After summer evaluating the auto maker, new boss Hackett prepares to lay out path forward
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This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 2, 2017).
DETROIT -- Ford Motor Co.'s new boss spent the summer touring the auto maker's global operations, brainstorming with his executives on new business concepts and even paying a visit to an electric car maker in Silicon Valley that his predecessor had considered buying.
Now, he is ready to start tinkering under the hood.
Jim Hackett was promoted in May to chief executive after the board ousted then-CEO Mark Fields, amid concern about the company's strategy. After spending several months asking questions and strategizing, the 62-year-old former office-furniture executive is set to provide an update on Ford's progress at an investor meeting Oct. 3.
Mr. Hackett is expected to show how Ford is streamlining its core business while pursuing futuristic ideas. The 114-year-old company survived the recession last decade far better than its Detroit competitors, but now feels growing pressure from tech companies and traditional rivals in the emerging era of self-driving cars and ride-sharing services.
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Wall Street has yet to fully embrace Ford's leadership change at a time when U.S. car sales are softening. Ford's stock has risen 10% since Mr. Hackett took charge but investors are still looking for a firmer strategic road map.
Under Mr. Hackett, the company's leadership team set up several mini war rooms in conference spaces at Ford's Dearborn, Mich., headquarters, according to people familiar with the matter. Executives have huddled there to sketch out new concepts -- often on sticky notes and sheets of paper stuck to the wall -- in an effort to shake up the company's thinking on everything from its culture to branding.
"We expect Ford's next strategy to be more open to partnerships, new structures, new entities, and far greater emphasis on all-electric" vehicles, a Morgan Stanley auto analyst, Adam Jonas, wrote in a recent research note. "We are not convinced investors are prepared for the required sacrifice to near-term profit."
Other analysts say Mr. Hackett needs to rekindle Ford's competitiveness with certain peers and boost its profit margin. General Motors Co., for instance, has shown a greater willingness to make bold cost-cutting moves, including exiting its money-losing European operations, while at the same time focusing more sharply on future technologies.
Barclays analyst Brian Johnson said Mr. Hackett needs to take a "bold course of action" to revive interest on Wall Street. "In the past few years, Ford simply hasn't had a compelling narrative that investors could latch onto," Mr. Johnson wrote in a research note.
Mr. Hackett's hiring came after Ford's board grew concerned about how the company would maintain high profits while competing with tech firms such as Google parent Alphabet Inc. that are edging in on the car industry.
Associates say Mr. Hackett, a former longtime CEO of Michigan-based Steelcase Inc., is likely to place big bets and push for quick action.
This past week, Ford announced a deal with ride-hailing service Lyft Inc. to test its self-driving cars on Lyft's network and co-develop software to connect Ford vehicles with the San Francisco-based company's app.
Ford also is studying a partnership with India's Mahindra & Mahindra Ltd. that could cover a swath of ideas, from electric vehicles to connected-car services and is pursuing a joint venture with China's Anhui Zotye Automobile Co. , to form a new electric-car brand in the world's largest vehicle market.
Separately, in June, Mr. Hackett dropped by Lucid Motors Inc., a Silicon Valley electric-car startup, for a presentation, according to people familiar with the visit. Ford considered buying the company under Mr. Fields, but talks have been put on the back burner as Mr. Hackett works to firm up Ford's strategy.
Mr. Hackett is concerned about the company's ability to make money as regulations and the race to make electric and self-driving cars pressure the bottom line. He often talks about evaluating Ford's "fitness," a term he uses for efficiency.
Mr. Hackett also needs to address concerns dealers have had about the company shifting too much attention away from its current product portfolio. The issue arose during Mr. Fields's tenure when he emphasized future projects such as car-sharing services with no near-term profit potential for dealers or the company.
Among Mr. Hackett's other stops: Ford's operations in Turkey and Russia, and a transmission plant in suburban Detroit. In September, he met with union leaders from Ford's U.S. factories and paid a visit to Microsoft Corp.'s headquarters in Redmond, Wash., following an appearance by the software giant's CEO, Satya Nadella, at a Ford leadership meeting in August.
Mr. Hackett said his travels to Silicon Valley, a place he frequented when running Steelcase for two decades, affect his approach to business. "I did learn and understand the culture out there," he said during a recent conference call with analysts and investors. "It's steeped into my thinking, optimism, innovation and questioning the status quo."
Before being named CEO, Mr. Hackett was recruited by Ford Chairman Bill Ford to run the company's fledgling Smart Mobility unit, a Silicon Valley operation charged with pursuing future transportation ideas. Since taking the company's helm, Mr. Hackett has hired IDEO, a design firm once majority owned by Steelcase, to consult on how to inject more "design thinking" into Ford's corporate activities, people familiar with the move said.
After taking over at Steelcase, Mr. Hackett took aim at the product that was considered the company's bedrock offering: cubicles.
At one point he walked into a planning meeting and declared that any furniture the company made that stood "below the belt line" -- low filing cabinets, desks, etc. -- should be put on wheels, said David Kelley, the founder of IDEO and a longtime friend of Mr. Hackett's. That would allow office workers with laptops and cellphones, who no longer are tied to desks, to reconfigure their workspaces.
"This was huge," Mr. Kelley said. "Everyone was thinking, 'How are we going to do this?'" But Steelcase figured a way, increasing its focus as a purveyor of open-plan workplaces.
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October 02, 2017 02:47 ET (06:47 GMT)