Bill Ford Isn’t Scared of Apple Henry’s great-grandson explains how the automaker can become a software-driven service company that makes cars, too Steven Levy Blocked Unblock Follow Following Jan 10, 2016 Unlisted

Is the Ford Motor Company…pivoting? Startups do it all the time, occasionally with seismic consequences. Android was originally conceived as an operating system for cameras. Slack began as a video game. Airbnb really was all about air mattresses. But none of these companies was a 113-year-old pillar of the economy, with 197,000 employees, billions of dollars spent on branding, and countless tons of metal emblazoned with the company logo rumbling along the world’s roadways. The mind reels at the notion that Ford — Ford! — would change directions like an angel-funded six-person SOMA venture switching gears after a failed app. 1913: Ford’s first moving assembly lines at Highland Park. (Photo by Hulton Archive/Getty Images) Yet that’s what the Ford Motor Company seems to be doing. Or at least that’s what I sensed when I attended a Ford media day in Dearborn, Michigan, last month. (It was a palate cleanser for 2016 events — CES, followed by this week’s giant Detroit Auto Show.) The point of the day was to emphasize Ford’s evolving strategy. Making cars will remain a big part of Ford, but the company is committed to an additional but vital business model, a high-tech effort based on “smart mobility.” This approach not only doesn’t focus on selling vehicles, but even embraces some instances where potential car owners might forgo a Ford, or any other vehicle, in their driveway. Part of the vision would even point people to public transit. Sounds like a sea change to me. To confirm whether this is indeed an epochal moment, I tap the perfect source: William Clay Ford, Jr. He’s executive chairman (and a former CEO) of the company founded by his great-grandfather in 1903, and he’s altogether one the most intriguing figures in the auto industry; his weaves between anachronism and futurist qualify him for a cognitive DUI. Bill, I ask (Can I call you Bill?), is Ford attempting the biggest pivot of all time? We are sitting in his office at Ford World Headquarters in Dearborn, a 12-story glass behemoth that expressed currency and power when it was built 60 years ago and now looks kind of retro, a boxy ode to postwar muscle. Its address is 1 American Road. Bill Ford’s aerie is a wood-paneled man cave full of toys and mementos. It’s also, he notes, created with sustainable materials, from the acoustical tiles to the rug. There’s apparently a story behind every object. For instance, we are sitting at a table that was originally old-growth logging remains dredged from the bottom of Lake Superior. On the table is a vintage 1970s controller for a garage door opener. When he presses the big button on it, the office door slides shut, and Ford, wearing a blue dress shirt and a tie, shares a memory about it. The gadget is a great icebreaker, but Ford doesn’t need conversational lubricants: He’s an engaged talker. And he doesn’t shy away from grappling with the pivot issue I raise. “No question,” he says. At the previous day’s media events, Ford executives made a grab bag of announcements, ranging from the strange to the heretical. An example of the former: a program to place packets of sensors in motorcycles that will map roads in West Africa to improve routing of health care services. (The technology began from an earlier project that empowered cars to send tweets, and evolved into an open data platform called OpenXC.) An example of the latter is the Dynamic Shuttle, a pilot project for custom-designed ride-sharing vans on the Ford campus. If all goes well, Ford might expand the concept to cities around the world, filling the gap between taxi service and buses. When asked whether Ford was moving into territory occupied by Uber and Lyft, company executives gave Cheshire cat smiles of non-denial. Don’t rule it out! Ford, they explained, is on its way to becoming a mobility company.

Left, Ford is building a future in services, like analyzing data from sensors on a motorcycle. Right, a pilot project for custom-designed ride-sharing vans on the Ford campus.

