Mark Fields, Ford’s successor to the brilliant Alan Mulally, was unceremoniously removed from his CEO position by a restive board and a gaggle of Ford family members.
They were frustrated with reduced earnings, but more so with a stock price stuck in low two digits. Mark was a talented Ford lifer: bright, experienced, and personally charming, with an outstanding record of achievement in every assignment he held. Blessed with a good feel for product, he reestablished Ford’s lead in full-size pickups, outmaneuvered GM by introducing Transit vans to North America, oversaw a nascent turnaround of Lincoln, and produced a newly styled Mustang, which is cleaning the Camaro’s clock where it counts: with customers. He learned the “One Ford” mantra from Mulally (admittedly, a hard act for even the best to follow).
But none of that is enough in an era where Wall Street uses the peripatetic Elon Musk as the standard by which automotive CEOs are measured. Great new cars are no longer enough, nor is the pell-mell shedding of unprofitable operations (as GM has tried, with no measurable impact on its stock). Face it: Tesla is exciting. Multibillion-dollar lithium-ion gigafactory! Tunnels under Los Angeles! (Earthquakes, anyone?) Manned flights to Mars! Now, that’s the stuff the newly minted Harvard MBA analysts understand. Sizzle and aroma. The steak can’t be far away. Okay, so Tesla is hopelessly unprofitable, the cars’ reliability unproven, compared with those built by the dreary “legacy” automakers. None of that matters: Musk, the ultimate pitchman, draws an irresistible vision of the transportation future. Tesla’s stock defies gravity and all conventional business logic. Ford shareholders, holding $11 shares, naturally became envious.
The legacy automotive CEOs, trained to under promise and over deliver, warned by generations of corporate counsel to avoid getting crosswise with the Securities and Exchange Commission by making irresponsible statements that could mislead investors, do their best to adapt to the fast-changing environment. They buy ride-share companies, invest in digital mapping, tout upcoming electric, autonomous cars. But it doesn’t move the stock price.
It’s sad, in a way. Exercising all the judgment and caution of someone entrusted with billions of dollars of shareholders’ money is no longer enough. The old saying “ultimately, the fundamentals will prevail” is still true, but shareholders don’t want to wait for “ultimately.” Today’s automotive CEO has to be part sound leader, part P. T. Barnum ringmaster. He or she needs to be a vocal personality in the mold of the unforgotten Lee Iacocca.
Time to shed some of the caution and misgivings, time to display 1000-mile- range electric concept cars (“No firm production plans, but we’re definitely considering it”). Time to say, “Let Musk tunnel. We’re investing in autonomous quadcopters.” Poor Mark Fields, a good legacy CEO, was no longer a fit in a world where promise and hype outclass perseverance and financial performance. Best of luck to his successor.
Bob Lutz has been The Man at several car companies. Ask him about cars, the auto industry, or life in general.