Great Management Decisions
What makes a management decision great? Itâs hard to quantify or classify which management decisions will bring success and which ones will bring failure. Making a good decision is a combination of factors: imagination, courage, experience, and sometimes just plain luck. Good managers are good listeners. They can bring ideas to fruition even if they didnât originate the ideas. However, good managers also follow their gut instincts. They are not afraid to challenge the status quo, especially if they strongly believe in an idea and feel they are right. The following examples of the worldâs greatest management decisions show these common strengths.
The Birth of Advertising
One hundred years before the birth of Jesus Christ, someone lost a slave named Shem in the city of Thebes. The owner publicly offered a "whole gold coin" for returning the slave. Today, itâs hard to imagine a world without advertising. You see advertising on billboards while speeding along the highway, on television when youâre watching the nightly news, and on the Internet when you check stock quotes. You hear it on the car radio and see it on hot air balloons at sporting events. Because advertising comes in so many different forms, you cannot escape its pervasiveness. Whatever physical form it takes, advertising is designed to do one thing. It sells your company. Few companies would be successful without advertising. Shemâs owner invented an industry, which is something few people can claim.
Whatâs In a Name?
Thomas Watson Sr. is not a household name, but he created one of the worldâs most admired companies. Under Watsonâs leadership in the early 1900s, the Computing Tabulating Recording Co. nearly doubled its sales from $4.2 million to $8.3 million. You probably never heard of this company, but perhaps you will recognize its second name. Watson changed his companyâs name to International Business Machines (IBM) in 1924. In doing so, he created a self-fulfilling prophecy. IBM was not an international company in the 1920s, but the name change reflected Watsonâs dream of a firm that would change with the times. The Computing Tabulating Recording Co. sold butcherâs scales and meat slicers before selling more sophisticated tabulating machines, such as calculators. IBM wouldnât be the behemoth it is today without its legendary founder who had the foresight to think big and expand internationally.
Brand New Extensions
Despite such new-fangled toys as Nintendo and Beanie Babies, dolls never go out of fashion. Consider the case of Barbie. If Barbie were real, she would be a freak standing seven-feet tall with a size 40 bust and 22-inch waist. Although critics say her disproportionate figure contributes to lower self-esteem among girls, it hasnât stopped sales. Despite her success, something was missing in Barbieâs life. Mattel, the company that produces Barbie, introduced Ken in 1961. Ken paved the way for other dolls that complement Barbie. Barbie has also matured. She has been an astronaut, surgeon, diplomat, business executive, aerobics instructor, airline pilot, and athlete. Barbie provides two valuable marketing lessons: Develop "add-ons" to your product or service, and grow and change with the market.
Listening to the Beat Within
Akito Morita (born 1921) and Masura Ibuka (1908-1997) founded Sony - Americaâs most respected brand - according to one Harris poll. Originally called the Tokyo Tsushin Kogyo company, Sony sold its first tape recorder in 1950 in Japan. Seven years later, the company made a pocket-sized radio. By 1958, Morita and Ibuka had renamed their company Sony, based on the Latin word for sound: sonus. Sony is famous for several electronic products, but its crowning achievement was the Walkman. The Walkman stemmed from Moritaâs observations that young people liked music and were always on the go. "I do not believe that any amount of market research could have told us that it would have been successful," Morita said about his invention. "The public does not know what is possible, we do." Morita did not conduct any scientific studies or polls to prove that consumers would buy the Walkman. He instinctively knew they would. Morita had an idea and followed it. The Sony story proves that some of the best decisions come from within.
Ethical Leadership
Levi-Strauss & Co., the worldâs largest apparel company, continually wins awards for its ethics. Top business leaders regard it as the "most ethical private company" in the United States. Two major events secured its reputation for integrity. In 1906, an earthquake and later a fire destroyed company headquarters and two factories. Levi-Strauss extended credit to its wholesale customers so they could recover their losses. The company built a temporary office and kept employees on the payroll. It also continued to pay its employees during the Great Depression. While other companies measured performance by revenues, Levi-Strauss based its decisions on adhering to its corporate "aspirations statement" as well as the bottom line.
âGood companies will meet needs; great companies will create markets.â-- Philip Kotler, marketing expert
Published in 1987, this "aspirations statement" requires all employees to demonstrate leadership in "modeling new behaviors, empowerment, ethical management practices, and good communications." Their strategy has proved successful so far; management turnover at the San Francisco headquarters is just 1.5 percent annually. Declare your companyâs intentions, and remember that trust is earned.
