Too often Locked-in companies literally race toward the exit of their business. And such seems to be the case with Ford (see chart here). Back on 3/15/07 I blogged that Ford was Defending and Extending its bad business by selling one of its good businesses, Aston Markin (link here). Now the company is following that same destructive path as it considers selling both Jaguar and Land Rover (see article here.)
From the late 1980s into the 1990s Ford started to develop a new future via acquisition of Aston Martin, Jaguar, Land Rover and Volvo. These were combined into its Premier Auto Group, which could have served as White Space for developing a new Success Formula that would effectively compete with Toyota, Honda, and BMW. But instead of letting this be White Space, with funding and resources to develop a new Success Formula, Ford tried to force its old Success Formula onto this group. Executives at Ford pushed to have these new acquisitions "leverage" Ford by using common parts, common engineering and common approaches. The result was a negative impact on Jaguar and Land Rover, as the old Ford Success Formula drove down the value of these brands. Instead of migrating Ford toward a new Success Formula, leadership tried to integrate these premier brands into the old Success Formula focused upon supply chain optimization and cost reduction.
Instead of becoming a great new company that led the market, Ford leadership turned Premier Auto Group into another Edsel. Something intended to be valuable, but not coming close to meeting anyone’s goals.
Jacque Nasser had an idea of how to transform Ford when he made several of these acquisitions and kept them outside of Ford. But William Ford, Jr. started the process of destroying long-term shareholder value when he rejected learning from these acquisitions and instead put company focus on old fashioned "big iron" – a claim he bragged about in ads for the Mustang. The new CEO appears to be a man after the Chairman’s heart as he tears apart the future opportunities of the company in search of cash to Defend & Extend the low-yielding Ford Success Formula. Too bad for investors and employees.