Apple Brings Back Steve Jobs BY ADAM LASHINSKY
Several famous entrepreneurs have taken back the reins of their companies—Michael Dell, Howard Schultz (multiple times)—but never has the founder of a major company cashed out and then been absent for more than a decade before being brought back to save his own baby. Founders, instead, are typically relegated to having buildings and awards named after them. But for the existing leadership essentially to admit they’ve failed and need the founder back is astounding. In the case of Steve Jobs, it resulted in “the best work of his life” and created the most valuable company in the world. Sometimes these days boards and investors are too quick to jettison the founder in favor of professional management. But for all a company might gain from bringing in a pro, it risks losing the magic, energy, and entrepreneurial vigor that only a founder can bring.
How Free Shipping Saved Zappos BY JENNIFER REINGOLD
During the dotcom boom, online shoe retailer Zappos was struggling to stand out in a crowded field. Then, in 1999, the founders made one desperate decision—to offer free shipping and free returns—that eventually helped the company realize that its true competitive advantage was not price, but a fanatical attention to customer service. Key to this was the notion that an online business needed to be much more than a website—that it needed to control the entire retail value chain, from warehousing to filling orders to shipping. Today much of the online industry has copied the Zappos strategy, and Internet sales are skyrocketing. A decade or so after Zappos made this crucial decision, the National Retail Federation reported that nine in 10 retailers now offer free shipping during the holiday season. It’s often the simple things that break open entire industries.
Why Samsung Lets Its Stars Goof Off BY NICHOLAS VARCHAVER
Samsung had a problem. Its culture was static and inward-looking. Then, in the early 1990s, Lee Kun-Hee, chairman of the South Korean electronics giant, made a decision that would reshape his organization and create a blueprint for globalization. He sent a handful of the brightest young employees to far-away corners of the globe to immerse themselves in the culture, learn the language, and build networks so that someday Samsung would know how to supply those markets.
What an amazing investment in the future. Today Samsung has become one of the most well-known and far-reaching brands on the planet. It’s a lesson many U.S. corporations could heed. Americans are often missing in action when it comes to global business. Germany’s exports per capita are almost four times higher than those of the U.S. The Netherlands government has sponsored a program somewhat similar to Lee’s: It sends retired Dutch executives to countries, companies, and projects around the world. These globetrotters then source valuable opportunities for the mothership. Talk about “Act local, think global.”
At Johnson & Johnson, the Shareholder Comes Last BY TIMOTHY K. SMITH
When Johnson & Johnson learned that bottles of its Tylenol being sold in Chicago had been laced with cyanide and had left seven dead, CEO James Burke snapped into action. At the time the FBI was recommending against a recall to avoid panic during Halloween. Even so, Burke had his company pull off the shelves every bottle of the painkiller nationally and designed a tamper-proof bottle—all at a cost of $100 million. Burke lived by the credo that a leader’s first responsibility was to those who use Johnson & Johnson’s products and services. The way he handled the tragedy became a textbook case for crisis management: Reveal all you know fast and do everything necessary to take care of your customers.
Why Daydreaming Pays Off Big at 3M BY GEOFF COLVIN
For nearly a century 3M has been one of the world’s most innovative companies, creating everything from sandpaper to masking tape to Post-it Notes to DVDs. Yes, its well-financed R&D labs had a lot do with that, but more important was a decision that many of today’s CEOs have lost sight of: Give your employees time to daydream. The landmark decision, made in 1948, to allow workers to spend 15% of their time on their own projects has kept the company’s innovation engine humming. It led to the corollary that 30% of revenue must come from products less than five years old, a legacy that is still alive today. In 2009, even in the midst of the financial crisis, 3M launched more than 1,000 new products. Getting the most out of such a policy, however, is easier said than done. What manager wants to give up control? Here’s how 3M manages its 15% rule and why some of today’s most creative companies, including Google, have followed 3M’s lead.
