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CHAPTER 1
1. Author interview, November 19, 1990.
2. “The Character of Procter & Gamble,” text of speech by John G. Smale, November 7, 1986.
3. We used the Center for Research in Securities Market Index Database (CRSP) as the source of our stock return data. The “general-market” portfolio consists of the weighted average (based on market value) of all stocks traded on the NYSE beginning in 1926, AMEX beginning in 1962, and NASDAQ beginning in 1972. Analysis does not include Nordstrom versus Melville and Sony versus Kenwood (data not available in CRSP), which would have improved the performance of the visionary companies. We were faced with a decision about how to handle Texas Instruments, which merged with Intercontinental Rubber Company in 1953. To maintain consistency across the data source, we elected to use the CRSP data directly—since this is what we did in all of our other companies in the analysis. However, to ensure that TI would not unduly skew the data, we also calculated the returns using TI data only after the 1953 merger. This produced a comparison total of $1,024, thus not dramatically changing the overall result; the visionary companies still outperformed the comparison companies by over six times.
4. We used descriptive statistics, histograms, confidence intervals, and t-tests. We examined:
• Population versus returns. Expected returns based on: (number of companies headquartered in each state in the population) times (total number of returns)/(total population), as compared to actual returns.
• Population versus sample. Expected sample based on: (number of companies headquartered in each state in the population) times (total sample/total population), as compared to actual sample by state.
• Sample versus returns. Expected returns based on: (number of companies headquartered in each state) times (total number returned)/(total sample), as compared to actual returns by state.
• In all three of the preceding cases, the difference in scores proved not significantly different from zero.
5. Fortune 500 industrial: 23 percent; Fortune 500 service: 23 percent; Inc. 500 private: 27 percent; Inc. 100 public: 25 percent.
6. Darwin didn’t see the tortoises and immediately have the flash of insight that led to his theory of evolution (in fact, he left the Galapagos still a creationist). But the tortoises (and other variations in species) that didn’t fit neatly into prior assumptions about species planted a tiny seed of doubt and discontent, which later germinated in his evolutionary theory of variation and natural selection. (See Stephen J. Gould’s book The Flamingo’s Smile, “Darwin at Sea,” Norton, 1985.)
7. Jerry I. Porras, Stream Analysis—A Powerful Way to Diagnose and Manage Organizational Change (Reading, MA: Addison-Wesley, 1987).
CHAPTER 2
1. Schickel, Richard, The Disney Version (New York: Simon & Schuster, 1968), 44, 363.
2. Sam Walton with John Huey, Sam Walton: Made in America (New York: Doubleday, 1992), 234.
3. The original inspiration for this analogy came from a lecture series on intellectual history and the Newtonian Revolution entitled The Origin of the Modern Mind, taught by Alan Charles Kors, Professor of History, University of Pennsylvania, and captured on audiotape as part of the Superstar Teacher Series from the Teaching Company, Washington, D.C.
4. Hewlett-Packard Company Archives, “An Interview with Bill Hewlett,” 1987, 4.
5. “Research Packed with Ph.Ds,” Business Week, 22 December 1956, p. 58.
6. John McDonald, “The Men Who Made T.I.,” Fortune, November 1961, 118.
7. Akio Morita, Made in Japan (New York: Dutton, 1986), 44–57.
8. Nick Lyons, The Sony Vision (New York: Crown, 1976), 4–5.
9. Akio Morita, Made in Japan (New York: Dutton, 1986), 44–57.
10. Japan Electronics Almanac, 1988, 282.
11. Vance Trimble, Sam Walton (New York: Dutton, 1990), 121.
12. Sam Walton with John Huey, Sam Walton: Made in America (New York: Doubleday, 1992), 35.
13. Hoover’s Handbook of Corporations, 1991.
14. Vance Trimble, Sam Walton (New York: Dutton, 1990), 102–104.
15. Ibid., 121–122.
16. Robert O’Brien, Marriott: The J Willard Marriott Story (Salt Lake City: Deseret, 1987).
17. John W. Nordstrom, The Immigrant in 1887 (Seattle: Dogwood Press, 1950), 44–50; “Nordstrom History,” company publication, 26 November 1990.
18. Values and Visions: A Merck Century (Rahway, NJ: Merck, 1993), 13–15.
19. “Procter & Gamble Chronology,” company publication; Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981), 1–14; Alfred Lief, It Floats: The Story of Procter & Gamble (New York: Rinehart, 1958), 14–32.
20. Harry Mark Petrakis, The Founder’s Touch (New York: McGraw-Hill, 1965), 62–63.
21. The Philip Morris History, company publication, 1988.
22. Our Story So Far (St. Paul, MN: 3M Company, 1977), 51.
23. Charles W. Cheape, Norton Company: a New England Enterprise (Cambridge, MA: Harvard University Press, 1985), 12.
24. Robert J. Serling, Legend and Legacy (New York: St. Martin’s Press, 1992), 2–6.
25. “Take off for the Business Jet,” Business Week, 28 September 1963.
26. René J. Francillon, McDonnell Douglas Aircraft Since 1920, (Annapolis, MD: Naval Institute Press, 1988), 1–12.
27. Richard Schickel, The Disney Version (New York: Simon & Schuster, 1968), 106–107.
28. Clive Hirschhorn, The Columbia Story (New York: Crown, 1989), 7–16.
29. Grover and Lagai, Development of American Industries, 4th Edition, 1959, 491.
30. Robert Lacey, Ford: The Men and the Machine (New York: Ballantine Books, 1986), 47–110.
31. Centennial Review, Internal Westinghouse Document, 1986.
32. Ibid.
33. Leonard S. Reich, The Making of American Industrial Research: Science and Business at GE and Bell, 1876–1926 (Cambridge: Cambridge University Press, 1985), 69–71. (Author’s note: We cannot verify that GE’s lab was definitely America’s first, but we do know that it preceded Bell Labs, one of the other early labs, by a full twenty-five years.)
34. Bill Hewlett internal speech, 1956. Courtesy Hewlett-Packard Company Archives.
35. Dave Packard, “Industry’s New Challenge: The Management of Creativity,” Western Electronic Manufacturers’ Association, San Diego, 23 September 1964, Courtesy Hewlett-Packard Company Archives.
36. “Hewlett-Packard Chairman Built Company by Design, Calculator by Chance,” The AMBA Executive, September 1977, 6–7.
37. Harry Mark Petrakis, The Founder’s Touch (New York: McGraw-Hill, 1965), x–63.
38. Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981), xii.
39. “National Business Hall of Fame Roster of Past Laureates,” Fortune, 5 April 1993, 116.
40. Hoover’s Handbook, 1991, 381.
41. Our Story So Far (St. Paul, MN: 3M Company, 1977), 59.
42. Mildred Houghton Comfort, William L. McKnight, Industrialist (Minneapolis: T. S. Denison, 1962), 35, 45, 182, 194, 201.
43. Akio Morita, Made in Japan (New York: Dutton, 1986), 147.
44. Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981), 1–15.
45. Robert J. Serling, Legend and Legacy: The Story of Boeing and Its People (New York: St. Martin’s Press, 1992), 70.
46. Values and Visions: A Merck Century (Rahway, NJ: Merck, 1993), 12.
47. Camille B. Wortman and Elizabeth F. Loftus, Psychology (New York: McGraw-Hill, 1992), 385–418.
48. Harold van B. Cleveland and Thomas F. Huertas, Citibank 1812–1970 (Cambridge, MA: Harvard Universtity Press, 1985), 32.
49. Citibank, 1812–1970, 301.
50. Harold van B. Cleveland and Thomas F. Huertas, Citibank 1812–1970 (Cambridge, MA: Harvard Universtity Press, 1985), 41, 301; and John Donald Wilson, The Chase (Boston: Harvard Business School Press, 1986), 25.
51. Citibank, 1812–1970, 54.
52. Anna Robeson Burr, Portrait of a Banker: James Stillman, 1850–1918 (New York: Duffield, 1927), 249.
53. “Wiggin Is the Chase Bank and the Chase Bank Is Wiggin,” Business Week, April 30, 1930.
54. Vance Trimble, Sam Walton (New York: Dutton, 1990), see pp. 1–45 for a good account of Walton’s early life.
55. Sam Walton with John Huey, Sam Walton: Made in America (New York: Doubleday, 1992), 78–79.
56. “America’s Most Successful Merchant,” Fortune, 23 September 1991.
57. Much of the detail in this section comes from: Sam Walton with John Huey, Made in America (New York: Doubleday, 1992), 225–232.
58. Vance Trimble, Sam Walton (New York: Dutton, 1990), 274.
59. Sam Walton with John Huey, Made in America (New York: Doubleday, 1992), 225.
60. Vance Trimble, Sam Walton (New York: Dutton, 1990), 121.
61. “Industry Overview,” Discount Merchandiser, June 1977.
62. “Gremlins are Eating up the Profits at Ames,” Business Week, 19 October 1987.
63. “David Glass Won’t Crack Under Fire,” Fortune, 8 February 1993, 80.
64. “Pistner discusses Ames Strategy,” Discount Merchandiser, July 1990.
65. “James Harmon’s Two Hats,” Forbes, May 28, 1990.
66. Goals for the year 2000 from a letter we received from a Wal-Mart director in 1991. See our chapter on vision for more details.
