Here is episode 19 of the CPO Rising Series, featuring Ford CPO Hau Thai-Tang. Hau speaks with Products That Count CPO Renée Niemi on the big transitions at Ford. A key theme is how Ford decided to stop hedging their bets and go all in on electric vehicles, or EVs.
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Transcript
Renée Niemi:
Hello, Today, I am so excited to announce that I have how Tae tang with me from Ford. He is the chief industrial officer who’s responsible for product procurement and manufacturing, Operations Engineering. Wow, that’s a lot. So first of all, let me start how by congratulating you for being designated and nominated and receiving the top 20 product officers in the World Award. How does that feel?
Hau Thai-Tang:
Hi, Renee, thanks so much for the recognition, I feel very humbled and honored to represent all the men and women at Ford, we’re really big company. And many people have their hands in bringing all of our great products to market. So I’m delighted to represent them.
Renée:
Oh, that’s awesome. So I I’ve been so looking forward to this interview. But before I dive in and get into the nitty gritty, I thought it would be really helpful for our listeners to learn a little bit about your story. You know, how what was your journey to your current role. And maybe just a little bit about your current role at Ford, I know that you guys had a recent change, and it would be great to get an update.
Hau:
Sure. I’ve been with Ford all of my career very fortunate. And I’ve had a lot of great opportunities to grow and contribute. I joined Ford right out of school and started in our college graduate training program where you do a two year on rotation to really learn a little bit of the business. And then I grew up within our product or a product development organization, as an engineer, rising to the point where I had a chance to lead my own product program that’s kind of like one of the big load bearing jobs at Ford.
So I was fortunate enough to work on the fifth generation Mustang product, being responsible to bring that product to market in 2005. And then after that, I spent some time overseas, running a couple of our different product development organizations around the world. Then I came back to headquarters and did a development move into purchasing and was Ford’s lead Procurement Executive. And then subsequently, I picked up responsibility for both product development and and purchasing. And now I’m doing also the manufacturing engineering.
As you’ve highlighted, it’s a wonderful time to be in the auto industry, because we’re going through this huge disruption with the shift from internal combustion engines into electrified vehicles, but also connected vehicles.
And it’s giving us a chance to rethink our business to be a lot closer to a lot of what your constituents are used to. Which is the intersection of hardware and software, creating products where for the longest time, we thought of bringing the product to market as the finish line. And an unconnected, always on well, that that’s not just a starting line. It’s when we cultivate this ongoing customer relationship and using the data that we collect. To understand how our consumers use our products and services and then using the software capabilities and our capability to update them over the year that make that experience better over time to create value for the customer and for Ford.
That’s that’s basically the genesis of the most recent organization change we made that you’ve highlighted we’ve separated the company into an electric propulsion business and EV business and wonder centered around internal combustion engines and we recognize that those two businesses are very different and we need a different focus in terms of how we think about optimizing the business performance as well as delighting the customer. So that so that was basically the basis of the change.
Renée:
Yes, you know, the industry in large is going through massive transformation to digital accelerated only by the pandemic and sometimes we forget that, you know, traditional businesses like yourself are also going through very large changes, they have to be seismic changes for your industry. And, and that’s why I am so a that’s why you been recognized for your ability to actually make that shift. But I’m so excited to learn more about, you know how you think about your new worlds and how you get your organization ready for that, because there are a lot of other CEOs and product heads of product that are in a similar position where they’re in a traditional business that needs to change or be relevant. So I’m super excited about this. So let’s go ahead and, and dive in. You know, driving change is, you know, is really, really hard.
And often it falls on the shoulders of product executives like yourself, you know, they have to have strong vision, they have to have strong conviction, empathy for the people who you’re affecting their lives as you make these big changes. I would love to just know, some stories are ways that you have been able to drive this change influencing Ford, when the path forward wasn’t always clear. And specifically, now that you’re in this new role, given the recent restructuring, you know, how are you thinking about your product teams?
Hau:
Yeah, I think it’s, you know, it’s often referred to as the innovators dilemma, right. So Clayton Christensen’s book, and it’s especially hard for a traditional incumbent company, in a mature industry like Ford, and automotive, we’ve been around for 118 years, we don’t have the luxury of starting from scratch, like some of our competitors, who are starting with a clean sheet of paper, designing a EV business. Whether it’s Tesla, rivian, lucid, you name it. They don’t have to worry about that transition, they can just take advantage of that clean sheet approach. And for us, that has been the hardest thing is getting our heads around.
