Ford's Existential Risk: Don't Wait. Act As If

Be early in developing your Big Bet Portfolio

By failing to prepare, you are preparing to fail. - Benjamin Franklin

A WSJ article in caught my eye a few months ago.

“What Scared Ford’s CEO in China: Jim Farley is changing strategy to combat what he calls an ‘existential threat’ from  China’s electric carmakers”

As I read the article, I thought “why do most companies, led by talented, well intentioned management, wait for an emergency to act with urgency on fundamental reinvention?”

I texted the article to a few clients who I believe have exposure to a China disruption risk. And I gave them my best advice …Don’t Wait! Act As If

The Spark

The article starts with the CEO’s spark of insight, reaction and action:

In an early-morning call with fellow board member John Thornton, an exasperated Farley unloaded. 

The Chinese carmakers are moving at light speed, he told Thornton, a former Goldman Sachs executive who spent years as a senior banker in China. They are using artificial intelligence and other tech in cars that is unlike anything available in the U.S. These Chinese EV makers are using a low-cost supply base to undercut the competition on price, offering slick digital features and aggressively expanding to overseas markets.

“John, this is an existential threat,” Farley said.

Jim Farley, CEO of Ford, returned from China with concerns about the rapid advancements of Chinese electric vehicle (EV) makers. He noted their integration of cutting-edge technologies, such as AI, and their ability to offer competitive pricing, positioning them as an "existential threat" to Ford and other global automakers. Farley observed that Chinese brands like BYD and Xiaomi are using a low-cost supply chain to produce high-tech, affordable EVs, quickly expanding into markets like Europe and the Middle East.

To combat this, Farley has shifted Ford’s strategy, focusing on commercial vehicles in China and considering collaborations with low-cost Chinese suppliers. He acknowledges that Ford’s large SUVs and trucks need to evolve to smaller EVs due to the high cost of large batteries. This strategic pivot has already resulted in the cancellation of a planned large electric SUV.

The CEO has a team exploring ways to contract with some of the same low-cost parts suppliers that have given Chinese EV makers such a big edge

Farley recognizes the need to adapt Ford’s culture and operations to compete with the speed and efficiency of China’s EV industry, while focusing on cutting costs and improving EV technology.

I’m guessing Jim Farley wishes he had acted with this clarity, ambition, and speed on this far earlier.

Don’t Wait. Act As If

I’ve been retained by potential investors and private equity operators several times to evaluate the potential of disruption in an investment. Often, they are interested in my insights on Amazon.

Most of the time, the answer to the question isn’t “if” Amazon or another company could disrupt the potential investment, it’s a matter of “when” and “how” — what could Amazon’s value proposition and approach look like.

So the scenarios we build are then “If Amazon or other disruption threats happened, what would you wish you had done now to minimize this threat? How could we turn this threat into an opportunity?

The result is a number of suggestions. Some are “moves of no regrets”, many are hypotheses which are then evaluated through the lens of a Big Bet and further scrutized, evaluated and tested.

Big Bet Legends Don’t Wait

The systematic innovators and transformational leaders don’t wait. When an early threat appears, they act with clarity and speed. And because they are responding and acting early, they can approach with multiple answers to be tested out, versus proceeding with unproven commitments up front. And they have the greatest asset of all — time. These are the habits of Big Bet Legends.

How AI Accelerates

AI and other technology are accelerating disruption risks. The advent of "software-defined anything," now supercharged with the transformative potential of AI, creates opportunities for groundbreaking efficiencies, dynamic adaptability, and revolutionary customer experiences. This new era of capability demands that leaders not only recognize disruption risks but actively prepare to counteract and capitalize on them.

To navigate this complex landscape, executives must maintain a dynamic portfolio of potential risks and corresponding strategic responses. This isn’t a static checklist—it’s a living framework, systematically monitored and acted upon by a dedicated and agile team.

Every concept in the portfolio encounters one of two fates:

1. Wait: The decision to pause is strategic, signaling that more clarity or favorable conditions are needed. This will be the outcome for 90% of the concepts.

2. Proceed: When proceeding, the next steps involve rigorous design, focused testing, and validation to ensure the hypothesis aligns with business goals and customer needs.

Relentlessly working this portfolio drives organizations to identify and act on "existential threats" early—those rare opportunities or risks that can redefine the trajectory of the company. The key? Adopt a disciplined yet bold mindset. Act as if the stakes couldn’t be higher because, in today’s hyper-digital era, they often are.

Just Act As If.

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Onward!

John

About The Digital Leader Newsletter

This is a newsletter for change agents, strategists, and innovators. The Digital Leader Newsletter is a weekly coaching session focusing on customer-centricity, innovation, and strategy. We deliver practical theory, examples, tools, and techniques to help you build better strategies, better plans, and better solutions — but most of all, to think and communicate better.

John Rossman is a keynote speaker and advisor on leadership and innovation. Learn more at www.johnrossman.com.