Bravery Meeting 85 (Australia)

Transcription

[MUSIC] Let's give a GSB welcome to Ellen Melleli. [SOUND]. Thank you. Thanks. Thank you. Thank you. So, how are you? Good? I'll be outside after this to take your car orders. [LAUGH] We've got some great vehicles for you. First of all it's really neat to be back, in the MBA program. And what I thought I'd do is, you're still studying case studies, right? Do a lot of that? And they describe the situation, give you lots and lots of data, then you're supposed to think or reflect on what you would do. So I thought a way to introduce our conversation today was, let's to a case study on Ford, okay? And then you get to be me. Okay? Cuz I'm looking for a few more good ideas. And I'm gonna get it here today. Okay, so, it's, 2006. It's, September. I'm, the, the chief executive officer at Boeing, commercial airplanes. I'm looking forward to creating one more Boeing airplane. To replace maybe the 737. 80% of all the seats that are flying worldwide are Boeing airplanes. Feeling really good about Boeing, feeling really good about our contribution to safe and efficient transportation, and I get a phone call from Bill Ford. I'm going, Bill Ford, of like the Ford Motor Company? The great grandson of Henry Ford? That's the one. And he said, we're in really tough shape, and I would really like your help, and would you consider coming to Ford. So, I started doing my due diligence, and at the end of the day, I was being asked to serve a second American, and global icon, and I just couldn't, I just couldn't turn that opportunity down. So, I walk into the office in the world headquarters of the Ford Motor Company, the 12th floor and I look out the window, and here's the rogue plant. And here's where Henry Ford created the assembly line, this is where Mister Toyo Da of Toyota came to visit. To learn how to make cars and how they continuously improve their quality and productivity. And here's the entire plan. At the time it was a 100% vertically integrated. Most efficient operation in the world. And I'm, reviewing the situation. And here's the situation. I check with our finance people and they give me the the great news that we are projected to lose $17 billion in 2006. You could run out of money really fast. At $17 billion a year. I also review in the situation about what Ford has become. And Ford has now become a house of brands. And remember, I left Boeing to come to Ford. And Ford was Aston Martin, it was Jaguar, it was Land Rover, it was Volvo. I was, had a, had a significant relationship with Mazda. And so Ford was this house of brands. And it also happened to have Ford and, Mercury and Lincoln brands also. Also, Henry Ford set up for it all around the world so that he can participate in the economy. Not only provide great cars and trucks but also be a part of economic fabric of all the countries at which Ford operated, but Ford had become very regionalized. And none of the Fords talked to each other around the world. There was no synergy. And we were competing with the best global companies in the world and we had no scale, and no integration of all the intellectual capability around the world. Also, in the United States, we had labor agreements with the unions, and our cost structure, where we really couldn't make cars in the United States and make them profitably. So we stopped doing that. And ones that we did make were pretty marginal. And we focused on bigger SUVs and trucks. So if you wanted to, if you wanted to, you know, live on a 150 and put your house behind it simultaneously, you needed to get the best truck in the world from Ford but we didn't have a full family of vehicles, in the United States. Also, we had never, we really hadn't made a commitment to the investing class or the competition so we were kinda competitive on quality and fuel efficiency and safety and really smart design. And. But we weren't really best in class. In addition, we were unprofitable in every one of those brands and in every model we were losing money. Thinking back, I wonder why I did come. >> [LAUGH] >> And we we're running out of cash really fast. So, that's the situation. [SOUND]. I've got a card and I have a pencil. So, please shout out what you would do. You thought this was gonna be a free lunch. [LAUGHING] Okay. Now with that situation, this is Standford. The MBA program. We've got engineers, we've got business, we've got the smartest people in the world right here. Right? OKay, what would you do? Okay, just shout it out. Okay, now I'm going to take notes, because I've got a feeling that this is going to work out really well. [LAUGH] Okay, fantastic, probably over capacity. Good. >> Invest in R&D. >> Good. >> Standardize vehicle platform. >> Standardize the platforms. Wow, good. >> Labor negotiations. >> What would you do about that? >> Try to reposition the probably long term pensions to be less. >> Very good. [LAUGH]. >> Okay, what else? >> [INAUDIBLE]. >> Wow, what do you mean by that? >> Put a little more emphasis on the four brand of cars, not all the inferior cars. >> Fantastic. Fantastic. >> [LAUGH] >> Okay, what else? >> [INAUDIBLE] >> [LAUGH] >> That was, not part of the plan. >> [LAUGH] >> Although we. >> That's what happened. >> But that's what happened cuz we're a real pain right now. >> [INAUDIBLE] >> Wow, maybe all around the world. >> Figure out what customers want. >> Really? >> [LAUGH] >> [INAUDIBLE] >> Overhaul your design process. Absolutely. End of production. Maybe do it together. [LAUGH] What do you think the customers really want? >> Safety. [INAUDIBLE] Fuel economy. >> Focus on quality and safety? Entertainment. >> Seamlessly connected to the internet. Hands on the wheel, eyes on the road. Bluetooth activated. Sync my Ford. [SOUND] Oh man, I found the next management team right here. >> [LAUGH]. >> What else? >> [INAUDIBLE] >> Really? >> [INAUDIBLE] >> You mean you can't compete on a global scale by operating regionally? That's really something. >> We have a performance culture based on discipline. >> Whoa. >> Lower your reliance on incentives. >> Whoa. [LAUGH] >> [INAUDIBLE] China. [LAUGH] [LAUGH] I personally have this philosophy if I, if I think anybody's from China I