How do we untrain all of the paradigms that we’ve accumulated for the past century of how we thought about the business?
And it starts with, you know, reimagining the product, the fact that you no longer have an internal combustion engine, a transmission a fuel tank, an exhaust system, what design freedom does that give you? And then thinking about, as these products become connected? How does that change our relationship with our, with our customers? How do we better serve them? And I think, for me, there’s been two sort of aha moments personally.
One was, we have always tried to hedge our business, because there’s always so much uncertainty around the rate of adoption of electric vehicles. What happens with fuel prices? What happens with government incentives, you know, whether that’s incentives around co2 reduction or tailpipe emissions are incentives to incentivize consumers to buy vehicles, you know, rebates, access to carpool lanes, those types of things. We tended to default into a hedge your bet strategy when you’re trying to deal with all those uncertainties. And when you do that, you find that you don’t do anything. Well, because you’re trying to do a little bit of everything, just in case. So we went to market with internal combustion engines, hybrid vehicles, plug in hybrid vehicles, you know, will dabble with battery electric vehicles.
And a few years ago, we sort of made up our mind that we would create the certainty by basically just saying, we’re gonna go all in on full battery electric vehicles, rather than trying to hedge our bets.
And that, that created sort of the urgency of trying to, you know, optimize around that business. So that was really important for us. The second one was recognizing that the business was going to change. And this idea of, we’ve been somewhat removed from the customers, right. We worked through franchise dealers day on the relationships with the customers and now that these vehicles are connected. We have the opportunity to really connect directly with our customers and create what we call an always on business model where the products get better over time versus you drive off the lot and then the vehicle starts to depreciate. Which is the way we’ve always have thought about the business. So those two sort of were key epiphanies for us in terms of how to reimagine the business and how do we really organize ourselves to optimize around that?
Renée:
Yeah, you know, the Always On connected this is this is your digital reality, where all of a sudden you have loads and loads of data, how do you turn that into information to not only make your products better, but also to increase? You know, that delight factor and that satisfaction of your vehicles I had to imagine that was a mess. Massive mental framework shift? How? Well I have so many questions about that. We’re gonna get into cultures in a minute I getting ahead of myself. And I would love to know, like, how you think about your team structure in the face of such a seismic shift?
Hau:
Great question, Renee. All of our processes are really designed around hardware. So the whole lifecycle of the gestation of an automobile, you know, it’s 36 to 48 months, depending on the scope of change. And that’s really rooted in how long it physically takes us to industrialize, you know, sheet metal stamping parts, body assembly shops, you know, engines and transmissions. And that’s very different from a business that’s rooted in software that’s happening at a much faster cadence.
So we’ve had to kind of reimagine our product development process on two different clock speeds, and not try to, you know, try to manage it with one. That’s been one one major change. The other one is, we’ve always thought of, I’d say that of us as being the sun in the solar system, that everything revolved around the vehicle. And we have to realize that most of our customers already have a digital ecosystem in their life, they’re either an iOS family or an Android family, or, you know, they have an Amazon Echo at home. And the vehicle is just another connected device in their life, it has to fit into their universe, their solar system. So we have to get our heads around it.
You know, we can’t always design a bespoke operating system and force customers to adopt our digital ecosystem, we have to integrate our product into their digital life. And, you know, so that those two things have been really key enablers. For us to think about the problem differently. Think about us as just another connected device in someone’s household, and then recognizing that hardware and software are very different in terms of clock speed, in terms of talent, in terms of processes. And modifying our approach accordingly.
Renée:
Yeah, you know, as you’re sharing your story, I have to imagine that dichotomy between the very, very long lead time elements of your business, combined with this new world that is literally, you know, looking at new features and new capabilities on a weekly if not monthly basis. Right. So it is just that it has to be quite a challenge to lead that. But talk to me a little bit about the culture, and what you’ve done to actually develop the internal energy and culture needed to actually support two very, very different mindsets.
Hau:
We found that it’s very difficult to ask people to operate in both worlds, because in many ways, there’s a tension there. So this was one of the drivers behind the reorganization that we did when we created a team. We come model II that’s really focused on the EV business and the embedded hardware and software of that digital vehicle, if you will, those digital products.
