Lesson 3
Program Management
Read and translate the text and learn terms from the Essential Vocabulary.
How Ford Hit the Bull’s-eye with Taurus
A team approach borrowed from Japan has produced the hottest US car in years
It’s been a long time since a car built in Detroit has drawn such rave reviews. But there’s no doubt about it: Ford Motor Co.’s new Taurus and its sister, the Mercury Sable, are four-star successes. Customers are snapping them up faster than the company can turn them out. The two cars are Ford’s hottest sellers since Lee Iacocca’s Mustang took the auto world by storm in the mid-1960s.
For Detroit, Ford’s success may herald a turning point. It’s true that Detroit still suffers from a perception of poor quality and a sense that it’s out of step with the customer. That’s why the Big Three continue to lose market share to imports from Japan and Europe. But Taurus and Sable demonstrate that the former American competitive edge is not completely lost. U.S. carmakers can still build a machine that excites the average American driver.
How did Ford pull it off? Largely, by stealing a page from the Japanese. It studied customer wants and needs like never before, made quality the top priority, and streamlined its operations and organisation. Top management is so pleased with the result that the Taurus approach will be incorporated in all future development programs.
Radical Steps. The Taurus-Sable project was conceived in the bleak days of 1980, when Detroit was deep in recession. Ford’s executives finally realized that fuel economy was not the only reason consumers were choosing imports. «It was painfully obvious that we weren’t competitive with the rest of the world in quality,» says John Manoogian, who then was Ford’s chief of quality. «It became our number 1 priority.» Adds Lewis Veraldi, who headed the Taurus-Sable program: «We decided we had better do something far-reaching – or go out of business.»
Taurus and Sable were a huge gamble, indeed. When the automaker realised it needed to take radical steps to lure drivers back into the American fold, it decided that its new cars would replace the company’s best-selling models, Ford LTD and Mercury Marquis. To make sure Taurus and Sable would succeed, Ford invested $3 billion – an unprecedented amount for a new-car project.
The first step was to throw out Ford’s traditional organisational structures and create Veraldi’s group, christened Team Taurus. Normally, the five-year process of creating a new automobile is sequential. Product planners come up with a general concept. Next, a design team gives it form. Their work is handed over to engineering, which develops the specifications that are passed on to manufacturing and suppliers. Each unit works in isolation, there is little communication, and no one has overall project responsibility.
Turning the Tables. Team Taurus took a «program management» approach. Representatives from all the various units – planning, design, engineering, and manufacturing – worked together as a group. Top management delegated final responsibility for the vehicle to Team Taurus. Because all the usually disjointed groups were intimately involved from the start, problems were resolved early on, before they caused a crisis.
Ford methodically set out to identify the world’s best-designed and engineered automotive features, so that as many as possible could be incorporated in Taurus-Sable. Ford engineers turned the tables on the Japanese and did some «reverse engineering» of their own – to learn how the parts were assembled as well as how they were designed.
The company bought a Honda Accord and a Toyota Corolla and «tore them down layer by layer, looking for things we could copy or make better,» Veraldi says. All told, engineers combed over 50 comparable midsize cars. They found that the Audi 5000 had the best accelerator-pedal feel. The award for the best tire and jack storage went to the BMW 528e. Of the 400 such «best in class» features, Ford claims that 80% are met or exceeded in Taurus-Sable.
At the same time, to determine the customers’ preferences, Ford launched its largest series of market studies ever. That led to features such as a net in the trunk that holds grocery bags upright and oil dipsticks painted a bright yellow for fast identification. «Little things like that mean a lot to people,» notes Veraldi.
Worker Input. Meanwhile, a five-member «ergonomics group» spent two years scientifically studying ways to make the cars comfortable and easy to operate. They took seats from 12 different cars, stuck them into a Crown Victoria and conducted driving tests with a big sample of male and female drivers in all age groups who were then quizzed on what they liked and did not like. The best elements were combined to create the Taurus-Sable seats. Similarly, dashboard instruments and controls were tested to determine ease of use. People were timed pushing buttons, flipping switches, and pulling levers. It turned out that the quickest and most comfortable way to turn on the headlights was to turn a large round dial mounted on the left side of the steering column. That’s how you do it in the new Fords.
Ford also made some distinctly un-Detroit changes in production. It asked assembly-line workers for their advice even before the car was designed, and many of the suggestions that flooded in were used. For example, workers complained that they had trouble installing car doors because the body panels were formed in too many different pieces – up to eight to a side. So designers reduced the number of panels to just two. One employee suggested that all bolts have the same-size head. That way, workers wouldn’t have to grapple with different wrenches. The change was made. «In the past we hired people for their arms and their legs,» says Manoogian. «But we weren’t smart enough to make use of their brains.»