How Intel Got Consumers to Love Chips BY DAVID A. KAPLAN
It would be fun to imagine the meeting where young assistant Dennis Carter suggested to CEO Andy Grove that Intel spend what would eventually amount to billions on an ad campaign to brand its computer chip with the general consumer: But, Dennis, we can name our direct customers on one hand. Why do we need an expensive consumer ad campaign that highlights a component that most people don’t understand or really care about? Have you been smoking something? Anyway, the rest is history—Intel is one of the most recognized consumer brands in the world. More important, creating the “Intel Inside” campaign was a critical decision in preventing the commoditization of the computer chip. Consumers could be made to care about the chip inside their computer. In Michael Porter’s five-forces analysis, Intel’s move created what he might call a major shift in power. Other companies have discovered that an anonymous ingredient of a larger consumer product might achieve its own identity—consider what NutraSweet, Teflon, and Dolby have all accomplished.
Jack’s GE Cathedral BY DAVID A. KAPLAN
You’re a newly minted CEO with a struggling global company. You make the tough call to lay off more than 100,000 people while simultaneously deciding to invest $50 million in an executive education center. Are you flippin’ nuts? “We were downsizing the company, and I needed a place where people could congregate and get the message straight from the horse’s mouth, says Jack Welch, the former CEO of General Electric. “I used GE’s Crotonville center as a vehicle to teach where we were going and why—our corporate values and vision.” The decision was brilliant. GE is iconic for having an inordinate number of alums in CEO positions at other companies. Decades later Steve Jobs spent the last two years of his life essentially perfecting his own version of Crotonville at Apple. The corporate university model might have been around before Jack Welch, but he made it vital and sexy.
Bill Gates Decides to Take a Week Off BY DAVID A. KAPLAN
The hardest thing for leaders is to keep themselves and their companies relevant. Given the enormous shifts in technology today, it’s easy to become obsolete overnight. To keep ahead of the pack, Bill Gates, when he ran Microsoft, began his celebrated “Think Week.” Once or twice a year he would retreat from the world to focus deeply on a topic crucial to the software maker’s future. During his Think Weeks, Gates admonished Microsoft executives to pivot to the Internet or face extinction, and gave the green light to Xbox Live. After Gates left to run his foundation, Microsoft CEO Steve Ballmer stopped doing Think Weeks. One young CEO, however, is reportedly interested in pursuing the habit: Mark Zuckerberg of Facebook. Given his youth, his ambition, and that he may overtake Gates as the richest individual in America, there would be a nice symmetry to it.
Toyota Pursues Zero Defects BY ALEX TAYLOR III
When Toyota made the decision to put quality first, the move wasn’t as obvious as it might seem today. The company was struggling. When it started shipping its first cars to the American market in the late 1950s, they were met with derision for their shoddy quality. In the midst of this crisis, president Taizo Ishida decided to do one of the hardest things for any company—especially a Japanese one—to do. Toyota adopted the ideas of an outsider—in this case the quality guru W. Edwards Deming—and turned its entire organization upside down in order to improve itself. Today the company’s quality system, known as the Toyota Way, has been adopted by manufacturers and, yes, even service firms around the world. The Toyota Way, for example, helped the company design cars faster than its competitors, proving that the process was just as important for “brain work” as it was “back work.” Executing this process, however, is a lot harder than it looks, and even Toyota in recent years has struggled with quality problems. By reapplying the Toyota Way with renewed vigor, the carmaker is now getting back on track. Here’s Toyota’s secret sauce.
Tata Takes the Sting out of a Painful Situation BY GEOFF COLVIN
Tata Steel faced a problem that has confronted many companies before and since: how to get rid of lots of people. Do it well, and your company becomes more competitive while your former employees go on to productive careers elsewhere and tell the world the company is a fair, honorable institution. Do it badly, and your productivity stagnates because the best people leave and you’re reviled by media, politicians, and society for being heartless and greedy. Tata Steel’s CEO made a decision that led to a novel downsizing approach that today’s leaders should heed. One can’t help but think it paid off in many different ways. Perhaps years later the Tata Group found it easier to win government and union approvals of its international deals, such as its acquisitions of Tetley Tea, Corus Steel, and Jaguar Rover Group. Here’s how Tata did it.
