Alan Mulally Reveals How He Turned Around Ford

The turnaround at Ford under Alan Mulally has been nothing short of spectacular. It's gone from posting record multibillion-dollar losses in 2006 when he took over, to five consecutive years of annual profits.

It's been so impressive that he's a leading candidate to take over at Microsoft after current CEO Steve Ballmer leaves. In a recent interview with McKinsey Quarterly, Mulally pointed out a few unique elements of his leadership and management style that have helped change Ford's culture. It's a hint at what he could bring to the table if he goes to Microsoft.

According to Mulally, a turnaround isn't about the executives at the top or their brilliant strategy. It's about figuring out a way to get every employee to understand the vision of the company, buy in to the plan, and feel supported in their jobs. If people aren't optimistic, they're not going to make the sacrifices and do the work required to turn things around.

His starting point as a leader? "It is an honor to serve," Mulally says.

It's a remarkably humble leadership style for an executive as prominent as Mulally. And it's a fascinating way to think about fixing a company.

Here's how he puts it:

"At the most fundamental level, it is an honor to serve - at whatever type or size of organization you are privileged to lead, whether it is a for-profit or nonprofit. It is an honor to serve. Starting from that foundation, it is important to have a compelling vision and a comprehensive plan. Positive leadership-conveying the idea that there is always a way forward - is so important, because that is what you are here for - to figure out how to move the organization forward. Critical to doing that is reinforcing the idea that everyone is included. Everyone is part of the team and everyone's contribution is respected, so everyone should participate."

He illustrates that with an analogy. If employees stopped production, the previous Ford managers would have jumped down their throats, asking what they were doing and why the stoppage happened.

Mulally says now managers ask, "What can we do to help you out?"

That approach has been much more productive and efficient at solving problems, he says.

Employee buy-in is taken so seriously at Ford that some employees carry a card that details the business plan on one side, and the culture and expected behaviors on the other.

The problems at Microsoft are thought to be as much about culture as they are the company's failure to anticipate the shift to mobile devices and away from the PC, so it could probably do with a dose of positive leadership.