67. Harry Mark Petrakis, The Founder’s Touch (New York: McGraw-Hill, 1965), 49, 61.
68. Ibid., 69, 88.
69. Ibid., 114–15.
70. Ibid., p. xi.
71. Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991), 45, 65.
72. “Zenith Bucks the Trend,” Fortune, December 1960.
73. “At the Zenith and on the Spot,” Forbes, September 1, 1961.
74. “Zenith Bucks the Trend,” Fortune, December 1960; “Irrepressible Gene McDonald,” Reader’s Digest, July 1944; and “Commander McDonald of Zenith,” Fortune, June 1945.
75. International Directory of Corporate Histories (Chicago: St. James Press, 1988), 123.
76. Zenith Bucks the Trend,” Fortune, December 1960.
77. Ibid.
78. Galvin died in November of 1959; McDonald died in May of 1958.
79. International Directory of Company Histories (Chicago: St. James Press, 1988), Volume 2, 135.
80. International Directory of Company Histories (Chicago: St. James Press, 1988), Volume 2, 135.
81. Clive Hirschhorn, The Columbia Story (New York: Crown, 1989).
82. Schickel, Richard, The Disney Version (New York: Simon & Schuster, 1968), 362.
83. The Disney Studio Story (Hollywood: Walt Disney, 1987), 18.
84. The Disney Studio Story (Hollywood: Walt Disney, 1987); and Schickel, Richard, The Disney Version (New York: Simon & Schuster, 1968), 180.
85. The Disney Studio Story (Hollywood: Walt Disney, 1987), 42.
86. Personnel, December 1989, 53.
87. John Taylor, Storming the Magic Kingdom (New York: Ballantine Books, 1987), 14.
88. Ibid., p. viii.
89. We have paraphrased from the lecture series “The Origin of the Modern Mind,” by Alan Charles Kors, Professor of History, University of Pennsylvania, for this paragraph.
90. For the best coverage of the theory of evolution, we suggest Biology, by Norman K. Wessells and Janet L. Hopson (New York: Random House, 1988), chapters 9–15, 19, 41–43.
91. For an excellent description of the personalities and processes of the constitutional convention see Miracle at Philadelphia—The Story of the Constitutional Convention: May to September, 1787, by Catherine Drinker Bowen (Boston: Little, Brown, 1966).
INTERLUDE
1. F. Scott Fitzgerald, The Crack-up (1936).
CHAPTER 3
1. Author interview, 17 April 1992.
2. Merck & Company, Management Guide, Corporate Policy Statement, February 3, 1989, courtesy Merck & Company.
3. Written personally by Don Petersen atop this chapter when he reviewed our manuscript, January 1994.
4. George W. Merck, “An Essential Partnership—The Chemical Industry and Medicine,” speech presented to the Division of Medicinal Chemistry, American Chemical Society, 22 April 1935.
5. Merck & Company, 1991 Annual Report, Inside Cover.
6. David Bollier and Kirk O. Hansen, Merk & Co. (A-D), Business Enterprise Trust Case, No. 90-013.
7. David Bollier and Kirk O. Hansen, Merk & Co. (A-D), Business Enterprise Trust Case, No. 90-013, case D, 3.
8. George W. Merck, Speech at the Medical College of Virginia at Richmond, December 1, 1950, courtesy Merck & Company historical archives.
9. “Chas Pfizer: Successful Upstart,” Forbes, 15 December 1962.
10. Akio Morita, Made in Japan (New York: Dutton, 1986), 43–44.
11. There is some debate as to the exact translation of the prospectus from Japanese into English. We have relied on two sources to capture the essence of this part of the prospectus: Nick Lyons’s book, The Sony Vision (New York: Crown, 1976), 1–18; and a translation by one of our Japanese students, Tsuneto Ikeda, to whom we are grateful for his perspective on the document.
12. Nick Lyons, The Sony Vision (New York: Crown, 1976), 10.
13. Akio Morita, Made in Japan (New York: Dutton, 1986), 147–148.
14. Ibid., 79.
15. Ranganath Nayak and John M. Ketteringham, Break-throughs! (New York: Rawson Associates, 1986), 130–150; and Nick Lyons, The Sony Vision (New York: Crown, 1976), xv-xvii.
16. Robert L. Shook, Turnaround: The New Ford Motor Company (New York: Prentice-Hall, 1990), 94.
17. Robert L. Shook, Turnaround: The New Ford Motor Company (New York: Prentice-Hall, 1990), 96.
18. Detroit News, November 14, 1916, cited in Lacey, 179.
19. Robert Lacey, Ford—The Men and the Machine (New York: Ballantine Books, 1986), 179.
20. Ibid., 128.
21. Ibid., 129.
22. Peter F. Drucker, Concept of the Corporation (New York: John Day, 1972), 305–307.
23. Peter F. Drucker, Management: Tasks, Responsibilities, Practices (New York: Harper & Row, 1985), 808.
24. David Packard, speech given to HP’s training group on 8 March 1960, courtesy of Hewlett-Packard Company archives.
25. David Packard, “A Management Code of Ethics,” speech presented to the American Management Association, San Francisco, CA, 24 January 1958, courtesy Hewlett-Packard Company archives.
26. Ibid.
27. Watt’s Current, internal employee newsletter, From Our President’s Desk, November 1961, courtesy Hewlett-Packard Company archives.
28. Dave Packard, “Objectives of the Hewlett-Packard Company,” January 1957; courtesy Hewlett-Packard Company archives.
29. Author interview with John Young, 17 April 1992,
30. John McDonald, “The Men Who Made TI,” Fortune, November 1961, 123.
31. “Running Things With a Slide Rule,” Business Week, 27 April 1968.
32. “The Men Who Made T.I.,” Fortune, November 1961.
33. “Running Things With a Slide Rule,” Business Week, 27 April 1968.
34. “Texas Instruments: Pushing Hard into Consumer Markets,” Business Week, 24 August 1974.
35. “Japanese Heat on the Watch Industry,” Business Week, 5 May 1980.
36. Internal HP Speech by David Packard emphasizing to division managers the importance of thinking in terms of contribution, not in terms of market share or size, courtesy of Hewlett-Packard Company archives.
37. “How TI Beat the clock on its $20 digital watch,” Business Week, 31 May 1976; “Japanese Heat on the Watch Industry,” Business Week, 5 May 1980; HP internal archives speech by David Packard, February 11, 1974; Interview with John Young, April 1992.
38. Lawrence G. Foster, A Company that Cares (New Brunswick, NJ: Johnson & Johnson, 1986), 17.
39. Ibid, 64–67.
40. Ibid, 65.
41. R. W. Johnson, Jr., Try Reality, a pamphlet he wrote in 1935.
42. Lawrence G. Foster, A Company that Cares (New Brunswick, NJ; Johnson & Johnson, 1986), 108–109.
43. Francis J. Aguilar and Arvind Bhambri, “Johnson & Johnson (A),” Harvard Business School Case No. 384-053, 4.
44. Warren Bennis, On Becoming a Leader (Reading, MA: Addison-Wesley, 1989), 192.
45. Francis J. Aguilar and Arvind Bhambri, “Johnson & Johnson (A),” Harvard Business School Case No. 384-053, 3.
46. Francis J. Aguilar and Arvind Bhambri, “Johnson & Johnson (A),” Harvard Business School Case No. 384-053.
47. Ibid, 5.
48. “Bristol-Meyers Prescription for Profits,” Dun’s Business Month, December 1982.
49. See E. E. Tauber, Boeing in Peace and War (Enumaclaw, WA: TABA, 1991); Robert J. Serling, Legend and Legacy: The Story of Boeing and Its People (New York: St. Martin’s Press, 1992); Harold Mansfield, Vision (New York: Popular Press, 1966).
50. From “Gamble in the Sky,” Time, 19 July 1954, and “Accelerating the Jet Age,” Nation’s Business, August 1967.
51. Robert J. Serling, Legend and Legacy: The Story of Boeing and Its People (New York: St. Martin’s Press, 1992), 285.
52. Harry Mark Petrakis, The Founder’s Touch (New York: McGraw-Hill, 1965), 134, 153.
53. Ibid., 111.
54. Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991).
55. “For Which We Stand—A Statement of Purpose, Principles, and Ethics,” Motorola Internal Publication, 1988.
56. Robert O’Brien, Marriott: The J Willard Marriott Story (Salt Lake City: Deseret, 1987), 324.
57. Ibid., 320.
58. “Staying Power,” Vis a Vis, February 1981, 60.
59. Robert O’Brien, Marriott: The J Willard Marriott Story (Salt Lake City: Deseret, 1987), 256.
60. “Money, Talent, and the Devil by the Tail: J. Willard Marriott,” Management Review, January 1985.
61. Ibid.
62. Marriott 1988 Annual Report, 3.
63. “Howard Johnson Tries a Little Harder,” Business Week, 29 September 1973; “HoJos will Repaint its Roofs,” Business Week, 13 December 1982; “How a Great American Franchise Lost its Way,” Forbes, 30 December 1985; “The Sad Case of the Dwindling Orange Roofs,” Forbes, 3 December 1985.
64. “HoJos will Repaint its Roofs,” Business Week, 13 December 1982; “How a Great American Franchise Lost its Way,” Forbes, 30 December 1985.
