Ford is now a 'personal mobility' company: How the comeback kids are riding tech to a new destiny
As Bill Ford sees it, Ford Motor Company is about democratizing technology, and it's preparing to tackle a new challenge over the next 50 years. TechRepublic's Jason Hiner has the story.
Every innovator is thinking about what's next. But it's the ones who are thinking about what's after what's next that are the true visionaries and disrupters.
Bill Ford is one those.
In the 1980s and '90s, when most of the auto companies were building bigger and bigger vehicles and the public was gobbling up huge SUVs, Bill Ford was trying to convince Ford Motor Company to build more fuel-efficient, environmentally friendly cars and trucks. He was almost completely stonewalled by the executives at Ford.
However, he's now the executive chairman of the company that his great grandfather Henry Ford founded in 1903, and while the rest of the automotive industry is now racing to see who's going to build the best electric and alternative fuel vehicles, Bill Ford has his sights set on the next challenge.
"Everybody's focused on the environmental issue with cars, and rightly so, but I believe in my lifetime we're going to solve that," said Ford. "It's either going to be through electric or hydrogen. We are going to make clean cars, and we're well on our way to having the technology to do that. But even as we're doing that, another issue is coming at us called global gridlock. We've got a billion cars on the road today and 7 billion people in the world. By midcentury we're going to be about 9 billion people and 4 billion cars on the road."
Clearly, the math doesn't add up to a very good scenario. There simply aren't going to be enough places to put all those cars, especially in urban areas that are already badly overcongested with vehicles.
Bill Ford has some ideas for how we're going to solve that as a society, and his vision is refreshingly unmyopic.
In the final installment of this four-part series on Ford Motor Company's rise to become a 21st century tech powerhouse, we take a look at how Ford plans to use technology to address one of the planet's most important looming challenges in the decades ahead, and how the company is transforming itself in the process.
The environmentalist and the astronaut
Depending on how you look at it, Bill Ford is either the most unlikely guy on the planet to be leading the world's most profitable auto company, or he's the natural savior to take the American icon back to its long-forgotten roots.
An auto industry blue blood, Ford grew up learning to love automobiles and the raw, natural beauty of Michigan. Then he went off to Princeton, where he studied history, played rugby, and became an environmentalist. When he graduated and came back to join the family business in 1979, his new "green" philosophy was not well received.
"Coming back to Detroit and the auto industry, to say those views weren't very popular would be a huge understatement," said Ford.
"It was hard because I couldn't find anyone else in the company at a remotely high level who shared where I thought this company had to go," Ford said. "My great fear was that I thought not only was this the right thing to do, but I felt that if we didn't get on the right side of the issue that the next generation would never come work for us. We wouldn't get the best and the brightest. We would end up being like the tobacco industry where our employees would have to apologize to their family and friends for working there. I never wanted that to happen to us because I love the Ford Motor Company. But I felt that for me to love the Ford Motor Company in the future would mean that we'd have to completely reinvent ourselves, and it took a lot of years and it was a tough journey."
He agitated to get Ford to build more fuel-efficient vehicles and adopt more sustainable and environmentally friendly energy policies within the company itself. Though these ideas fell on deaf ears with management, many of the rank-and-file at Ford appreciated his views. And management appreciated his passion and talent enough to give him a series of important leadership positions, probably hoping that he would eventually temper some of his more radical ideas. He never did. Eventually, that led to an underlying tension that nearly forced him to leave the company.
Ford said, "It was very tough in the early days to get any traction in our company, and there were many times where I thought about leaving. I'd come home at night and talk to my wife and say, 'I don't know why I'm doing this, because I feel like I'm not making any progress. I'm going to leave and go start my own environmental foundation.' And she said to me many times, 'You can go do that and that's great, but don't you think you'd have a bigger impact if you could actually help change Ford?' And so ultimately that's why I stayed."
