CEO Forum with Mulally: Be nice, visionary

• Ford CEO Mulally drives home advice to students with affability.
• Importance of workplace skills %u2014 technical and interpersonal %u2014 stressed.
• He envisions smarter cars that make for better drivers.

ATHENS, Ga. — College students packed an auditorium on the University of Georgia campus here this month seeking words of wisdom from Ford CEO Alan Mulally.

He passed along some sage advice … from his parents. "One thing I learned from (them) was that it's nice to be important, but it's more important to be nice," Mulally told the 425 students in the Tate Student Center's Grand Hall.

People skills and aptitude for teamwork are critical for students as they prepare to enter the work force, he said. "Be terrific at the skill you're doing right now, be open to the possibility of expanding those skills, and then just enhance and learn and develop your working together skills," Mulally said. "Be true to yourself and your values … and be accountable for actually getting things done."

That simple but solid counsel has served Mulally well. As an aerospace engineer and executive at Boeing, he helped the aircraft company take off with development of the 777 jetliner.

Arriving at Ford in 2006, Mulally, 68, helped steer the automaker through a restructuring and led it through the U.S. financial crisis and Great Recession while its Detroit rivals landed in bankruptcy court. Today, he's one of the most sought-after CEOs in the U.S., with persistent rumors that Microsoft might woo him away before his planned 2014 departure from Ford.

Mulally touched on that issue and many others, including globalization and in-vehicle technology, during the 16th USA TODAY CEO Forum, held Oct. 1 in cooperation with the university's Grady College of Journalism and Mass Communications, Terry College of Business, the College of Engineering, the Student Government Association, the University Union Student Programming Board and the Division of Student Affairs.

During the question-and-answer session with students, Mulally was asked what would persuade him to leave Ford for Microsoft by Holly Beale, a senior in information systems management who has been offered a job with Microsoft when she graduates.

"Congratulations. They are a great company," he said. "With respect to Microsoft, I love serving Ford, so I have nothing new to announce besides serving Ford."

Then he invoked another bit of parental advice to always be open to new possibilities. "I never really thought I would leave Ford," he said just as he hadn't planned to leave Boeing. "When (then-Ford CEO and current executive chairman) Bill Ford called, I knew I was having trouble, because I didn't say 'No' right away."

When he got to Ford, Mulally did a reality check on where the carmaker was at the time — a philosophy that students could apply to their own plans, he said. "The most important thing is to simultaneously deal with reality, really the way it is, not the way you wished it could be or you hoped it could be," he said. "But also have a vision about where you want to go."

He sold the Jaguar and Land Rover brands in 2008, Volvo two years later and through those same years, shed Ford's ownership stake in Mazda to focus on the core Ford and Lincoln brands. He committed the company to "quality, fuel efficiency, safety, really smart design like seamlessly connecting to the Internet, and also," Mulally said, "to be the most affordable, which was (company founder) Henry Ford's original vision."

Ford financed its overhaul — and avoided needing government aid to survive the financial crisis in 2009 the way General Motors and Chrysler did — with $23.6 billion in private credit that Mulally arranged in 2006, just months into the job, by mortgaging the entire company.Ford reported a profit in 2009 and is on a string of 16 consecutive profitable quarters.

A new companywide accountability process has helped identify problem areas sooner than was the case in the past, Mulally says. "Every week, we meet with the entire team worldwide, and we review the status against the plan," he said. "Have we launched all of the new technology? What areas need special attention? And then we work together as a team worldwide to turn the reds to yellows to green. … We all can't wait to get back there the next week to see the progress."

Highlights of the conversation with Mulally, edited for space and clarity.

Q: What was like going from Boeing to an automaker?

A: At kind of the highest level, (the two industries) probably have more similarities than they're different. Most of them are very, very sophisticated vehicles. We design (planes) for the traveling public so you go point to point non-stop. Same with automobiles. I remember, when we walked out on stage in Dearborn (Mich.), and Bill Ford introduced me to all of the press, one of the journalists said, 'Mr. Mulally, with all due respect, you're not a car guy, and, you know, we're in trouble here. And what does that mean to us?' Because it's such a complicated industry starting with the vehicles themselves.

I kind of rubbed my chin, trying to buy myself some time to think of an answer, and I said, 'Well, I really agree with you that automobiles are very, very sophisticated. As a matter of fact, the average automobile has around 10,000 parts. They're very, very sophisticated. I might point out that the 777 has 4 million moving parts, and it stays in the air.'

Q: Technology has been very important at Ford. What is in the future for connected vehicles?

