longer such a great success. The notion was to drive down costs to make the product more affordable, to increase both the customer base and the size of the company. It also increased the problems.

The second phase was to manufacture where the customers are worldwide. By the mid-1920s, Ford had plants in about 20 countries around the world. In those days, of course, with transportation and communication being so inefficient, that basically meant that you had 20 companies around the world somewhat linked together.

The research contribution in this phase of the business really was in materials assessment, testing the properties of metals and plastics, and developing them. Early on, for example, Ford used aluminum block engines, but unlike what was going on at General Motors during this period, the research was not so much on how to make a new product, or a new propulsion system. The research emphasis all along has been attention in research to manufacturing efficiency. Research until after World War II was, by and large, a decentralized activity in the company.

After World War II, the next phase basically involved styling and feature innovation—cruise control, air conditioning systems, power steering, tail fins, and the like. In the mid-1950s, research was organized as a central enterprise. Engineering also received a big boost at that time. It is not clear exactly why that happened, but it was able to happen because the company went public and there was a massive infusion of funds into what was basically a bankrupt company. Research was founded as a central division in the company. It very deliberately went in the direction of “Let a thousand flowers bloom. ” That is, hire smart people and turn them loose—the kind of mistake that was, I think, almost universal with corporate America at that time and characteristic of research in the country in general. It is important to remember that Ford is a company that makes automobiles and nothing else, not linear optics, superconductivity, or magnetic resonance. Some of those fields are relevant; some of them are not. The notion was that if you hire smart people, somehow something good would come out of it. But do not tell them what to do.

Well, one of the results of being prosperous and satisfied is that eventually you may be neither. The next crisis occured in the 1970s when the oil shock came about and the Japanese learned how to make better cars more cheaply. They discovered what Henry Ford had tried to do in 1903 and the fact that they discovered it, by the way, was not an accident. The real turning point was that Dr. Toyota, back in the 1950s, spent six months in the Rouge plant doing nothing but observing how Americans made automobiles, and he was very grateful.

So, the Japanese learned how to run our business, in what I call phase one, better than we did. At that time, there was obviously a major response in the corporation, a very traumatic period, much like what has occurred more recently at IBM and AT&T. There was a major redirection of research. A central corporate research committee was set up, chaired by Lee Iacocca by the way—who has been president of the company and chief financial officer, the head of manufacturing, the head of engineering, the head of product development, and the head of what is called technical affairs—to try to decide what to do, particularly in terms of research.

One objective, obviously, was to cut costs. A second was that for the first time, the research department asked its internal customers what they really wanted from the research lab, their top 10 list. The third objective was to centralize the research that was still going on around the company in various divisions—the glass division, the plastics division, the paint division, et cetera—back in the research department. Also, the advanced engineering part of the company was combined with research under technical affairs, with the goal of trying to get better throughput. The idea was to find out what really needed to be done from the corporate point of view and to overcome some of the internal barriers that existed back in the 1970s.

In the 1980s, there was an attempt to get even more formalized—to formalize a total corporate technology strategy, as opposed to just sending a letter out to the heads of the various operations to ask them what they wanted. The idea was not only to have a strategy, but to try to improve internal working relationships. A point that was emphasized quite heavily, and has been at least over the last 10 years, is how to develop technical people and researchers to their full potential. Another thrust was to have the technology process focused on a product attribute leadership strategy (PALS), which basically decided what you want to be. Do you want to be very good at ride and handling, for example? Do you want to be the world's leader in styling? About 10 of these were set out to determine where we wanted to be—where we were willing to be a follower, et cetera —to be used in the strategy process. This was arrived at by consensus by everybody in the company, from the chairman down, and reexamined annually.

Another process that became extremely important at that time was benchmarking the competitors' technology. What is General Motors doing? What are Toyota, Nissan, and Volkswagen doing? What is Mercedes doing in its product that we could look very carefully at? Where are they, and how can we tell where they are heading from what they have done? It became very important to benchmark the competitors ' technology in order to look at where Ford should be putting its efforts.

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