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Take a look at Microsoft's most recent corporate restructuring and what is going on inside Ford begins to become much clearer.

Suggesting that the strategy of one of the venerable Big Three of the automotive industry – GM, Ford and Daimler-Chrysler – should be compared not with the others, but with a software company, is revolutionary enough.

But as the realities of a world where the customer is increasingly king continue to permeate every industry, examples of how to respond bear less and less allegiance to product sectors.

It also means the performance of companies such as Ford in turning around their business models to face new challenges has to be benchmarked against the masters from any and all industries, not just the "best of breed". Ford President Jac Nasser has a huge challenge to match the likes of Microsoft in this regard.

Part of the reason performance comparisons can now be made between different industries is that businesses are less and less defined by what they make than by who they sell to. Sam Hill, co-author of the recently-released book Radical Marketing, was recently reported as saying one of the revolutions the internet has created is in allowing marketers to reverse their approach.

"Most marketers have been very successful (on the net) by finding a community of consumers and selling everything to that community, instead of having a product and trying to sell the product to everyone in the world", Hill says.

Microsoft almost learnt that lesson the hard way in the mid 1990s when it ignored the beginning of the Internet revolution, clinging initially to the notion that its business was operating systems and applications software for the desktop personal computer.

Microsoft was able to switch strategies quickly enough to see off the challenge from Netscape. But those same fickle, technology-empowered consumers who moved the ground from under Bill Gates' feet are the people who have Ford president, Lebanese-born, Melbourne-raised Jac Nasser, arguing that the company must fundamentally change if it is to maintain a leadership position in its own industry.

Indeed, one of the most important recruits Ford has made in recent years has no automotive background, but does have a strong pedigree in transforming companies to understand what the information revolution means for their business.

Bud Mathaisel, appointed in 1997 as Ford's first chief information officer, is building the information infrastructure inside the company to support the vision of a customer-centric, flexible and fast-moving company, says Nasser.

Mathaisel came to Ford from Ernst & Young, where he was US national director of multimedia services consulting. He specialised in consulting on the application of information technology to business transformation. Between 1986 and 1990, he was chief information officer at the Walt Disney Company, to which he had consulted in 1984.

Ford and Microsoft: taking up the challenge

There are two compelling parallels between what Nasser is doing inside Ford and what chairman Bill Gates and president Steve Ballmer are doing inside Microsoft.

The first is Microsoft's recasting of its internal divisions to better align it with categories of customer demand instead of the categories of products it produces, a corporate makeover it calls Vision Version 2. It replaced a system where its product divisions were organised along technology lines, with operating systems in one giant division and applications software in another.

Microsoft now has eight divisions, including a fundamental research division, which operate with a high level of management autonomy and each is focused on specific customer groups or needs.

The idea is to make the company better able to hear what consumers are saying and quicker to respond to those demands.

Nasser points out that technological changes have "just changed the rules completely" in all businesses. "And I think they've changed them in favor of the consumer and they've changed them to the advantage of those enterprises that are nimble and flexible and who can really use technology and use the economies of scale that the globalisation of markets has allowed to happen", he says.

He believes Ford has to be so close to its customers that it can anticipate changes in the market, not be forced to chase shifting consumer tastes.

The second parallel is one that Mathaisel argues is common to all consumer companies, but one that is little discussed outside the entertainment, communication and information industries – convergence. He says no one has yet worked out how to a make profit from the convergence of different businesses that logic would suggest the information revolution demands.

Convergence is not a theory for Ford, but a reality. The company is much more diverse than is apparent at first glance. It now owns six major brands of automobiles – Ford, Lincoln/Mercury, Mazda, Jaguar, Aston Martin and Volvo – each of which it must maintain as separate identities in the marketplace, as well as a light truck business.

But it also has a slew of ancillary business, from car rental company Hertz to lease finance.

In the past year it has added to this several other businesses seemingly even more distant from the core operation. It is rolling out a business plan across the US and Australia to rationalise the number of independent dealership sites selling Ford cars. They will be replaced with joint ventures where the company itself for the first time is a partner, having fewer but larger car showrooms and more satellite service centres. See article: Ford Dealerships: The Worldwide Plan Swings into Action.

It is also creating an online second hand parts exchange, and is buying up parts recycling businesses to support it, and has bought an independent parts supply chain in Europe.

Personal mobility, total service

But Nasser says the "business scope" has not changed. The company is in the personal mobility market. "I think what's changed is the opportunities under that umbrella," he says. See article: Jac Nasser Interview.

"It's no longer selling a car or a truck. It's also wanting to make sure that we have a longer term relationship with the customer and be able to provide services and support for the customer and the family of the customer over a longer term relationship period."

Information technology provides both the opportunity to establish these relationships -- by bundling services together to be delivered through the Internet, for example -- and the threat that if Ford does not do it, someone else will, utilising the lower barriers to entry afforded by the internet.

Like Microsoft, Ford's primary weapon in competing in these new environments is its ability to take its existing brand cachet into new fields. Brand value is emerging as the single most important asset a company can have in the information-based economy (see accompanying article: The Frictionless Economy). A powerful brand can act as a surrogate for the communities that successful purely internet based e-commerce companies such as Amazon.com have leveraged into impressive sales figures.

Which is where Mathaisel and his perspective become crucial.

"I have worked in the information industries … and as a consultant, I have worked in industries where information was the product. Unlike a vehicle, the product could be
delivered, the service could be rendered electronically, completely electronically," Mathaisel says.