The Team Approach to Product Development
Bulging Backlog. Ford pulled suppliers into the effort too. Typically, an automaker turns to its suppliers almost as an afterthought. Only when a car’s design has been completed does the manufacturer send out specifications for parts and solicit bids in search of the lowest cost. The companies that are chosen keep the business only until a lower price comes along. Team Taurus, on the other hand, signed long-term contracts with contractors and invited them to participate in product planning. «We never had the supplier input we had on this car,» says Veraldi. «Now we’ll never do it any other way.»
Taurus and Sable have not been completely free of problems. There have already been recalls to correct troubles with the side windows in station wagons and with the clutch in some four-cylinder models. As for overall reliability, it will be a year or two before an accurate track record on repairs emerges.
Still, Ford’s bet on Taurus-Sable is paying off – handsomely. With bare-bones models starting at $10,200, more than 130,000 of the midsize sedans and station wagons have been delivered so far, and Ford has a backlog of orders for 100,000 more. Elated dealers say that customers – some of whom haven’t set foot in a domestic producer’s showroom for years – are content to wait patiently for two months or more to drive away with a Taurus or Sable.
In fact, transplanting many Japanese principles worked so well for Team Taurus that Ford decided to apply management-by-teamwork across the board. It promoted Veraldi to vice-president for car-programs management and gave him the job of spreading the message throughout the company. Ford, it seems, isn’t too haughty to say arigato gozaimasu – thank you very much.
Source: Business Week, June 30, 1986, p. 69—70.
Essential Vocabulary
1. perception n – восприятие
perceive v – воспринимать
perceived a – воспринимаемый
2. competitive edge – конкурентное преимущество
3. carmaker (automaker) n – автомобилестроитель
4. streamline v – рационализировать, оптимизировать
5. recession n – рецессия, снижение уровня деловой активности
6. consumer n – потребитель
consumption n – потребление
consume v – потреблять
7. fuel n – топливо
8. investment n – инвестиция, капиталовложение
investor n – инвестор
invest v – инвестировать
9. manufacturer n – производитель, изготовитель, промышленник
manufacture v – производить, изготавливать, выпускать; перерабатывать (сырье)
manufacturing a – промышленный, производственный
10. engineer n – инженер, конструктор
engineering n – инжиниринг
engineer v – проектировать; создавать, сооружать
engineering a – прикладной, технический, инженерный
11. unit n – часть, доля, единица; подразделение компании; набор
12. program management – программное управление
13. delegate responsibility – делегировать ответственность
14. vehicle n – перевозочное средство; средство выражения и распространения; проводник
15. customers’ preferences – предпочтения клиентов
16. launch n – запуск (продукции, проекта)
launch v – запускать
17. sample n – образец (товара), выборка, проба (напр. грунта)
sample v – пробовать, испытывать, отбирать образцы или пробы
18. age group – возрастная группа
19. advice n – совет, консультация; авизо, мнение
advisor n – советник, консультант
advise v – консультировать
advisory a – совещательный, консультативный
20. backlog n – задолженность, просроченная работа; портфель заказов
21. solicitor n – адвокат, поверенный
solicit v – ходатайствовать, просить; навязывать (товар, услуги)
22. bid n – предложение
bidder n – покупатель; лицо, предлагающее цену; участник торгов
bid v – предлагать (цену), участвовать в торгах
23. contractor n – подрядчик
24. recall n – призыв ранее уволенных работников вернуться на работу; отзыв товара (по качеству)
recall v – призывать, отзывать
25.track record – послужной список; предыстория, прошлые результаты
26. delivery n– поставка
deliverables n – результаты (осязаемые)
deliver v – поставлять
27. domestic a – внутренний; национальный
28. showroom n – салон, демонстрационный зал
29. across-the-board – повсеместный, тотальный, включающий все категории и классы
Exercise 1. Answer the following questions.
1. Why were the Big Three losing market share to imports from Japan and Europe? 2. What was the situation in Detroit when the Taurus project was launched? 3. What was the traditional approach of the American carmakers to creating a new automobile? 4. What are the key characteristics of the «program management» approach? 5. How did Ford identify the world’s best-designed and engineered automotive features? 6. What were the results of the market studies conducted by Ford? 7. What was the input of the «ergonomics group»? 8. How were workers involved in the design process? 9. What was the role of suppliers? 10. Did Ford successfully transplant the Japanese management principles?
Exercise 2*. Which of the following statements are not correct and why?
1. Taurus and Sable manufactured by Ford were huge successes. 2. Detroit suffered from a perception of poor quality and that’s why the Big Three were losing market share to imports from Japan and Europe. 3. Ford executives understood that fuel economy was the reason why consumers were choosing imports. 4. To make sure Taurus and Sable would succeed, Ford invested $3 billion, which was the usual amount of money needed to develop a new car. 5. Normally, the five-year process of creating a new automobile is sequential. 6. With the sequential approach, different units work in close cooperation and are in constant communication with each other. 7. The final responsibility for the vehicle was delegated to Team Taurus. 8. To determine the customers’ preferences, Ford launched its largest series of market studies ever. 9. Detroit carmakers always asked assembly-line workers for their advice. 10. The American automakers usually involved their suppliers in the design process. 11. The Japanese principles were successfully applied in the Taurus project.
