Ford’s layoffs fit with Hackett’s vision for fitness

Today’s announcement by Ford’s CEO Jim Hackett that the automaker is cutting 7,000 white-collar jobs, worldwide, was jarring, but not surprising, considering his focus on business fitness.

Today’s announcement by Ford CEO Jim Hackett that the automaker is cutting 7,000 white-collar jobs worldwide was jarring, but not exactly surprising to me.

Just a little over a month ago at the Detroit Economic Club, Hackett articulated a key term I’d heard him use before. When I interviewed him in 2013, he used the term in reference to how Steelcase prepared for upcoming recessions in 2002 and 2009. He said that the key to surviving the ups and downs inherent in business is “fitness”--a state of preparedness.

“Lean thinking is a form of a more fit system. It means 'competitive,' or it means 'the ability to withstand an onslaught of another threat,' he had said in that interview.

As CEO of Steelcase, it’s true that he steeled the office furniture company for a succession of downturns by “leaning” it. There were the legendary rounds of layoffs and early retirement packages offered in 2002 and in 2009. Job losses were no less devastating then than they will be now.

But cutting the labor ranks—both blue and white—was not the only fitness measures Hackett took. Some fitness approaches included rearranging manufacturing equipment to maximize available space and empty a few buildings. Not only did that action save money on maintaining, heating, cooling, and lighting the building, it allowed the company to then sell the buildings for added cash flow. The lean exercises extended to Steelcase’s suppliers, which had to engage in value-stream mapping, Kaizen, and other lean events to qualify as suppliers.

Transformative Thinking

But it is how the prophetic Hackett transformed the company from a traditional office furniture manufacturer to a workspaces provider and design innovator that salvaged it and grew it to become the world’s largest. “The office desk was built to support a 10-pound computer. I wondered what would happen to the desk when the computer only weighs one pound,” Hackett remarked at the DEC event.

As a forethoughtful visionary, Hackett recognized that smaller, lighter, and mobile computers would free office workers from being anchored to a desk in an office building miles from home that they had to physically be in to do work. “Work is no longer a place you go to, it’s a thing you do,” he said in the interview.

For a company making furniture for offices, that reality had serious and company survival-altering implications.

Living Laboratory Learnings

Hackett turned the Steelcase headquarters into a living laboratory, experimenting with arrangements that simply facilitated work. Café booths, workstation treadmills, comfy sofa chairs and lounge sofas, and sleek tabletops were positioned for employees to try out and report on. Laptop lap shelves; springy, rolling desk chairs; retractable glass walls; touchscreens on mobile stands; videoconferencing wall mounts; and open space facilitators that allow workers to adapt space on demand all became part of the company’s offerings.

In addition, Steelcase expanded beyond its current customer base, offering not only office furniture, but also architectural and technology products for office environments and the education, health care, and retail industries.

Hackett indicated that what drove his fitness concepts was the devastation of downturns in the late 1990s.

Survival of the Fittest

Hackett said, “The macro concept governs the way I think about the company. It is this notion that I began pondering in the last downturn. These events that come ... you manage through them, you suffer through the implications … and then you go back to normal. I was pondering that. And I felt like one way to enlighten myself was to ask the question, ‘Is the struggle of what businesses go through in downturns only economic-related, like a sales drop, or is it the contortions of trying to change to be more competitive?

“They seem different, but they might be the same. In other words, as we witness the automotive sector right now, they’re suffering from a lack of sales, but we knew before the sales dropped that something else wasn’t right.

“So that led me to this micro concept that is already out there, that systems that are complicated clusters of activities go through a process of fitness to survive. Take a system like nature. Why does one type of species survive and another one die? In economic systems, why do bubbles occur? Why do some things create wealth and other things don’t?

“Take for a given that we live in a world that’s always searching for the better model. It’s a perversity that you think it’s just a flash or a temporary moment. In other words, the system that’s most dominant believes its virtues will keep it from ever being overtaken. It’s those same virtues that keep it from looking at what’s overtaking them.

“I think the reason business is contorting so much faster in our lifetimes is because of globalization. I think that is a unique time in the world’s history. We just happen to be here. It’s just an accident that you and I were born in a time when trade structures evaporated. The internet was born and now we’re in a new world construct. That has put the industrial models in tremendous stress.

“So you'd better get yourself ready, not just wait out a moment that will pass, but to get yourself fit so you can embrace it. We use the term 'judo throw.”' Leverage the problem to make you stronger.”

“And so it’s working. We’re ready for the next downturn because we’ve started thinking about being more fit before it came.”

I suspect that Hackett’s visionary approach to business fitness is what will transform Ford into its next iteration and extend its life another century.

Got thoughts? I'd love to hear from you. kateb@thefabricator.com