65. Interview with Ross Millhauser, New York Times, 25 January 1979, D1.
66. “Voyage into the Unknown,” Forbes, 1 December 1971, 41.
67. Fortune, 8 May 1989.
68. Discussion with the authors at a conference at Stanford University, October 1991.
69. “Philip Morris: Unconventional Wisdom,” Forbes, 1 January 1971.
70. “How Philip Morris Diversified Right,” Fortune, 23 October 1989.
71. “Can He Keep Philip Morris Growing,” Fortune, 6 April 1992.
72. “How Philip Morris Diversified Right,” Fortune, 23 October 1989.
73. Prior to the early 1950s, Philip Morris appears to not have had much of a coherent ideology; this discussion relates to the mid-1950s on. Philip Morris is the only visionary company in our study in which the ideology doesn’t appear until relatively late in the company’s history.
74. Mildred Houghton Comfort, William L. McKnight, Industrialist (Minneapolis: T. S. Denison, 1962); Virginia Huck, Brand of the Tartan—The 3M Story (New York: Appleton-Century-Crofts, 1955); Our Story So Far (St. Paul, MN: 3M Company, 1977); various historical business articles; “Getting to Know Us,” 3M publication.
75. Alden Hatch, American Express 1850–1950: A Century of Service (Garden City, NY: Country Life Press, 1950); Jon Friedman and John Meechan, House of Cards: Inside the Troubled Empire of American Express (New York: Putnam, 1992); “Eight Principles: Lou Gerstner Discusses the Staying Power of Corporate Philosophy,” TRS Express (American Express Publication), December 1987; Peter Grossman, American Express: The Unofficial History.
76. E. E. Tauber, Boeing in Peace and War (Enumaclaw, WA: TABA, 1991), Robert J. Serling, Legend and Legacy (New York: St. Martin’s Press, 1992); Harold Mansfield, Vision (New York: Popular Press, 1966); Boeing statement of mission and values, courtesy Boeing Corporation; “Accelerating the Jet Age,” Nation’s Business, August 1967.
77. Harold van B. Cleveland and Thomas F. Huertas, Citibank 1812–1970 (Cambridge, MA: Harvard Universtity Press, 1985); Richard B. Miller, Citicorp: The Story of a Bank in Crisis (New York: McGraw-Hill, 1993); Robert B. Levering, The 100 Best Companies to Work for in America (New York: New American Library, 1984), 43; “Our Future” and “Ethical Choices,” internal Citicorp publications.
78. Henry Ford, II, The Human Environment and Business (New York: Weybright & Talley, 1970); Robert L. Shook, Turnaround: The New Ford Motor Company (New York: Prentice-Hall, 1990); Anne Jardin, The First Henry Ford (Colonial Press, 1970); Robert Lacey, Ford—The Men and the Machine (New York: Ballantine Books, 1986); American Legend and This is the Ford Motor Company, Ford corporate publications; Ford at Fifty (New York: Simon & Schuster, 1953).
79. Ronald G. Greenwood, Managerial Decentralization: A Study of the General Electric Philosophy (Lexington, MA: Lexington Books, 1974); Robert Conot, Thomas A. Edison—A Streak of Luck (New York: Da Capo Press, 1979); The General Electric Story (Schenectady, NY: Hall of History Foundation, 1981), volumes 1 & 2; Noel M. Tichy and Stratford Sherman, Control Your Destiny or Someone Else Will (New York: Doubleday Currency, 1993); “1956 Statement of GE’s Company Objectives,” courtesy General Electric Company.
80. “Objectives of the Hewlett-Packard Company,” January 1957, courtesy Hewlett-Packard Company archives; Interviews with William Hewlett and John Young; various internal publications.
81. Thomas J. Watson, Jr., Father, Son, & Company (New York: Bantam Books, 1990), 302; Thomas J. Watson, Jr., A Business and Its Beliefs (New York: McGraw-Hill, 1963); “IBM Yesterday and Today,” corporate publication; Lou Mobley and Kate McKeown, “Beyond IBM; IBM 75th Anniversity,” Think, September 1989.
82. “Our Credo,” courtesy of Johnson & Johnson Company; Francis J. Aguilar and Arvind Bhambri, “Johnson & Johnson (B),” Harvard Business School Case No. 384-054; James E. Burke, letter “One Hundred Years,” published in A Company that Cares (New Brunswick, NJ: Johnson & Johnson, 1986), 163; various articles and internal company newsletters.
83. Robert O’Brien, Marriott: The J Willard Marriott Story (Salt Lake City: Deseret, 1987); Marriott 1988 Annual Report; various articles.
84. Merck & Company, “Statement of Corporate Objectives,” courtesy Merck & Company; Merck Century Celebration Videos, courtesy Merck & Company; Values and Visions: A Merck Century (Rahway, NJ: Merck, 1993); various articles and documents from Merck archives.
85. For Which We Stand—A Statement of Purpose, Principles, and Ethics, Motorola internal publication, 1988; Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991); Harry Mark Petrakis, The Founder’s Touch (New York: McGraw-Hill, 1965); various articles.
86. Drawn from “Nordstrom History,” company publication, talk by Bruce Nordstrom at Stanford Business School, 1991; various articles.
87. (Note: Prior to the early 1950s, Philip Morris appears not to have much of a coherent ideology; this list relates to the mid-1950s on.) Sources: “How Philip Morris Diversified Right,” Fortune, 23 October 1989; “Voyage into the Unknown,” Forbes, 1 December 1971; “Philip Morris; Unconventional Wisdom,” Forbes, 1 January 1971; “Can He Keep Philip Morris Growing,” Fortune, 6 April 1992; Interview with Ross Millhauser, New York Times, 25 January 1979, D1; “The Two Tier Market Still Lives,” Forbes, 1 March 1974; “A Machine That Will Sell Anything,” Business Week, 4 March 1967.
88. “Facts about Procter & Gamble,” company publication, 1988, 6; Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981); It Floats: The Story of Procter & Gamble (New York: Rinehart, 1958).
89. Akio Morita, Made in Japan (New York: Dutton, 1986), especially pages 147–48; Nick Lyons, The Sony Vision (New York: Crown, 1976), Chapter 1; Genryu—Sony Challenge 1946–1968, special collection of Sony Management Newsletters, 40th anniversary edition (Tokyo: Sony, 1986).
90. Sam Walton with John Huey, Sam Walton: Made in America (New York: Doubleday, 1992); Vance Trimble, Sam Walton (New York: Dutton, 1990); company interviews.
91. “The Wonderful Worlds of Walt Disney,” company publication, 1966; Schickel, Richard, The Disney Version (New York: Simon & Schuster, 1968); John Taylor, Storming the Magic Kingdom (New York: Ballantine Books, 1987); Disney University Employee Brochure and Course Offerings; from In Search of Excellence Video on Disney, the Tom Peters Group, Palo Alto, CA; Joe Fowler, Prince of the Magic Kingdom: Michael Eisner and the Re-Making of Disney (New York: Wiley, 1991); Marc Eliot, Walt Disney: Hollywood’s Dark Prince (New York: Birch Lane Press, 1993); author interviews.
92. Robert B. Cialdini, Influence (New York: Quill, 1984); Philip G. Zimbardo and Michael R. Leippe, The Psychology of Attitude Change and Social Influence (New York: McGraw-Hill, 1991).
93. Memo from John F. Welch to GE corporate officers, October 4, 1991.
94. “Feisty P&G Profile,” Publishers Weekly, 2 August 1993.
95. Francis J. Aguilar and Arvind Bhambri, “Johnson & Johnson (A),” Harvard Business School Case No. 384-053, 5.
96. Thomas J. Watson, Jr., A Business and Its Beliefs (New York: Columbia University Press, 1963), 5–6, 72–73.
97. Sam Walton with John Huey, Sam Walton: Made in America (New York: Doubleday, 1992), 183, 233.
98. “Memorable Years in P&G History,” company publication, 7.
99. Author interview with John Young, 17 April 1992.
100. Thomas J. Watson, Jr., A Business and Its Beliefs (New York: Columbia University Press, 1963), 12–13.
101. David Packard, commencement speech, Colorado College, June 1, 1964, courtesy Hewlett-Packard Company archives.
102. Values and Visions: A Merck Century (Rahway. NJ: Merck, 1993), 173.
103. “Disney’s Philosophy,” New York Times Magazine, 6 March 1938; Richard Schickel, The Disney Version (New York: Simon & Schuster, 1968); Walt Disney, speech about the opening of Disneyland, 18 July 1955; John Taylor, Storming the Magic Kingdom (New York: Ballantine Books, 1987); Christopher Finch, Walt Disney’s America (New York: Abbeville Press, 1978).
104. Formal/Explicit: H-P, J&J, Merck, Motorola, Sony, Walt Disney; Implicit/Informal: 3M, Boeing, Ford, GE, Marriott, Philip Morris, Wal-Mart.
105. Lawrence G. Foster, A Company that Cares (New Brunswick, NJ: Johnson & Johnson, 1986), 17.
CHAPTER 4
1. Paraphrased from Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991), 16–34.
2. Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981), 269.
