The Art of the Restart

January 04, 2017 / THE ART OF THE START

The Art of the Restart

January 04, 2017

Peter Greulich Author

Peter E. Greulich is an author, publisher and public speaker. His forthcoming book due in September 2017, THINK Again: IBM Can Maximize Shareholder Value, studies how a corporation can truly maximize shareholder value. IBM’s history reflects an almost non-intuitive truth: that a corporation maximizes shareholder value by maximizing stakeholder value. Its greatest Chief Executive Officers distributed profits equitably within their stakeholder community depending on the current social, economic or political conditions of the day. In doing so, they maximized shareholder value. The foreword is available here: Think Again: IBM CAN Maximize Shareholder Value.

Several of America’s greatest 20th Century industrialists mastered the art of the restart. Thomas J. Watson Sr., traditional founder of IBM, lived for four years under the threat of imprisonment for possibly violating the Sherman Antitrust Act; his restart founded a corporation that not only required gentlemanly dress on the outside but employees of unquestionable business integrity on the inside. George Eastman, founder of the Eastman Kodak Company, had his moment of awakening looking out over a major distributor’s warehouse full of his company’s spoiled product; his restart, after more than 470 experiments to fix the problem, added a fifth principle to his business rules of engagement: control of the alternative.

Never blindly follow the crowd.
John H. Patterson, founder of the National Cash Register Corporation (NCR), had his restart moment too. When he started the NCR Corporation he viewed his workers like many of the industrialists of his day. He believed that people were to be hired at the “lowest possible wage, worked as hard as they could be worked, and then fired when anyone felt like firing them.” These labor practices brought him to the edge of corporate failure.

How we fail is not as important as how we rise back up.
NCR had just shipped its first large international export of cash registers to England. The necessary changes were made to transition the machines from counting dollars and cents to tracking pounds and pennies. They were to be an extraordinary overseas testament to the benefits of the cash register: reduce theft and provide business owners with more control over their cash flow. But the registers failed to add properly—a major failing in a high-powered adding machine. Overseas sales clerks were accused of theft and fired. Store owners lost control of their money, and because of poor workmanship, Patterson’s machines were sent home. With his usual flair for the dramatic, he amassed the useless machines in a pile and enclosed them within a locked, glass enclosure as a memorial “for all time”. It was a monument of junk dedicated to preventing another business failure.

Sometimes it just takes a new perspective.
At the time, Patterson did not know what the problem was, but he knew he needed to see things differently. He wanted to face his corporation’s problems head-on. He moved his desk out of the corner office and placed it on the factory floor. With this new perspective, he immediately saw the problem: the factory was not a fit place to work. His factory took the heart out of a man. Samuel Crowther writes that what happened next gave rise to the modern-day factory floor—a place where human beings worked in comfort and with self-respect to produce products through the highest of efficiencies. 

Observing and listening are the first steps toward change.
From his new vantage point, Patterson resolved daily problems in his characteristic flamboyant style: one man commented that the place was too dirty—that night the factory was cleaned inside and out; one night-worker grumbled that, unlike the day shift, the night shift had to wash in dirty water—the chief executive stayed all night overseeing the installation of new wash basins; one man complained that the foremen had lockers while the employees did not—the company installed lockers for all of its workers. Patterson then arranged for the employees to take two baths a week on company time because their homes had no bathing facilities; he installed a lunch room so people could eat in peace instead of in the midst of the ever-pounding machinery; he replaced stools with chairs for back support.

Sometimes, it pays to be a little crazy.
Although architects said it was structurally impossible, he built his new factory with more exterior glass than any of its day because he believed men and women would work better in light than in the dark. Finally, even though he wasn’t making money at the time, he raised wages. As a result, his peers chided him and called him a fool. They deemed him crazy. To which he commented, “It is an epithet which I prize highly, for I take it as a compliment to a vision that is denied to many unfortunates. . . There are advantages in being crazy!”

Don’t be afraid to restart.
John Patterson hung signs in his factories that proclaimed, “It Pays”. His employees knew what the sign meant: it was simple business math to invest three cents in a free lunch and clean bathrooms to get back five cents’ worth of work. It was a change that had a factory-, nation-, and world-wide effect; because it did pay. Sometimes it takes a restart to teach a leader what “it” may be.

 

Peter Greulich Author

Peter E. Greulich is an author, publisher and public speaker. His forthcoming book due in September 2017, THINK Again: IBM Can Maximize Shareholder Value, studies how a corporation can truly maximize shareholder value. IBM’s history reflects an almost non-intuitive truth: that a corporation maximizes shareholder value by maximizing stakeholder value. Its greatest Chief Executive Officers distributed profits equitably within their stakeholder community depending on the current social, economic or political conditions of the day. In doing so, they maximized shareholder value. The foreword is available here: Think Again: IBM CAN Maximize Shareholder Value.

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