It’s all part of that pivot. In early 2015, the company set its scheme in motion, launching 25 experiments. Some of them were fairly conventional (backup power for electric cars), others a bit daft (a “monsoon helper” for Mumbai drivers), and others seemed lifted from the business plans of recent startups (various apps for parking, ride sharing, and data collecting). All of them revolved around that mobility concept, using apps, data, and exotic tech to enhance and build on the experience of transportation, often in ways that minimize or even eliminate the good old American practice of a single driver getting behind the wheel to gleefully burn fossil fuel. The motorcycle sensors and the shuttle are the first graduates from that class of experiments. Mark Fields, who has been Ford’s CEO since July 2014, contextualized Ford’s push to become not just an automaker but a mobility company by using the example of Apple and Nokia. Only Apple successfully built a broad customer experience and robust ecosystem. “You can become extinct when you only focus on the hardware,” he said. The company’s other big news, which actually involved selling cars, was that Ford was investing an additional $4.5 billion in electric vehicles, with the goal of having electrified options for 40 percent of its “global nameplates.” (This isn’t the same as having 40 percent of its cars electrified, but it’s a pretty big step for an American automaker.) It was ironic that Ford’s CEO and not its executive chairman was making those pronouncements. Those themes — electrification and mobility — were ones that Bill Ford has been touting for years, and using all his influence to bring to his family business. It hasn’t been easy. Because Bill Ford is both the auto industry’s ultimate insider and its singular apostate. From boyhood, he loved cars, down to their smelly, greasy, smog-belching innards. But time spent in the wilderness of Michigan’s Upper Peninsula gave him a love of nature. When he went east for his higher education — Hotchkiss, Princeton, and, later, an M.S. at MIT’s Sloan School — his professors confronted him with the incompatibility of those passions, citing his family business as a profiteering wrecker of the planet. Ford has always believed that his great-grandfather’s vision transformed America positively, by giving people the freedom to travel and by paying workers fair wages. But he knew the professors had a point. As he moved up the ranks of Ford, he vowed to do things differently. Many in the company viewed him as a dangerous radical. But when he became CEO in 2001, he struggled when pressured to temper his idealism with pragmatism. He did try to shift the fleet to small cars and hybrids, but was forced to compromise and at times was stymied by his subordinates. It seemed there was no way to run an auto firm in the early 2000s without building fleets of SUV’s and pickup trucks. He was sharp enough to realize that there was much to learn in Silicon Valley, a culture seen as diametrically opposed to that of the auto industry. Ford caused a minor panic in Detroit in 2005 when he decided to serve on eBay’s board. (Meg Whitman, then its CEO, had been a Princeton classmate.) This wigged out some of the Ford directors, who had assumed he would serve on a board of a Fortune 10 company. “They had never even heard of [eBay],” says Ford. Serving on eBay’s board, he saw one unlikely commonality between the tech world and the car world. “To me, Silicon Valley is an interesting culture, but in its own way it’s every bit as insular as the Detroit culture has been accused of being. There’s a feeling that if something doesn’t originate in the Valley, it’s not worthwhile.” Getting to know Silicon Valley led to Ford’s early exposure to some of the auto-related activity there. For instance, as soon as he picked up the buzz about an advanced electric-car company called Tesla, he reached out and asked to see it. Hosting his visit was Tesla’s CEO at the time, Martin Eberhard, who had heard disparaging reports about Ford’s intellect. He found them groundless. “Incredibly smart guy,” he says. “He was really bright and fairly knowledgeable about electric cars. I asked him what it was like being CEO of an automaker. He smiled and said it was kind of like being handed the helm of the Titanic.” Ford test-drove an early Telsa prototype. “It was unrefined but, man, it was fun,” he says. He told Eberhard, “I think your technology is fantastic, but there is a difference between being a technology company and a car company, and some of the prosaic things about being a car company you may not find terribly interesting but you’re going have to do, like parts supply, servicing, logistics—all these things that customers will want and take for granted.” (My own view is that Detroit is dancing with denial with this argument. Anyone who spends a few minutes in a Tesla gets that it’s different from other cars — more a delightful digital device than a cabin pulled by belching engine — and even those who aren’t “car people” experience object-lust. If Apple enters the business, as rumored, get ready to multiply that feeling by 10. But when I asked Mark Fields about Tesla, he called it “a nice car,” and began peeling off the same imperious notes that Bill Ford did: “I don’t want to sound arrogant,” he said, “but it takes a lot to manufacture a car — logistics, design, dealership, marketing….” Certainly he can’t presume that Apple doesn’t know how to handle a supply chain, or market its wares.) In the years Bill Ford held the CEO post, company performance sagged. The stock price tanked, and red ink was tallied in the billions. In 2006, he resigned, turning over the job to former Boeing executive Alan Mulally. But one might argue that some things he set in motion, however belatedly, helped position the company for the future. (His supporters note that an SUV hybrid he did bring to market, the Ford Escape Hybrid, was named American Truck of the Year in 2005.) When the economy collapsed two years after he gave up his post, Ford was the sole major U.S. automaker that didn’t need a bailout. (Much credit was due to his successor, who took on $23 billion in debt and ordered a huge workforce cut.) Ford has now been profitable for 25 consecutive quarters. He pointedly remains active as chairman, however, and claims that arrangement has worked just fine, first with Mulally and now with Fields. “I mean, I was the CEO,” he says. “I know what that job is. I know what my strengths are. So I don’t want go back to that. Done incorrectly it could create, I suppose, fighting and everything else. But I’m not going to let that happen.”