3. Sam Walton with John Huey, Sam Walton: Made in America (New York: Doubleday, 1992), 249.
4. Thomas J. Watson, Jr., A Business and Its Beliefs (New York: McGraw-Hill, 1963), 5–6, 72–73.
5. Robert O’Brien, Marriott: The J Willard Marriott Story (Salt Lake City: Deseret, 1987), 307, 326.
6. Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991), 165–166.
7. Bronze plaque on the wall of Boeing corporate headquarters.
8. Jottings in Henry Ford’s notebooks. From the Ford Archives of the Edison Institute, cited in Robert Lacey, Ford: The Men and the Machine (New York: Ballantine Books, 1986), 141.
9. “Nordstrom Gets the Cold,” Stores, January 1990.
10. One of the authors worked directly with this marketing manager at Hewlett-Packard.
CHAPTER 5
1. Bartlett’s Familiar Quotations, Fifteenth Edition, 686.
2. Tsueneto Ikeda, “Masaru Ibuka,” unpublished research paper, Stanford University Graduate School of Business, November 1992.
3. Schickel, Richard, The Disney Version (New York: Simon & Schuster, 1968), 171.
4. “How Boeing Bet the Company and Won,” Audacity, Winter 1993.
5. Robert J. Serling, Legend and Legacy: The Story of Boeing and Its People (New York: St. Martin’s Press, 1992), 72–79.
6. According to “How Boeing Bet the Company and Won” in Audacity and Serling (page 122), the project would cost between $15 million and $16 million. We then went back and compared the $15 million figure with Boeing’s income statements and balance sheets for the period 1947–1951.
7. “How Boeing Bet the Company and Won,” Audacity, Winter 1993.
8. H. Ingells, The McDonnell Douglas Story, 121.
9. “Zooming Airlines Grab for New Jets,” Business Week, 22 May 1964.
10. Robert J. Serling, Legend and Legacy: The Story of Boeing and its People (New York: St. Martin’s Press, 1992), 31.
11. Ibid., 180–192.
12. Ibid., 285–290.
13. Daniel J. Boorstin, The Americans: The Democratic Experience (New York: Vintage Books, 1974), 593–597.
14. Ibid., 596.
15. Noel M. Tichy and Stratford Sherman, Control Your Destiny or Someone Else Will (New York: Doubleday Currency, 1993), 245–246.
16. Robert Slater, The New GE (Homewood, IL: Richard D. Irwin, 1993), 77–93.
17. Ibid., 77–93.
18. Westinghouse 1989 Annual Report.
19. “Reynolds Gets a Bang out of the Cigarette Brand Explosion,” Fortune, October 1976.
20. “Bad News Can Mean Good Growth,” Forbes, 15 November 1968
21. Daniel J. Boorstin, The Americans: The Democratic Experience (New York: Vintage Books, 1974), 548.
22. Robert Lacey, Ford: The Men and the Machine (New York: Ballantine Books, 1986), 89–100.
23. Ibid., 89–100.
24. Genryu—Sony Challenge 1946–1968, special collection of Sony Management Newsletters, 40th anniversary edition (Tokyo: Sony, 1986), 131.
25. Akio Morita, Made in Japan (New York: Dutton, 1986), 74.
26. For good overall coverage of these events, read Akio Morita, Made in Japan, Genryu—Sony Challenge 1946–1968, and The Sony Vision.
27. Akio Morita, Made in Japan (New York: Dutton, 1986), 66–69.
28. Genryu—Sony Challenge 1946–1968, special collection of Sony Management Newsletters, 40th anniversary edition (Tokyo: Sony, 1986), 98.
29. Ibid., 98.
30. Ibid., 98.
31. Sam Walton & John Huey, Sam Walton: Made in America (New York: Doubleday, 1992), 22.
32. Ibid., 29.
33. Vance Trimble, Sam Walton (New York: Penguin Books, 1990).
34. Ibid., 306.
35. E. E. Bauer, Boeing in Peace and War (Enumclaw, WA: TABA, 1991), 288.
36. John Taylor, Storming the Magic Kingdom (New York: Ballantine Books, 1987), 8–12.
37. Walt Disney Company Annual Report, 1992, 1.
38. “Close Encounters at Columbia Pictures,” Fortune, 1 December 1978.
39. T. A. Heppenheimer, “How IBM Did It,” Audacity, Winter 1994, 59.
40. Thomas J. Watson, Jr., Father, Son, & Company (New York: Bantam, 1990), 346–351.
41. “Anatomy of a Turnaround,” Forbes, 1 November 1968, 28.
42. Thomas J. Watson, Jr., Father, Son, & Company (New York: Bantam, 1990), 16.
43. IBM 75th Anniversary, Think, September 1989, 23.
44. Thomas J. Watson, Jr., Father, Son, & Company (New York: Bantam, 1990), 28.
45. Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981), 87–98.
46. Ibid., 98.
47. Ibid., 200.
48. “Where Management Style Sets the Strategy,” Business Week, 23 October 1978.
49. Nick Lyons, The Sony Vision (New York: Crown, 1976), 150.
50. Ibid., 152.
51. Harold van B. Cleveland and Thomas F. Huertas, Citibank 1812–1970 (Cambridge, MA: Harvard University Press, 1985), 32.
52. “James Stillman,” Cosmopolitan, July 1903, 334.
53. Richard B. Miller, Citicorp: The Story of a Bank in Crisis (New York: McGraw-Hill, 1993), 1.
54. Harold van B. Cleveland and Thomas F. Huertas, Citibank 1812–1910 (Cambridge, MA: Harvard Universtity Press, 1985), 89.
55. Richard B. Miller, Citicorp: The Story of a Bank in Crisis (New York: McGraw-Hill, 1993), 59.
56. Ibid., 80.
57. Ibid., 4.
58. Harold van B. Cleveland and Thomas F. Huertas, Citibank 1812–1910 (Cambridge, MA: Harvard Universtity Press, 1985), 88.
59. Richard B. Miller, Citicorp: The Story of a Bank in Crisis (New York: McGraw-Hill, 1993), 82.
60. Harry Mark Petrakis, The Founder’s Touch (New York: McGraw-Hill, 1965), 170–171.
61. Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991), entire booklet.
62. Ibid., 24.
63. “Motorola Gets Closer to Orbit,” Business Week, 6 August 1993, 36.
64. “Zenith Corporation (C),” Harvard Business School Case Study, No. 9–674–095, Rev. 8/77, 14.
65. Paper on the General Electric revolution; paper kept confidential at request of the author.
CHAPTER 6
1. Sam Walton with John Huey, Sam Walton: Made in America (New York: Doubleday, 1992), 223.
2. From In Search of Excellence Video on IBM, Tom Peters Group, Palo Alto, CA.
3. Robert Levering, Milton Moskowitz, and Michael Katz, The 100 Best Companies to Work for in America (New York: New American Library, 1985), 243–245.
4. “Nordstrom’s Push East Will Test its Renown For the Best Service,” Wall Street Journal, 1 August 1979, A 1.
5. “Nordstrom,” Harvard Business School Case No. 9-191-002 and 1-192-027, Rev. 9/6/91.
6. “Why Rivals as Quaking as Nordstrom Heads East,” Business Week, 15 June 1987.
7. William Davidow and Bro Utall, Total Customer Service (New York: Harper & Row, 1989), 91.
8. Interview transcript from discussion with Jim Nordstrom by the staff of The Reporter, Stanford Graduate School of Business, 1991.
9. Author interview with a Nordstrom manager, May 1993.
10. 60 Minutes, CBS television interview, 6 May 1990.
11. Robert Levering and Milton Moskowitz, The 100 Best Companies to Work for in America (New York: Doubleday Currency, 1993), 327–332.
12. “The Secrets Behind Nordstrom’s Service,” San Francisco Chronicle, 24 December 1992.
13. Nordstrom orientation packet.
14. Robert Levering and Milton Moskowitz, The 100 Best Companies to Work for in America (New York Doubleday Currency, 1993), 327–332.
15. “At Nordstrom Stores, Service Comes First—But at a Big Price,” Wall Street Journal, 20 February 1990.
16. “The Other Nordstrom,” Los Angeles Times, 4 February 1990, Business Section.
17. Ron Zemke and Dick Schaaf, The Service Edge (New York: New American Library, 1989), 352–355; William Davidow and Bro Utall, Total Customer Service (New York: Harper & Row, 1989), 86–87.
18. “Nordstrom’s Push East Will Test its Renown For the Best Service,” Wall Street Journal, 1 August 1979, A 1; William Davidow and Bro Utall, Total Customer Service (New York: Harper & Row, 1989), 130.
19. Author interview with a Nordstrom manager, May 1993.
20. “Nordstrom,” Harvard Business School Case No. 9-191-002 and 1-192-027, Rev. 9/6/91.
21. Ron Zemke and Dick Schaaf, The Service Edge (New York: New American Library, 1989), 352–355.
22. Robert Levering, Milton Moskowitz, and Michael Katz, The 100 Best Companies to Work for in America (New York: New American Library, 1985), 243–245.
23. Robert Levering, Milton Moskowitz, and Michael Katz, The 100 Best Companies to Work for in America (New York: New American Library, 1985), 243–245.
24. Wall Street Journal, 20 February 1990.
25. “Nordstrom,” Harvard Business School Case No. 9-191-002 and 1-192-027, Rev. 9/6/91.
