch, while decisively addressing underperforming parts of the business
- Modernizing Ford’s business, using new tools and techniques to unleash innovation, speed decision making and improve efficiency. This includes increasingly leveraging big data, artificial intelligence, advanced robotics, 3D printing and more
- Transforming the company to meet future challenges, ensuring the company has the right culture, talent, strategic processes and nimbleness to succeed as society’s needs and consumer behavior change over time
The first two points are basically “Get better stuff to market faster” and the final one is to “React to market forces faster.” Speed has always been key in the automotive industry, but today it is not proven on the dragstrip but in how quickly new tech can be placed in consumer’s hands.
Load the bases with innovation first
Perhaps the cautionary lesson best imbibed by Mr. Hackett, based on Mr. Fields’ hasty departure, is this: focus on how Ford can best apply vehicle connectivity to a short-term strategy that quickly elevates drivers’ user experience and their brand affinity to Ford.
As an example, how about offering a first-year lease that’s dramatically less expensive in exchange for the lessee opting into a comprehensive (and openly acknowledged) data collection and sharing effort? Essentially a version of the “freemium” model long employed by vendors of consumer software. Such a tactic would garner loads of attention, immediately begin to leverage the massive investment in big data infrastructure already made by his predecessor, and get a large number of new drivers (think Millennials long ago inured to having their personal data exposed in exchange for services they value) behind the wheel of a Ford in short order. All the while, this strategy will be opening up several additional potential monetization streams for Ford by openly selling driver behavior data to third parties like insurers and dealers for cross-sell purposes. It’s just an idea, albeit one that’s decidedly different, but it acknowledges that the market as OEMs have come to know it is ceasing to exist.
There’s nothing wrong with broad rubrics like “mobility” and “connectivity”, nor anything inherently wrong with long-term strategies that seek to monetize under those rubrics comprehensively in the long term. But what’s clear is that Mr. Fields and Ford have been punished by Wall Street (and drivers!) for pursuing a long-term strategy at the cost of an understandable and compelling short term one. They are not mutually exclusive, and in a fickle and rapidly changing market they must not be thought of as such.