A critique of Ford’s CEO Alan Mulally’s Approach to Decision Making.
By Ally M Mukasa
Executive Summary
Ford Motor Company is a public company founded on June 16 th 1903 by Henry Ford.
It is headquartered at Dearborn, Michigan in the United States of America. Its products are mainly automobiles but it also offers automotive finance, vehicle leasing and vehicle servicing. Ford has three divisions which include; Ford, Lincoln and Motocraft. Ford has subsidiaries all over the world. Mr Alan R. Mulally is its president and Chief Executive Officer. Prior to his appointment as CEO, Mr Mulally worked at Boeing. His journey from aerospace to automaker industry was a new challenge but an opportunity for him to prove to the sceptics that an aerospace person can run an automaker. Among the challenges he faced were; the economy in recession, soaring prices of gas, a calcified corporate culture, a general lack of transparency in decision making, fractious divisions, the penchant cycling of executives into new jobs every few years, the problem of pre-meetings that was antiethical to decision-making, and hiding problems. Mulally had to make decisions to address the challenges mentioned. His decision making style is much of directive with low tolerance for ambiguity than behavioural or people-centred. He did not involve Ford staffers below top echelon in decision-making. He downsized the company, closed down underperforming factories, stopped the cycling of executives into new jobs every year, and instituted a culture of transparency in decision making.
He introduced a weekly business plan review system and holding daily meetings with the global team. In a nutshell, he reshaped the company’s strategy. The decisions he made produced the following results among others:


Ford kept its independence by escaping the USA’s Treasury loan window.



Decision making became much more transparent.



Cars of better quality are moving faster from design studio to showrooms.



Ford has switched to vehicles that could be sold in several markets.



Plants are handling multiple models.



Problems are reported as soon as they are identified, and,



Decision-making is guided by available data.
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Mulally’s decisions have succeeded in imposing discipline on Ford Motors and sharpened its competitive advantage.
A description of Mulally’s approach to decision making.
1. (a) The meaning and practice of Decision Making.
Decision making is the thought process of selecting a logical choice from the available options (www.Business Dictionary.com, Online September 2013). When trying to make a good decision, a person must weigh the positives and negatives of each option, and consider all the alternatives. For effective decision making a person must be able to forecast the outcome of each option as well and based on all these items, determine which option is the best for that particular situation. It is the mental processes resulting in the selection of a course of action among several alternative scenarios. According to Kreitner and Kinicki (2010:336) decision making is identifying and choosing solutions that lead to a desired end result. It is the art of choosing alternative solutions that lead to a desired state of affairs. Kreitner and
Kinicki (2010:336) maintain that there are two broad approaches to making decisions; the first is rational and the second is non-rational.
1. (b) A description of Mulally’s approach to Decision Making.
Decisions managers occasionally take are influenced by the prevailing circumstances within the company. The size of the company, its liquidity, the behaviour of its employees, the competitiveness of its products, the attitude of its shareholders, the market environment and others have a tremendous impact on decision making. Before the researcher interrogates the approach to decision making Mulally is using, it is imperative to give an outline of the business environment at Ford Motor and reveal some facts about Mulally as the CEO.
Mentioned below, are some business facts at Ford Motors:


Since Mulally’s appointment as CEO he has left most of the team he inherited intact and dispelled rumours that a former aerospace manager cannot run an automaker. 

He has the support of the Board of Directors of Ford Motors.



He has transformed the calcified culture of the company thus saving it from bankruptcy and from the Department of Treasury’s loan window.
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

With his appointment, decision making has become much more transparent at
Ford Motors.



It is only top management executives that are involved in decision making;
Ford staffers below the top echelon are not sufficiently involved in decision making. 

A change in the company strategy in order to improve Ford’s competitiveness is underway. There is a plan to modernise plants so that they could handle multiple models rather than just one, and, a switch to vehicles that could be sold to several markets.



Some executives seeking audience with Bill Ford to complain to him is an explicit manifestation that there is some resistance to change at Ford Motor.



Anew ethics regime is in place to remedy the ‘old culture’ of ‘pre-meetings’ that was used by managers to scheme how to get their stories straight to higher-ups. 

Providing a constant stream of data to give Mulally’s team a weekly snapshot of Ford’s global operations is underway. The data will be used to improve performance. 

Mulally has imposed desclipline on a company that veered from one strategy to the next.

