A tall woman in a taut skirt enters. She takes my drink order, and then I watch her disappear down a burnished-mahogany-paneled hall. It's library quiet. Through the glass walls of the waiting area, past three Marcel Breuer chairs, I can see another woman seated at a huge desk, in an enormous mahogany office, talking on the phone. Suddenly, she stands up, reflexively straightens her flannel skirt, and smiles at somebody I can't see. Then she looks over at me. Beckons. Time speeds up. I'm ushered across the hall.
The episode of Mad Men ends and reality begins. And there he is, Alan Mulally, the chief executive of Ford Motor Co., his red hair combed in the old-timey coif of a former Boeing engineer. He leaps to his feet.
"C'mere!" he says, and puts his arm around my shoulder. "You've got to see this."
Mulally drags me into his giant inner office and points out the 20-foot-long window. "Look!"
There is a broad, sweeping view of the Rouge River; a hundred factory buildings; smokestacks.
"That's GM," he says, "right there. Bankrupt!"
He turns to his left, still with his arm around my shoulder, spinning me with him. I'm off balance.
"See that over there? Chrysler. All gone. Unbelievable, right?"
He's silent for a moment. He's not gloating, just amazed at the cataclysm right outside his window. "Unbelievable."
Mulally has steered Ford away from the brink in the four years since he arrived from Boeing. He cut labor costs by almost 22%; rallied his company around a printed four-point mantra that 200,000 Ford employees can carry around on a card in their wallet; and with his former chief financial officer, Don Leclair, even managed to raise cash the old-fashioned way — by borrowing from a bank, securing $23.5 billion in loans without asking the government for a penny. The moves paid off. In 2009, while his competition stalled, Ford made a $2.7 billion profit; by early 2010, the company had earned "car of the year" and "truck of the year" awards from the auto press and its stock price rose 700% from its 52-week low.
Mulally also culled his brand's herd of nameplates, to fewer than 20, from 97. This achievement especially thrills the CEO, who still becomes unhinged thinking about how unfocused, how uncool, the Ford brand had become. "I mean, we had 97 of these, for God's sake!" he says, pointing at a list of old models. "How you gonna make 'em all cool? You gonna come in at 8 a.m. and say, 'From 8 until noon, I'm gonna make No. 64 cool? And then I'll make No. 17 cool after lunch?' It was ridiculous!"
Mulally has certainly benefited from his rivals' recent tendency to slash their own tires — as when GM was repo'd by American taxpayers, or when Toyota inadvertently installed its accelerators in the "always on" position. But his most recent move is his boldest: He's getting out of the car business. Or rather, he's joining forces with a most un-automotive cabal, the consumer-electronics industry. In his quest to change Ford's culture, redefine its image, thrill young customers, and even revolutionize the car itself, Mulally wants to connect his autos to the Internet and to the souls of the people who surf it.
"Look, it's cool to connect. But it's past cool," he says, standing up in the middle of his sentence. (He's getting worked up again.) "It's a reason to buy. Tech is why people are going to buy Ford! We're going to be the coolest, most useful app you've ever had, seamlessly keeping you connected."
Ford is transforming the car into a powerful smartphone, one that lets you carry your digital world along with you and then customize it. And by the way, says Mulally, it "makes you a better driver." How? By freeing you from the tyrannies (and dangers) of messing with that little phone while you drive and letting you command your technology, through the car, using only your voice; by establishing the car itself as your connection to the cloud; and by giving mobile developers a way to create an ever-expanding portfolio of services designed for — and around — your vehicle.
And if the thought of a slightly stooped, graying multinational hooking up with a hot young industry leaves you a little queasy, here's the surprise: Ford is not just basking in the borrowed glow of the likes of Pandora and Twitter; the car company is generating heat as well. To the surprise of technologists and CE wonks, Ford has discovered a way to make the world's most popular high-tech device — the phone — stronger, just by bringing it into a car. Ford's system takes the power, features, and much of the content on your smartphone and gives it a human-scale outlet that's easy and safe to operate at 65 miles per hour.
It's a new foundation for the ultimate mobile device. The automobile will never be the same.