Bill also looked back to the company's founder for inspiration. What's often forgotten is that in his own time Henry Ford himself was a bit of what we'd call an environmentalist. He powered his entire estate with a hydroelectric power plant that he had installed. When he built the estate, he took extreme measures to make sure wildlife was safely relocated and he installed bat houses in order to control mosquitos without having to spray chemicals. At Ford Motor Company, he even envisioned a car made completely from soy and developed prototype parts for it. He also experimented with lots of alternative biofuels. So, Bill Ford saw his crusade as not just transforming the Ford Motor Company, but restoring its true character.
By the late 1990s, the world had started to catch up with Bill Ford's ideas, and Ford Motor Company turned to him to lead the company. He became chairman of the board in 1999 and then took over as CEO in 2001. However, by the mid-2000s the company was weighed down with an overwhelming series of operational challenges. While Bill Ford remained a visionary, he wasn't necessarily a great chief executive. But he did make one brilliant executive decision -- he convinced one of the rising stars of American industry, Boeing's Alan Mulally, to come to Detroit and be his replacement.
Mulally said his life and career have been motivated by three compelling visions. The first was when John F. Kennedy issued his 1962 challenge to America to send a man to the moon. The 17-year-old Mulally decided to study science and engineering and eventually joined the Air Force and entered the astronaut program but was rejected from being able to go to the moon because of a slight color blindness. When he graduated from college, he joined Boeing as an engineer led by the compelling vision of building commercial aircraft that would bring people together and make the world a smaller place. When he came to Detroit in 2006 to talk to Bill Ford about how he might help Ford Motor Company, he ran into a third compelling vision.
"I was just so excited about his vision, and his great-grandfather's vision," said Mulally. "We talked about Henry's original vision. He took this advertisement out from January 24, 1925, and the advertisement in The Saturday Evening Post was 'Opening the Highways to All Mankind.' At the time only the wealthy had automobiles and so his vision was that he wanted to make great vehicles but make them available to everybody and democratize the technology."
Ford said, "I interviewed Alan Mulally at my house in 2006, and it was so refreshing to sit down with somebody who, within an hour, we were finishing each other's sentences. Right there, before he was even hired to come to Ford, we actually talked about doing two things that we thought would be very important... We took two big bets and they were big bets for us because they were very far from what Ford was at that time. We said we wanted to be known as the fuel economy leader in every segment we participated in. And we were anything but that. The second was we wanted to be the technology leader. And, actually to deliver the first we had to become the second, because to be the fuel economy leader we had to deliver a lot of technology to our vehicles."
The rest is history, albeit recent history. Bill Ford became executive chairman and Alan Mulally became CEO and the two orchestrated one of the greatest turnarounds in the history of American business. They refocused on Ford-branded vehicles, they reunited the different factions of the company, they renegotiated contracts with the unions in order to bring manufacturing jobs back to America, and they started building automobiles that people wanted to buy and that actually turned a profit -- all while implementing Bill Ford's vision for more fuel-efficient vehicles and a more sustainable company.
Looming global gridlock
Even as Ford's current prospects have improved dramatically and the company is running a healthy business again, Bill Ford sees storm clouds on the horizon. And he's worried even more about the impact these storms could have on society than about what they could mean for his business.
The world's current population trends are skewing heavily toward urbanization in the decades ahead. Even a country as geographically diverse and spread out as the United States is undergoing strong urbanization trends, aided by two decades of urban renewal projects that are making many of its cities safer and much more livable.
Carol Coletta, one of the world's most respected urbanization experts and the former CEO of CEOs for Cities, said her organization did a study that confirmed this urbanization trend among young adults -- and especially young professionals -- in the United States.
The study focused on 25- to 34-year-olds, since that's when people are most likely to move and resettle in a new community. It found that in 1980, this group was 10 percent more likely than the rest of Americans to live within a 3-mile radius of the downtown business district, or what Coletta calls "the close-in neighborhoods." In 1990, that number had edged up slightly to 12 percent. However, after the urban renewal projects that began in the 1990s, that number jumped to 29 percent in 2000. Then it skyrocketed to 42 percent in 2010.