With the above mentioned, Mulally’s approach to decision making is what the
University of Leeds (Online: 2013) calls ‘muddling through’ since most of his work is target-driven. A weekly business plan review has been established. Weekly targets are set; divisions around the world are monitored to ensure they meet the set targets. A daily meeting with the global team to discuss problems as they occur and suggest remedial actions has been proposed. Those that do not meet targets represent ‘red flags’. The weekly sales outcomes determine the course of action at
Ford Motor. The course of action is the decision making process that emanates from the weekly statistics at Ford Motor which is non-prescriptive in its formation. A problem is approached according to its magnitude after putting into consideration the available resources. His decision making approach is guided by the fact that the remedial action to major company challenges is incremental, there are frequent policy decisions, several centres of power and influence, reasonable attempts to obtain consensus through the daily meetings with the global team thus satisficing
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rather than seeking the best solutions. The major problems such as the global recession and soaring prices of fuel are beyond his control.
With the above examples mentioned, the researcher is of the view that Mullaly’s approach to decision making is task-focused that has no tolerance for ambiguity.
According to Kreitner and Kinicki (2010:346) task focused managers are those that do not pay much attention to people issues.
2. Is Mulally’s approach more of characteristic of the rational, normative, or garbage can models of decision making?
(a) The meaning of Rational Decision Making.
This is the prescriptive model of decision making. It is a logical four-step to decision making. According to Kreitner and Kinicki (2010:337) this model proposes the using of a rational four step sequence when making decisions. They mention the four following steps:


Identifying a problem.



Generating alternative solutions.



Selecting a solution, and;



Implementing and evaluating the decision.

Managers use available information to make decisions that shape the activities and strategy of the company. The business dictionary (www.businessdictionary.com) states that rational decision making is a method for systematically selecting among possible choices that is based on reason and facts. It goes on to mention that in a rational decision making process a business manager always employs a series of analytical steps to review relevant facts, observations and possible outcomes before choosing a particular course of action. Practically, in the recent business decisions, this model was used by Mr Stephen Elop of Nokia in 2011 to discontinue the using of
Symbian software that was used to power Nokia’s mobile phones. To Stephen Elop, the problem was not that Nokia could not produce smartphones; the problem was the continuous use of Symbian software. Stephen Elop according to Lynch (2012:
359) argued that the using of Symbian software was stunting the growth of Nokia and thus checking its successful entry into the world of smartphones. Stephen Elop

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had two alternatives as key to solving the problem and thus guide his choice of decision: 

Either switching to Google’s Android open-source software, or;



Migrating to Microsoft Windows 7 mobile operating system.

He zeroed on Microsoft Windows 7 mobile operating system as the kernel to power
Nokia’s entry into the world of smartphones and also reinvent its competitive advantage. As the researcher stated earlier, the rational model is a prescriptive one outlining a logical sequence that decision makers should use when making decisions. (b) The meaning of Simon’s Normative Decision Making Model.
This process describes how managers make decisions guided by a decision maker’s bounded rationality. It represents the notion as Kreitner and Kinicki (2010:340) explain that decision makers are bounded or restricted by a variety of constraints when making decisions. The constraints include any personal or environmental characteristics such as limited capacity of the human mind, problem complexity and uncertainty, amount and timelines of information at hand, criticality of the decision and time demands that reduce rational decision making. The authors further state that because of the above mentioned constraints, managers tend to acquire manageable rather than optimal amount of information that profoundly restrict the managers’ ability to identify all possible alternative solutions and as a result they resort to satisficing. Satisficing as they maintain, resolves problems by producing solutions that are satisfactory not optimal. It is choosing a solution that meets a minimum standard of acceptance. The satisficing theory as Herbert Simon
(1959:263) explained if used in business, the firm’s goals are expected to be not maximising profit, but attaining a certain level or rate of profit, holding a certain share of the market or a certain level of sales. Models of satisficing behaviour he argued are richer than models of maximizing behaviour, because they treat not only of equilibrium but of the method of reaching it as well.

