What is strategy? Why is strategy so important to an organization’s success? These questions are at the very heart of what it takes to develop a plan for success and follow through or execution of the strategy is the vehicle in which successful businesses deliver their vision. Strategy is defined as an action plan to achieve organizational objectives. (Thompson, Margaret, Gamble, & Strickland, 2018)
Quite simply put, this is the plan for how you will reach your goals, and the necessary tools and planning needed to get there. Without a properly planned strategy, you are simply floating in the ocean without a sail or motor, hoping that you arrive at your destination still intact and on time. Strategy would tell you that you need to map out your course, plan for unexpected events such storms, make sure you have the necessary supplies and tools for survival, and most importantly, know what you are looking for when you see it. Henry Ford has been described as the “father” of the modern automobile.
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But truth be told, Henry Ford didn’t invent the automobile, that accolade goes to Karl Benz of Germany in 1885. No, what Henry Ford did almost 20 years later was create a strategy that would revolutionize the automobile industry as we know it. Henry Ford was an engineer by trade and his first attempt at building an automobile was in 1899 when he formed the Detroit Automobile Company with William H. Murphy. The concept was great, but the strategy that the company had did not layout the fact that they could not build the automobile fast enough and so this venture lasted less than a year. Of course, this is the story of many great innovators, “if at first you don’t succeed, try, try again”. So, Ford started the Ford Motor Company in 1903 in an old wagon factory warehouse. His first official car was called the Model “A” and was produced in 1903. Within one year, Ford had produced over 500 Model “A” cars, quite an accomplishment for someone who had already failed once. Ford had a vision that he laid out into a very effective strategy, build an automobile that everyone can afford, therefore increasing your demand for your product. Four years later in 1904, Ford released the Model “T” which was dubbed the “working man’s car” and it was a huge success. Unfortunately, Ford’s strategy had worked in producing a car for the common man, the problem with his initial strategy was that he didn’t plan for how he was going to keep up with he increased demand. This failure in strategy led to Ford having to stop taking orders for the Model “T”, as he could not keep up with production. As with his previous failures, Ford didn’t see this as failure, but an opportunity to improve and change his strategy.
In 1913 Ford truly found his calling, the “Father of Mass Production”. Ford figured that if you trained an employee to do one task and they did that task all day, then then several employees doing one task would be more efficient, and the Model “T” could be produced faster and for less. This theory held true in the fact that it took 12 and half hours to produce a Model “T” the old way, now it took a mere 93 minutes! (Entrepeneur, 2019) As you can see, if Henry Ford would have applied the 3 tests to winning strategy early on, he would realized that his strategy was not very well laid out. The first test, the “Good Fit Test” would have illustrated that a good idea is only that if you can’t deliver the finished product to keep up with demand. Of course, by trial he learned this lesson.
The second test, the “Competitive Advantage Test”, Ford did pass. He was able to provide an automobile that others could not produce for less and was able claim the market for which he sought, the average American driving his automobile. The third test, the “Performance Test”, was somewhat passed, but has history tells us, Ford stayed too complacent for too long. Ford had no real competition for the “affordable” automobile until Chevrolet entered the market in 1911, and really started mass production of the Chevrolet Series “D” in 1917 and 1918 with over 4000 cars produced. Chevrolet started a new concept of producing a different model every year, whereas Ford continued producing the Model “T”. Chevrolet realized that they could not compete with Ford in production, so they adjusted their strategy to offer consumers the appearance of “difference”. This slight change in competitive strategy was enough to give Chevrolet the edge over Ford and would make Henry Ford re-think his own strategies. If you fast forward to modern times, and look at the government bailouts to Detroit, you will see that Henry Ford’s Ford Motor Company accepted no bailout, and as such was able to emerge as one of the strongest American made automobile companies. Ford has changed its strategy many times over the company’s history and has become the number producer of trucks in America.
Just this past year, Ford realized that the automobile industry was changing that in order to keep up and stay competitive, they would no longer keep all their automobile lines of vehicles. They will now only produce the Ford Mustang and Focus cross-over turning their attention on electric SUVs and trucks. (Bloomberg, 2018) My how times have changed! Henry Ford started with a vision to produce a low-cost affordable car for the “working” man, fast-forward, and now Ford Motor Company is moving away from the low-end automobile and focusing on what it deems is the future, electric powered vehicles. Only time will tell if Henry Ford’s dream will be able to survive this new strategy and stand the test of time.
References
- Bloomberg. (2018, April 26). Ford Will Stop Making Cars — Except These 2 Models. Retrieved from Fortune: http://fortune.com/2018/04/25/ford-stop-making-cars-sedans/
- Entrepeneur. (2019, January 9). Henry Ford The Man Who Taught America To Drive. Retrieved from Entrepeneur: https://www.entrepreneur.com/article/197524#
- Thompson, A., Margaret, P., Gamble, J., & Strickland, A. (2018). Crafting & Executing Strategy. New York: McGraw-Hill Education.
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