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CEO Distortion Field

I recently covered Chief Executive magazine’s CEO of the Year event honoring Ford Motor Co. CEO Alan Mulally.

The link to that event is here.

In his remarks accepting Chief Executive Magazine’s award for 2011 CEO of the Year, Ford Motor CEO Alan Mulally told a story that illustrates the distortion field that can envelope senior executives unless they are determined to hear the truth.

It was shortly after Mulally ioined Ford in 2006 after a 36-year career at Boeing. He convened a staff meeting with every department instructed to prepare color-coded charts indicating the degree to which they were tracking goals. Three hundred and twenty graphs were presented; 320 all-green charts indicated that every part of Ford, without exception, was on-target. Mulally was stunned and showed it. “But Finance tells me that we will lose $17 billion this year. Guys, is there anything that’s not going well?”

Mulally showed that he was eager to have managers talk to him about realities, however inconvenient those conversations may be, and work at solving real problems, however painful it may be. With that, the corporate culture at Ford shifted. At the next staff meeting, the progress charts were peppered with significant amounts of orange and red. At that point—by being willing to confront hard truths—Ford could actually begin the hard work of building for the future. The discipline has paid off. Ford announced profits of $2.4 billion in the second quarter. In his acceptance remarks, Mulally announced that Ford has paid down $20 billion of the $23 billion debt that he approved in 2006.

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