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(c) The meaning of Garbage Can model of Decision Making.
The Garbage Can theory, or model, according to York University (online: 2013) attempts to explain some organizational decision-making anomalies-in particular, decision making by "organized anarchies" where preferences are not clear, technology is not clear, or participation is fluid. Problems, solutions, and decision makers move from one choice to another depending on the mix of recognized problems, the choices available, the mix of solutions available for problems, and outside influences on the decision makers. In short, problems are uncoupled from choices giving an image of "rummaging around" inside a garbage can. Problems are addressed based on a solution choice, but choices are made based on shifting combinations of problems, solutions, and decision makers. In this sense, decisionmaking appears "pathological" instead of rational. The Garbage Can theory allows problems to be addressed and choices to be made, but does not necessarily follow a rational process. Poorly understood and addressed problems can drift into and out of the garbage can process, depending on the situation and factors.
The University of Minnesota (Online: 2013) explains that the garbage can model is based on the assumption that decision making is sloppy and haphazard. Decisions result from an interaction between four independent streams of events: problems, solutions, participants, and choice opportunities.
The following diagram gives a simplified overview of the Garbage Can Model of decision making:

Adapted from University of Minnesota (Online, September 2013)
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Concurring with the above arguments, Kreitner and Kinicki (2010:341) mention that this approach grew from the rational model’s inability to explain how decisions are actually made. It assumes that decision making does not follow an orderly series of steps they assert that the garbage can model has four practical implications, initially they argue that many decisions are made by oversight or by the presence of a salient opportunity, they also highlight that political motives frequently guide the process by which participants make decisions. Kreitner and Kinicki (2010:341) continue to state that decision-making process is sensitive to load; that is, as the number of problems increases relative to the amount of time available to solve them problems are less likely to be solved. Lastly, important problems are more likely to be solved than unimportant ones because they are more salient to organisational participants. (d) The rationale behind Mulally’s choice of Decision Making.
The researcher submits that decision makers are bounded or restricted by a variety of constraints when making decisions. This is the position Mulally is in, as a result, he is using Simon’s Normative Model of decision making. This model follows the fact that there is a ‘roadblock’ to decision making that leads to optimal performance and results. Personal environmental characteristics which are beyond his control such as the recession which occurred in the USA in 2008, General Motors discounting its pickup trucks, autonomous Ford Motor branches located in China, Russia and South
America, the soaring of gas prices which affected the sale of its 2008 pickup trucks that resulted in the delay of the launch of Ford F-series, the sluggish pace at which the corporate culture is changing and so on. Mulally acknowledges the dire business conditions; in order to position Ford to be able to react to rapidly changing circumstances he warrants daily meetings with the global team in order to react to situations as they appear and try to achieve not the optimal but what could be achieved. This is a characteristic of satisficing. The management team at Ford
Motors would like to maximize profits if they could, but have been limited in doing so by the conceptual and computational difficulties of finding the optimal courses of action (Herbert Simon: June 1959: 259).
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3. What type of decision-making styles are most and least consistent with
Mulally’s approach to decision making?
A Decision making style as Kreitner and Kinicki (2010:346) argue is the reflection of the combination of how an individual perceives and comprehends stimuli and the general manner in which he or she chooses to respond to such information. They submit that styles vary along two different dimensions: value orientation and tolerance for ambiguity. Value orientation reflects the extent to which an individual focuses on either task and technical concerns or people and social concerns when making decisions. Tolerance for ambiguity does not need structure. It can thrive in uncertain situations. When the two dimensions are combined they form the following four styles of decision making:
(a) The meaning of the directive style of decision making.
This is characterised by low tolerance for ambiguity. People with this style are oriented towards task and technical concerns when making decisions. They are efficient, logical, practical and systematic when making decisions (Kreitner and
Kinicki, 2010:347). They like to focus on facts, are action oriented and decisive.
However, their drawback is sometimes they tend to be autocratic, exercise power and control and always focus on the short term because of their pursuit of speed and results. The group leader solves the problem using the information he possesses. He does not consult with anyone else nor seek information in any form. The style assumes that the leader has sufficient information to examine all the relevant options and make an effective decision.
(b) The meaning of the analytical style of decision making.
With this style, the manager does not possess sufficient information to make an effective decision; he needs to obtain information or skill from others. He may not tell them what the problem is, normally, they simply ask for information. The leader then evaluates the information before making a decision. Kreitner and Kinicki (2010:348) are of the view that this style has much higher tolerance for ambiguity and is
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characterised by the tendency to overanalyse a situation. People with this style like to consider more information and alternatives than do directives. Kreitner and Kinicki
(2010:348) assert that analytic individuals are careful decision makers who take longer to make decisions but who also respond well to new or uncertain situations.
(c) The meaning of the conceptual style of decision making.
Here, the leader explains the situation to the group or individuals whom he provides with relevant information and together they generate and evaluate many possible solutions. This style tends to have a long-term perspective and as a result, individuals will be more creative and expansive in their approach entailing a higher level of risk for the long-term benefit of the organisation. Kreitner and Kinicki,
(2010:348) point out that people with a conceptual style have a high tolerance for ambiguity and tend to focus on the people or social aspects of a work situation. They take a broad perspective to problem solving; rely on intuition and discussions with others to acquire information. They are risk-takers and are good at finding creative solutions to problems.
(d) The meaning of the behavioural style of decision making.
With this style according to www.boundless.com (Online: 2013), the leader explains the situation to the group or individuals and provides the relevant information.
Together, they attempt to reconcile differences and negotiate a solution that is acceptable to all parties. The leader may consult with others before the meeting in order to prepare his case and generate alternative decisions that are acceptable to them. Kreitner and Kinicki, (2010:349) state that this style is the most peopleoriented. People with this style work well with others and enjoy social interactions in which opinions are exchanged. They argue that behavioural types are supportive, receptive to suggestions, show warmth and prefer verbal to written information.
(e) Of the above mentioned styles, which ones are most and least consistent with Mulally’s approach to decision making?
Using the table below, the researcher benchmarks the decision making styles in a summarised form vis-à-vis Mulally’s approach to decision making.