give them a hug. [LAUGH] Look at we'll talk about this in a little bit but the, the China market now as you know, is bigger than the United States. It's just a fabulous opportunity and I love the Ford brand. We're expanding as fast as we can. >> [LAUGH] >> Now why would you do that? >> [INAUDIBLE] brand had to be Ford and Lincoln. >> Oh a tweeners? Is that a new business school expression? >> [LAUGH]. It was a good... We'll talk about this some more. And again this allows you to ask some questions that you want to ask to, because all of these are a clear part of the plan. What would you do about financing? >> Leaves you in debt. >> You better not run out of money. Right? So, when you do a transformation like this the most important thing is when you have a plan... But two, do you have the finances in place? Cuz if you run out of money during the, during the transformation it doesn't work out. So get a home improvement loan. Got it? Okay, what else? >> [INAUDIBLE] >> Cuz they're so cool. Yeah. But better have a cost structure here so you can. Make them here too. I did that on the first day. [LAUGH] Back to [UNKNOWN] oh, you [INAUDIBLE] okay. This is fantastic. And this is what we did. And thanks for inviting me. [LAUGH] And I would propose to you that everything you said is about leaderships, cuz that's what your class is about today. Everything you say is about leadership. Cuz every one of those is a courageous decision. It's gonna come from having a, a point of view about the future, and having your conviction that you're gonna have a comprehensive plan to implement that compelling vision. And just one last question. What would you use, what would you have used for, your vision in this situation? Something, think of, of like what would you have rallied everybody around? Because you clearly are where you are, but you're going to different place, you just described this different place. What would you, what would you do about that compelling vision? How would you describe what your new Ford is going to be like? What do you think that's important? >> [INAUDIBLE] >> My god. >> [LAUGH] >> Oh man. I don't know if I can wait until after this to meet you. >> [LAUGH]. [LAUGH] Okay. That's absolutely incredible. And that's exactly what we did. And when you walk into that same office today, where I walked in four and a half year ago, the. The entire wall is filled up with Henry Ford's vision for the Ford Motor Company that he laid out on January 24th of 1925 in the Saturday Evening Post. And you can Google it and find it, it's like fantastic. And it says, opening up the highways to all mankind. That's what Henry Ford was about. He wanted to make traveling on the highways affordable and available for all of us. And at the time, the only people that had a car were, were wealthy. He couldn't afford a car. So, he describes in this vision how it would have to be big in scale. Big in scope. To get the economies of scale. They'd have to be a complete family vehicle. They have to be best in class, in safety, in efficiency. And have to contribute to making life more pleasant, more useful. Everybody will have to participate. And at the time, January 24, 1925, he's at the top of his game. He has 56% market share worldwide. Every country around the world wants Henry to come set up his operation. He's wildly successful by any measure, and at the end of this advertisement for his vision, it says that, it's not about what Ford has done up through 1925. But this is all about the opportunity to serve all the people around the world. Is that incredible? So that's what we went back to. He didn't, he wasn't talking about Jaguar and Aston Martin and Landrover. He's talking about Ford. So we went to work and we did all those things that you just said. We focussed on the Ford brand. We decided to have a complete family of vehicles, small, medium and large, cars, utility and trucks, in every region around the world. We also decided that they'd be best in class, in quality, in fuel efficiency, safety, really smart design, like Sync and MyFord. And because of our scale, you know, [INAUDIBLE] keep going on around the world, absolutely the very best value. We also decide to match our production to the real demand, which is, what [INAUDIBLE] pointed out; cuz we were, cuz we were facilities for a, you, market share is considerably higher from years back. So we were profitable. We also invested in accelerated our investment in all these new vehicles, during the worst of times. So even though we're loses 17 billion dollars. We actually invested more during the worst of times so we'd be here to help everybody as part of the accounting recovery. The financing, we took out a small improvement loan. We took this, this plan to 500 banks. We presented to 'em. We raised 23 and a half billion dollars. Bankers don't want your assets. They want you to be successful. They actually would like you to pay the money back. Not quite as fast as we're paying it back now, cuz they like to get some interest, more interest too. And then the last thing is we decided that we're gonna work together as one team for around the world. No matter where we operate, we're gonna operate as one team. And use all that energy, and that's why you see the new C one platform for the Focus. And so we're gonna have ten top hats off that new, that new platform. And, we could be making 2 million of them, worldwide each year, in five different locations, and 80% of the parts are exactly the same, all customized to the unique taste of the, of the consumer's around the world. You could imagine with that approach, what we can do vis a vie the competition. Okay. That's my report to the committee. Nice job. Okay, now, what are you thinking about and maybe if you just, we've got some microphones, although it's pretty good here, too. And maybe just introduce yourself, and let's just move to a, there's so many things to talk about... Especially with economic development and energy independence and security and, environmental sustainability. This will be fun. Okay, where's, this one in the middle. Oh dear, let's just say row 18 wanted to ask this question. Hi there. Oops. Miko, nice to meet you thanks for coming. What