By almost any measure, Ford's in-car Sync communications platform, introduced in partnership with Microsoft in January 2007, has been a huge success, largely because Sync enabled Fords to do something dramatic.Where once driving entailed a kind of social disappearance, Sync was a breakthrough because it allowed you to move seamlessly from the connected world contained in your phone to an equally connected one inside your car — without touching a single button. Calls are automatically transferred to the car's speaker system, for example, when you get in. To make a phone call without taking your hands off the wheel, all you have to do is press the MEDIA button on the steering wheel and say out loud, "Make a call." The system speaks back to you and guides you through the process, all the while accessing the address book and call information you have on your cell phone. If that feels a little old hat, consider this: Ford's so-called Service Delivery Network can also connect your car wirelessly to the cloud. SyncMyRide, for example, a Web-based service, lets you load a destination into your kitchen computer and pull it up on your car's navigation system, so you don't have to print out directions and then hold a fluttering piece of paper in front of you while you drive.
Fords with Sync already sell twice as fast as identical Fords without the system. A million and a half Sync-enabled cars are now on the road. But this spring, Sync, now firmly established as Ford's big strategic focus, will get a killer user-interface upgrade called MyFord Touch. Coming first in the 2011 Edge/Lincoln MKX, then the 2012 Focus, the new UI is a voice- and touch-activated system, layered on top of the Sync operating system in the same way new software is updated onto your PC's OS. And it will dramatically simplify the Sync experience. (More important, it will also satisfy Mulally's first commandment: "We won't do it unless it lets you keep your eyes on the road and your hands on the wheel. Otherwise, you're not adding value to the customer — you're just adding buttons.")
For example, the MyFord Touch interface is customizable. Two LCD panels sit on either side of the speedometer, and drivers can change the layout of the instrument cluster above the steering wheel to suit their needs. Don't need to know about your car's climate right now, but you're lost? Get rid of the climate-control graphic and replace it with the navigation display. On a long stretch of highway and don't care about the nav? Replace it with the radio-station information or phone controls — whatever is most important to you at that moment. (You can even watch video on the center console, but only when the car's in park.)
Being able to choose which digital information sits in front of you is a nice way to reduce what Ideo, Ford's partner in researching the system's design, calls "cognitive overload." But the most dramatic changes in MyFord Touch will be profoundly human. The new voice-recognition system, created by Burlington, Massachusetts-based Nuance Communications, will let you speak to the car as if it were another human being.
In fact, according to Vladimir Sejnoha, vice president and chief scientist of Nuance, the next version of Sync actually approaches artificial intelligence. It predicts what word you'll say next based on the string of words you've already spoken. It also "learns," tuning its predictions based on its past interactions with each speaker. Nuance's software breaks down every sound you make into its most basic components and compares them against a giant database it has collected over the past decade. "It's a what-if proposition, millions of times," Sejnoha says. "We don't understand the speech, per se. We're just saying the input signal looks like this sequence of this model, so we're going to guess."
All of which makes sitting in the cockpit of a 2011 MyFord Touch — enabled car a little disconcerting — sort of like talking to a cat and having it understand you. Or like talking to a cat and having it listen to you and then go get you a beer. Stored in Nuance's system are more than 10,000 commands associated with driving, allowing you to speak normally to the car. Instead of talking to the dashboard in a stilted series of menu commands, you just say, "I'm hungry," and out comes spoken restaurant advice, matched up with the nav system. If you're in the mood for Oscar Peterson, you don't have to say "music," then "playlists," then "artists"; you just utter the phrase "I'd like to hear some jazz." Up comes every piece of jazz music attached to the car, whether it's in your phone or on your iPod. If you have Sirius Satellite Radio in the car, you can say, "Find talk radio" to pull up your preferences.
But perhaps the best thing about voice recognition is what it does for the devices you bring into the car. It lets you control them with your voice too. For starters, making a phone call takes one verbal command — "Call Paul at home" — instead of five or more. But even more impressively, you can control your smartphone (and run mobile applications) through the dashboard controls. No more fumbling around with your Droid as you swerve into that semi-trailer's lane. No more thumbing through tweets (the car even reads them aloud to you). The mobile applications from Pandora and OpenBeak (a Twitter client), as well as Stitcher, an audio news aggregator, are now available to you by simply saying the word. And those are just the first three services Ford has partnered with; more will follow.
The new combination of skills has all the earmarks of being a game changer. "I'd go one step further," says Thilo Koslowski, a VP and lead automotive analyst for Stamford, Connecticut-based Gartner. "MyFord Touch could be a category killer. Right now, Ford has redefined this market, and it has made it very difficult for anybody to enter the space and compete. Ultimately, what Ford is doing is moving the automobile into the next century."