"Young people were 42 percent more likely to live in the close-in neighborhoods than were other Americans," said Coletta. "But if you take college-educated 25- to 34-year-olds, they're actually twice as likely -- 102 percent more likely -- than other Americans to live in that 3-mile radius. That is dramatic change. That is a formidable trend... Eighty-five percent of Millennials say they want urban living, and they are decisively acting on their preferences."
Of course, whether all those young Americans will stay in the urban neighborhoods when they have children is an open question. Nevertheless, some of them certainly will and the urbanization trend will have a major impact on transportation systems in America. Globally, urbanization is accelerating at an even stronger rate, especially in Asia.
Bill Ford said, "In the decades to come, 75 percent of the world's population will live in cities and 50 of those cities will be of 10 million people or more, so you can see the size of the issue we're facing. When you factor in population growth, it's clear that the mobility model that we have today simply will not work tomorrow. Frankly, 4 billion clean cars on the road is still 4 billion cars, and a traffic jam with no emissions is still a traffic jam."
Ford added, "This is going to create the kind of global gridlock that the world has never seen before.... Today, the average American spends about a week a year stuck in traffic jams and that's a huge waste of time and resources, but that's nothing compared with what's going on in the nations that are growing the fastest. Today, the average driver in Beijing has a 5-hour commute, and last summer there was a 100-mile traffic jam that took 11 days to clear in China."
Venkatesh Prasad, Ford's senior technical leader of vehicle design, said, "We want to make sure we are prepared for that future. If you look at the 19-20-21 metaphor... it speaks about the 19 cities with 20 million or more people in the 21st century. That's a big piece of what we worry about, or look at as an opportunity."
Beyond just the impact to the company's business model, Bill Ford sees this as being a potential human rights issue. "Global gridlock is going to stifle economic growth and our ability to deliver food and health care, particularly to people who live in city centers, and our quality of life is going to be severely compromised," he said.
A vehicle and infrastructure network
So what can society do to combat global gridlock, and how can a car company possibly be part of the solution and not part of the problem?
These are the questions Bill Ford has been asking himself lately, and he started publicly talking about them in earnest during a TED Talk in 2011 and then at his keynote presentation at Mobile World Congress 2012 in Barcelona in February.
"The answer to having more cars is simply not to have more roads," said Ford. "When Americans began moving west we didn't add more wagon trains, we built railroads. To connect our country after World War II, we didn't build more two-lane highways, we built the interstate highway system. Today we need that same leap in thinking for us to create a viable future. We are going to build smart cars, but we also need to build smart roads, smart parking, smart public transportation systems, and more. We don't want to waste our time sitting in traffic, sitting at toll booths, or looking for parking spots.
"We need an integrated system that uses real-time data to optimize personal mobility on a massive scale, without hassle or compromises for travelers. That's the kind of system that's going to make the future of personal mobility sustainable."
He gave several scenarios that illustrate how smart vehicles and smart infrastructure connected together on a common network could help streamline transportation:
- A smart road system with eight lanes in a major city automatically switches between six inbound and two outbound lanes in the morning to four of each during the day to two inbound and six outbound in the afternoon, all based on timing and traffic levels.
- A car runs into a traffic jam on the highway and signals the network, which signals the cars behind it to change course and take a different route.
- In a really bad traffic jam, the car is alerted and the driver pulls over to a metro train stop and hops on the train and takes that into work, and then after work takes the train back to the station where the car is.
- A red traffic light senses that you're coming down the road at midnight with no other cars around and changes to green so that you don't have to stop, and waste time and fuel in the process.
- A smartphone app matches you up with the nearest cab in New York City.
- You get in your car to go downtown and your car automatically goes out and books you a parking spot and then uses the GPS system to direct you to that spot, saving on fuel and traffic congestion.
While some of the technologies are already available to start making this happen and we can see glimpses of it, Bill Ford sees a lot more innovation being needed to fill the gaps, and he has been appealing to engineers and entrepreneurs to dedicate some of their resources and their startups to the transportation industry in general and to global gridlock specifically.
"We need our best and our brightest to start entertaining this issue. Companies, entrepreneurs, venture capitalists, they all need to understand this is a huge business opportunity as well as an enormous social problem," Ford said.