do you think about the sustainability of traffic going forward? And how, what is forward? So what is your vision to, to make traffic more sustainable? >> Absolutely, this is a really important question, and I'm really, I'm just so pleased that the position Ford is taking going forward. We, part of our business is gonna be how to we have transportation solutions, and as you know, we have so many cities now that are moving, into 2, 3, 4, 10, 20 million people in, in cities. And so we're gonna be part of that solution about using all modes of transportation. But when you look at, the specifics of your question, I think the technology roadmap we see going forward, which is what we're investing in. Is there's a lot of room to improve the internal combustion engine both petrol and diesel. And that's why you see things like turbo charging, direct fuel injection, light weight materials, integrated electronics. Lots of opportunity to improve. The new Explorer, 30% improvement in fuel mileage. [COUGH]. >> You know, all the capability if you need to carry seven passengers. Then I, I, we see more biofuels, ethanol, cellulosic, going forward, alternative biofuels. I think we'll then see more electrification, always be that component of natural gas, especially for the bigger vehicles, and we have the infrastructure for the natural gas, then you'll see more electrification, more hybrids. There are some plug in hybrids, and the there are some more all electric, but the real issue there is, the infrastructure, and the cost of the batteries, because today, you have an all electric vehicle, and the battery alone costs $15,000 and they weigh 700 pounds, so, it's nice that you and the battery can ride along in the car, but not anybody else. [LAUGH]. >> but, we're working on that really hard, and we're making a lot of progress on it. But it's that part on the technology but also the infrastructure. [LAUGH]. >> But I think electrification will see more and more. And then, we haven't, we're still very very positive about hydrogen. But the issue there as you know is, that one, you have to have the infrastructure again. So, it's a public-private partnership between the governments, and business all around the world on how you wanna proceed. But also, you need really efficient fuel sales, that are cost effective, which we don't have today. And you still need the very efficient battery, cuz you're gonna take hydrogen next to a platinum, outcomes a water up take pipe. And electricity goes over to the, the new, new cap of battery. So, kind of the same enabling technological box that we need to all of them. But it's kind of that progression that we're seeing going forward. I think the biggest thing is that we. We, the citizens of the world, are gonna, play a very important part, in making this decision about where we go. What do we wanna do about energy independence and security, right? What are we gonna do, what are we gonna do about, generating, our electricity clean, cuz you can't just be working on using it clean, but we need to generate it clean. And then where do we wanna go with energy policy, by going forward. On the the sustainability [UNKNOWN] thing, 80% of all of the Ford vehicle components are from recycle. So we have, very quietly moved to a place where you really do wanna use the minimum amount of resources, the minimum amount of time. Yes, sir. >> hi. My name's Alex. Thank you so much for being here today. >> Glad to be here. >> I'm actually a joint MBA and Masters in public policy student. >> Very good. >> And I, I see Ford as, basically a great example, almost symbolizing this country. Coming out of our, recession here, on the one hand, a remarkable turn around story. 6.6 billion of profit last year. Sales are up. >> Keep, please keep going. [LAUGH]. >> The company's looking great for the future. On the other hand, There's still very high employment and employment for Ford has you know, had made some tough decisions which were absolutely necessary. >> Yep. >> And the country in some ways has corporate profitability, it's highest level ever last year but, other parts of the economy aren't doing as well and I'm wondering where we go from here? Do we need to accept that U.S.manufacturing is going to look different in the future and. And how do, the leading companies, how should they think about operating in this com, in this country and,. >> Wow. >> Also internationally? >> Absolutely. First of all thank you for your comments as the dean pointed out is just, this is so important for manufacturing, is so important for. The U.S. is so important for every country in which we operate around the world. Because, we are, a key part of the solution for economic growth, right? Also, energy independence and security. And, also environmental sustainability. I, I think I mentioned during our, our conversation, with the Dean earlier that, when I first When I first arrived at Ford and I started working on the public-private partnerships and going back to Washington D.C. I felt like I was running drugs or guns. You know, if you're from the auto industry, because, they stood so tall, for trying to help people understand what the cost benefits were for both fuel efficiency and, safety. Because we were taking a lot of costs and materials and putting them out of. [COUGH]. >> Reach for people to own them. And, I'm so pleased with your comment that where you, how you started out because we are now, viewed as a, a major, portion of the solution. Ford Dollars, big issues. And going back to the issues that you raised, and we, and we have to talk about it. We have serious problems. Now you take our trade deficit, and you take our, budget deficit. And this is not sustainable. I mean, we all, have been living way beyond our means. For a lot of years, and we have structural problems that we absolutely need to address. And [SOUND] it was mentioned, that I'm on the President's Export Council and also we have a manufacturing sub committee there. I'm just,. so, pleased that we have now moved the discussion over to what are we really gonna do about the intersection now, of economic development and, and, and environmental sustainability. Because we have to do this in