Other car companies are chasing the same space, including Kia, which now uses Microsoft's open platform to create some rudimentary Sync-like features. (Ford had only 18 months of exclusivity with Microsoft, which has expired.) But Ford's hope is that in the same way the iPhone's hardware became the platform for an international app explosion — who thought a phone would one day be a carpenter's level, a remote control, a compass? — Sync will transform Ford.
Dearborn was not always this app-happy. In fact, by 2001, things were looking dire. To understand how far Ford has come, digitally speaking, it's important to recognize how dark the technological night was before the dawn.
"Everybody has been through this," says Mulally, "where they think they can manage everything. Where they make proprietary systems that don't work with anybody else's. The 'not invented here' syndrome kills all kinds of great ideas. It's the same thing in airplanes. The minute you make it proprietary, you're dead meat."
Mulally's EVP and Americas president, Mark Fields, who looks like he could bench-press a Camry, characterizes the old days of techno-tentativity more bluntly. "We used to have a saying in the company that we were a fast follower," he says. "Which meant we were slow."
Starting a decade before Mulally arrived in the spring of 2006, Ford had been spending millions of dollars trying to catch up with GM's in-car phone and modem system, OnStar. Ford had good reason: OnStar, rolled out in 1996, was highly successful. Hundreds of thousands of car owners bought the system so they could make basic cell-phone calls and connect with emergency services if needed. And owners paid for OnStar three times — for the bolted-in phone/modem box, for the $199 annual subscription fee, and for the marked-up phone minutes. By 2001, GM was pulling down hundreds of millions in revenue from that feature alone.
Ford couldn't figure out a way to counter. The company launched and killed not one but two competing "telematics" products and was $160 million into a third, Wingcast, when Doug Van Dagens, director of Ford Connected Services, realized there was a fundamental flaw in the GM model: OnStar's phone was built into the vehicles. That meant GM wouldn't be able to adapt to the rapidly evolving technology outside the car. Each generation of OnStar would be obsolete almost as soon as it was installed.
Weeks before Wingcast was slated to go on the market, Van Dagens had a vision. And that vision was Bluetooth. "Bluetooth was a much more affordable method of hands-free connection [than our telematics system]," he says, "and way, way, way more flexible." Bluetooth, now ubiquitous, was then just getting started — a basic radio language that allows all brands of consumer-electronics products and smartphones to talk to one another; a cheap, wide-open, universal protocol for voice and data that, to users, is invisible, agnostic, everywhere.
Wingcast's CEO initially kiboshed Van Dagens's idea of integrating Bluetooth. Van Dagens went to Ford's leadership. "Ford took steps to insert me as the CEO and chairman of the board of the division," he says, in a diplomatic retelling. "They said, 'Here's what we'd like you to do. We want you to walk into the board meeting and politely tell everybody that their services are no longer required.' That was the point at which we said, 'We're not going the way OnStar went.' "
Still, almost three years passed between the death of Wingcast and the birth of Sync. Only in 2005, after a Dearborn meeting between "the Two Bills," Gates and Ford, was the Sync concept hatched.
When Mulally arrived as CEO in 2006, a Sync prototype was among the development projects he was presented. That's when he surprised everyone by pointing to Sync as the future of the company. Mulally seized on a strategy already being developed to use the low end of the Ford lineup as the tech's showcase, seeing it as a way to do what Henry Ford had done back at the beginning: "democratize a brand new technology. Make it available to the masses." Instead of making Sync a feature for its high-end Lincolns, it would roll out in the 2008 Focus. "People said, 'Aren't you making a big bet on small cars?' " recalls Mulally. "And I said, 'Wait a minute, there's not a market for small cars in the U.S.? Have you heard of the Japanese?' "
To hear Ford executives tell it, the implosion of Wingcast and rise of Sync presented an opportunity to redefine the company. At its core, that meant meshing the slower, bigger teeth of the car business with the smaller, faster-spinning gears of the high-tech world. "These [high-tech] companies work at a very different clock speed than Ford," says Fields, "a much faster clock speed. We had to jump in. We had to learn." So in that new embrace of an open system, what had changed at Ford? "Simple," he says. "We started thinking like a software company."