26. Wall Street Journal, 20 February 1990.
27. Author interview with a Nordstrom manager, May 1993.
28. Wall Street Journal, 20 February 1990.
29. Author interview with a Nordstrom manager, May, 1993.
30. 1990 Nordstrom Annual Report, 12.
31. Wall Street Journal, February 20, 1990
32. 1988 Nordstrom Annual Report, 9.
33. Wall Street Journal, 1 August 1989.
34. Nordstrom 1988 Annual Report, 5.
35. Wall Street Journal, 1 August 1989.
36. Ibid.
37. The secretive nature of Nordstrom came clear from a variety of sources, including some of the articles already cited, our discussions with a Nordstrom manager, and the fact that Nordstrom was one of the few visionary companies in our research to refuse to assist us in our research efforts on the company.
38. Wall Street Journal, 20 February 1990.
39. Ibid.
40. Robert Levering, Milton Moskowitz, and Michael Katz, The 100 Best Companies to Work for in America (New York: New American Library, 1985), 243–245.
41. Ibid., 318–322.
42. “How Disney Does It,” Newsweek, 3 April 1989.
43. We relied on the following sources in the literature on the study of cults:
• John J. Collins, The Cult Experience: An Overview of Cults, Their Traditions, and Why People Join Them (Springfield, IL: Thomas Books, 1991).
• Marc Galanter, M.D., Cults and the New Religious Movements (Washington, DC: American Psychiatric Association, 1989).
• Marc Galanter, M.D., “Cults and Zealous Self-Help Movements: A Psychiatric Perspective,” American Journal of Psychiatry, May 1990.
• Willa Appel, Cults in America (New York: Holt, Rinehart, 1983).
• Robert B. Cialdini, Influence—The New Psychology of Modern Persuasion (New York: Quill Press, 1984).
• Susan Landa, “Children and Cults: A Practical Guide,” Journal of Family Law, Volume 29, 1990–91.
• Literature from the International Cult Education Program, Gracie Station, NY.
• Literature from Cult Awareness Network, Chicago.
44. Thomas J. Watson, Jr., Father, Son & Company (New York: Bantam Books, 1990), 82.
45. Robert Sobel, IBM: Colossus in Transition (New York: Truman Talley Books, 1981), 58–69.
46. Robert Sobel, IBM: Colossus in Transition (New York: Truman Talley Books, 1981), 58–69.
47. Thomas J, Watson, Jr., Father, Son, & Company (New York: Bantam Books, 1990), 68.
48. Ibid., 68–71.
49. “IBM: A Special Company,” special issue of Think, September 1989, IBM Corporation.
50. Robert Levering, Milton Moskowitz, and Michael Katz, The 100 Best Companies to Work for in America (New York: New American Library, 1985), 163–168.
51. Ibid.
52. Ibid., 165.
53. F. G. “Buck” Rodgers with Robert L. Shook, The IBM Way (New York: Harper & Row, 1986), 48.
54. Robert Sobel, IBM: Colossus in Transition (New York: Truman Talley Books, 1981), 59.
55. “IBM: A Special Company,” special issue of Think, September 1989, IBM Corporation, 78–79.
56. Training, August 1989, 38.
57. Disney University Employee Brochure and Course Offerings.
58. Ron Zemke and Dick Schaaf, The Service Edge (New York: New American Library, 1989), 526–533.
59. Schickel, Richard, The Disney Version (New York: Simon & Schuster, 1968), 319.
60. “How Disney Does It,” Newsweek, 3 April 1989.
61. Marc Eliot, Walt Disney: Hollywood’s Dark Prince (New York: Birch Lane Press, 1993), 89.
62. Schickel, Richard, The Disney Version (New York: Simon & Schuster, 1968), 319.
63. From In Search of Excellence Video on Disney, Tom Peters Group, Palo Alto, CA.
64. Ibid.
65. Schickel, Richard, The Disney Version (New York: Simon & Schuster, 1968), 318.
66. Ron Zemke and Dick Schaaf, The Service Edge (New York: New American Library, 1989), 526–533.
67. Training, August 1989, 38.
68. From a student paper on Walt Disney, Stanford University Graduate School of Business; author name kept anonymous at her request.
69. Interview with thirteen-year Disney imagineering veteran.
70. Walt Disney Company annual reports, 1987–1992.
71. Joe Flower, Prince of the Magic Kingdom: Michael Eisner and the Re-Making of Disney (New York: Wiley, 1991), 3.
72. Author observation.
73. Joe Flower, Prince of the Magic Kingdom: Michael Eisner and the Re-Making of Disney (New York: Wiley, 1991), 3.
74. For an excellent account of Walt’s relationship to his employees, see Marc Eliot, Walt Disney: Hollywood’s Dark Prince (New York: Birch Lane Press, 1993).
75. Marc Eliot, Walt Disney: Hollywood’s Dark Prince (New York: Birch Lane Press, 1993), 85.
76. Ibid., 89.
77. Ibid., Chapter ten and page xviii; Schickel, chapter eight.
78. Richard Schickel, The Disney Version (New York: Simon & Schuster, 1968), 319.
79. Robert Levering and Milton Moskowitz, The 100 Best Companies to Work for in America (New York: Doubleday Currency, 1993), 372–376.
80. Robert Levering, Milton Moskowitz, and Michael Katz, The 100 Best Companies to Work for in America (New York: New American Library, 1985), 286–290.
81. Author interviews with P&G recruits; Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981), introduction and 165.
82. Documents furnished by the Procter & Gamble Company.
83. Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981), 116.
84. Robert Levering, Milton Moskowitz, and Michael Katz, The 100 Best Companies to Work for in America (New York: New American Library, 1985), 288.
85. Alecia Swasy, Soap Opera: The Inside Story of Procter & Gamble (New York: Times Books, 1993), 21.
86. “Memorable Years in P&G History,” P&G corporate publication, 17–19; Robert Levering and Milton Moskowitz, The 100 Best Companies to Work for in America (New York: Doubleday Currency, 1993), 375; Alecia Swasy, Soap Opera: The Inside Story of Procter & Gamble (New York: Times Books, 1993), 6–7.
87. “Memorable Years in P&G History,” P&G corporate publication, 17–19.
88. Ibid.
89. Author interview, October 1993.
90. “The Character of Procter & Gamble,” speech by John G. Smale, 7 November 1986.
91. Alecia Swasy, Soap Opera: The Inside Story of Procter & Gamble (New York: Times Books, 1993), chapter 1; author interviews with P&G brand managers graduated from Stanford Business School.
92. The Character of Procter & Gamble,” text of speech by John G. Smale, 7 November 1986; Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981).
93. Comment from Rick Tranquilli about the “Tide Ones Operation,” captured in Smale’s speech, page 7.
94. “A Policy that Guided 118 Years of Steady Growth,” System—The Magazine of Business, December 1924, 717–720.
95. “How to Be Happy Thought #2,” Forbes, 15 July 1976; “The Morning After,” Forbes, 22 January 1979.
96. Sam Walton with John Huey, Sam Walton: Made in America (New York: Doubleday, 1992), 157.
97. See Chapter 7.
98. Paraphrased from John Nordstrom visit to Stanford Business School.
CHAPTER 7
1. Darwin, Charles, Origin of Species (Buffalo, NY: Prometheus Books, 1991), 222.
2. This is more of a motto than a quote and appears in various forms throughout materials on 3M. We paraphrased this version from Our Story So Far (St. Paul, MN: 3M Company, 1977), 107.
3. Lawrence G. Foster, A Company that Cares (New Brunswick, NJ: Johnson & Johnson, 1986), 116.
4. Ibid., 32.
5. Elyse Tanouye, “Johnson & Johnson Stays Fit by Shuffling Its Mix of Businesses,” Wall Street Journal, 22 December 1992, A1.
6. Lawrence G. Foster, A Company that Cares (New Brunswick, NJ: Johnson & Johnson, 1986), 82.
7. Robert O’Brian, Marriott: The J. Willard Marriott Story (Salt Lake City: Deseret, 1987), 182.
8. Ibid., 180–184.
9. Alden Hatch, American Express 1850–1950: A Century of Service (Garden City, NY: Country Life Press, 1950), chapter 6; Jon Friedman and John Meechan, House of Cards: Inside the Troubled Empire of American Express (New York: Putnam, 1992), chapter 3; “About American Express,” company historical publication.
10. Alden Hatch, American Express 1850–1950: A Century of Service (Garden City, NY: Country Life Press, 1950), 93.
11. Jon Friedman and John Meechan, House of Cards: Inside the Troubled Empire of American Express (New York: Putnam, 1992), 52.
12. Ibid., 106.
13. “About American Express,” company historical publication; Alden Hatch, American Express 1850–1950: A Century of Service (Garden City: Country Life Press, 1950), 96–108.
14. Alden Hatch, American Express 1850–1950: A Century of Service (Garden City, NY: Country Life Press, 1950), 106.
15. Author interview.
16. “How Hewlett-Packard Entered the Computer Business,” Hewlett-Packard Company archives document.
17. Author interview.
18. “Riding the Electronics Boom,” Business Week, 27 February 1960; Harry Mark Petrakis, The Founder’s Touch (New York: McGraw-Hill, 1965), 215–218.
