Lessons from History

In the best-seller Built to Last, Jim Collins explores the factors that led some compa-nies to thrive over the long term by contrasting them to similar companies that merely survived (and in some cases didn’t even accomplish that).

Certainly all leaders want to see their companies in the “built to last” category – who would want to brag about how they led their companies to achieve survival.

Within the past month, we have seen two well known companies celebrate a signifi-cant milestone. IBM turned 100 years old and Southwest Airlines reached 40 during the month of June. Clearly different companies in very different industries – yet both have thrived during some very turbulent times.
Each company learned some vital lessons that we can take to heart. This month we will explore the lessons from IBM and next month Southwest.

Money magazine author Kevin Maney wrote an article offering “5 Lessons from IBM’s 100th Anniversary”, and here they are:

1. “At the start, convince the troops you’re a company of destiny, even if that seems crazy”.

Founded in 1911 as the “Computing – Tabulating-Co” or (CTC), the early days found the company struggling in dramatic fashion when it hired the now infamous Thomas Watson, Sr. in spite of the depression and the “hand writing on the wall” Watson immediately set out to convince the employees that they were part of a large international, high class company of the future. He took the bold move of including “international” when he renamed the company, sending a clear message of his future vision.

2. “Build a cult-like culture that people either buy into, or run away from.”

One of the factors Collins found his research for Built to Last he calls “getting the right people on the bus in the right seats while getting the wrong people off the bus”. Watson understood that and focused on building a corporate culture so strong that those who were aligned bonded and could thrive together and those who were not either left or were asked to leave. One element of that tight culture is the infamous IBM “uniform” of blue suit and white shirt.

3. Bet the company once in a while.

Risk-taking and courage have always been an important characteristic of executive leaders and it was no different for IBM and Watson, Sr. Maney talks about how Watson, dur-ing the height of the depression in 1933, built a new state-of-the-art research facility. He knew that the depression would eventually end and he wanted the company to be ready.

It turns out that the passage of the Social Security Act in 1936 created a massive demand for computing power and IBM was positioned as the only company that could handle the need.
Jim Collins referred to this as a “Big Hairy Audacious Goal” or BHAG for short. The research for the book showed that companies that thrived generally undertook a huge strategic gamble.

4. Make people talk about you.

During the early years, not many people knew or frankly cared about business machines, especially computers. Watson used every opportunity to get his products out into the public eye. Maney talks about Watson funding an “IBM Day” at the New York Worlds Fair.

5. Hand off to a successor who is better than you.

Like most leaders, Watson understood the value of a strategic succession plan. It turns out he didn’t have to look far. A strong willed and visionary leader, Watson led the company for almost 40 years. Following his successful era, his equally strong willed and powerful son took over and continued the tradition begun by his father in ushering IBM into the electronic age.

In his article, Maney offers the following closing:

“Obviously, it's not easy to be a vibrant company for most of 100 years. It takes a cultural foundation at the start, some big bets and luck along the way, and a great second act when it's time for the first successor to take charge. Keep those things in mind, and it might be possible to guess which of today's companies will be around at 100.”

So perhaps it would be worth spending some time contemplating these five lessons in your business. Is there an area or areas where your leadership is in line with Watson’s…how about a factor or factors you might learn from for your business?