And then the other team that’s rooted in our traditional ice business, but also where we have a lot of expertise on industrializing hardware. We talked about body assembly, you know, sheet metals, the interior of the vehicle, the seating systems, the safety systems, things that are, I’ll call it propulsion agnostic. We have to engineer for internal combustion vehicles, as well as EV vehicles to try to capture the best of both worlds. And the reality was, we realized that they were different cultures. So in that traditional business, which we’re calling Ford blue, that’s really all around mastery.
This idea of harnessing the expertise that we’ve developed and cultivated and grew from the last 100 years. And that’s all around this idea of doing it right the first time, you know, and being able to replicate and scale up with high repeatability. That’s the culture we want to cultivate there.
On the Ford Model east side that’s doing the digital vehicle and the EV vehicles. They’re not going to do it right the first time because they’re innovating. And trying to challenge existing paradigms. Doing new things for the first time. So it’s more of a culture of being much more agile, experimenting, failing, fast learning from it. And using that to constantly iterate and refine and come up with really breakthrough solutions. So one of our learnings is don’t try to force the same team though, to balance to manage that tension, and re-design your organ position to allow them to really deliver the best of both worlds and bring them together.
Renée:
Yeah, that makes perfect sense to me. I know that your team blue, or a good portion of that is based in Michigan. Did you reconsider talent and where to hire talent and D, do you have a new center of excellence associated with that?
Hau:
We have, you know, the combination of recognizing the software talent residing in a different place, plus the last 18 months of what we’ve gone through with COVID. And working remotely, we’ve become much more adept at being less, I’ll call it geographically dependent with the workforce. So we are leveraging our California footprint in Palo Alto, as well as in Southern California around Irvine to allow us to onboard more of this new tech digital talent that people are on the West Coast.
As well as allowing people to work really, from anywhere in the world, they want to becoming loved much less geographically dependent. That’s got to be kind of an, you know, an interesting dynamic when you start to think about, you know, leadership. And how to lead broadly, especially for those leaders who have to cross over both.
Renée:
Talk to me a little bit what you’re thinking about, or what you look for when when you’re hiring executive product leaders.
Hau:
We’re looking for people that really, first are just passionate about delivering, creating and delivering insanely great products. That’s first and foremost, we want people who can work cross functionally across boundaries, and really leverage the influence model, because in many cases, your success is totally dependent on your work partners, people who don’t directly work for you, but have, you know, huge leverage in terms of making your product successful. So we’re looking for people who are passionate that can articulate a compelling vision to rally the folks around that vision to help deliver that vision.
And the way we want to work for days. Have these cross functional teams and their allegiances to that product, and to those customers rather than to their home organization. So I’m not from body engineering, or chassis engineering, or from the manufacturing team or the marketing team, I’m part of the team that’s delivering the Mustang Maki, or the Ford lightning. My allegiance is to making that product successful and those customers to delight those customers. And that’s kind of the culture we want we want to engender.
Renée:
That makes perfect sense. By the way, I must say I’m a huge fan of the Mustang. I always have been. I just had to put that plug in there. First car I ever bought with my own money was a Mustang.
So plus one on the passion. So kind of keeping on that whole executive product theme. I’d love to move more to you and your own skill set. And what is your secret sauce for keeping all of this together and driving this change? Are there any life experiences that you had that have shaped you as a leader?
Hau:
Yeah, I think probably the most important aspect of my job is getting true deep insights into customers. And they’re all of their needs. The spoken needs, as well as the unspoken needs. And being able to translate that into opportunities in terms of we tend to think of it as where to play and how to win.
You know, where do we position this product? What’s going to allow us to be differentiated from our competitors? And how do we leverage that to delight the customers and for me, it’s all about understanding people, you have to have a curiosity around just observing people understanding, you know, not only what they tell you, but what they don’t tell you and use those insights to get at, huh, we think there’s an unspoken unmet need here that we can, we can better serve. So to me, that’s really key. I think in terms of key experiences.
The second part of your questions, I had a couple of really impactful one. One of the big ones was early on in my career, I went to work in racing. We tend to rotate a lot of engineers through our performance, our Ford Motor Sports Business as a way to expedite their training, and I was assigned to go work in indy cars for a year. And all of my training up until then has been around passenger vehicles. And one of the big things with Indy cars is aerodynamics plays a really big part of the vehicle.