Boeing Bets Big on the 707 BY ADAM LASHINSKY
Sixty years ago when you embarked on a flight, you’d be aboard a prop plane. Boeing CEO Bill Allen had a different vision: that consumers would embrace the speed, convenience, and comfort of jet travel, and that the real growth would be not in the defense industry but in the civilian sector of the booming global economy. And he was willing to risk Boeing’s future on it. In 1952 he persuaded his board to invest $16 million in the Boeing 707, the first U.S. transatlantic commercial jetliner, a plane that would alter the course of Boeing’s history. The company invested $185 million in the 707 all told, $36 million more than Boeing’s net worth at the time. When Allen decided to launch the 707, he had no orders in hand. He simply bet big that Boeing could produce—and that customers would buy. His gamble on the 707 foreshadows Steve Jobs’ going by his gut to create the iPod, the iPhone, and the iPad before many customers had even conceived of them. It takes courage to wager a company’s future on a vision; Allen showed us how—and changed the history of aviation.
IBM’s Operation Bear Hug BY ADAM LASHINSKY
In the early 1990s, IBM had hit a wall. It was hemorrhaging money as well as losing market share, a victim of the trend toward personal computers and away from IBM’s mainframes. Lou Gerstner, who had been a McKinsey consultant and then CEO of American Express, was called in ostensibly to break up Big Blue. But first Gerstner made a decision to ensure that IBM’s leadership was “back in touch” with reality. In what he called Operation Bear Hug, Gerstner and his lieutenants traveled the world talking to key customers. What they heard changed the destiny of the computer giant and eventually made it one of the most valuable companies in the world. Often senior management too quickly gets isolated from the realities of the marketplace. Operation Bear Hug, a unique “first 100 days” initiative among Fortune 500 CEOs, was an antidote to that—and an approach more companies would do well to emulate.
Wal-Mart Creates the 6 a.m. Meeting BY HANK GILMAN
Fifty years ago Wal-Mart was nothing more than a single store outside Bentonville, Ark. One day founder Sam Walton made a decision that changed the destiny of his company: He started gathering his employees early Saturday mornings in the store’s office and had them go over the previous week’s numbers. What was selling? What wasn’t selling? How did sales compare with the previous week? The Saturday morning meeting became a mainstay as Wal-Mart grew into the world’s largest retailer, and still exists to this day. The meeting put Wal-Mart days ahead of the competition—and you can argue that it’s been days ahead ever since. The retailer perfected the art of learning fast and acting fast, and in the process discovered that you don’t have to be years ahead, just days ahead. Here’s how Sam came to this momentous decision and why.
The HP Way BY DAVID A. KAPLAN
The prevailing wisdom in corporate America during Hewlett-Packard’s salad days—and perhaps today as well—was that management’s chief responsibility was to shareholders. Founders Bill Hewlett and Dave Packard believed that to be far too constricted. Nor did they want their employees to become archetypes of the mid-century “organization man,” who subordinated all individuality to the corporation. Hewlett and Packard made the decision to create a management philosophy built around a fundamental respect for employees. The HP Way, as it came to be called, instilled teamwork, trust, and risk taking throughout the organization and became a template for how today’s most successful companies, from Starbucks to Google, operate. In the end “their greatest product was the Hewlett-Packard Co., and their greatest idea was the HP Way,” wrote the management expert Jim Collins.
Henry Ford Doubles Workers’ Wages BY ALEX TAYLOR III
When Henry Ford raised the wages of his workers in 1914 from $2.50 to $5 a day, his move flew in the face of conventional wisdom. After all, laborers were drones, to be paid as little as possible. Ford, however, had come to believe that workers were important assets. Doubling their wages would boost morale and lower turnover. In turn, workers could now afford the very products they were producing. That triggered a consumer revolution that helped create the wealthiest nation on earth. Speed forward 100 years. Companies in India and China are wrestling with the same issue. Apple’s Chinese factories have doubled wages over the past three years, giving the computer maker, some experts believe, a competitive edge: the ability to attract the best employees. Apple’s moves are also early signs of a China moving toward a more consumer-driven economy.