19. Jon Friedman and John Meechan, House of Cards: Inside the Troubled Empire of American Express (New York: Putnam, 1992), 53.
20. International Directory of Corporate Histories (Chicago: St. James Press, 1988), 395; Alden Hatch, American Express 1850–1950: A Century of Service (Garden City, NY: Country Life Press, 1950), 133.
21. “About American Express,” company historical publication; Alden Hatch, American Express 1850–1950: A Century of Service (Garden City, NY: Country Life Press, 1950), chapter 11.
22. A Company that Cares (New Brunswick, NJ: Johnson & Johnson, 1986), 38, 116, 119.
23. Elyse Tanyoue, “Johnson & Johnson Stays Fit by Shuffling Its Mix of Businesses,” Wall Street Journal, 22 December 1992, A1.
24. Ibid.
25. Sam Walton with John Huey, Made in America (New York: Doubleday, 1992), 70.
26. Darwin quote from Origin of Species.
27. Author interview with Wal-Mart operations executive that attended Stanford Executive Program in Organization Change.
28. Noel M. Tichy and Stratford Sherman, Control Your Own Destiny or Someone Else Will (New York: Doubleday, 1993), 52.
29. Virginia Huck, Brand of the Tartan—The 3M Story (New York: Appleton-Century-Crofts, 1955), 23.
30. Mildred Houghton Comfort, William L. McKnight, Industrialist (Minneapolis: T. S. Denison, 1962), chapter 5; Our Story So Far (St. Paul, MN: 3M Company, 1977), 60.
31. Virginia Huck, Brand of the Tartan—The 3M Story (New York, Appleton-Century-Crofts, 1955), chapters 3–8.
32. “Product Directory 1990,” 3M Corporation, 261.
33. Our Story So Far (St. Paul, MN: 3M Company, 1977), 58.
34. Virginia Huck, Brand of the Tartan—The 3M Story (New York: Appleton-Century-Crofts, 1955), chapter 12.
35. Ibid.
36. Our Story So Far (St. Paul, MN: 3M Company, 1977), 56–58.
37. Mildred Houghton Comfort, William L. McKnight, Industrialist (Minneapolis: T. S. Denison, 1962), 127.
38. From all sources on 3M, with particular emphasis on William L. McKnight, Industrialist, and Our Story So Far.
39. Our Story So Far (St. Paul, MN: 3M Company, 1977), 12.
40. Virginia Huck, Brand of the Tartan—The 3M Story (New York, Appleton-Century-Crofts, 1955), chapter 15.
41. Ibid., 134; Our Story So Far, 70; Comfort, 138.
42. Virginia Huck, Brand of the Tartan—The 3M Story (New York, Appleton-Century Crofts, 1955), 189–190.
43. Our Story So Far (St. Paul, MN: 3M Company, 1977), 113–115.
44. Robert Levering and Milton Moskowitz, The 100 Best Companies to Work for in America (New York: Doubleday Currency, 1993), 299.
45. Our Story So Far (St. Paul, MN; 3M Company, 1977), 93.
46. Ibid., 112.
47. P. Ranganth Nayak and John M. Ketteringham, Break-throughs! (New York: Rawson Associates, 1986), 55–56.
48. “Keeping the Fire Lit Under the Innovators,” Fortune, 28 March 1988, 45; 1992 3M Annual Report, 3.
49. “Masters of Innovation,” Business Week, 10 April 1989, 58.
50. Our Story So Far (St. Paul, MN: 3M Company, 1977), 5.
51. “Masters of Innovation,” Business Week, 10 April 1989, 62.
52. Our Story So Far (St. Paul, MN: 3M Company, 1977), 12.
53. Ibid., 101.
54. “Masters of Innovation,” Business Week, 10 April 1989, 60.
55. Getting to Know Us, 3M corporate publication.
56. Robert Levering and Milton Moskowitz, The 100 Best Companies to Work for in America (New York: Doubleday Currency, 1993), 299.
57. Our Story So Far (St. Paul, MN: 3M Company, 1977), 4.
58. Ibid., 7.
59. 1992 3M Annual Report, 3.
60. 3M Annual Report, 1989; Robert Levering and Milton Moskowitz, The 100 Best Companies to Work for in America (New York: Doubleday Currency, 1993), 299.
61. Virginia Huck, Brand of the Tartan—The 3M Story (New York, Appleton-Century-Crofts, 1955), 115–118.
62. P. Ranganth Nayak and John M. Ketteringham, Break-throughs! (New York: Rawson Associates, 1986), 63,
63. Ibid., 57.
64. Ibid., 54.
65. Charles W. Cheape, Family Firm to Modern Multinational: Norton Company, A New England Enterprise (Boston: Harvard University Press, 1985), chapter 2.
66. A phrase Tom Peters has often used to describe 3M.
67. Charles W. Cheape, Family Firm to Modern Multinational: Norton Company, A New England Enterprise (Boston: Harvard University Press, 1985), chapter 2.
68. Ibid., 145.
69. Ibid., 159.
70. Ibid., 145.
71. Ibid., 235.
72. Ibid., 264.
73. Ibid., 291.
74. “It’s no Longer Just Grind, Grind at Norton,” Fortune, August 1963, 120.
75. Charles W. Cheape, Family Firm to Modern Multinational: Norton Company, A New England Enterprise (Boston: Harvard University Press, 1985), 264.
76. Ibid., 263.
77. Paul B. Brown, “See Spot Run,” Forbes, 10 May 1982, 140.
78. Charles W. Cheape, Family Firm to Modern Multinational: Norton Company, A New England Enterprise (Boston: Harvard University Press, 1985), 313.
79. P. Ranganth Nayak and John M. Ketteringham, Break-throughs! (New York: Rawson Associates, 1986), 72.
80. Charles W. Cheape, Family Firm to Modern Multinational: Norton Company, A New England Enterprise (Boston: Harvard University Press, 1985), 307.
81. P. Ranganth Nayak and John M. Ketteringham, Break-throughs! (New York: Rawson Associates, 1986), 65; Paul B. Brown, “See Spot Run,” Forbes, 10 May 1982, 140.
82. Charles W. Cheape, Family Firm to Modern Multinational: Norton Company, A New England Enterprise (Boston: Harvard University Press, 1985), 356.
83. Our Story So Far (St. Paul, MN: 3M Company, 1977), 23.
84. Nick Lyons, The Sony Vision (New York: Crown, 1976), 147–149.
85. “The Three Year Deadline at David’s Bank,” Fortune, July 1977; author interviews.
86. Suzanna Andrews, “Deconstructing the Mind of America’s Most Powerful Businessman,” Manhattan Inc., 1989.
87. “Things Are Adding Up Again at Burroughs,” Business Week, 11 March 1967; “Anatomy of a Turnaround,” Forbes, 1 November 1968; “Burroughs’s Wild Ride with Computers,” Business Week, 1 July 1972; “How Ray McDonald’s Growth Theory Created IBM’s Toughest Competitor,” Fortune, January 1977.
88. “Texas Instruments Cleans up Its Act,” Business Week, 19 September 1983.
89. Bro Uttal, “Texas Instruments Regroups,” Fortune, 9 August 1982.
90. Thomas J. Peters and Robert H. Waterman, In Search of Excellence (New York: Harper & Row, 1982), 15.
91. Our Story So Far (St. Paul, MN: 3M Company, 1977), 7.
CHAPTER 8
1. Robert Slater, The New GE (Homewood, IL: Irwin, 1993), 268.
2. Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991), 51–52.
3. “A Master Class in Radical Change,” Fortune, 13 December 1993.
4. Welch was born on November 19, 1935 (Slater, 27). He began work at GE on October 17, 1960 (Slater, 33). The board named him CEO-elect on December 19, 1980; he took office four months later (Tichy, 58).
5. Robert Slater, The New GE (Homewood, IL: Irwin, 1993), 24.
6. The General Electric Story (Schenectady, NY: Hall of History Foundation, General Electric Company, 1981), volume 4, 81; Robert Slater, The New GE (Homewood, IL: Irwin, 1993), 25.
7. GE under Jones grew pretax profits at an average annual rate of 14.06 percent; GE under Welch grew pretax profits at 8.49 percent. Using a combination of return on equity, return on sales, and return on assets, Jones attained an average of 17.32 percent; Welch attained 16.03 percent.
8. The General Electric Story (Schenectady, NY: Hall of History Foundation, General Electric Company, 1981), volume 4, 28–31.
9. Noel M. Tichy and Stratford Sherman, Control Your Own Destiny or Someone Else Will (New York: Doubleday, 1993), 256.
10. The General Electric Story (Schenectady: Hall of History Foundation, General Electric Company, 1981), volume 4, 23.
11. Noel M. Tichy and Stratford Sherman, Control Your Own Destiny or Someone Else Will (New York: Doubleday, 1993), 39.
12. Calculated as pretax profit divided by year-end stockholder’s equity. We constructed Excel Spreadsheets dating back to 1915 using Annual Reports and Moody’s financial analysis reports.
13. Calculated as the ratio of cumulative GE stock return during the CEO era divided by cumulative general market stock return or cumulative Westinghouse stock return during the GE CEO era.