a public-private partnership, and we're the ones who are gonna have to vote. We can't del, you can't delegate this to somebody else. [COUGH]. >> These are issues that we need to decide where we wanna take the. The U.S., and where do we want to take our countries, all around the world, and how do we do that working, working together. So do we have a long way to go? Yes. Is now the time to, to really, move those up on the agenda? Absolutely. I think there's no reason, why back to your question about the United States, why we can't compete with the best in the world just like we're doing, with manufacturing. And I think it's true for every country around the world. As all the countries move up Maslow's hierarchy and create these great jobs and, great industries. It's gonna be so globalized that, that operating everywhere helps everybody, and it's not like a have or have not or zero, sum game. We have to move the economic development up for everybody, right? So I, I, I think that the most important thing is, you got, we just got to be competitive and the data sets you free, right? You, you all business people and the data sets you absolutely free. What does profitable growth look like? There's only two things you have to do, right? Create products that people really do want and value, and will actually pay for, and do it more productively than your competition. That means use less resources and less time. Nanny. [LAUGH]. >> It's taken you two years to get this degree. I think I've contributed to helping you get through this. [LAUGH]. >> Always go, go back to that. What are we here? What's our brand? What do we stand for? And, do we have a profitable growth plan cuz if you're not profitably growing, what are you doing? [BLANK_AUDIO] You're not? You're going out of business. Yes sir? >> so. >> I've never had a question asker so close. [LAUGH]. >> Are you okay? >> I, I'm feeling fine, how are you? >> Yeah, very good. >> Okay. So, I wanna know what you think about the, the Google car, and is it real? And what's the impact of that? >> Do you know about the Google Car? It's one of the dreams of the founders, that have a, a autonomous car. I really like driving. [LAUGH]. >> now, I say this with, with all due respect; because as an airplane person too. You know, we've gotten to the place now where, most of our airplanes they can take off by themselves they can land by themselves, but we always have pilots there, and as an engineer [COUGH]. >> You just can't anticipate everything there's not another. There's no, nothing like the human being, for being able to handle, multiple things, and analyze things, and then deal with it. And, with all engineering skills, you just can't anticipate every situation, that sophisticated vehicles can get themselves into. And so, I think that, that, you can write these specific uses of it, but it be very controlled. And there's no reason technically, you can't do it. but, you can imagine all the different issues that go along with a systems solution. So from Ford we could always have you, in charge. And you're gonna be the driver and you're gonna be a better driver because a sink in my Ford. Because you're gonna be able to use, access all your, your information. Your navigation, your guidance control, your hands are gonna be, be on the wheel, you're gonna use a five position consumer electronics controller, and you're gonna be voice activated. So you can hear everything with your voice, so you can keep your eyes on, and you're gonna be seamlessly connected to, our Digital World. >> Thank you. [LAUGH]. >> You're welcome. Yes sir, oh, oh I'm sorry [INAUDIBLE]. Yes. >> I got a mic. >> Okay. [LAUGH] >> You win! >> Yeah. I'm, I'm Clay Calhoun. And I'm a, a second year student here >> Very good. >> First, I wanted to say I love my Ford Edge. It's the best car I've ever owned. [SOUND]. I, and second I, I worked a, a little with GM during their restructuring. And even more than kinda their balance sheet, what I though was the main problem, was the institutional culture. At the company, which was, you know, management versus, labor instead of working together. You kind of, see sense of entitlement from everyone there. And from what I understand, when you got to, Ford, things weren't all that different. Can you, talk about, maybe tell, some stories as to what culture's. >> Oh, yeah. >> Like then, and what you did to, change the culture. and, you know, kind of how you initiate cultural change from the top down. >> Absolutely wow. I was thinking that, one of the things Bill Ford, that bill ford was asked one time about the culture. And, I think he used the Kremlin comes to mind. [LAUGH]. >> From a, you know, past history. And, and you imagine what it was like at Ford, when everybody was regionalized. There were no skill teams like engineer manufacturer, that went across the company so there was no way to, work together. And, and everybody was scared. It's not going very well, we're losing money. There's not that compelling vision where we're going, There's not actions in place for this, there. So, and, and, And problems with the vehicles. And, so, it was pretty. It was a pretty tough environment, Although, I'd say that, Ford has always attracted, the best and the brightest, over the years, from around the world. I mean, none of the Wizkid stories and. It's just, it's just this fabulous company with 107 year history of, of innovation throughout the years. And so talented people, motivated people. But, we didn't have a plan, we didn't have a vision, we didn't have a comprehensive strategy and, we weren't implementing it. So it was pretty, scary. And everybody's kind of looking out for themselves and a lot of people were leaving and. So the only thing that I, I know to do is, just like my days at Bollingworth. We got to pull everybody together. We need a compelling vision, about where we're going, so we all understand where we're going, so then all the actions are explainable. Everybody has to be on the team. So I, I every skill team I invited. So engineering, manufacturing, legal, communications, every skill team, was now on the team, on the leadership team, all reporting to me. And and all the business leaders from around the world, Asia Pacific, Americas, all there, and then we started, what we do, what I've always done with big airplane program, is that I have a weekly meeting, where we review. Everything associated with the plan, everything. So we meet at seven o'clock in the morning, because we're trying to honor, time changes in Shanghai, and, and the Australia and everything else. So we've got the clocks all up on the wall. We're all interneted, connected on the internet. We have screens that were on the round table, we are seeing all the leaders where ever they are around the world. [SOUND] One set of charts. 