Why a Ford Took Over at Ford

Jacques Nasser couldn't have been surprised when he was told late Monday afternoon that his tenure as CEO of Ford Motor Co. was over. Following a series of managerial missteps, Nasser had been taking heat from the Ford board since March. Even before chairman William Clay Ford Jr. announced the creation of an executive office of the chairman in July, there had been heated discussion over how — not whether — to rein Nasser in. But the timing was sensitive. Bill Ford, the first family member to run the company since his uncle Henry retired in 1979, needed the broad support of management and, more important, Wall Street.

By last summer, the company's fortunes were souring quickly. The Firestone tire crisis had scorched Ford's image, whether or not Ford's Explorer SUV was partly at fault. The company launched a redesigned Explorer in January. The new machine exceeds safety requirements, and critics of the old Explorer, including Consumer Reports, hailed the new design as safe and efficient. But, like several other new vehicles over the last two years, the Explorer had initial quality problems and several thousand were recalled. The Explorer was the latest on a list that included the award-winning Ford Focus, the popular new Ford Escape, a small SUV, and most important, the Ford Thunderbird, a much-acclaimed new design that was due in showrooms earlier this year but still has not arrived in the hands of some buyers who signed up two years ago.

Bottom line: Ford had some hot new cars, which Nasser couldn't deliver. Instead, analysts say he spent too much time making deals ("he never saw a deal he didn't like" was the refrain in early 2000) to acquire other car companies, too much time pushing the importance of the Internet, too much time emphasizing Ford's new destiny as a "consumer company" — all at the expense of the carmaker's basic pursuit.

In fairness, Nasser's instincts were no different from other managers during the economic boom. Internet. Consumers. Communication. But that last area of competition was Nasser's Achilles heel. Last summer, when Ford insiders, board members began calling for Nasser's head, he had few people whose support he could count on. "He was so dictatorial and arrogant, the dealers hated him, the employees didn't have any patience for him and after awhile, even the analysts turned against him," says one longtime Ford watcher.

How will Bill do? He has plenty of credibility at the company, and analysts who were ready to write him off as a rich kid at the wheel have been increasingly impressed since early this year at his savvy. He's clearly tough enough to shake up management. The question now is whether he can lead a new team in a turnaround.