14. Noel M. Tichy and Stratford Sherman, Control Your Own Destiny or Someone Else Will (New York: Doubleday, 1993), 42.
15. Robert Slater, The New GE (Homewood, IL: Irwin, 1993), chapter 4.
16. Noel M. Tichy and Stratford Sherman, Control Your Own Destiny or Someone Else Will (New York: Doubleday, 1993), 56–58.
17. Robert Slater, The New GE (Homewood, IL: Irwin, 1993), chapter 4.
18. Noel M. Tichy and Stratford Sherman, Control Your Own Destiny or Someone Else Will (New York: Doubleday, 1993), 44.
19. Centennial Review, Internal Westinghouse document, 1986.
20. Gwilym Price had been hired two years earlier to negotiate military war contracts. Succeeded Andrew Robertson. Source: International Directory of Company Histories (Chicago: St. James Press, 1988).
21. “Westinghouse’s New Warrior,” Business Week, 12 July 1993, 38; Westinghouse 1992 Annual Report.
22. An “outsider” is someone who had not worked inside the company prior to becoming chief executive. Companies use different official titles at different times in history: president, general manager, chief executive officer, chairman, and others. CEO is actually a relatively new term, not used extensively in business until the 1970s. We picked the person who held the de facto role of operating chief executive, regardless of the exact title. We counted CEO transitions during and after acquisitions or mergers in our tabulations.
23. Sidney M. Colgate, “A Policy that Guided 118 Years of Steady Growth,” System: The Magazine of Business, December 1924, 717.
24. “Colgate-Palmolive-Peet,” Fortune, April 1936, 120–144.
25. Ibid.
26. Shields T. Hardin, The Colgate Story (New York: Vantage Press, 1959), 71–75.
27. We calculated an average return on sales for both companies for the first three years of Pearce’s tenure (1928–1930) and compared to an average return on sales for the second three years of his tenure (1931–1933).
28. Colgate’s core ideology prior to Pearce is well documented in Sidney M. Colgate’s “A Policy that Guided 118 Years of Steady Growth,” System: The Magazine of Business, December 1924, 717.
29. “Colgate-Palmolive-Peet,” Fortune, April 1936, 120–144.
30. Ibid.
31. P&G sales grew a total of 178.58 percent and Colgate sales grew at 87.52 percent during the period 1934–1943. Cumulative profit before tax for the period 1934–1943 was $285 million at P&G and $74 million at Colgate.
32. Business Week, 4 May 1957, 120.
33. “Colgate vs. P&G,” Forbes, 1 February 1966.
34. “More for Lesch?” Forbes, 1 March 1969.
35. Hugh D. Menzies, “The Changing of the Guard,” Fortune, 24 September 1979.
36. Ibid.
37. Oscar Schisgall, Eyes On Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981), 76–78, 108–109.
38. “The Character of Procter & Gamble,” speech by John G. Smale, 7 November 1986.
39. P&G: ‘We Grow our Own Managers,’” Dun’s Review, December 1975, 48.
40. “Neil McElroy of Procter & Gamble,” Nation’s Business, August 1970, 61.
41. Ibid.
42. Richard Hammer, “Zenith Bucks the Trend,” Fortune, December 1960.
43. Ibid.
44. “Zenith Radio Corporation (C),” Harvard Business School Case No. 9-674-095, Rev. 8/77, 3.
45. Bob Tamarkin, “Zenith’s New Hope,” Forbes, 31 March 1980.
46. “Underpromise, Overperform,” Forbes, 30 January 1984.
47. “Bob Galvin’s Angry Campaign Against Japan,” Business Week, 15 April 1985.
48. Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991), 63.
49. Harry Mark Petrakis, The Founder’s Touch (New York: McGraw-Hill, 1965), chapters 17–18.
50. Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991), 45.
51. Robert W. Galvin, The Idea of Ideas (Schaumburg, IL: Motorola University Press, 1991), 64–65.
52. Barnaby J. Feder, “Motorola Will Be Just Fine, Thanks,” New York Times 31 October 1993, section 3.
53. “Melville Show,” Forbes, 1 February 1969, 22.
54. Roger Beardwood, “Melville Draws a Bead on the $50-Billion Fashion Market,” Fortune, December 1969.
55. Wilbur H. Morrison, Donald Douglas—A Heart With Wings (Ames, IA: Iowa State University Press, 1991), 252.
56. “Remarkable Revival of RJR Industries,” Business Week, 17 January 1977.
57. “When Marketing Takes Over at R.J. Reynolds,” Business Week, 13 November 1978.
58. “The Burroughs Syndrome,” Business Week, 12 November 1979; “A ‘tough street kid’ steps in at Burroughs,” Business Week, 29 October 1979.
59. John Taylor, Storming the Magic Kingdom (New York: Ballantine Books, 1987), 203.
60. Author interview.
61. Vance Trimble, Sam Walton (New York: Dutton, 1990), 118.
62. “Employee Development, 1958,” Internal HP document, courtesy Hewlett-Packard Company archives.
CHAPTER 9
1. George Plimpton, The Writer’s Chapbook (New York: Viking Penguin, 1989), 31.
2. Business Month, December 1987, 46.
3. Robert O’Brian, Marriott (Salt Lake City: Deseret, 1987), 10, 11, 315.
4. Oscar Schisgall, Eyes on Tomorrow: The Evolution of Procter & Gamble (New York: Doubleday, 1981), chapter 1.
5. We could not find the specific date at which Colgate introduced a competing brand management process. In culling through all articles, books, and company publications, we found no specific mention of anything resembling P&G’s mechanism until the 1960s.
6. Louis Galambos and Jeffrey L. Sturchio, “The Origins of an Innovative Organization: Merck & Co., Inc., 1891–1960,” seminar paper delivered at Johns Hopkins University, 5 October 1992, 34–35.
7. Itzkik Goldberger, unpublished research study on Motorola, ALZA Corporation Organization Design Project, summer 1992.
8. Jill Bettner, “Underpromise, Overperform,” Forbes, 30 January 1984.
9. Itzkik Goldberger, unpublished research study on Motorola, ALZA Corporation Organization Design Project, summer 1992.
10. Robert Slater, The New GE (Homewood, IL: Irwin, 1993), chapter 13.
11. Robert J. Serling, Legend & Legacy (New York: St. Martin’s Press, 1992), 448.
12. Sam Walton with John Huey, Made in America (New York: Doubleday, 1992), 240 (photograph).
13. “Nordstrom,” Harvard Business School Case No. 9-191-002 and 1-192-027, Rev. 9/6/91.
14. Transcript of interview with The Reporter, Stanford Graduate School of Business, 1991.
15. Based on author’s personal experience as an H-P employee.
16. “Human Resources at Hewlett-Packard,” Harvard Business School Case No. 482-125, 5.
17. Hewlett-Packard Videotape session with Bill Hewlett and Dave Packard, August-March 1980–1981. Transcript courtesy Hewlett-Packard Company archives, part 3, 3–4,
18. Ibid., 13–14.
19. Ibid., 3–4.
20. Ibid.
21. David Packard, comments at the corporate annual meeting of stockholders, 24 February 1976.
22. “On Managing HP for the Future,” David Packard, contained in 18 March 1975 memo from Dave Kirby regarding “HP Executive Seminars”; courtesy Hewlett Packard Company archives.
23. “Perspectives on HP,” David Packard, general manager’s meeting, 17 January 1989, courtesy Hewlett Packard Company archives.
24. “The Men Who Made TI,” Fortune, November 1961, 121.
25. “Texas Instruments Wrestles with the Consumer Market,” Fortune, 3 December 1979.
26. “Texas Instruments: Pushing Hard into the Consumer Markets,” Business Week, 24 August 1974; “The Great Digital Watch Shakeout,” Business Week, 2 May 1977; “Texas Instruments Wrestles with the Consumer Market,” Fortune, 3 December 1979; “When Marketing Failed at Texas Instruments,” Business Week, 22 June 1981; “Texas Instruments Regroups,” Fortune, 9 August 1982; “TI: Shot Full of Holes and Trying to Recover,” Business Week, 5 October 1984.
27. Four cases came directly from income statement line items: Boeing, IBM, Johnson & Johnson, and Merck. Four other cases came from a variety of published sources that led us to a convincing conclusion: H-P, 3M, Motorola, and Procter & Gamble.
28. Based on financial statement analysis and a wide variety of articles on the pharmaceutical industry.
29. Itzkik Goldberger, unpublished research study on Motorola, ALZA Corporation Organization Design Project, summer 1992.
30. Ibid.
31. Values & Visions: A Merck Century (Rahway, NJ: Merck, 1991), 121.
32. Nancy A. Nichols, “Scientific Management at Merck,” Harvard Business Review, January 1994.
33. Bryan Burrough and John Helyar, Barbarians at the Gate (New York: Harper-Perennial, 1991), chapters 2–3.
34. Schickel, Richard, The Disney Version (New York: Simon & Schuster, 1968), 107.
35. Bryan Burrough and John Helyar, Barbarians at the Gate (New York: Harper-Perennial, 1991), chapters 2–3.
36. Ibid.
37. “Where Management Style Sets the Strategy,” Business Week, 23 October 1978.
38. “Colgate vs. P&G,” Forbes, 1 February 1966.
39. “More for Lesch?” Forbes, 1 March 1969.