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Style.

Mulally’s approach that is

Characteristic of style.

consistent with the style.


Low tolerance for ambiguity.



Task oriented.



Directive.

Logical, efficient, systematic in



Changing a ‘culture that loved to meet’.



Not involving Ford

solving problems.

staffers below the top



Action oriented.

echelon sufficiently in



Autocratic.

decision making.


Barring some executives to meet
Bill Ford.



Saying to employees,
‘that does not work for me’.



High tolerance for ambiguity.



Tendency to overanalyse a situation

team he inherited in

present.

Analytical.



place’.


Leaving ‘most of the




Take longer to make decisions.

divisions on a daily


Conceptual.

Careful when making decisions.

Autocratic.

basis.



High tolerance for ambiguity.



Tendency to focus on people and

of radical

social aspects of a work situation.

transparency that



Broad perspective to problem solving.

makes it harder to



Rely on intuition and discussions with

hide problems.





others.

Requesting data from

Kicking-off a new era

Having a constant



Willing to take risks.

stream of data to give



Good at finding creative solutions to

his team ‘a weekly

problems.

snapshot of Ford’s

Idealistic and indecisive approach to

global operations.



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decision making.


People-centred or people oriented.



Supportive to suggestions.

‘decision making is



Receptive to suggestions.

more transparent’



Prefer verbal to written information.

(Kreitner and Kinick,



Always avoid conflict.

2010, 367)



Behavioural.



Have a hard time to say no to others.



In his regime,

Not using information as weapon on a team.

With the above analysis of Mulally’s approach to decision making, the researcher is of the view that there is no single or dominant decision-making style that he is following. To support this point of view, Kreitner and Kinicki (2010:349) point out that most managers have characteristics that fall into two or three styles. They maintain that decision-making styles vary by age, occupation, job level, gender, and countries.
Mulally’s approach to decision making is cross-cutting all styles. Kreitner and Kinicki
(2010:349) hold that there is not a best decision making style that applies to all situations; a manager is best off to use a contingency approach where a style that best suits the situation is used.

(f) To what extent is Ford following the practical recommendations of increasing creativity?
The meaning of creativity.
Kreitner and Kinicki (2010:361) define creativity as the process of using imagination and skill to develop a new or unique product, object, process or thought. They argue that creative individuals are highly motivated and spend a considerable time developing both tacit and explicit knowledge about their field of interest or occupation. Creative individuals are dissatisfied with the status quo. They look for new and exciting solutions to problems and are always perceived as disruptive and hard to get along with. Creativity involves a convergence between tacit and explicit knowledge. Creative ideas at work are often triggered by work-related problems,
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incongruities or failures. In organisations, creativity can be enhanced by effectively managing the creativity process and by fostering a positive and supportive work environment. Ford is effectively following the practical recommendations of creativity as illustrated in the following diagram:
Characteristic associated with Is it present

The extent to which Ford’s CEO is adopting

creativity (Kreitner and Kinicki at Ford

the characteristic in order to increase

, 2010:362)

Motors?

creativity.

