Case Study Assignment On Ford And On Its Role In Disruption

The article by Ernest Goulding describes Ford’s storied history with innovation and its reaction to disruption - within and outside the USA – in the transportation industry from 1903 to 2016. It also highlights the aggressive moves made by the past CEO and leadership team to save Ford from bankruptcy and make it profitable again after the 2008-2009 economic recession. Coming from a near-death experience, the article details the technological investment plans of Ford’s ambitious and experienced new CEO and queries the validity of his responses to the organization’s current threats; new technologies and well-financed competitors that are changing market demands. There are three reactions to the new CEO’s strategy to deal with these new threats. One member of the leadership team argues that the company has tried to take on too much, too fast and should stick to what has been a reliable driver of profit for Ford - trucks and SUVs in North America. Another executive argues that Ford has in fact not done enough and should focus more heavily on Ford’s role in industry disruption.

The last executive states that they believe Ford’s current strategy of adopting a flexible, broad-based path for industry disruption is best and the company should continue this course. With the perspective of a CEO, I strongly agree with the executive who argues that Ford has not done enough and should focus more heavily on its role in disruption. I agree with the three points made in this article in the favour of this executive about Ford needing to improve its organizational structure, create more internal value within the firm and do more to improve its position in emerging markets to react to industry disruption. To the first point, I believe Ford’s strategy to deal with disruption only partially enable it to fulfil its vision for the future. While its technological investments may enable it to run its current automotive business effectively within the current market landscape, it does not do much to position Ford for the future. Ford increases its chances of staying relevant and being a game-changer in the future if it makes aggressive changes to its organizational structure and culture.

For example, positioning Ford Smart Mobility to focus on different ways to take people from one location to another, without focusing on how people want to move does not put Ford in the best position to anticipate the needs of the consumers, predict and build desirable features and products. Another example is Ford taking a more proactive stance to industry disruption. Fields approach to fulfil Ford’s vision - Ford does not need to be first in the market with luxury offerings but offer technology options in a way that is accessible and affordable to ordinary citizens - does not exactly position the organization to be more curious and accessible in the face of fast-paced and dynamic competitors. Making bold statements in favour of disruption and workspace adjustments that mimic new innovative competitors like Google, Apple and Tesla only scratch the surface and does not automatically translate into a more workforce that can change its insular habits and resistance to change and be more innovative. To the second point in favour of intensifying Ford’s focus on its role in industry disruption, I believe that Ford needs do more to improve its internal technological value - unique assets, resources and position - to take advantage of future market demands. Improving its internal value could enable Ford to influence the market and capture more value from its other technological investments.

For example, developing strategic partnerships with the government, suppliers and other innovators in emerging markets in South America, South Asia and Africa, gives Ford the access it needs to build and introduce more competitive vehicles, further increase its share of emerging markets, reduce its cost of production. This in turn enables Ford to get more direct and indirect returns from its powertrain, software and autonomous technological investments and position it to cater to the needs of the growing middle-class within those markets. The article also does not show any evidence that tripling its testing fleet and partnering with Velodyne, a manufacturer who worked closely with Google, provides Ford access to the intellectual property and research material it needs to shorten the lifecycle of its autonomous products and catch up with a competitor like Google. Google and its associates are not only positioned to finance research and develop products with up-to-date technology but is already piloting test vehicles and thinking of flying vehicles for the future. Ford, who is coming in late to this segment will need to partner with innovators that match the competition’s research, development and other strengths to catch-up and get results a lot faster. My response to sceptics - who say that Ford should stick to a reliable driver of profit because electric cars make up less than 1% of today’s global market and autonomous technology will not be ready for another decade – is that, the surest way to ensure that Ford is not relevant at all or significantly late in those market segments is to do nothing in the present to advance its position in segments that are already significantly capturing the consumer’s attention. Pre-order sales by Tesla show that either all consumers who own an electric car in the U. S favour the low-priced Tesla models or new consumers will like to own these low-priced electric cars when they are released. This interest also indicates that the fact that electric cars make up less than 1% of the global market now does not mean the market will not grow in the future.

Current investments by Tesla to ensure its vehicles have more sustainable methods of charging could garner the support of new consumers who see these vehicles as a low-maintenance option and further increase its current market demand. Ford’s own history of losing market share to Japanese automakers in the 1970s and 1980s because they reacted to the consumer’s need for fuel-efficient and affordable vehicles should serve as a reference point that underestimating consumer’s needs and the competition is not the best idea. I think Ford should not just stick with its current strategy because while it is flexible and broad-based, it is more competitor-driven than consumer-driven. Just implementing its current strategy does not put Ford in the position to anticipate shifting consumer preferences in different market segments but just catch-up with the current and future competition. The article does not show any evidence that Ford’s technological investments in powertrain, software, autonomous vehicles, car ownership and small car challenges was driven because Ford identified ahead of time that the consumer’s preferences were shifting. A review of the article suggests that its investments in all these areas were because non-traditional competitors identified the changing needs of the consumer, provided products that filled this need which made Ford aware of the relevance of these disruptive factors. To be more proactive than reactive, Ford needs to do more to predict consumer needs and not just match the competition.

Despite my belief that Ford should do more, it is important to note that pursuing all five factors enables Ford to pursue and integrate technologies more broadly, be more competitive, create more desirable products and increase its chances of getting a return on investment. However, I think the software disruptive factor is the most important for Ford to pursue for three main reasons. Firstly, based on the article, the software disruptive factor seems to have the most impact on today’s current market which should most likely affect Ford’s revenue at the present time. The article claims that today’s consumers are putting more value on cars as a source of infotainment rather than transportation devices. With this kind of interest and value placed on in-car infotainment by consumers, it safe to assume that Ford cars are less likely to sell without software-related improvements. Secondly, Ford’s vehicle connectivity improvements that address the market’s software challenges gives Ford value in multiple ways and a higher chance of getting return on its investments. For example, SYNC improvements have the potential to lead to direct and indirect returns on the investment for Ford. Direct returns could include increase in revenue through the increased sale of cars with customizable software improvements that appeal to the majority of customers with varying technology preferences and needs. Indirect returns could include the identification of new features and add-ons that could further improve the riding experience after implementation. Lastly, Ford’s collaborations over the years with strong competitors, like Microsoft and Blackberry, makes it feasible to produce up-to-date technology for this segment at a faster pace.

Also, being a leader in brought-in technology segment makes it easier for Ford to develop expertise in other forms of connectivity and eventually lead this segment. In conclusion, Ford needs to make more changes to its organizational structure and mission to foster an internal culture of innovation. It needs to leverage more innovators and organizations to improve its technological assets, save cost and time and increase its market share in the U. S and emerging markets. I think the article also misses a critical source of disruption; the consumer. If Ford plans to really disrupt itself, I suggest that each form of technological research and development looks at the categories of consumers they serve, what they hire a vehicle to do for them, what they will like to do with their vehicle that current options do not offer and the technology that can address those needs. I think focusing on maximizing the satisfaction of each kind of consumer can put Ford in the lead and enable the firm to anticipate future trends better and maybe, just maybe stop playing catch-up.