Ford put its logo up as collateral

Quick note: I’ve just added a new free lecture to my schedule — Scaling from 1 to 100 Acquisitions, with Logan Leslie. Nov 12 at lunch. Sign up free!

I've been spending some time with Ford's history lately.

A crazy detail: in 2006, the blue oval logo was collateral on a bank loan.

Here's how they got there.

In 1999, Ford earned $7.2 billion. In its own words, "more than any other automotive company in history." So it went shopping. It already owned Jaguar and Aston Martin. It added Volvo and Land Rover.

Then gas got expensive. Sales of the big SUVs weakened, and the luxury brands started losing money too.

In 2006, Ford lost $12.7 billion. The worst year in its history.

The new CEO, Alan Mulally, was proactive: he went to the banks and lined up $23.5 billion in loans and credit lines. To get it, Ford pledged nearly everything. Plants, subsidiaries, trademarks, all the way down to the iconic logo.

Bill Ford, the founder's great-grandson, signed the papers. Bloomberg quotes him: "When we had to hock the blue oval… my heart stopped for a moment.”

Then 2008 happened. Credit froze. In 2009, GM and Chrysler went into bankruptcy.

But Ford didn't. It already had its money.

And in 2012, Ford got the logo back. Not a bad trade.

Here’s the part I find more interesting than the loan.

When Mulally showed up, Ford was headed for its worst year ever. And every week, his executives brought him status charts.

All green.

So he asked the room: we’re going to lose billions this year. Is anything not going well?

Silence.

Eventually Mark Fields, who ran the Americas, put up a red chart. It wasn’t a disaster, but a new SUV launch was stuck on a tailgate problem. People figured he’d be gone by Friday.

Instead, Mulally clapped.

The next week, the charts came in red and yellow. Now Ford could actually fix things.

The lesson:

You can’t fix problems your people are scared to tell you about.

Steal Mulally’s weekly meeting.

Every leader brings their top priorities, each one marked green, yellow, or red.

The rule that makes it work: the first person who shows red gets thanked. Out loud, in front of everyone. Then the room helps fix it.

Give it a few weeks, then look at the colors. If everything’s still green, somebody’s hiding something.

If you want to go deeper, the whole Mulally turnaround is in American Icon by Bryce Hoffman.

Thanks for reading,

Michael

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