An elegant blue sedan parked in a Ford Motor Co design studio gradually awakens when it senses Chief Executive Mark Fields approaching. Like a child slowly waking to his mother’s voice, the car’s LED headlamps blink on, then a lamp illuminates the ground beneath the driver’s door and soft lights slowly warm the interior, as if the car were stretching to begin a new day. Grinning at the thinly disguised prototype for a new Lincoln Continental coming in 2016, Fields says, “See how it greets you in a very human way?” And it’s not because he’s the boss. The car would greet anyone this warmly, as long as he or she had the key fob.
“That’s the new face of Lincoln,” he says, pointing to the polished chrome-mesh grille. He spends a few minutes showing off the car’s clever styling tricks, like the discreetly hidden door handles and the translucent chrome taillights sweeping across the back end. But he can’t wait for me to climb inside and sample the serene future of Lincoln, an iconic brand that has all but disappeared from the luxury landscape.
I slip into the rear passenger seat, where I am swathed in supple Scottish leather upholstery, my toes sinking into the shearling wool carpet and my hands gliding along the silky fabric overhead. Fields pushes a button, and the rear seat begins reclining until I am fully prone, like a first-class passenger on a flight to Paris. Another touch of a button and the expansive sunroof automatically dims for privacy. Every detail is designed to make driving this modern-day land yacht more pleasurable.
Reviving Lincoln is an urgent mission for Fields, 54, who replaced Alan Mulally as chief executive in July 2014. With luxury cars accounting for one-third of industry profits, Ford’s lack of a credible premium brand means it is missing out on billions of dollars in extra income. But he knows it will take time. “With this sedan concept we really wanted to connote the future,” he says.
But three months later, Fields is in Silicon Valley, painting a much different vision of the future, one in which traffic congestion and pollution threaten the very idea of car ownership. “In many cities driving your personal car from home to work simply doesn’t work,” he says, showing off a family of electric bikes that fold like a jackknife and plug into the back of a Ford vehicle. When traffic snarls, you park the car and ride the bike the rest of the way. Ford designed three versions of the e-bikes and is now testing them in London, where motorists who drive into the central city between 7 am and 6 pm pay a ‘congestion charge’ of $18 a day.
The bikes are paired with a smartphone app that provides directions plus real-time information on weather and traffic—even potholes to avoid. When you need to make a turn, the left or right handle vibrates accordingly. If you’ve got a smartwatch, the app can measure your heart rate while you pedal. If you’re labouring too hard, the e-bike will do more of the work, so you can arrive pumped up, not overheated and sweaty.
Fields has to straddle both visions as he leads Ford through the most transformational era in automotive history. His immediate task is protecting Ford’s core business from newly-revived competitors like General Motors and Fiat Chrysler Automobiles while fending off disruptive new players like Google, Tesla and Apple. But the merger of Silicon Valley smarts with Detroit steel is inevitable if the 112-year-old car company is going to successfully adapt to unprecedented societal changes. Rising standards of living around the world mean more people can afford cars, but the migration of people to megacities like Mumbai, Shanghai and Sao Paulo is creating global gridlock, and pollution is making people sick. Younger consumers, meanwhile, have different attitudes toward transportation, and owning a car just isn’t a priority.
Yes, Ford will continue making cars, trucks and SUVs for the foreseeable future. But if it wants to be around for another 100 years, the company needs to start thinking of itself not just as a vehicle manufacturer but also as a provider of mobility services in a world where cars talk to one another and transportation is shared.
Balancing the two is dicey. Fields knows all too well what can happen when a company takes its eye off the ball by chasing shiny new strategies. In the early 2000s, Ford stumbled badly after then CEO Jacques Nasser tried to transform the company from an Old Economy vehicle manufacturer into a broad-based, web-savvy, automotive-services company. He struck deals with Microsoft and Yahoo and tried to extend Ford’s reach well beyond the showroom, buying repair shops, a driving school, the Hertz car-rental agency and even a junkyard.
“In our company history we’ve sometimes gotten enamoured of new, emerging things,” says Fields, who was in Japan running Ford’s Mazda unit when the wheels started to come off Nasser’s plan. “I’m not saying those strategies were wrong; but during that time, if you were in the core business, maybe you weren’t loved as much as the people on the sexy new things.”
