What are the unlikeliest, most industry-shaking decisions CEOs have ever made?That’s the focus of ‘The Greatest Business Decisions of All Time’, a new book from Verne Harnish and the editors of Fortune.
It relates the untold stories of 18 of the most legendary, controversial, and successful choices ever made, from Henry Ford doubling his worker’s wages in 1914 to Apple bringing back Steve Jobs.
We spoke to Verne Harnish, who conceived of and put together the book, about what ties all of these decisions together and what businesses can learn today.
Invest in good employees
The idea that workers are an investment, not interchangeable cogs is now second nature.
What the editors of the book termed the single-best business decision of all time was that seemingly obvious discovery.
Henry Ford doubling his worker’s wages “…represented kind of the first time in history that employees were seen as an investment, not just an expense to be minimized.” Harnish said, they were no longer just ‘an input that you could just of use up and abuse and throw out.”
A simple pay raise completely changed the history of corporate culture. It seems simple, but ran directly counter to the conventional wisdom of the time, as the best decisions tend to do.
Never let a crisis go to waste
“One of the common themes was desperation” Verne said, “a sense that they were at the end of their rope.”
Apple was in truly dire straits in 1996. A number of poor CEO hires and decisions had made the company a buyout target rather than market leader. That led to them bringing back Steve Jobs and becoming the world’s most valuable company.
IBM was floundering so badly in the early 90s that people expected new CEO Lou Gerstner to break the company up. Instead, he enacted ‘Operation Bear Hug’, completely reoriented the company around the customer, and helped make it one of the world’s most valuable businesses again.
When things are at their worst, there’s an opportunity to push through solutions people would normally reject outright.
Be OK with a counter-intuitive strategy
Jack Welch was savaged for the idea of making a giant investment in Crotonville, GE’s corporate university, when the company was in the process of firing more than 100,000 people.
But Welch truly believed in the idea, as Verne described it:
“When they did the return on investment calculation on it I just love it the fact that he looked at the numbers of the guy from Harvard that who was running Crotonville for him, and he thought about if for a moment, scratched it out, and just wrote the world ‘infinite’.”
Sometimes belief is as important as the idea itself. GE wouldn’t be what it is today if Welch hadn’t believed that the return on creating amazing executives was limitless, and scaled his investment to match it his belief.
The program’s been incredibly successful, 90 per cent of GEs top 600 managers were promoted from within, and 26 CEOs of large, publicly traded companies were GE alums as of 2008.
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