The groups and individuals that are ready to start pursuing this opportunity can target two main areas, according to Bill Ford.
"There's lots of new technology, some of which has been invented, a lot of which needs to be invented -- vehicle-to-vehicle communication [and] vehicle-to-infrastructure communication," Ford said. "In the world that I think has to happen, if you think of a major city you think of the transportation assets -- the subways, the bicycles, the pedestrians, the buses, the private cars, the cabs. They're all going to have to be integrated into one network."
The Ford of the future
Just because Bill Ford is talking about his company integrating with all of these different types of transportation doesn't mean that Ford is going to to start building trains or buses or bikes or personal vehicles likes the Segway.
Prasad explained that Ford is "looking at the value of the automobile in a little more holistic sense and in the context of what your options might be for personal mobility... [In the future] people might still want to buy cars, but many of them may choose not to buy a car. Their choice of brand may not be the car that they own but the car that they lease and maybe they lease this car or rent this car in a business-to-consumer context such as Zipcar, or they might do it through a peer-to-peer car leasing or car ride-sharing mechanism, and there are many examples of those today that are not just being experimented but are being seriously embraced by urban areas, cities, and neighborhoods. We are very, very closely watching that and tracking that and trying to understand how we need to model our technologies to best fit for that."
Bill Ford said, "I suspect we'll always be making cars and trucks, but we may be doing something else very different as well. If we think of ourselves as a mobility company rather than just an automobile provider, that really opens lots of different possibilities."
The Ford SYNC software platform obviously lays an important foundation for Ford to connect to the kind of vehicle-to-vehicle and vehicle-to-infrastructure communication Bill Ford envisions. In that context, the company's focus on SYNC and making it a universal part of its entire product line becomes even more clear.
"We at Ford use the term 'democratization of technology,' and that's what I think we should be doing as we go forward, and it drives everything we do," said Ford. "So when we [started] SYNC, which is our mobile platform, we didn't put it on our most expensive cars to start. We put it on our least expensive cars to start. Why? Because we wanted to democratize it and get it out to lots of people."
Still, Bill Ford dismissed the idea that Ford will become the world's backend infrastructure provider for a global transportation network. He said, "I'm not sure we'll be the integrator. We might be. But I'm not sure we're the most natural integrator, but we will work with companies that will do that."
Bill Ford also sees Silicon Valley playing an important role in this future. "I think it's a fascinating place with brilliant people who don't have any sense of limitation and I really like that," said Ford. "To me it's been really inspiring. I've had a blast being on the eBay board and I've had a blast going to the Valley. We just opened our own Silicon Valley office [in June]... It gives all the really smart entrepreneurs out there a place to go to interact with Ford."
On the other hand, Mulally remains proud of the work Ford is doing to expand its overall operations in the United States, especially in its manufacturing plants, in order to meet growing demand for Ford products. The company is showing that it's still viable to make things in the U.S. "We're fighting for the soul of American manufacturing," Mulally said.
It's that mix of returning to tradition and speeding ahead toward an uncertain future that makes Ford such a fascinating company to watch. It still has its critics -- environmentalists argue that it could do more to increase the pace of fuel efficiency in its vehicles, and the business world has recently criticized the company for not being able to respond to increased product demand as quickly as its cross-town rival General Motors. Nevertheless, Bill Ford's altruistic approach to tackling humanity's future transportation challenges is likely to continue to win friends and admirers for the Ford Motor Company.
"If you believe as I do the purpose of any company is to make people's lives better, then we better get on with solving this global gridlock issue," said Ford. "It's kind of like a reinterpretation of my great grandfather's 'Opening the highways to all mankind.' In some ways this is keeping the highways open to all mankind, but instead of [just] the highways it's [also] going to be the urban areas."
Read the rest of the series
- Part 2: How Ford reimagined IT from the inside-out to power its turnaround (TechRepublic)
- Part 3: Ford's 'open platform' car: How open is 'open'? (ZDNet)
- Part 4: (CNET)