Fields’s job is to make sure everyone at Ford understands how the new stuff reinforces the core: Car-sharing, for instance, means many cars will wear out faster and need to be replaced more often.
The potential upside is mind-boggling. Ford sells about 7.6 percent of the world’s vehicles, a $2.3 trillion market, which is expected to reach $3.5 trillion by 2030, a nice trajectory for a mature business. But the larger transportation market—what people spend to get around via mass transit, taxis, Uber and Lyft, for example—is worth trillions and growing. “We get zero of that,” says Fields. “The question is, how do we get more?”
“This is not about moving from an old business to a new business,” he says. “This is about moving to a bigger business.”
In many ways, Fields has a much tougher challenge than his celebrated predecessor Alan Mulally, a former Boeing executive. Mulally arrived at Ford in 2006 after it had already begun working on a $23.6-billion loan package from big US banks that would prove crucial to its survival during the 2009 financial crisis. Mulally emerged a superstar, credited with saving Ford from bankruptcy by refocusing the automaker on its core brand and uniting a fractious management behind a simple set of goals. But Mulally was also the beneficiary of exquisite timing: Ford prospered in part because its competitors were on their knees after the Great Recession. GM and Chrysler filed for bankruptcy in 2009. The following year, Toyota was crippled by damaging recalls and in 2011, Honda and other Japanese automakers were devastated by the massive earthquake and tsunami.
Fields, on the other hand, inherited the company last year when competitors had already rebounded and Ford was in the midst of a risky overhaul of its flagship product, reimagining its iconic F-150 pickup in an aluminium body, a lightweight but more expensive solution to tougher fuel economy laws. The launch went slowly as Ford worked to get the quality right, creating opportunities for rivals like Chevrolet and Ram to grab market share. With F-150 production down, Ford’s net income fell 56 percent to $3.2 billion in 2014 as revenue slipped 2 percent to $144 billion. Now that F-150 production is up to speed at two factories and SUVs like the Escape and Explorer are flying off dealer lots, Ford says 2015 is shaping up as a breakout year, projecting pretax profits between $8.5 billion and $9.5 billion.
Still, Fields has plenty of issues on the front burner besides fixing Lincoln. Number one is the global economy, especially China, where Ford has invested heavily to catch up with rivals like GM and Volkswagen. Ford’s joint ventures in China contributed $1.3 billion in pretax profit last year, but industry growth has stalled this year, putting the company’s $5-billion bet on China at risk.
“Nobody’s strategic plan for China is going to be remotely the same going out of this year,” says Mark Wakefield, managing director at global consulting firm AlixPartners, pointing to the slowing Chinese economy coupled with excess factory capacity. South America is a problem as well; volatility in Venezuela and Brazil means the company is still losing money there.
Even in the US, there is reason to be cautious. The industry is riding a five-year recovery, helped by pent-up demand, low fuel prices and cheap lending rates. But a rise in fuel prices or interest rates could chill demand quickly. Fields also has to negotiate a new labour contract this fall with a restless union.
But as he looks 10 to 15 years down the road, he worries about four trends in particular that will shape the company’s longer-term decisions.
One is urbanisation. Today there are 28 so-called megacities with populations of 10 million or more worldwide. By 2030, experts say, there will be at least 41. At the same time the Brookings Institution reports that the global middle class will more than double in size—from 2 billion to 5 billion—by 2030, with most of the growth in Asia. For this emerging middle class, owning a car is a sign that they have arrived. But as Bill Ford, the company’s executive chairman and family scion, has been warning for years, there simply isn’t enough room on the planet for all those cars.
Air quality in parts of the world is another worry. “It’s not just an issue of protecting the environment. It’s an issue of basic health,” says Fields.
And, finally, Ford is worried about how to stay relevant to a new generation of consumers who love their smartphones more than their cars. They’re more interested in access to transportation than car ownership.
Ford’s MoDe: Flex electric bike folds up for easy storage and charging in a car
In 1961, when Fields was born in Brooklyn, none of this was imaginable. America was deep in the thrall of its postwar romance with the automobile. Stylish, affordable muscle cars like the Ford Mustang and Chevrolet Camaro fuelled the four-wheeled dreams of a generation. Fields fell in love, too. Well before he earned his driver’s licence (in 1977) or bought his first car (a Datsun B210 in his junior year of college) he collected Hot Wheels toy cars, which he kept in his bedroom in Paramus, New Jersey, where he grew up.