Not to get too technical, but the vehicles generate a lot of downforce to generate about 2000 pounds of downforce. But the car itself only weighs about 1500 pounds. So the aerodynamic effects overwhelms the traditional what we would call mechanical grips. And all of my training has been around the mechanical grip that’s relevant in passenger vehicles because they don’t have wings on them.
And I had to have like, sort of untrained myself to think about how you would optimize the vehicle, a traditional vehicle that does have all of those aerodynamic effects as an example, so that that was a really good learning for me, because it forced me to sort of challenge all of my, the traditional paradigms, the rules of physics that I was rooted into now thinking about it completely differently. So as we transition to connected vehicles or electric vehicles, the ability to sort of step back and say, Wait a minute, the rules of engagement, if you will, are different. And we have to think about it differently. That’s been really helpful.
Our CEO, Jim Farley has a saying that I love, he said, think of the internal combustion business, our traditional auto businesses scheme. And think about the EV business to new digital EV businesses snowboarding. He’s like, they’re similar, but they’re not the same. You go to the same resort, you write up the same chairlift. But once you get off the chairlift, the muscles that you use to get down the mountain, they’re very different.
I think that’s a good analogy. And it goes back to the discussion we had earlier. I told Jim that the only thing worse than learning how to snowboard after you spent your whole life trying to ski is trying to go down the mountain with one foot in the snowboard and one foot in a ski. And that’s what we were asking our teams to do before we reorganized.
Renée:
I love the analogy, just use for multiple reasons. But but the the the fact of the matter is, is that people and how you have thought about structuring your teams, and and surrounding them with the culture necessary for success is is a good lesson for a lot of folks in a similar in a similar position. You know, some might say it took a while a while to get there. And, and can you just speak a little bit because as you’re talking about this, you know, I think about about speed and and the importance of speed and, and the handcuffs that you have associated with how long it takes your platform to get to market. And I I I would just love to understand a little bit about how that plays into your thinking.
Hau:
It’s simple to say, well let’s decouple software from hardware and put them on different clock speeds. But we know there’s interdependencies. You know that from your own personal experience. So, as we do a new vehicle, we have to think about things like how much compute should we plan on with the embedded, you know, compute architecture in the vehicles? How much memory should we plan on what new capabilities can we expect to have even simple things like, we want our products to be compatible with smartphones, and we want it to be agnostic to whether the customer owns an Android phone or an Apple phone.
But we have to realize that geez, over the life of ownership of a vehicle, if you own it for 10 to 12 years, there’s going to be multiple iterations of an iPhone or an Android phone, and how do you future proof those products? So we try to think about your designing platforms. You have to realize that if your gestation period is four years, you have to look at the rate of technology change, and say how much it is gonna move in four years and sort of bacon that futuring is part of how you spec the system.
And in some cases, you don’t know how you’re going to use that yet.
You know, when Steve Jobs invented the first iPhone, I don’t think he ever had any idea that, you know, half the things that we use it for at the time, you know, wasn’t in the planning. They thought about it as we’re we’re building a computer that you carry around in your pocket. And over time, as the capabilities improve more and more experiences, services, and products can be created from it. So that’s a little bit of the tension for us and it’s not a perfect science. You are trying to anticipate and predict future technology, you know, rate of change and do your best to future proof that. And that’s kind of the way we’ve approached it.
Renée:
Yeah, I’m glad you use that Steve Jobs analogy because as you were talking I was thinking through I remember getting my first you know iMac years years before video conferencing, or even FaceTime existed. And I remember thinking that myself having been, you know, frankly, in product and hardware my whole life, what did it cost them? To put that camera in there knowing that in the future they were going to need to use it? Yeah. So it’s a very similar, very similar approach. And it, I think it’s very, very smart. I’m going to shift gears real quick and talk about people.
You know, I talked to a lot of product leaders. And it seems that especially right now talent is one of the top challenges. And when I say talent, this is not only hiring, but retaining and frankly, growing your internal talent. Can you speak a little bit about your philosophy associated with that and things that you do to support your talent?
Hau:
Yeah, this has been another big shift for us, we’ve been for a long time. It’s been a very insular culture, we tend to promote from within there are a lot of people like myself lifelong. Employees, I hired into Ford straight out of school. I’ve been here for this will be my 34th year. And that’s pretty typical in auto. When you go out to the West Coast, and you talk to somebody and you introduce yourself, and you say, Yeah, I’ve been with the same company for 30 plus years. They kind of look at you and say, you know what’s wrong with you? So this idea of lifelong employment is very novel for folks.