320 charts. All of the plan, whether it's income statement, balance sheet, launches of new vehicles, it's all, blue bars. There's a forecast, a red diamond, which is, that, that leaves assessment for how it's going. Then that, there's a, they risk and opportunities, all the risk have been identified, the opportunities have been monetized. And so, we're looking also five years out, so when we complete the performance like the 6.6, or you could also say an operating profit, 8.3. I just might toss that in. [LAUGH]. >> that, everybody knows what the plan is, everybody knows what the status of the plan is, and everybody knows the areas that need special attention. When you do it together, the mean goes from seven to. About 7 to 9.30, and then, we have guests there, from around the world, from the engineering, manufacturing, all, all watching, and we meet them, and we get their feedback at the end. So you can imagine how, hoe transparent and, and close you get. Now when we first started this. Remember I told you that, that within a couple of days the forecast was that we were gonna lose $17 billion. So I started the business plan review, the charts are flowing, 320 charts, we even have them color coded, red, yellow, green. Any change in the chart is in blue, so there's lots that doesn't change, all you're looking for is what has changed. You don't want to hear a long explanation about what, what's going on. But what you want is that, everybody knows the plan, everybody knows the areas of special attention. So the color you got, you got the charts going, and I, there's about three or four weeks of data flowing. And all the charts are green, and I, I stopped the meeting and I said guys. We're gonna be $17 billion, is there anything that's not going well? [LAUGH]. >> Eye contact, goes to the floor. Nobody says anything. Now remember that closure yes about, it wasn't okay, to bring things up, I mean there's command and control,. You know, people disappeared. [LAUGH]. >> So, I think that, and then a week went by and they're green. And, and of course they got me. They got this new leader. What, what's this leader gonna do? And, so the next two weeks later Mark Fields. He was a, leader of all the Americas business, Canada, the United States and South America had an edge avant, in Oakville, Canada and then actuator issue, on the, tailgate, so he stopped production because we're gonna be best in class, we're not gonna deliver one vehicle, unless it's done and is the best in quality. So he had 2 or 3,000 edges. You know, sitting out on the tundra, think I was cold, so it went sinking in. Cuz when you stop production. I mean, it's a big deal. And so up comes his chart. For the launch of this new edge. And it's bright red. And I mean, you, it got so quiet. I, I, you know what they're all thinking, it's over, Mark's gone, [NOISE] he's out of here, and what's this new guy gonna do? So, I started to clap now they knew that was a sign the door was gonna open someone was gonna come in Mark's out of here. So I could just, I could just feel it I mean, it just and I said Mark is there anything that we can do to help you with that? And before Mark could say one word, Benny Fowler who is the head of quality now world wide, said Mark, I think I've seen that issue on a launch that we did six months ago. Because you know in the car business you have so much product coming out and that's what's so exciting. And then Joe Hendricks, at the time, he's a leader of [UNKNOWN] now. Was the header of a manufacturer, and he said you gonna need some manufacturer engineers, cuz as soon as you find the problem and fix it, you're gonna have to change all these vehicles and get the production going again. I'll have those, I'll have our dynamite talent up in Canada immediately. And then Derek Cusack who leads product development worldwide, says Mark I've seen that technical issue on such and such five years ago or something. I'll get right on that. That exchange took 12 seconds. 12 seconds. We're on to the next chart. Course it was green. [LAUGH] On the next shot, it's green. The next week I think it was still red. Mark's chart. Everything else is green. Next week I think he changed it to yellow because they found a solution and now they're implementing it. I think the next week, it turned to green and boom, all of the vehicles started going and then, probably, one of the most exciting days of my life both from an oh, shit, I mean this is a terrible situation. [LAUGH] Sorry, so sorry. [LAUGH]. >> To my gosh, we're gonna make it. Was the following week, guess what the charts looked like:? They looked like a rainbow. >> [LAUGH] >> Like a rainbow. And I'm, I'm going, oh, my goodness. I'm now the data says. Right here, why we're losing 17 billion dollars. Cuz the data sets you free, right? Data tells you everything. But, also now, it was safe enough that you could share how it was. You weren't red, the issue you're working on is red. And, matter of fact, the expectation is that everybody really does know what the situation is. Cuz you can't manage a secret. People can't help if they don't know what the real situation is. And it's safe and you're not gonna get a [UNKNOWN]. Now you can imagine the accountability around the table. Are you gonna be read on a item and then you're gonna go through the week and come back and say to all your colleagues I was really busy last week. I didn't have a chance to work on that. And the pressure in a positive way is like fantastic. Cuz everybody there is trying to figure out how to help go forward. So in that one day it was probably, I was