Unlike Chrysler and GM, Ford has managed to minimize the downward depreciation spiral that’s been plaguing business models across Detroit. In fact, FoMoCo has increased its net pricing by $1.9b in the first half of this year alone. Ford explains this achievement with a reach back to history: a team of 19 P.H.D.s tasked with managing pricing, production and option mixes is given credit, and compared with the “Whiz Kids” of the post-war era in the Detroit News. “They are unbelievable,” gushes Ford’s Jim Farley. “It’s very scientific. I’ve never seen anything like it in our industry.” The Global Lifecycle Analytics Department (GLAD) was formed in 2000, as a modern-day equivalent to the statistical analysis pioneers hired to bring Ford back from the brink of oblivion in the 1940s. By 2005 the team, led by Rose “The Silent Lamb” Peng, had figured out that “the resale value of Ford’s cars and trucks was being eroded by sales of poorly contented vehicles to rental agencies.” Go figure. Let’s hear it for statistical analysis.
Instead of just trying to sell the vehicles to push up volume, we are actually giving the customer higher value with their product and pulling back incentives. At the end of the day, they will have lower cost of ownership and higher residual value.
And how did GLAD reach these conclusions about product mix and strategy? “Before, it was more art than science. Now it is definitely more science-based,” says Peng. And though Ford is spinning GLAD’s achievements as a triumph of neo-Whiz Kiddery, the emphasis on science seemed to yield results that make sense on the good, old-fashioned common sense level. And a rule-by-spreadsheet can have its downsides. Just ask the current batch of Wall Street “Whiz Kids.” Or the original Whiz Kid, Jack Reith, who “scientifically determined ” that Ford needed a new mid-range brand, a calculation that ended up in the Edsel debacle. And I’m not even going to touch the Vietnam War or the transition at Ford to an architectonic corporate panopticon (for obvious reasons).
All the same, results do speak for themselves. And like all things Ford, those results look good… when compared to GM and Chrysler. Can you imagine GM’s Susan Docherty poring over spreadsheets for hours, or earning the nickname “Silent Lamb”? Besides, even Peng admits that the Whiz Kid allusion is pure Ford PR. “I don’t think we can compare ourselves with them,” she says. “It is enough of a reward for us when the company uses our models.” Which is something no original Whiz Kid, a pack of high-flying, we-know-best executives, would have ever been caught dead telling a newspaper.