Exercise 3. Make 2—4 sentences using the term «track record».
Example: Aeroflot has a good track record in terms of flight safety, but this fact is not well known to its customers.
Oleg Deripaska, head of RUSAL, has an impressive track record of arranging successful mergers and acquisitions that turned his company into the world’s biggest aluminum producer.
Exercise 4. In economic context, «domestic» means «национальный, внутренний». Make 2 sentences with each of the following expressions:
domestic market
domestic producer
domestic prices
Exercise 5*. Fill in the blanks using terms given below.
Getting Customers to Love You
In 1984, General Motors shrank the Cadillac two feet and sales declined, forcing the dismayed…….. to rethink the way it…… cars. Instead of interviewing car buyers only at the start of………….. met over three years with five groups, each composed of 500 owners of Cadillacs and other models, to discuss design ideas. General Motors literally placed these people behind the wheel of prototypes, letting them fiddle with switches and knobs on the instrument panel, door handles, and seat belts while…….. sat in back and took notes.
The result: The new De Ville and Fleetwood cruised into……. with subtle tail fins, nine extra inches, and fender skirts – all reminiscent of the opulent post-war automobiles. As a result…….. quickly increased. The troubles and the comeback taught the company a very tough lesson. GM says, «We learned to….. on the consumer.»
Many companies that once led in technology must now hang on to…….. by carefully tailoring their products to customer needs and……… quickly. Says Du Pont Chairman Richard Heckert: «As the world becomes more and more………., you have to sharpen all your tools. Knowing what’s on the customer’s mind is the most important thing we can do.» It is also cheaper than finding new buyers. Studies by Forum Corp., a Boston-based consulting firm, show that keeping a…….. typically costs only one-fifth as much as acquiring a new one.
Techsonic Industries in Alabama, which manufactures Hummingbird depth finders, keeps its customers…….. even though some 20 Japanese……. make technologically……… products. Depth finders are electronic devices that fishermen use to measure the water beneath the boat and track their prey. Techsonic had nine new-product failures in a row before 1985, when Chairman James Balckom…….. 25 groups of sportsmen across the U.S. and discovered that they wanted a gauge that could be read in bright sunlight.
«The customer literally developed a product for us,» Balkcom says. In the year after the $ 250 depth finder was……., Techsonic’s sales tripled. The company has 40% of the U.S. market for depth finders, and its motto – not surprisingly – is, «The……of any product or service is what the customer says it is».
Source: Fortune, 1990, June 25 (excerpts)
Terms:
interviewed, delivering, manufacturer, competitive, loyal, quality, engineers, development, customer, showrooms, designs, sales, market share, competitors, focus, innovative, launched, planners
Exercise 6. Translate into English.
Когда уволенный из «Форда» Ли Якокка пришел в «Крайслер» на должность президента, компания находилась на грани банкротства. «Крайслер» обладал завидным послужным списком в области исследований и разработок, хорошей дилерской сетью и первоклассными конструкторами. Однако Ли Якокка быстро выяснил, что компания не функционировала как целостный организм. Каждое подразделение работало в полной изоляции, не поддерживая никакого общения с коллегами. В концерне было 35 вице-президентов, которые ничего не слышали о делегировании ответственности. Корпоративная структура была совершенно не рациональна – сбыт и производство автомобилей находилось в ведении одного вице-президента. При этом производственники выпускали автомобили, не интересуясь мнением сбытовиков, просто надеясь, что их кто-нибудь купит.
В компании фактически отсутствовала целостная система финансового контроля. Никто в корпорации не имел представления о том, как составляются финансовые планы и проекты. Руководство было ориентировано на краткосрочные прибыли, а не на долгосрочное процветание компании. Вместо того чтобы пользоваться своим конкурентным преимуществом – сильными инженерными и дизайнерскими кадрами, – когда прибыли стали падать, «Крайслер» начал сокращать издержки за счет снижения инвестиций в исследования и разработки.
Качество автомобилей было неприемлемым, клиенты засыпали компанию жалобами и множество автомобилей возвращали дилерам для ремонта. Доля автомобильного рынка США, принадлежащая «Крайслер», постоянно уменьшалась, а уровень верности клиентов ее автомобилям был самым низким среди «Большой тройки». Потребители воспринимали ее бренд как «скучный и чопорный». Моральный дух сотрудников «Крайслер», которые не имели представления о командной работе, также оставлял желать лучшего. (Продолжение см. в уроке 5.)