How Normative Forces Shaped Ford's Decisions

Three ways to identify the normative forces shaping your decisions.

Can Ford Survive the EV Transition?

This week we are talking about the normative forces that affect our decisions, starting with external ones.

External normative forces come from customers, stakeholders, culture, government and anything outside of the organization.

Organizations cannot ignore external forces but too much influence will lead to bad decisions.

Take Ford for example. It is clear the company’s decisions have been highly influenced by external forces. They decided to double down on EVs after pressure from governments, activist investors and a minority of customers threatening to boycott.

The bet isn’t going well. In the U.S., EV demand is waning and many Ford dealers are stuck with an oversupply of electric cars. American consumers are wary of high prices (typically higher than gasoline cars), high interest rates on loans and the overall practicality of using a car with limited battery range.

Ford loses around $36,000 in every EV sale and is expected to lose $4.5 billion from the EV unit this year alone. This doesn’t mean EVs are dead. They are a growing segment and could become the de facto car type in the next 10 years. Ford simply needs to survive

External forces aren’t inevitable. Toyota has been vocal about their skepticism of EVs and have instead pushed their hybrid cars, which are selling quite well in the US market.

Ford didn’t need to make such a bold bet on EVs, as Toyota shows. Instead, they let external forces shape their decision-making.

Question: How much does your team take into account external forces?

What is the Evidence?

Internal normative forces are our second type. These forces come from your own employees.

Employees are demanding more from their employers, as you see in the battle for remote work, political freedom, social issues, workweek design and others.

Internal forces can be particularly difficult because of their closeness. If employees are not happy, won’t they leave?

The key question to remember whenever dealing with an internal force is the following: what is the evidence?

Whenever it seems like most employees are in favor of something, such as making political statements, leaders need to gauge the evidence of their support before making a decision. It could be true or it could be a minority of employees, drowning out everyone else.

I helped an organization where the Executive Director was concerned that employees weren’t happy. They ran anonymous surveys and she would take individual negative comments as evidence of widespread malcontent. I had to explain that these comments were a one-off.

You cannot make decisions simply because a handful of people demand something. Internal forces must be converted into tangible evidence.

Question: What internal force are you taking for granted and could, instead, verify through evidence?

What Are You Thinking?

The third force is personal. These forces come from your own beliefs and ideas.

Our decisions are influenced by our own beliefs (no surprise here) and the question is how to make sure these forces are positive.

I worked with an executive who believed that money was the most important thing in the world and this belief or bias shaped his ideas on how to retain employees.

You may not need to change the personal forces shaping your decisions but you should know what they are. Here are several ideas on how to do that:

• Write down your reasoning behind key decisions

• Explain your reasoning to someone else

• Work with a coach to uncover these forces

• Ask for feedback from colleagues

• Ask your partner or family

Part of the work needed to make better strategic decisions is understanding the forces shaping your thinking. Personal forces are some of the powerful and the most hidden. Unlike gravity, you can take steps to make them visible.

Question: What can you do this week to uncover the personal forces affecting your decisions?

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That’s all I have for this week.

If you’re interested in exploring how your team or organization could better deal with normative forces to make better decisions, get in touch.

Until next time,

Ruben