So, we found that, as we, as we’re trying to disrupt ourselves and move into these new emerging spaces, that it’s not a realistic expectation that we will have all of that talent in house. If you look at our senior leadership team, over the last 18 months, since Jim Farley, our CEO has been in place 50% of the senior leadership team that reports to him are new to Ford, that’s been very intentional. Whereas in the past, it would be more like, you know, 80% would be lifelong Ford folks. And then maybe 20%, would be new to Ford.
That’s why we’ve had to sort of trickle that down throughout the organization. And in certain areas like software, the digital space, EVs. A lot more of the people are coming from outside the company, because that’s where the talent is. So that’s been a very deliberate change on our part. To infuse the right expertise and talent, but also to change the culture of the company.
Renée:
Yeah, I can only imagine. What efforts, if any, do you spend actually growing your internal talent, specifically towards and giving them opportunities to work and, and grow their own careers in this new space?
Hau:
Yeah, and that’s another area of emphasis for us. So as we’re bringing in new talent, we recognize we have a lot of very capable, talented people from within. How do we upskill them, retrain them, in some cases, give them those opportunities to grow and develop. We’ve, we’ve found that, Renee, there are people that are just very good and capable with dealing with ambiguity, they can, you know, have the agility to move into very different roles and thrive in that kind of environment.
You know, those are the types of people that we really target. Say, Look, I know you’ve only been working on internal combustion engines. But based on your leadership, capabilities, your track record, your change agility, we think you can do really well in these areas. We were trying to give them those opportunities to also, you know, develop themselves and grow and help lead this transformation for us. So it’s been a really nice blend.
Renée:
Yeah. That has to be fairly inspirational for those who see talent, having these kinds of opportunities. Is there anything you’ve had to do to shift your hiring processes? In, you know, as you guys have made these changes?
Hau:
Yeah, absolutely. We’ve essentially rebooted our hiring practices. We’ve prioritized these new high tech, high demand competency areas. And we’ve moved away from the traditional models where we would have big recruiting teams that would go to the same universities every year and recruit. It was largely rooted in relationships and to now where it’s much more accessible, leveraging digital platforms, we’ve had the turnaround offers much faster, you know, we have to do it within a week.
We’ve had to change our compensation structure to be much more competitive with a lot of the folks in that space on the West Coast, for example, where more of their compensation is In equity and those types of things, so yes, complete redesign of not only our recruiting and hiring practices, but our people policies as well.
Renée:
It’s so interesting how change, really there’s no aspect of the business that really goes untouched. And in this whole digital, in your case electrification journey, it’s just fascinating to me how one decision can affect so many elements of the business.
Hau:
Everything from the work and physical working space to compensation structure to titles to food services to what the wardrobe is, you name it, it’s, it’s completely changed from top to bottom.
Renée:
Wow, that’s just very, very interesting. Interesting. I want to shift gears for a minute and talk a little bit about the pandemic, because, obviously, the way we interface with our employees, the way we interface with our customers. I think in your case, the way you interface with your vendor partners has had to change quite a bit. Tell me a little bit about, you know, how that the world has changed for you and what you see moving forward as a result of it?
Hau:
Yeah. You know, we talked earlier about working remotely, and how that fundamentally has changed the way we’ve worked. And I don’t see this as a one time change. You know, we’re going to go back now to the way it was, I think some of these changes are fundamental.
I’ll give you an example. The way we communicate with our workforce pre pandemic, we would have two senior leadership meetings a year at Ford, and it’s usually the top 300 leaders from around the world, they all fly into Dearborn, Michigan. And we would have two days of meetings. Then we would ask each of those senior leaders to go back and cascade that information to their teams. That process would take maybe a month to six weeks before the message from headquarters would trickle down to the individual contributors around the world.
Once we had the pandemic, we went to a weekly, global townhall, where the CEO and the senior leadership team would address the entire company. Regardless of where you were in the world, what level you could call in and hear the messaging straight from the CEO. Through the digital chat systems, you can submit your questions and we can have a dialogue with employees. So that’s an example of why we’ve just completely transformed the lines of communications between the senior leadership team and every single employee, and we’ve changed the frequency to from twice a year to every week. We want to keep that.