at, it was probably like, oh my gosh. This is really in bad shape. But we all knew that. On the other hand, I knew at that moment that we were going to be able to turn Ford around. So that's my, can I, can I tell you one more? okay, so here's another one. In this thing about vision and, and everybody understanding. So I wanna tell you about the first time I drove in the garage of the World Headquarters of the Ford Motor Company. How we doing on time? [INAUDIBLE] 15 minutes, okay. So I left Boeing and I'm coming to Ford. Ford. Ford. I drive into the garage of the world headquarters of the Ford Motor Company. And I drive in, there's not one Ford vehicle in the garage. I know, I know, and I just left Boeing to come to Ford and there all these Ashton Martens and Jaguars and, and I, I remember thinking to myself I wonder what all the people in this building are working on I don't think it's Ford and it was Ford was 85% of the business but Ford was kind of. And, then I remember walking up and then walking in that office like I shared with you and I knew, I knew it right away, what we had to do. And you can imagine when the culture change. Can you imagine being with all those different brands, we had 97 different models, that we were trying to be world class at. So, let's go work on the new Jaguar from 8:00 to 8:10, then we'll work on the new Edge from 8:10 to 8:20, can you imagine doing that for 97 different things. Business, the days when people would pay you to manage a conglomerate, are over. Information is ubiquitous, people wanna know exactly what that brand stands for. And what to expect when they walk in that Ford's door, right? And now they know. It's Ford. Full family. Small, medium and large. Cars, utilities, trucks. Best in class, in quality, filters and safety. And you've gotta have a laser focus on that branch. All the suppliers know what the plan is. All of your [UNKNOWN] customers know what the plan is. So, I think. What that did to, almost unleash all the talent inside for it because now, everybody knew what we were coming to work for. They knew what we were going to do, and that just created this, add that to the business plan review process and the creating value road map where you actually have to create value every year. Because this is, it's a discounted cash flow right? It's a wonderful think a discounted cash flow right? All you gotta do is fill the arrows in. The arrow's up and the arrow's down. And if you're in business, good businesses grow at discounted cash flow whether it's cash or profits by 15% a year, right? And most good companies grow the top line by 7% a year, by making price [INAUDIBLE] along value. And then they also improve their productivity by 7%. And what's 1.07 times 1.07? 1.15. That's how you grow 15% a year. That's what good companies do. So it's just absolutely unleashed all the talent around the world. By, by focusing the vision, what we are, and the comprehensive strategy and then that relentless implementation part by working together. Make sense? [BLANK_AUDIO] Yes, sir? >> [INAUDIBLE]. [INAUDIBLE] >> I >> You're okay. >> Yeah. [LAUGH] What's the biggest mistake you've made since joining Ford? What have you learned from it? What would done differently? >> Wow. Is there another question? >> [LAUGH] >> I don't, I don't know about the mistake word, I thought. I. Every time I get. You're reflecting about this all the time. What, work you've done. When. Or, actions you have taken. And, it was, And, there's not anything that I would not do, I think, part of the reason is, we're in crisis, right? And so, you have to. You have to pull together. You have to decide what you're going to do. Together and then you've gotta move decisively and, I don't know how we could've moved any faster. I'm so pleased about how we pulled together. I'll tell you, another thing, I wondered, really wondered whether I was doing the right thing by going back and testifying on behalf of GM and Chrysler. I mean, I'm a market person. I really believe that market should allocate precious resources. Not governments, the market. We should do it with our purchase decision, right? We're the ones that decide the products are, are successful or what companies will be successful. And so to go back and testify on behalf of my bankrupt competitors, I mean, it's a, it's a serious question, right? They were, they were gone they should have been gone the market should have let it go. But I also at the same time believed like two administrations and all their economic advisors that if we would have taken 12 to 15% of the US GDP in the bankruptcy in the United States we would have taken the United States from a recession into a depression so that's why I decided to do it. And if you like to know how to go to a hearing, most important thing is to fly on your corporate jet. [LAUGH] Works really well. I kept reminding them I was not there to ask for the precious taxpayer money, I was there supporting my, my competitor for the good of, of the world. And the other thing is, is to have very thoughtful answers to their questions is another thing. Do you remember when, when we were, we were all sitting there and they were going down asking, Chrysler, would you, the leader, would you work for $1 a year, if we give you our money. Tax-payer money. Yes, please, thank you. Would you work for $1 a year. Yes. And, please. And then he turned around to me and said well Mr. [UNKNOWN] would you work for $1 per year? I, I just couldn't think of what to say. So I kind of rubbed my chin thoughtfully and I said, no I think I'm okay where I am. >> [LAUGH]. Just got killed for that. >> [LAUGH] >> When I reminded them that I wasn't there to ask them for them for the money, but they kind of forgot about that. Whatever. >> [LAUGH] >> The other thing is, is they you know, you're sitting there and they give you little bottles of water and the most important thing is just to sip it. Cos you can't get up and leave. [LAUGH] And we're there sometimes like 12 hours. And so that's another important thing is going really easy on the water. Cuz the whole worlds watching you. [LAUGH] Now on a, on a really serious note. And I think about this all the time. A lot of