Ford’s Flexible Strategy to Drive Toward Lower Impact

With sustainability becoming more and more of a concern with consumers, automobile manufacturers are providing solutions to meet that demand.  Likewise, there needs to be infrastructure to provide fuel for these new automobiles.

However, there is no guarantee that consumers will adopt the automobile choices provided. Nor is there a guarantee that a fueling infrastructure will be in place. As an auto manufacturer, how do you make decisions for auto production not knowing if your offering will be accepted by the market?  How does an auto business deal with such uncertainty?

At the 2011 Eco:nomics conference by The Wall Street Journal, Bill Ford, Executive Chairman of the Ford Motor Company, provided his strategy on how his company is driving towards this challenge.

Some companies, like Tesla, focus only on pure electric vehicles.  Others, like Chevy with the Volt, and Nissan with the Leaf, include the a pure electric vehicle as part of their lineup. Yet other manufacturers, like Toyota, have their eyes set on hybrid and plug-in hybrid technologies.

The Ford uses an ‘all of the above’ approach.  As the Ford Focus chassis as a basis, it comes in a variety of technologies, including pure electric, hybrid, plug-in hybrid, and even internal combustion. Rather than take a guess, Ford is embracing the uncertainty of the future.

It’s like Ford has a microcosm of the auto market within its own company.

The rational for covering a variety of technologies is that the future is uncertain. Specifically, no one knows which technology will fit consumer preferences. No one knows if the infrastructure will be in place to support new technologies electric technologies. Obviously no one can predict the future.

One could argue that Ford may be spreading themselves too thin, by seeking to keep one foot in newer technologies like hybrid and electric, while keeping the other one in old ones like the internal combustion engine.

But another way to see it is that Ford will be able to let the technologies that don’t succeed die, simultaneously allowing the ones that do to flourish. One could say this is contingency or scenario planning in action.  Will oil prices be too high driving consumers to other auto technologies?  Will the infrastructure remain untouched, forcing consumers to continue with the (albeit more efficient) internal combustion engine?

Is that to say that the other companies are wrong in their one or two track approaches?  It is any ones guess.  However, this is the most important process of the market.

Innovations in the marketplace happen through the process of trial, and error or success.  Companies take their best guess as to what cars will consumers want.  Some succeed, some fail.  Only through this process will consumer and market preferences be revealed.

While I personally would like to see all electric vehicles in the future, it also has to be feasible in terms of cost, price, and infrastructure.  When the rubber meets the road, it is great to see Ford and other auto manufacturers giving their best guess and efforts to providing solutions with less impact on the environment.

Jonathan Mariano is an MBA candidate with the Presidio Graduate School in San Francisco, CA. His interests include the convergence between lean & green and pursuing free-market based sustainable solutions.

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