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For Mulally, Ford's Culture Is Job One

Stocks in this article: F

Editor's note: Lori Ann LaRocco, author of Opportunity Knocking, share some important lessons for exec below.

NEW YORK ( TheStreet) -- In the last four and a half years, chief executives have had the task of increasing shareholder value in a slow-growth economy. They have made cuts, but you can't cut your way to prosperity. Growth is needed to prosper. One of the foundations of creating growth is through culture.

It is a necessary part of a company's foundation.

Culture is created and supported from the corner office, all the way down to the mailroom and employees meeting with the public. It is nurtured as it is a living entity and the identity of an organization; if neglected, it can go sour.

CEO Alan Mulally of Ford Motor (F) faced a decayed corporate culture when he took over. By creating a new culture, he was able to revive and turnaround a beleaguered icon.

In order to take advantage of opportunity and meet demand, an organization's structure is key. Ford may be a global company, but the model Mulally uses to structure his company is something any entrepreneur or business leader can apply. He calls it the "One Ford" plan.

The tiered, focused 'One Ford' plan illustrates the culture of Ford. It all centers around human capital. By meeting every week, Mulally and his team get to know each other extremely well: "You know you can't fool anybody. Without leadership sharing the same vision and communicating about how they would execute, the 'One Ford' plan would cease to exist."

As with any plan, it must be executed properly to be effective, and Mulally executes it through his example. He is known for his unbelievable memory, able to recall someone after meeting them just once.

A Ford employee told me about being "blown away" by his memory when walking with him on the floor of the Detroit Auto Show. Mulally went out of his way to go say hello to a dealer he'd met the year before, remembering his name and the dealership he ran. "It's things like that, that motivate you," the employee told me, "He truly cares about the employees. Everyone is important to the overall plan."

Mulally's personality also comes through in his clothing.

Sure, all CEOs wear suits, but Mulally has a staple "uniform" for Ford meetings and events: A blue blazer with a Ford lapel pin, red tie and white shirt. One Ford worker told me it's comforting to see Mulally on the floor of an auto show "getting right in there" and meeting with workers.

By acknowledging the "people" aspect of Ford, Mulally has been able to include everyone at every level of Ford in its growth equation. Looking at the company's brand now, you know exactly what Ford offers and what they are about.

Mulally explains the essence of Ford's culture comes from a message he read in a 1925 Ford ad, "Opening the Highways to All Mankind."

To create a culture around such a mantra, Mulally and his team went back to the basics. Mulally said honesty is the core of their culture and while the truth can be painful, it cannot be ignored. From shutting down facilities and laying off workers to eliminating brands, the actions Mulally and his team took would help boost profitability and create a stronger company over the long term.

"We needed a plan to build a cathedral," Mulally stressed.

In order to build that cathedral, Mulally created a culture where all employees from the boardroom down to the showroom believe in brutal honesty and commitment. All wear clear glasses on the reality they are facing and share the same vision and enthusiasm in developing cars based on the needs of their global consumers.

Mulally's new corporate culture was built on a three-prong approach: First the needed to define opportunity by deciding what Ford was. What kind of brands would it offer? They decided to offer a full family of vehicles: small, medium and large cars, utilities and trucks.

Second, his team focuses on being best in class for all of its vehicles.

Third, Ford ensures its vehicles will be accepted and adapted by consumers around the globe. If a model was developed for the U.S. market, it needed to be adaptable to car buyers in other countries.

Mulally said matter-of-factly, if workers didn't share the same vision and enthusiasm, they were let go, or they left on their own.

Human capital is important to the dynamics of an organization. Mulally explained when he hires, he is looks for people like himself because he knows that the success of his company depends on it.

Looking at the company's brand now, you know exactly what Ford offers and what it is all about.


By Lori Ann LaRocco, "Opportunity Knocking" Author, CNBC Sr. Talent Producer

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