The JCPenney Company, IBM and The Golden Rule

June 28, 2015 / TREAT OTHERS THE WAY THEY WANT TO BE TREATED

The JCPenney Company, IBM and The Golden Rule

June 28, 2015

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.

Two men from uniquely different backgrounds founded two of the 20th Century’s greatest corporate brands. These two men seemed unlikely kindred spirits. Yet operating independent of, and unknown to each other, they built two unique corporate brands—one in retail and one in business machines—on the same belief system: treat customers, employees, shareholders and society the way you want to be treated.

James Cash Penney
In 1902, Penney started his economic life with borrowed money invested in a store in Kemmerer, Wyoming—a town of one thousand people. He lived with his family for more than a year in that store’s unfinished attic—where shipping crates were used as chairs and a table, and an adult could only stand tall in the center of the room. The following twenty-three years, the J. C. Penney Company grew from its single-store, first-year sales of $29,000 to 571 stores generating $75,000,000 annually.[1]

Thomas J. Watson Sr.
In 1914, Watson Sr restarted his economic life by traveling between the population hubs of the northeast. He had just been fired as NCR’s general manager, convicted of violating the Sherman Anti-Trust Act, become a father, and was now entrusted with leading a young, demoralized corporation that was deep in debt. From the outset he enforced his moral code of business conduct and finally, after a decade, changed the company’s name to match his aspirations—International Business Machines (IBM).

Applying the golden rule to business
During the Great Depression both Watson and Penney stabilized their democratic political system by creating jobs. They experienced two world wars fought with the hope of ending all wars; the first of which resulted in 23,000,000 dead and 23,000,000 wounded or missing—the equivalent of 174,000,000 men, women and children today. Only the seven countries of China, India, Indonesia, Brazil, Pakistan, Nigeria and the United States have larger populations. If fought today, more than 1 out of every 2 men, women and children in the U.S. would be killed, maimed or missing; or whole nations obliterated in multiples of 5 or 10. Likely, because of these experiences they sought to run their organizations with a single unifying principle of do unto others as you would have them do unto you—applying the Golden Rule to their businesses.

Two businesses based on a common belief system
As the J. C. Penney Company grew, pictures proliferated of Penney with his customers and employees. And in the background of many—emblazoned on posters like Watson Sr.’s THINK—was “The Golden Rule.” In a personal memo, today darkened with age, Penney counseled a pastor on the fundamentals of human relationships.

“We need to have firm faiths, which can inspire and effectively guide us. As I see it, these needed faiths, broadly speaking, are three in number: first and foremost, a trust in God—in the power of His goodness, which is bound to be victorious; second, a full confidence in the golden rule—the fundamental ethical principle for human relations enunciated in various ways by eleven of the world’s major religions; and third, a reliance on the soundness of our American way of life—as expressed in the United States Constitution.”–J. C. Penney, July 1954, to an unnamed pastor

One gets the impression that he sent similar letters to many of religious leaders of his day.

The golden rule also underpinned many of Watson Sr.’s writings. It was the major unifying philosophy in four articles he penned within two short years of each other: The Essence of Civilization, The Heart of Peace, Moral Law and Human Relations. In the last of these articles on human relationships he summed up the personal philosophy that permeated his business:

“The simple rule to follow in all human relations is the Golden Rule. This rule applies to all human relations, great as well as small… The Golden Rule is a rule of justice between men and between nations.”–Thomas J. Watson Sr., Human Relations, Think Magazine August 1943

To Watson Sr., a thinking human being would sooner or later believe in human relationships based on the golden rule.

Similar dreams of a different gold
The relationship between J. C. Penney and Watson Sr. started late in their lives. Watson was a manufacturer; Penney, a retailer. Watson sought out the international spotlight; Penney did not. Watson was comfortable in the presence of royalty, actors and presidents; Penney looked most comfortable in one of his stores chatting with an employee or elderly customer. Watson was always dressed impeccably; Penney was dressed reasonably. Watson was a staunch supporter of FDR; Penney wrote to congratulate their new president but he did not vote for him. Watson left the Republican party to join the Democrats; Penney reversed that direction. In outward externals there wasn’t much common ground between the two men. Yet, even with so many differences, there was one unifying terrain they both inhabited that was stronger than all others–they both lived by one philosophy that defined their lives and determined how they ran their businesses.

A story of motivation
On the occasion of the dedication of the Watson Memorial Homestead, Penney spoke of the late Watson Sr. to almost 2,000 people. He asked them, “Have you ever been able to resist becoming a ‘sidewalk superintendent’ when a group of men is at work in the street, particularly in a large hole?” He then told a story:

A young fellow taking a breather during his lunch hour joined a crowd by the barriers surrounding a deep excavation. He leaned over and watched with lazy interest the workers below who were digging frantically in one corner. The conversation around him soon made it clear that there had been a cave-in, and a worker was trapped. Suddenly, one of the diggers looked up, recognized the young man, and shouted: “Bob! It’s your brother Bill we’re digging out!” As you can imagine, Bob was immediately transformed from a nonchalant watcher to an eager volunteer. It was his brother in mortal danger and that made all the difference! Do you see why my friend Tom Watson thought and acted as he did? He recognized in all men, his brothers. That simple, yet profound, thought governed his life and work. This was the foundation for his fair dealing with customers, employees and associates.”

America’s future depends on leaders following the golden rule. This was a unique 20th Century friendship between two men of dissimilar backgrounds but shared environments who, late in life, discovered their common ground. Here were two businessmen, in two different industries that built two of the most recognizable brands of their century. Theirs was a friendship, two businesses and thousands of human relationships based on a single rule—a golden rule.

Even though this century’s corporate leadership faces different externals from those of T. J. Watson and J. C. Penney, the great corporations to come will arise from leaders—followed by those—with similar dreams of a different gold.

[1]Extracted from the J. C. Penney Papers and published with the permission of the DeGolyer Library, Southern Methodist University. Any other use of this information requires their prior written approval.

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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