A: Because of the Internet of things, we're all going to be connected. Instead of inventing the technology, we're using all of the (current) smartphone devices. ... When you bring your smartphone into the car, then we allow you to use that smartphone. You provide the voice activations so you can keep your hands on the wheel, your eyes on the road and yet use your smartphone through voice, and you can operate not only your connection with the Internet, but you can also manage your apps.

The next step is going to be that we're going to end up with embedded modems in the car, and now the car will really be another instrument on the Internet. That philosophy, keeping the driver as the center of the attention, is probably the most important thing we can do to remove distracted driving and making drivers better drivers.

I think you'll have a relationship with your Ford store like your Apple store, where you'll be able to flash (upgrade) the car every couple of months, (and) it will have all of the latest applications, latest upgrades.

Q: Talk about the importance of Ford's EcoBoost technology and the risks involved with that strategy.

A: It was probably one of the most significant breakthroughs in engine and propulsion technology. What EcoBoost is, is an internal-combustion engine but also using direct fuel injection and (a turbocharger). You run at higher temperatures at higher burner pressure rates, but it allows you to burn more in a clean way and improve fuel efficiency by over 25%. You can reduce the CO² by nearly 15%. Another neat thing is, you increase the torque at the lower (engine revolutions). When you're driving the vehicle, you just have this wonderful driving experience, plus you get all of the benefits of fuel efficiency.

In terms of the risks is that at the time, that technology was very expensive. But we knew that we could increase the scale and improve the costs of it, and get the real benefit worldwide. Now, within a few years, all of our vehicles will have this EcoBoost technology.

Q: There have been reports that younger people may not want to buy cars as much as Baby Boomers have. How is Ford targeting Millennials?

A: I just saw a student in the new Fiesta, and, my gosh, they're just the neatest vehicles. But it used to be, in the United States, that if you had a smaller vehicle, it's going to be considered to be cheap because it wouldn't have all of the features, and it wouldn't have the technology, and it wouldn't have the fuel efficiency and the quality. Now, back to our brand promise, these are the best-in-class vehicles in the world. When you get a Fiesta, you get the best quality and all of the features. We're really attracting all age groups with all of the different interests and the different-size vehicles because we made that commitment.

Q: In your time as CEO, Michigan and northern Ohio have had some of the highest unemployment rates in the country. What is Ford's commitment to helping people who helped build Ford?

A: The most important thing that we can do and we're doing is to create an exciting, profitably growing Ford. We are now competing with the best companies in the world right here in the United States. That wasn't true seven years ago. In our case, we've announced that we're going to be hiring nearly 15,000 new employees within the next couple of years, and great salaried jobs, great hourly jobs and great careers. That's our commitment. The best thing we can do everywhere we operate in the United States is to grow by making the best cars and trucks in the world and provide for ever-increasing job opportunities.

Q: How will Ford compete internationally where companies in other countries can offer vehicles at lower prices?

A: Ford's point of view is that we believe that we can serve maybe three-fourths, 80% of the market, but we are not making vehicles at the very small, lowest end. It's just not our competency. There's a tremendous market all around the world for vehicles around the Fiesta size, a B (subcompact) size. So we compete on the B size all the way up through the larger vehicles.

When you look at automobiles worldwide, about 30% of all the vehicles sold over the next few years are going to be in the Americas, North and South America. About 30% will be in Europe, Russia and Africa, and 40% will be Asia Pacific, led by China. In China this year, the industry will probably sell 21 million vehicles. In the U.S., it will be around 16 million. In Europe, around 13 million. You can just see the impact Asia Pacific is going to continue to have through the world.

Ford is going to focus on the Fiesta size and the larger vehicles. The Chinese love the smaller SUVs, just like the rest of the world. They are just so practical, they're so fun, they're safe, you're sitting up high, you have great visibility. You can use it for work, you can use it for family, for leisure. It's probably the fastest-growing segment around the world. I think we're really well-positioned. We're increasing our production as fast as we can.

Q: What else is in the future for Ford and the U.S. auto industry?

A: We're going to see a lot of improvement in internal combustion, whether it's diesel or (gasoline), and new materials, integrated electronics, the aerodynamic improvements, system integration, so a lot of improvements. Looking forward, I think we're going to see more biomass fuels. I think we're going to see more natural gas vehicles — we're going to have one out there — but I also think we're going to see more electrified vehicles and more hybrids, then all of the electric vehicles that have a much larger battery. How fast that happens will be dependent on how we improve the costs and the capability and reduce the weight of the batteries, because that's the single most important thing.

You can imagine a world where you have a hydrogen tank and you mix the hydrogen with platinum, and water comes out of the tailpipe, electricity goes to the new high-efficiency battery, and now we're actually using our energy in a clean way. As we develop our energy policies in the United States to generate our energy clean, then I think we're going to really move to a world that all of us want, and that is a sustainable future.