Why would you go back to the old way of doing things?
That’s a great example, you talked about the relationship with our suppliers and vendors. The semiconductor shortage has been a huge change for us. The auto business has long been rooted in the Toyota manufacturing system, which was all around just in time inventory. We’re very reliant on our tier one supplier. Roughly 70% of the value of all of our vehicles is externally purchased from our suppliers.
And the suppliers would supply us with an electronic module. It was a black box, literally and figuratively, right there with a black plastic box with an internal combustion, internal printed circuit board inside it. That could control an internal combustion engine in the case of a powertrain module. But that box came in as one, part number two Ford, we would buy an electronic circuit board for an engine control module. We had no idea what was on that printed circuit board, let alone how many ICS were there, where they bought those ICs, from what wafer foundry in Taiwan, manufacture that silicon, and then where all the back end operations are for testing and assembly.
Since we’ve had these semiconductor shortages, we’ve had to work very closely with our tier one suppliers to map out that entire value chain down to the tier and, you know, wafer foundry in Taiwan or wherever it is. That level of visibility and transparency we’ve never had before. And that’s another fundamental change that we can’t go back now to a blackbox model, you know, from what we’ve seen. So those are just two examples of how the recent you know, supply chain shortages as well as the COVID pandemic has fundamentally changed the way we think about the business.
Renée:
Yeah, in the end, those are two very different, very relevant examples. Thank you for sharing. It’s really interesting when you think about having people and how much more effective on some on some level communications, especially in large organizations can be when forced to be? Are there any others? You had mentioned earlier that you’re rethinking policies around geographic locations? Do you believe that that will stay forever? The ability for certain employees to work remote?
Hau:
Yeah, Renee, the way we’ve tried to think about it is, we looked at each person’s role, and we ask ourselves is that job facility dependent. And there are some jobs that are right. So for example, if you’re running a physical test lab, you have to be there to operate that lab, if you’re a clay modeler in our design studio, and you’re, you know, carving clay off as a concept vehicle, you can’t do that remotely.
So there are jobs that have to be, you have to be there. We call it facility dependent. There are some jobs where you can do it 100% remotely. And you know, you’re, you’re doing, you know, data entry, you’re doing data analytics, and everything is virtual, and can be done anywhere, software programming, and then there’s jobs that we call hybrid.
And so the way we’ve looked at it is roughly 30 to 35% of our jobs are facility dependent, and those folks have to be in the office. There’s probably 20% that can be done anywhere, virtual, so we won’t force those folks to even come into the office, and they can be anywhere where they want. Then the rest of the folks fall into this hybrid where it’s by context.
And maybe it’s, you know, two days a week, three days a week, you you have to be in to collaborate with your team members, or you have to be around a physical facility or a physical product, and you need to come in the rest of the time, it’s up to you. And we’re finding that our employees’ lives are flexible.
My daughter just started with Ford. And she, you know, there’s a lot of people that say, Well, you know, millennials, Gen Z’s, they want to be remote. She’s completely opposite, because she did two years of learning remotely. She’s just started her job. And she’s trying to onboard remotely. And that’s very different, you know, very difficult. So she’s really anxious to get back to the office and meet her team and interact with people and do you know, teaming, team problem solving.
So I think it varies, but bottom line is, you know, we are going to provide that flexibility, it’s going to be very much in context to your specific job function. And we’re resizing our physical space to be sort of around a peak of about 65% of the workforce versus 100%.
Renée:
Yeah, I thank you for sharing that with us. I think I like the way you’re framing this a lot. And I think that that’s a really good insight for other folks that are faced with similar decisions and trying to really think about how to structure as we kind of ventually get out of this pandemic.
So last big topic, and then we’ll go to a couple smaller ones. So being a part of a team, part of the joy and team camaraderie comes with having clear goals and metrics, and working together to achieve those. I would love to understand your philosophy around setting metrics, you know, how do you coordinate? Who has What metric, but more specifically, what are you measuring? When you look at your teams?
Hau:
Renee, I’m a big fan of what gets measured gets done. And in fact, one of the things we’re piloting within our team is deploying OKRs, objectives and key results, which you know, is very something that many of your listeners are familiar with. But you know, regardless of what system you use, the idea of having KPIs metrics that are aligned across teams that are measurable, and could be linked, you know, as you work your way down through the organization, as well as across skill teams and businesses is really important.