40. Hugh D. Menzies, “The Changing of the Guard,” Fortune, 24 September 1979.
41. John A. Byrne, “Becalmed,” Forbes, 20 December 1982.
42. H. John Steinbreder, “The Man Brushing Up Colgate’s Image,” Fortune, 11 May 1987.
43. Gretchen Morgenson, “Is Efficiency Enough?” Forbes, 18 March 1991.
44. Business Week, 2 July 1966, 46.
45. John Merwin, “The Sad Case of the Dwindling Orange Roofs,” Forbes, 30 December 1985, 76.
46. “The Individual Star Performer is in Trouble,” Forbes, 15 May 1975.
47. John Merwin, “The Sad Case of the Dwindling Orange Roofs,” Forbes, 30 December 1985, 79.
48. Ibid., 75.
49. “HoJo’s Will Repaint Its Roofs,” Business Week, 13 December 1982, 109.
50. John Merwin, “The Sad Case of the Dwindling Orange Roofs,” Forbes, 30 December 1985, 75.
51. “Howard Johnson Tries a Little Harder,” Business Week, 29 September 1973, 82.
52. John Merwin, “The Sad Case of the Dwindling Orange Roofs,” Forbes, 30 December 1985, 79.
53. S. M. Sullivan, “Money, Talent, and the Devil by the Tail,” Management Review, January 1985, 21.
54. Ron Zemke and Dick Schaaf, The Service Edge, (New York: New American Library, 1989), 117–120.
55. S. M. Sullivan, “Money, Talent, and the Devil by the Tail: J. Willard Marriott,” Management Review, January 1985.
56. “The Marriott Story,” Forbes, 1 February 1971, 22.
57. Ibid.
58. Ron Zemke and Dick Schaaf, The Service Edge, (New York: New American Library, 1989), 117–120; company documents.
59. In the February 1971 Forbes article, Marriott claimed to be spending $1 million per year on management development. 1970 pretax profits were just under $20 million.
60. “The Marriott Story,” Forbes, 1 February 1971, 23.
61. Success, October, 1989, 10.
62. “Ames Has a Plan,” Discount Merchandiser, July 1991, 10
63. Harvard Business School Case No. 9-384-024, 12.
CHAPTER 10
1. Speech given November 10, 1942.
2. Robert L. Shook, Turnaround: The New Ford Motor Company (New York: Prentice-Hall, 1990), 131.
3. Ibid., 99–100.
4. Ibid., 90, 193.
5. Ibid., 207.
6. Ibid., 123.
7. Ibid. 136.
8. Ibid., chapter 6.
9. Ibid., chapter 7.
10. Welcoming address by George W. Merck at dedication of the Merck Research Laboratory, 25 April 1933, courtesy Merck & Co. archives.
11. Goal clearly evident in early 1930s. The quote comes from George Merck speech, 22 April 1935, courtesy Merck & Co. archives.
12. Laboratories created in the 1930s. Quote from George W. Merck talk at the Medical College of Virginia, 1 December 1950, courtesy Merck & Co. archives.
13. Values and Visions: A Merck Century (Rahway, NJ: Merck, 1991), 23.
14. Louis Galambos and Jeffrey L. Sturchio, “The Origins of an Innovative Organization: Merck & Co., Inc., 1891–1960,” 19, 27.
15. Many references to this throughout internal and external documents. Although we could not confirm the actual date of this practice, we believe it dates back at least to the 1960s, perhaps earlier.
16. “Profiles: Scientists in Basic Biology and Chemistry, Merck Sharp & Dohme Research Laboratories,” courtesy Merck & Co. archives.
17. Welcoming address by George W. Merck at dedication of the Merck Research Laboratory, 25 April 1933, courtesy Merck & Co., archives; Values & Visions: A Merck Century (Rahway, NJ: Merck, 1991); Louis Galambos and Jeffrey L. Sturchio, “The Origins of an Innovative Organization: Merck & Co., Inc., 1891–1960.
18. Welcoming address by George W. Merck at dedication of the Merck Research Laboratory, 25 April 1933, courtesy Merck & Co., archives.
19. Quote from Vagelos, MIT Management, Fall 1988; almost identical to a comment he made during a visit to Stanford Business School faculty in 1990.
20. We’re not exactly sure when this practice began. It might have been much earlier than the 1970s. Quote from “The Miracle Company,” Business Week, 19 October 1987.
21. “Merck Has Made Biotech Work,” Fortune reprint from 1987 article.
22. Business Week, 19 October 1987, 87.
23. Goal clearly evident in early 1930s. The quote comes from George Merck speech, 22 April 1935, courtesy Merck & Co. archives.
24. Values & Visions: A Merck Century (Rahway, NJ: Merck, 1991), 29.
25. Forbes, 26 November 1979.
26. Wall Street Journal, 23 June 1989.
27. Nancy A. Nichols, “Scientific Management at Merck,” Harvard Business Review, January 1994, 90–91.
28. Values & Visions: A Merck Century (Rahway, NJ: Merck, 1991), 51.
29. Ibid., 41.
30. Ibid., 51.
31. Ibid.
32. Nancy A. Nichols, “Scientific Management at Merck,” Harvard Business Review, January 1994, 89.
33. David Bollier and Kirk O. Hansen, Merck & Co. (A-D), Business Enterprise Trust Case No. 90-013.
34. Ibid.
35. Values & Visions: A Merck Century (Rahway, NJ: Merck, 1991), 168.
36. Again, not clear when the practice began exactly. We, as faculty at Stanford, have had to write some of these recommendations; they are unlike any other we’ve found in industry.
37. Many references to this throughout internal and external documents. The turnover rate comes from Merck World, July 1989.
38. Author interview.
39. David Packard memo to employees from “Watt’s Current,” November 1961, courtesy Hewlett-Packard Company archives.
40. Letter to IEEE Awards Board, 23 May 1972, courtesy Hewlett-Packard Company archives.
41. Courtesy Hewlett-Packard Company archives.
42. Documents courtesy Hewlett-Packard Company archives; quote from Packard on 22 March 1982.
43. Memo to HP employees that went with HP prospectus in 1957.
44. Speech by David Packard on 25 March 1982. Confirmed by other documents, courtesy Hewlett-Packard Company archives.
45. Began as a outgrowth of the 1945 layoffs at the end of World War II.
46. First articulated during the transfer of the Oscilloscope Division from Palo Alto to Colorado Springs in 1964, courtesy Hewlett-Packard Company archives.
47. HP implemented this with the recession in the early 1970s.
48. Packard speech, 25 March 1982, courtesy Hewlett-Packard Company archives.
49. Based on author interview with Bill Hewlett, 1991.
50. Letter to IEEE Awards Board, 23 May 1972, courtesy Hewlett-Packard Company archives.
51. Speech by Bill Hewlett, 1956, courtesy Hewlett-Packard Company archives.
52. Personal author experience.
53. Speech by David Packard, 23 September 1964, courtesy Hewlett-Packard Company archives; “Turning R&D Into Real Products,” Fortune, 2 July 1990.
54. Runs throughout H-P’s history. Quote from Bill Hewlett, 20 April 1977, courtesy Hewlett-Packard Company archives.
55. Direct author experience.
56. Runs throughout HP’s history. Quote from Bill Hewlett, 20 April 1977, courtesy Hewlett Packard Company archives.
57. Speech by David Packard, 23 September 1964, courtesy Hewlett-Packard Company archives.
58. Courtesy Hewlett-Packard Company archives.
59. Ibid.
60. Speech by David Packard, 8 October 1959, and description by David Packard on 19 September 1963, courtesy Hewlett-Packard Company archives.
61. Runs throughout HP’s history. Quote from Bill Hewlett, 20 April 1977, courtesy Hewlett-Packard Company archives.
62. Bill Hewlett, 20 April 1977, courtesy Hewlett-Packard Company archives.
63. “Human Resources at Hewlett-Packard,” Harvard Business School Case No. 482-125, 5.
64. Karl Schwarz, HP general manager, “HP Grenoble, a Case Study in Technology Transfer,” May 1988, courtesy Hewlett-Packard Company archives.
65. From HP video transcripts of Bill Hewlett and David Packard, 1980–1981, courtesy Hewlett-Packard Company archives.
66. Based on David Packard’s remarks at the beginning of new management training program on 17 March 1985, courtesy Hewlett-Packard Company archives.
67. Author interview with John Young, 1992.
68. Speech by Dave Packard, 1974, courtesy Hewlett-Packard Company archives.
69. First published versions appear around 1958. Quote from Packard on 25 March 1982, courtesy Hewlett-Packard Company archives.
70. Quote from interview with David Packard, 20 August 1981. Other sources indicate that the program began in the early 1960s, courtesy Hewlett-Packard Company archives.
71. Author interview with Bill Hewlett, 1990.
72. Letter to IEEE Awards Board, 23 May 1972, courtesy Hewlett-Packard Company archives.
CHAPTER 11
1. Charles Burress and Mark Simon, “David Packard Dies,” San Francisco Chronicle, March 27, 1996, 1.
2. Author interview, New Brunswick, NJ, February 1995.
3. Akio Morita, Made in Japan, (New York, NY: E.P. Dutton, 1986), 147–148.
4. Author interview.
5. William Manchester, The Last Lion, (Boston, MA: Little Brown, 1988), 686.