As a piece of software, Sync was designed to be a basic general-purpose platform that sits in a car and allows other companies' products to connect to it — a simple, sturdy foundation. Outside tech experts, such as smartphone manufacturers and software designers, could connect their products to a Ford (and let their customers connect to the world) by writing code that works on top of Sync's operating system.
"It's Windows CE," says Walter Sullivan, a senior product manager in Microsoft's autos division, "with a standard Win 32 API [programming interface]. Eight million developers and 400,000 partner companies around the world know how to speak it. It's a massive community."
Mulally sees huge advantages in this open platform, and in the community that already understands it; he knows he doesn't have to be responsible for developing all of the improvements. He just has to make sure they meet his standards. In fact, with so many outside experts familiar with Sync's basic OS, and with an easy-to-mate platform, upgrades come faster and cheaper. Updated services — traffic, directions, business searches, even news, sports, and weather — can just be "beamed in" from one of six data centers around the country. Pandora and OpenBeak created Sync-specific software in just 10 days.
Ford's group VP of global product development, Derrick Kuzak, gets a wee bit emotional talking about the power of Ford's strategic change. "That openness," he says of the universal platform, "you don't know how profound that impact was on some of us. We took that fundamental learning and took it all the way to the electrical architecture of our vehicles." It's late on a bitter cold Michigan evening, in Kuzak's big, low-slung office on the Dearborn campus; he leans in and extends a disapproving, Dickensian finger at my BlackBerry, sitting on his desk. "You talk about gears spinning at different speeds," he says softly. "That phone in 10 years will be lucky to be a doorstop. Everything we're doing, we're trying to do faster. We're even designing new cars 50% faster than we did three years ago, because it's all about speed... . We got that in part from consumer electronics."
In turn, Kuzak gave something back to the CE world: the dashboard. As anyone who has fumbled with a 2-inch-wide BlackBerry knows, the miniaturization of electronics has brought devices nearly to the vanishing point, where the keys are actually too small for the meaty fingers dancing across them. Wouldn't it be nice if you could turn up the volume on your palm-size handheld by twisting a big knob? Wouldn't it be nice if your phone was as easy to use as a steering wheel? Wouldn't it be nice if you could just talk to it? Why yes, yes it would.
And when Kuzak and his team connected the two — smartphone and dashboard — they realized that the dashboard actually made the newest technology both more powerful and easier to use. Play Pandora through your Sync system and the result is better than your car radio ever was. But it's also better than Pandora ever was. "Voice is far more elegant than typing or touch," says Pandora founder Tim Westergren. "It's like being in the audience at a concert and yelling out the song and having the band play it." Or as Kuzak says, "When you bring your mobile device into our vehicle, you're actually building a better one."
The great thing for Ford, of course, is that the more Ford improves a customer's favorite handheld device, the more likely it is that people will want to carry their handheld devices into a Ford. And if you think this is all a niche play, think about this: Pandora was the most popular Internet-radio application in 2009, with more than 40 million users, of whom 18 million listened on their mobile devices and 9 million listened in their cars. As Julius Marchwicki, Ford's director of mobile applications, said at this year's Consumer Electronics Show, that's 9 million people "fumbling with their phone, voting, bookmarking, changing stations — all while driving."
None of which means Ford's lead in this new space is secure. Competition is looming. In addition to Kia, Audi, Mercedes, and other manufacturers are working on their own systems. "They obviously have a big lead," says Koslowski, the Gartner auto analyst, about Ford, "but sometimes being a first mover doesn't pay off. Think of Apple. There were plenty of MP3 players in the market before it introduced the iPod. For Ford, the burden it has put on itself is to keep innovating. I think the company is capable, but it takes a commitment all the way from the top."
Up in his office on the 12th floor of Ford's Dearborn world headquarters, Mulally looks out the window for a moment. Then he looks me in the eye. "I'm not worried," he says. "We're committed to this thing. Look, this is part of Henry's [Ford] vision, 'Opening the highways to all mankind.' I think this is the way to do it."
Paul Hochman is the gear and tech editor for Today on NBC and host of msn.com's GearDaddy.
Correction: A previous version of this article mentioned the 2011 Ford Edge as the 2010 Ford Edge. Also, the 2012 Ford Focus was mentioned as 2012 For Focus and the last name of Doug VanDagens was incorrectly spelled VanDaegens.
A version of this article appeared in the April 2010 issue of Fast Company magazine.