Not being CEO liberated Bill Ford. He began pondering the long-term future of his industry. “I didn’t know what was going to change and what technology was going to enable,” he says. “All I knew was, we couldn’t keep doing what we were doing forever and expect a great outcome. As the years went on, my thinking sharpened.” His coming out really began when he took the stage at the TED conference in 2011. “It was the hardest place I have ever spoken,” he says. He was unaccustomed to the strict time limit and the pressure to woo an audience that might view a “car guy” as the enemy. But he was well briefed: His speech adhered to the classic TED form, a mix of biography, confession, inspiration, aspiration, wonky detail, and tree hugging. He said that the move to electric cars would significantly mitigate the climate crisis, but zeroed in on a previously unheralded problem, one he called global gridlock. He argued for a greener approach, with solutions like car sharing and pedestrian zones. “We are going to build smart cars, but we also need to build smart roads, smart parking, smart public transportation systems, and more,” he told the TEDsters. Viewed today, the talk seems prescient. Though he wasn’t explicit at the time about how his own company would address this, in retrospect Bill Ford’s vision was the seed for its current pivot. Five years after the talk, he says he is “stunned” at the progress since then. “For over 35 years, I was on the green side of the ledger, and was a lone voice for many years in the industry,” he says. “This time around, [the reaction] on this issue was almost immediate. I can’t remember if I even used the term mobility, but there was no such term. Now everybody is talking about mobility. [The auto industry] has been around for over a hundred years, and we’ve had a series of evolutions but no revolutions. Now we’re at the forefront of a series of revolutions, whether it’s how people access the vehicle, what drives the power train, the autonomous driving. There are various buckets of real change hitting our industry now and in the future.” Last year, to help manage those buckets, Ford hired a new VP of research and advanced engineering. Ken Washington is a nuclear engineer who had been heading research at Lockheed Martin’s Space Systems lab. When Ford approached him for the job, he asked himself whether he should even take an interview with, of all things, an automaker. Then he watched Bill Ford’s TED talk. “I was so inspired by that,” he says. “If a company can have a senior executive that looks over the horizon and thinks about making the planet a better place, that’s the kind of company I want to work for.” A key part of Washington’s job is working closely with the executive chairman. “In the 15 months I’ve been at the company, I’ve spent more time with him than I had with the senior-most executive of my former company in 28 years,” he says. “And I was a vice-president there, too!” Not surprisingly, they talk about figuring out what it means to make Ford a mobility company. When asked whether the company is willing to disrupt itself, Washington replies affirmatively. “We have been a product company for so long, it’s quite disruptive for us to think about a service that is not associated with building a thing,” he says. “And it was really disruptive for us to actually even talk about having an e-bike, and a van service that we would package and then offer to a consumer.” As you’d expect, Ford himself believes that disruption is crucial. Even as the company gains traction on his long-held dream of shifting the fleet to electric, he knows that’s not enough. “I think that’s great but it’s not the answer. There is no silver bullet here. There will be a series of events that will help create a better future. Some of it will be in the power train, some of it will be in the ownership model, some will be in the customer-care model, some of it will be in the hardware — autonomous vehicles.”

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