people ask me, cuz this is, you know, it's democracy and it's the way it works. And weren't you offended at the way you, you were treated? and, and cuz, you know, they were pretty aggressive questions. It was a serious situation. The United States was slowing down economically. Here you had a significant portion of the GDP was at risk. And it's going to get worse. And Hank Paulson, who is secretary of the treasury was sitting in the same chair that I was sitting in the day before trying to explain where the $700 billion went. And everybody was scared... And, they're anxious. And, they're asking questions that need to be asked. And, so I never took it, I never took it personally. And, I also believe, the only way to, to deal with the, with things like this, is you gotta do it together. You gotta make it okay. Just like we were talking about, to have a conversation. So, I never, I don't have any remorse for that. And, I, I wouldn't have done that differently. I think, everything on the product was good. So I don't think of it so much the mistakes as that, I think that just pulling together around this compelling plan we decisively, that we, that we did it at the right time and, and doing it fast. And it doesn't get any better. You know, most people tell you that, they wish they would've done something sooner, not waited. I think maybe because we were in such a terrible crisis, we had to move. And I'm in awe that, that we moved so fast and we're now making the best cars and trucks in the world that people really do want. Yes sir. >> My name's Marcus and thank you for your time today. My questions about vision. So you talked a little bit about Ford's globalization. >> Yep. >> And a lot of your competitors have opened up plants in the United States so... My question is, what does it mean to be an American car manufacturer? >> Wow. It kind of goes back to the question earlier. And I only can kind of speak from a, a multinational, large corporation operates around the world with Boeing and with Ford. And it really, is about being a global company. And, you can have your headquarters somewhere. You know the taxes and the way you repatriate money, exchange rates and everything. But I really believe that the companies that are gonna serve and provide what people really do want, and do it most effectively are gonna be one that lav, leverage their assets world wide. And you know, some brands are. There's always that conversation about is, is Amer, is the fact that it's an American brand, does that help you or not? The neat thing about Ford, again, is that when Henry set it up everybody around the world thinks about their Ford operation as Ford. You know, Ford is number one, number two. All the markets in Europe and it, and Ford of Britain concerned to be a British company and so we're very fortunate. And that's very different and like you said the company's that, that have, the say Asian companies have said come to the United States. Cuz one of the reasons they did that was they were taking all the wealth back home, so there's a lot of encouragement for them to operate here too. But I love that Ford is in this place. I think that what we've really done is accelerated Henry's original vision, actually accelerated by operating everywhere around the world. It's so neat to be part of the fabric, plus you know all the customers, you know everything that's going on. And you're, you're not only providing great cars and trucks but also great jobs and careers. So, I, I think the big companies that, that have the scale, and that's part of competing, are gonna operate like global companies. >> Guy with the mic. >> My name is Guy with the mic [SOUND.] I'm Chen, first year, Alan great to have you here. My question is about, I'm Chinese too so you owe me a hug. >> [LAUGH]. >> Sorry. My question is actually about jobs. So things I wanted to point out, you caught 40% of the, the workforce at Ford. And, and you know, I think it's an understatement, given the overcapacity and other industry in general. But you know, I think so much about the debate about economic growth right now is about bringing jobs back, are those jobs coming back? And do you see the auto industry grow as bringing the jobs back? >> Absolutely and we just announced, well can I come back up just a little bit to your, to your start of your question, because it's really important? This is about business and, this is about profitability growing. And you've got to do whatever it takes, because if, just like the situation we described, you couldn't go very many years losing $17 billion, and then you're gone, right? So you have to size yourself to the real demand no matter what. Remember in the automobile industry, because all their costs they thought were fixed, then they'd keep their production up... Over deliver all these vehicles, just to get the last incremental dollar, cuz if, couldn't, didn't think they could do anything about their cost. So what we did is we went to the to the unions and we talked about a future where we could actually make cars in the United States, but we had to have our cost structure right and we had to size ourselves in the near term, to the lower demand. Well, we agreed, because you, we came together around this vision of profit growing and actually hiring, hiring and providing great jobs. But you gotta take the tough action to get yourself started so you can keep investing during the toughest of times. So and it's hard. I mean it's, you don't, you don't any way want to go through that. That's why, this economic development worldwide is so important. Now having said that we sized ourself to the real demand. We took out all the extra production both, as somebody mentioned earlier also with our distribution channel. And with Ford and with our suppliers. And so now we're operating profitably at the lower demand. And, and we invest it for these new products. So now, we just announced over the next two years, we're gonna hire 7,000, new employees. And just give you one example, we're making the new Explorer in Chicago. That's the one that's 30% more efficient than our last one. And we'll be exporting that vehicle to 94 countries around the world. And in that plant