Why Ford Is a Lightweight (By Choice)
Whether you like Ford’s new pickup truck or not, the vehicle is a risk Ford had to take. Or at least that’s how Ford sees it.
Its newest F-150 pickup truck is made almost entirely of aluminum, “a first for a high-volume vehicle,” The Wall Street Journal noted this week. This makes the truck lighter—a key as the company attemps “to meet demands to more than double gas mileage in the world’s major markets by the middle of the next decade.”
But the approach has also meant taking considerable risks: Aluminum is pricier than steel and harder to work with.
“I’ve looked back at other periods where we have come off periods of success and then we stagnate and stumble, and I think it’s because we stopped making big bets,” Ford Chairman Bill Ford Jr. told the Journal. “If anything, I’ve learned you have to go faster and bet bigger when you are doing well.” The Journal added that “one insider says it was a multibillion-dollar investment, among the largest ever for a single model.”
All of this, we expect, would sound very good to Peter Drucker. As we’ve noted, Drucker likewise stressed that it’s precisely when you’re successful that you must invest in change. And Drucker would have been happy to see Ford flush enough to take chances, because the very purpose of profit, in his view, was to offset risk.
“The central question in respect to profits is whether they are high enough to allow the economy to take the risks it needs to take in order to grow,” he wrote in The Age of Discontinuity.
From Drucker’s vantage, taking risks was inseparable from planning for tomorrow, and depending on today’s success was deadly. “Tomorrow always arrives,” Drucker warned in Managing For Results. “It is always different. And then the mightiest company is in trouble if it has not worked on the future.”
Of course, bets can go wrong, and efforts can fail. This happened to Ford more than 50 years ago, when its Edsel flopped in the marketplace. But in such instances, the best way to recover is to accept reality, quit the effort and move on to something else. Otherwise, you’re bound to keep pouring money into ruinously expensive “investments in managerial ego.”
The response to Edsel, in this respect, set a good precedent. As Drucker noted, Ford “dropped the Edsel fast and recovered rapidly without lasting ill-effects.”
Do you think Ford is making a wise bet with its aluminum trucks?