Infrastructure Matters
The Incas, a diverse group of six million people spread throughout modern South America, could show todayâs managers how to rule a wide spread empire effectively. During the fifteenth century, the Incas controlled modern Peru, Ecuador, Chile, Bolivia, and Argentina. A system of administration based on numbers of ten - the precursor to the decimal system - remains one of their major contributions to the modern world. The Incas also created a vast network of administrative centers and food warehouses. Most importantly, the Incas built a 23,000 kilometer road system by training runners to pass on messages to their various administrative centers and forts. Logistics matter. Speed is a vital part of a global business; you must be able to quash turmoil quickly. Standardizing your administrative processes is also important but beware of overkill. The Incasâ massive empire only lasted 100 years.
Directions
Imagine a world without Peter Drucker. Without a telephone call in late 1943, Drucker would not have become the "founder of modern management." Drucker was born in Austria in 1909. His father, Adolf, was the chief economist in the Austrian civil service. Drucker himself was a teacher and writer before becoming a journalist and immigrating to the United States in 1937. In 1943, Paul Garrett of General Motors (GM) phoned Drucker and invited him to study GM. Druckerâs observations appeared in his 1946 book, Concept of the Corporation, which revealed a highly developed social system within the economical powerhouse. Since then, Drucker has produced nearly thirty books about every aspect of management including Managing for Results (1964) and The Effective Executive (1966), both of which were revolutionary in their time. The phone call piqued Druckerâs interest, and he followed his heart. Druckerâs life may have taken a different direction had it not been for that fateful phone call.
Printing Power
Establishing a competitive advantage is not easy. Rupert Murdoch, a multibillionaire with more than 780 businesses in 52 countries, redefined the newspaper industry in the mid-1980s. In 1985, Murdoch built a printing plant at Wapping that did not require union labor. On January 25, 1986, his Wapping plant near London printed four million newspapers from computers that transferred editorial content directly to paper. Murdoch emerged victorious despite the war that picketing printers and union members waged at Wapping. He streamlined his business operations and substantially reduced costs. From his humble beginnings at The Adelaide News in 1952, Murdoch proved to be a savvy businessman. He borrowed money to buy weak newspapers, so he could remake them. He repaid his loans on time, so banks began to trust him. Today, Rupert Murdochâs News Corporation owns The London Times, The News of the World, the Los Angeles Dodgers, HarperCollins, 20th Century Fox, Star TV, and much more.
Seizing Opportunities
Once upon a time, two McDonald brothers owned a barbecue restaurant in San Bernardino, California. Dick and Maurice (known as "Mac") noticed that their customers didnât like waiting for food. Their idea of "fast food" became a reality when they established the first McDonaldâs in December of 1948. Customers could buy a hamburger for fifteen cents, a malt drink for twenty cents, and fries for ten cents. The brothers eventually opened eight restaurants. One customer, kitchen equipment salesman Ray Kroc, felt Dick and Mac were on to something big. In 1954, Kroc purchased the United States rights to the McDonaldâs restaurants. In 1961, he bought the world rights. Today, 38 million people eat at McDonaldâs every day. Although the McDonalds had a great idea, Kroc seized the real opportunity. Kroc carried out his vision by insisting on quality, cleanliness, and uniformity.
The Golden Rule
Not much is known about the Roman Emperor Hadrian besides the wall he built. Hadrian, who ruled from 117 to 138, advocated "people power" long before such buzzwords existed. As a young man, Hadrian joined the army and shared the same conditions as his troops. He even refused to wear a cloak or cap, regardless of weather conditions. He made sure that all Roman mines had bathhouses, so miners could wash after work. This made him popular with constituents, but not with other leaders. Hadrian traveled extensively rather than ruling from Rome. He forbade castration and demanded that slaves be treated fairly. Some historians call Hadrian a "modern monarch" because of his management style. Hadrianâs biography reminds executives to practice what they preach.
Other Great Decisions
Other great decision-makers include such innovators as Henry Ford, Steve Jobs, and Bill Gates. Fordâs decision to mass-produce his automobiles is mentioned frequently as one of historyâs greatest management decisions. Jobs, founder of Apple, built the first personal computer in his garage in 1977. However, Gates, founder of Microsoft, persuaded eighty percent of computer owners to use his operating system, not Appleâs.
The Hall of Infamy
Oddly enough, some of the worst management decisions are linked to some of the best. For every success, hundreds of failures exist. For instance, in 1899, Asa Candler sold Benjamin Thomas and Joseph Whitehead the bottling rights for Coca-Cola for $1. Candler mistakenly thought the drink would be sold at soda fountains. Apple makes the hall of infamy for its refusal to license its Macintosh operating system to other manufacturers, forcing customers to buy only Apple computers. If Apple had given up control, it might be where Microsoft is today. Although Henry Ford is credited for introducing the concept of mass production, the credit should go to Honore Blanc. Blanc, an eighteenth century French gunsmith, realized he could use unskilled laborers to make interchangeable parts. However, the French government vetoed his idea, reasoning that it didnât make sense to make only part of a product.