alone we'll be adding 1,200 jobs and then another 600 jobs with 100 suppliers throughout the United States. And all of our suppliers now are all global. Cuz, which, when you operate this way you use your scale globally but then you operate locally so then you get the best of both both worlds. So, and our plan is to fundamentally now, to grow the business year after year forever cuz that's, that's the purpose of a business. So, we're really excited about how everybody pulled together to get to this place. And now it's really exciting now to grow and provide all these great opportunities. In Asia Pacific, we're grow, we're one of the fastest growing companies in Asia Pacific. Find tremendous opportunities. Great market in Europe, a little bit slower growth, a little bit more mature. Fabulous growth in Brazil, Russia. And especially in India and China. Okay, maybe one last question because I hear that when it gets close, you get up and leave. >> Here. >> Yeah. >> My name is Pragosh, I was at the consumer electronic show at Las Vegas. >> Were you really? And, I got to check out your, your Ford Sync. >> What'd you think? >> And, I love the voice activated experience, but I was wondering, are you guys thinking about a app store? Much like how Apple came out with theirs, for their hardware. >> Right. >> Are you coming out with an app store for your hardware? >> We're, we're not, right now, but you saw the apps that we were managing now. And, we also have all the app producers that are working on what's makes sense for a car. The real thing we decided was, was to not get in that as a business like Apple did but, but to focus on the automobile and the safe driving experience. So we're not making any money on all those apps ourselves. We could have taken a, a piece of each of those like other business models that you know of. Because what we, what we want to do is a ha, was to make sure that everybody when they bought a Ford. That they could seamlessly operate and yet, be connected to a digital world. So we're managing that interface that you saw with sync and My Ford and that's been our, our focus. Now a lot of people have wanted this, you know when Pandora comes in or any, you know, other applications. They would like, a lot would like us to do a business with them but right now we're focused on providing a better driving experience and a safer experience than having all of us have access to the internet for right now. Yes. >> Thanks again for joining us and I appreciate getting to ask the last [COUGH] question. My name is Caroline Mellon, I'm a first year here and I had the honor while I was at Deutsche Bank, before Stanford of working with the Ford Credit team. Oh, very good. I wanted to know what you thought their role was in the turnaround of Ford in 2009 and their active, kind of intensive balance sheet management, and then what your objectives are for balance sheet management as your positioning for growth, but also preparing for another potential crisis. >> Fantastic. It sounded like you had a great experience at the bank, too. [LAUGH] >> They're, they're, they're one of our main bankers, too. And they're fantastic. What what she is referring to is what we call Ford Motor Credit Corporation. And it's a Captive Finance Company that we have. Meaning that we own it. And it's cost the Capital goes with the parent with Ford. As opposed to, you know, independent bank. This has been really important for Ford, because as you go through these cycles, let's see, your banker friends kind of come and go a little bit. and, I mean, cuz they're managing their life too. And, but, but the reason we have a, a Ford credit corporation is that during the worst of times, the best of times, then we can continue to help with the financing for all of our Ford store owners with all their, their inventory, all their vehicles. We also have one-stop shopping. So when you walk into a Ford store, you can get your financing for the vehicle, in addition to the vehicle. And remember when when we went through this crisis GM, and they're trying to work their cash so carefully they actually sold GMAC, which they, which was their captive finance company. So we really believe we've, we've done the right thing. It really helped us get through this. Right now we have scaled back Ford Credit with the divestor of all these other brands. But now they're really right sized and they're just an absolute key part of our business going forward. And I'm just so pleased that we keep that as a priority to keep that captive finance company. And now on our balance sheet, now it just gets better and better. You saw last year. That, you know, when you borrow $23.5 million, you need to pay it back, and it's a wonderful thing to be paying back our banks, and our goal of course is to move back to investment grade because our cost of capital goes down. That makes that allows us to invest more in the products but also allows for credit to be even more competitive on helping you with loans. So last year we paid $14.5 billion back on our loans, which is fantastic and, we'll probably, keep some debt cuz, you know, it's good to leverage, a little bit. But we're clearly moving back to investment rate, a lot faster than what everybody thought. And most important thing is you're growing the business profitably, generating free cash flow. And it gives you great options not only on improving the balance sheet, but also on the products. okay. I know you're gonna get up and leave. And, and I would take it personally if I wasn't done, so I'm gonna be done. I, was honored, to get a request to come here. I, I grew up in Kansas, I grew up in Seattle, Lebowing. We've had tremendous programs with Stanford over the years. It's a fabulous school, as you know. You're getting, one of the finest educations, and you're also getting one of the best global educations. And it's so important, for where the world's going and so, thank you for the invitation and, congratulations, to you. I look forward to working with you. I would love you to consider maybe Ford, as you're considering going forward. And also, maybe you should drive a Ford, and feel the difference. Thanks a lot. [SOUND]. >> Thank you. Thank you.