Fields was a good student. He graduated in 1983 from Rutgers University with an economics degree and worked in sales and marketing at IBM before earning his MBA at Harvard Business School in 1989. He and his wife, Jane, have two sons in college.
Fields joined Ford directly after business school as a marketing manager and climbed the ranks quickly, with stints in Argentina and then Japan, where, at 39, he was in charge of Ford’s money-losing Mazda unit. He proved he could handle the tough assignment, fixing Mazda by unwinding its byzantine network of keiretsu suppliers, closing a factory and laying off 2,210 workers and rebuilding its product line with sporty, fun-to-drive cars like the Mazda6 and Mazda3. Later he moved to Europe to become chairman of Ford’s Premier Automotive Group, a collection of luxury brands that included Volvo, Jaguar, Land Rover and Aston Martin. Eventually he had responsibility for Ford of Europe as well.
By the time Fields was summoned back to Detroit to fix Ford’s North American operations in 2005, the company was in deep trouble, and infighting within the senior management had reached epic proportions. It didn’t help in 2006 when a Detroit TV station revealed that, while Fields was asking employees to accept painful sacrifices, he was using Ford’s private jets to fly back and forth to his family home in Florida at a cost of about $500,000 a year. That same year, he nearly got into a fistfight with the company’s former chief financial officer over a marketing budget and had to be restrained by Bill Ford, then CEO. In the end it was Fields who prevailed. The CFO later left the company.
“Mark grew and rose to every challenge, and he became a battle-tested executive through it all,” Bill Ford said last year when Fields was named CEO.
If you look back, it was Mulally’s arrival in late 2006 that was the turning point for Fields’s career. Mulally once joked that he never had anyone follow him around as much as Fields did, peppering him with questions. Fields was an attentive student, learning from Mulally how to challenge convention and trust underlings.
Fields studied other companies, too, such as Nokia and McDonald’s, and resolved not to repeat their mistakes.
He concluded it’s not enough to simply build a better car. “Look at the phone industry—Nokia,” he says. “They focussed on the core. Every year they came out with a battery that lasted a little longer or a new button that did something.” But Nokia was crushed by Apple and Google, which focussed on the broader experience they wanted to provide and then designed the technology to deliver it. “We don’t want that happening to us.”
To help map a long-term plan, Fields has brought in outsiders like former Merrill Lynch analyst John Casesa to head global strategy; Paul Ballew, a data science and analytics expert from Dun & Bradstreet, to mine consumer behaviour and vehicle patterns; and Ken Washington, a former Lockheed Martin space scientist, to head research and advanced engineering.
Like other automakers, Ford has opened an office in Silicon Valley to embed itself in the startup culture, and earlier this year the company launched a series of 25 mobility experiments around the world.
The six-month experiments ranged from car-sharing in India to delivering timely medical help in Africa to capturing data from employees’ cars near Detroit. So far Ford has identified three projects to pursue: The foldable e-bikes, a unique car-sharing and parking service called GoDrive and a programme for Ford owners to lend their vehicles to others. All are now being tested in London.
By collecting data from today’s cars, Ford is also looking for patterns it can use to create services that will make people’s lives better. Says Don Butler, executive director of Ford’s connected vehicle and services: “I think we can envision scenarios in which you are prompted by your smartphone, ‘Good morning. Based on the weather and traffic conditions, I’m estimating you’ll need to leave at 6:35 this morning, as opposed to your normal 7 o’clock—and by the way, here’s the route I would recommend that you take. Shall I order your favourite latte on the way?’ And, as you are arriving at your place of business, prompting you about an upcoming appointment, ‘Shall I have those materials prepared on your desktop so that when you arrive you can be ready for the meeting?’ What we’re really looking at is what we call context-based solutions.”
As a student of history, Fields might learn his best lesson from the company’s founder, Henry Ford, whose goal was not just to build compelling cars but also to leave a mark on society. In 1925, his company placed an ad in the Saturday Evening Post titled ‘Opening the Highways to All Mankind’ and showed a family overlooking a hilly landscape dotted with cars and a Ford factory in the background. Says Fields, “Henry Ford believed that a good business makes excellent products and earns a healthy return. But he proved that a great business does all that while creating a better world.”