"I've also been fortunate enough to work in industries where there are a lot of tangibles. So I've seen both sides of this.

"Although we all talk about convergence … it has yet to be proved that it is really profitable.

"Take any company, it could be a media company, and ask, how many have been really successful at generating good net profits and reinvestment when they have extended their reach beyond some core capability into adjacent capabilities.

"Sony, Time Warner, The Walt Disney Company, even information industries such as Dow Jones. Every one of them has struggled to prove the profitability of the logic of convergence.

"That doesn't mean that it isn't there, but it means it isn't there yet in demonstrated form."

Mathaisel says the problem for companies trying to extend their business reach is that consumers are very unforgiving if any element of the business services or products suite being offered is not world competitive, even if the brand is pre-eminent in its existing market.

"A lot of the so-called convergence theories have fallen apart in implementation when companies assume, in economists' terms, (they can) exact the consumer surplus, meaning take more of your wallet, by getting you as a consumer to overlook the fact that they are very, very uncompetitive in that other side of the business.

"So, if Walt Disney is very good at producing feature length films, and very good at entertaining you in a theme park, but … their television channel is third in the network rankings, then really how much convergence is there for people to swap their present feelings about Disney in theme parks into a watching a television channel?"

Mathaisel says convergence will only work in practice if companies "absolutely nail the competitive capability of every domain across it. Then, bingo, it falls together and the logic is compelling".

Mathaisel says information industries and industries selling tangible products "are beginning to look more and more alike in that regard".

"It is going to be very, very difficult for us to extend our reach across the range of consumer services if we can't make our vehicles compelling."

The customer is always right

Consumers, he says, will take what they want from Ford and splice together the rest of the package of services together themselves by buying from specialists in those fields. So many alternative service providers are now available online that this task becomes easier for them every day.

He compares the problems facing Ford to those of the health care industry. On the one hand, people will only rely on general practitioners to the point where they feel they need a specialist. But on the other hand, people in the US have shown no loyalty to brand name pharmaceutical products that they have to purchase repeatedly if they have been assured that the quality of cheaper generic products is as good.

Another issue Mathaisel sees as becoming more important due to new technologies is the diverse behaviour between consumers, from those who dissect the finances of a deal in great detail to those who are driven primarily by convenience.

Communication technology allows the buying behaviour of those consumers to become more diverse than ever before, because more information is available for them. But it also means they can also be targeted much more accurately.

"Financial institutions are getting much better than most of the rest of industries in being able to understand the major sub-segments and how to package to each.

"In fact, you may offer a high-end insurance product to affluent consumers if you make it very, very convenient for them. And that same financial institution might have an extremely competitive product that has less service imbedded in it for a better price, for a different type of consumer."

Mathaisel says the implementation of information technology in Ford needs to be broken into three dimensions to ensure it reaches its full potential to improve the delivery of customer satisfaction. Firstly, the customer relationship, which involves creating an appealing and powerful interface with potential and existing customers through the
Internet.

The next is the communication with the supplier base and the third is the use of technology to improve communication within the company. Both of these can move the company closer to just in time manufacturing while at the same time speeding delivery to consumers.

"One of the things we've been able to do at Ford is, using that tripartite model, begin to think, what are the linkages up and down inside of our company which would allow us to use information technology and business practices to be very competitive and differentiated with consumers," Mathaisel says.

He says Ford used that approach to establish a pilot program to allow consumers to custom configure and order vehicles from its Mustang range online. The average time to deliver a custom configured car in the US is 45 days, he says. Ford has reduced that to 21 days in its pilot program, and is targeting 15 days, which is theoretically the shortest time possible.

But how can Ford tie together a set of automotive brands, each representing a different price/value equation, a group of disparate businesses providing services to support each of them, and maintain some value for the Ford brand itself so that consumers are inclined to buy a bundle of Ford products and services?

Mathaisel says Ford is developing the concept of the Ford Trustmark to represent the company broadly. "It's the talented group of people and resources applied to businesses in many domains, all of which have a common thread, but are highly differentiated with respect to what they do", he says of the Trustmark concept.

Sources close to the Trustmark idea say Nasser is driving the marketing strategy, but it is not well understood by people outside the company's senior management team.

But the company has been slow in projecting the idea of the Trustmark outside of the company.

Probably, this reflects the fact that Ford has yet to make what the concept means, and its strategic importance, understood at all levels of the company. Until it has done that, it has no hope of selling the idea to outsiders.

This could well be Nasser's greatest challenge. It could be that smokestack manufacturing industries are have a greater internal inertia than the information industries for reasons other than the vision of their leadership teams.

Microsoft might be a giant, blue chip corporation, but it is still very young, produces software that has always had a very short shelf life and still is headed by its founder. It has long understood that its brand needs to be strong enough to sell its products, and not the other way around. Despite it's questionable practices in winning the "browser wars" against Netscape in the last four years, the strength of Microsoft's brand has been a central factor in its ability to build itself into a dominant position in desktop software over the past 15 years.

Ford has been around for almost 100 years and produces the most durable of smokestack industry products. Although the automotive industry has been marked by consumer loyalty to marques that borders on the fanatical, notably among some racing fans, it remains a highly competitive industry that has seen waves of new entrants over recent decades, from Japan, Korea and more recently South East Asia.

Perhaps this is because people within car companies associate their company more closely with individual products than do people in software production houses.

If so, turning Ford into the nimble and flexible corporation Nasser dreams of will be one mighty task.