And what we’ve tried to do is design our time and data management systems, so that we’re looking at the team’s delivery against those key objectives on a regular basis and adjusting as needed to help the team stay on track. So if they’re falling behind, it could be a resource allocation issue. A budgeting issue, it could be a skill set issue, it could be, you know, decision Making. And we use that to basically help us get ahead of issues. So it’s really fundamental to how we work and as part of our operating system,
Renée:
Yes, that actually makes a lot of sense when I think about the product metrics. And specifically, I have to imagine what you measure has changed a bit, especially more on the software side and the electric side versus, you know, the blue side, if you will. Especially as you think about that whole customer knowledge. Can you say anything about how you’re thinking about that differently?
Hau:
Yep. So one is, you know, we touched on an example earlier, when you said, you know, hey, how do you incentivize a team to spend more money on a camera, when you haven’t figured out what you’re going to use it for? And how you monetize the value of that cost, cost ad, right? That’s a great example of, if you don’t have the right incentives, the teams will not make those types of investment in that technology. So we try to really think through as we set up the way we measure success for our teams, and especially the product owners. Who we call the chief program engineers and run these vehicle programs, you know, are we incentivizing the right behavior.
So that’s one, you talked about the differences around the customers, and how we think about the business in the traditional four blue side where the vehicles, you know, we sell a vehicle, and that was basically the finish line, most of our metrics were really around contribution margin. And the profit look was just based on the point of sale of that product.
On the model east side, where now you have the opportunity to have software, connected services, recurring revenue, you have to think about that completely differently. So you know, how do we set up those KPIs to measure now, not only the initial revenue at the point of sale of the product, but the ongoing, recurring revenue that comes from the software and the services? And you know, how, how would you incentivize the teams to go after that. So those are just two examples of, you know, how we would have to redesign the metrics and the KPIs differently to incentivize the right behaviors.
Renée:
Those are really great examples. Thank you for your willingness to share those. All right, we’re gonna shift gears real quick. So these are more rapid fire and on kind of a high energy note. So I would love to know how you feel about what makes a great product.
Hau:
I think a product that strikes not only the rational needs of the customers, but also their emotional needs, it draws at their heartstrings.
Renée:
I think that’s a great answer plus one on that. I know, especially in the car industry, many purchases are made by emotions, and I speak with firsthand knowledge on that. All right, second question, what product do you admire most and why?
Hau:
I’m a big fan of our Ford Lightning that we’re just about to bring to the market. It’s our first battery electric truck. And why I love it is because we’re using electric propulsion, as well as the connected platform to not only amplify all the attributes that customers love about trucks, like payload and towing and, and torque but also to enhance productivity. So we have the ability to take the battery energy and power your house or power job site. So reimagining what that product can do for the customers.
Renée:
Oh, can’t wait. Looking forward to seeing that one. If it’s the product you admire, most that must be saying something. Okay, shifting gears you, we all learn through different ways. So one way is through reading. So are there any books that you’re currently reading newsletters, thought leaders you follow? Or maybe podcasts that inspire you?
Hau:
Well, I’m a voracious reader. I’ve read a lot of books around marrying human senses, human sciences, with the physical sciences to get this tension between rational and emotional needs. Sense Making by Christian Mattsberg is a book I really like. He runs a consulting company called Red Associates. We’ve partnered with him quite a bit to understand why people do what they do. Yeah, and then I’m a big fan of Harvard Business Reviw and just reading a lot of their test cases.
Renée:
Yeah, yeah. I love HBR as well. That’s a new book and I think I just added another one to my reading lists. I can’t wait to see what it’s all about. My last question for you is, from your perspective, what makes a great Chief Product Officer?
Hau:
I think someone who can imagine a different future that doesn’t exist today, and can inspire people to go after that vision and get people to do extraordinary things. So just through a compelling vision. To me, that’s what that’s the common intersection of all great product leaders is their ability to do that.
Renée:
I have to agree. Hau, thank you so much for your time today. I know you have so much going on with this reorg and all of these amazing products you and your team are working on. So thank you for sharing your knowledge. And again, congratulations for being a top 20 CPO.
Hau:
Thanks again, Renee. Appreciate your interest in Ford. Thanks.