A manager’s ability to see

Present.



problems in new ways and to

Shaking up a calcified culture to keep the company solvent.



escape bounds of conventional thinking.

Delaying the launch of Ford’s Fseries in order to clear out the old stock. 

Making the once fractious divisions work together.

The manager’s ability to



Present.

recognise which ideas are

Doing away with a culture that loved to meet.



worth pursuing and which are

Having a constant stream of data to give his team ‘a weekly snapshot of

not.

Ford’s global operations.


Downsizing.



Closing down unproductive factories.



Switching to production of vehicles that could be sold to several markets.

The manager’s ability to



Present.

persuade and influence

review system.

Present.

Daily meetings with the global team.



others.
Preference for thinking in

Instituting the weekly business plan

Switching to production of vehicles

novel ways of one’s own

that could be sold to several markets.


choosing.

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Modernising plants.

A manager’s willingness to

Present.



Winning over James Farley.

Present.



Postponing the launching of Ford’s

overcome obstacles.
A manager’s willingness to take sensible risks.
A manager’s willingness to

F-series.
Not present.



Needs improvement.

Present.



Imposing discipline on a company

tolerate ambiguity.
The manager’s Self-efficacy.

that veered from strategy to another.
The manager’s openness to



Present.

experience and

Making decision making much more transparent. conscientiousness.
Prudent management of the



Present.

creativity process.

Stopping the cycling of executives into new jobs every few years in order to create a supportive work environment. Autonomy, collaboration and



Present.

trusting relationships among

Ford does not use ‘data as a weapon on employees’.

employees.
Willingness to give and



Present.

accept on going feedback in

review system.


a nondefensive manner.
Keeping abreast with

Instituting the weekly business plan

Not present.

Daily meetings with the global team.



Not present at Ford Motors.

innovations taking place in the academic community.

4. Lessons to learn from the case:
(a) Knowledge should be prudently managed to improve production. Some executives’ desire to complain to Bill Ford about the new changes is an indication
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that knowledge management is not fully utilised at Ford Motor. Changes initiated from the top must be communicated to all workers and other key stakeholders to prevent resistance to change and innovation. Resistance to change may significantly harm or undermine the strategy of the company and therefore stunt its competitive advantage. (b) To prudently manage a company the manager does not need to be either an industry insider or outsider, what matters is skills and being people-oriented.
(c) There is no one single style of decision making that a manager can rely on to solve complicated problems. A manager has to wonder through other styles in order for him to arrive to a decision.
(d) There are a myriad of complexities in managing a multinational company such as
Ford with branches spread all-over the world.
(e) Resistance is always prevalent when a manager initiates a process of changing the corporate culture without solidly sensitising his subordinates about the benefits that would accrue from such changes.
(f) Transparency improves decision making and makes it harder to hide problems.
(g) It is imperative not to involve each and every staffer in decision making.
(h) Information collected should be used to improve the company’s processes, strategy, and solve problems, but, should not be used against workers of a company.
(i) Cycling workers into new jobs every few years undermines the growth of a company. (j) A high-performance team if set up performs better than a single executive.

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Conclusion
The quality of a decision is influenced by the amount of information available. To fully grow and graduate into learning organisations, companies need to put in place practical data-collecting and collating mechanisms, then use the data to identify problems. After the problem identification process, the leader should interact with his or her team and exchange opinions openly. Together with the team, they should look for alternative ways of solving the problem. Once all alternatives are investigated, a single best solution or multiple solutions depending on the problem should be adopted and implemented. A high-performance team works very well than a charismatic leader.

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Bibliography.
Kreitner, R; & Kinick, A. (2010). Organizational behaviour. The MacGraw-Hill
Companies, Inc; 1221 Avenue of the Americas, New York, NY, 10020; 211-219
Lynch, R. (2012). Strategic Management. Sixth Edition. Pearson Education Limited,
Edinburg Gate, Harlow, Essex CM20 2JE
Simon, H. June 1959: Theories of Decision-Making in Economics and Behavioural
Science.
The Business Dictionary: (Online 2013) www.businessdictionary.com
The University of Minnesota (Online: 2013): http://blog.lib.umn.edu/burn0277/pa5012/2013/03/garbage-can-model.html University of Leeds (Online: 2013): www.consult.leeds.ac.uk/public/level1/sec04/index.htm www.boundless.com (Online: 2013): Managing decision making styles.
York University (online: 2013): http://www.istheory.yorku.ca/garbagecan.htm

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