You
I think it's probably fair to say that we lived with a bit of a house of cards.
Let's go back to the end of World War II.
It had been 20 years since the Depression started.
There were 20 years, therefore, of pent-up demand.
Frankly, you could make anything and the American consuming public would have bought it starting
in 1946, and that's roughly what happened.
It didn't take a whole lot of genius to run a company.
And during this whole time period, we built all these management techniques and devices
and complex structures and made the horrible mistake of associating the structures with
the success, when the success, frankly, was a bit of an anomaly from the environment.
A few of us began to think, I guess increasingly strongly, that we were in nothing less than
crisis, because industry after industry, we were starting to lose to foreign competition.
I mean, things we used to own, like the automobile industry, suddenly it was somebody else's,
the Germans and the Japanese.
And we felt very strongly that unless something different happened, and I mean greatly different,
not the same old stuff again, and not a reinforcement of the same old management technique, unless
something really different happened, we were really headed downhill fast as an economy.
And so we went out looking for models of, is somebody doing it right?
And are they doing it right in the United States?
Looked at another way, it's nothing less than a 180-degree shift in the way we think about
managing and leading.
The models and the metaphors of the past have been the manager as a cop, as a referee, as
a devil's advocate, as a naysayer, as a pronouncer.
The words that we found that seem much more appropriate in the excellent companies are
the manager, the leader, as a cheerleader, as a coach, as a facilitator, as a nurturer
of champions.
The drumbeat and the drumbeat that has been so sadly missing was it all comes from people.
Ladies and gentlemen, boys and girls, Donald Duck's 50th birthday parade.
If you're looking for excellence in American business, this parade is a good place to start.
The best loved characters ever created are strutting their stuff down Main Street at
Walt Disney World, and people are having the time of their lives.
Disney Productions theme parks are designed and managed with only one thing in mind, satisfying
the customer.
When it comes to providing an entertainment vacation land for the whole family, Disney
has no peer.
Here in Orlando, Florida, the gates to Walt Disney World open at 9 a.m. every day of the
year.
In less than an hour, the grounds are mobbed.
On a busy summer day, more than 100,000 people will converge on the park.
The price of a one-day ticket to the Magic Kingdom or Epcot Center is $18.
But most folks buy a three- or four-day pass, stay on the property at one of three Disney-owned
hotels, and eat their meals in Disney restaurants.
Last year, the park hosted 23 million people from all over the world and took in gross
receipts of $730 million.
What is it that attracts people in these numbers?
In a word, the irresistible magic of Disney make-believe.
Mickey Mouse, the park trademark, is the emblem of that magic.
When a Disney executive takes you out to lunch and tells you it's on the mouse, he's not
kidding.
But how is it possible to sustain a seamless world of make-believe in the midst of this
teeming crowd?
The Disney solution to this challenge is one of the best examples in American business
of how a large company communicates its values to its employees.
The world of make-believe isn't real.
It's a continuous performance occurring all around you.
The physical park is a giant stage.
But to come alive, a stage needs performers.
What Disney does better than anyone else in the business is train its employees to be
performers in a live show.
Every smallest detail of the company's elaborate training program is designed to create an
awareness in its employees that Walt Disney World is, above all, show business.
There is no personnel office here.
You are hired at central casting.
And on day one as a new hire, everyone is required to take traditions one at Walt Disney
University.
Does anybody know all seven dwarfs?
Anybody got all seven dwarfs?
Go ahead.
Doc Sneezy, Grumpy, Dopey, Sleepy, Happy and Droopy.
Nope.
We got six out of seven.
What's the seventh one?
Bashful.
That's right.
There's no Godzilla.
The day begins with apparently trivial pursuits, but there is method here.
As the trainer drills his class about Mickey and Snow White and Fantasia, he enfolds them
in Walt Disney's vision of the Magic Kingdom.
He creates the illusion that Walt himself is present in the room, welcoming the new hires
to his personal domain.
The object is to make these new employees feel like partners with the park's founder,
sharing a mission to create the most wonderful place in the world.
There is no better example of how a large company instills values in its employees.
And of course he made sure he kept the place clean.
He made sure it was simple and unconfusing.
He made sure that he gave the people a good value for the dollar that they spent when
they visited Disneyland.
And most of all, he made sure that all of his employees were friendly, polite, courteous
and helpful.
Just grab a seat and make yourself comfortable.
After lunch, the class moves to a small theater, the perfect setting in which to learn that
they are all to be players in a live performance.
What business are we in?
You know, everybody knows that McDonald's makes hamburgers, General Motors makes automobiles,
Sony makes TVs, but what does Disney make?
It makes people happy.
Exactly.
It doesn't matter who they are, where they come from, what they do, what language they
speak, what color they are or anything else.
We're here to make them happy.
Nobody's been hired for a job.
Nobody has been cast for a role in our show.
Because of that, everyone is a cast member.
You're all hosts and hostesses.
There's no custodians, no cops, and there's no bell boys or anything else.
Everybody's a host and a hostess.
We also work on stage.
We take a break, we go backstage.
We wear our costume, not a uniform.
Of course, we deal with an audience, not a crowd.
That audience is made up of guests and of visitors, not of tourists.
It reminds us what business we're in.
We are in show business.
We are in entertainment.
On stage, off stage, a simple distinction that Disney drums into its employees endlessly.
Walt Disney saw to it that the stage itself, what customers see as they move through the
park, was what he called picture perfect.
There are props, backdrops, lights, and everything else that goes into a giant production, but
all is hidden from sight.
In the days when Disney toured the park in person, he made certain that nothing was allowed
to mar the picture.
Today, 17 years after his death, custodial crews sweep and polish the park around the
clock.
Off stage at Walt Disney World is really under stage.
The park is elevated.
At ground level, beneath it, runs a maze of tunnels called the underpark.
Located down here is the computer center which controls the rides, a cafeteria for employees,
and the wardrobe department.
Clean costumes, not uniforms, are issued to cast members, not employees, at the beginning
of each day.
With two million items in stock, this is the largest theatrical wardrobe in the world.
There you go, have a nice day.
In the underpark, strictly off limits to customers, employees may smoke, eat and drink, fix their
makeup, and in general behave as they do in the real world.
But once they ascend from the tunnel and enter the magic kingdom through inconspicuous doors
and quiet corners, they are on stage again and expected to perform.
It's easy to see that masked and costumed characters like Captain Hook are performing.
But the thing to remember and the point that Disney emphasizes to its employees is that
everyone is a part of the show, including the VIP hostesses stationed near City Hall
to answer questions.
When you get to each land, it's going to be a little more detailed and it will list all
the attractions, restaurants and shops.
Okay?
So you shouldn't miss a thing and you're starting off in Town Square.
Okay?
How are you today?
Good.
Each player's responsibility is the same.
The guests, not customers, feel welcome and special.
This guy is important.
How can I make him feel that way?
What can I do to give him the kind of day that he came to Walt Disney World for?
And that's not easy.
I'm not going to kid you.
That's probably the most difficult thing you're going to have to contend with here at Walt
Disney World.
People get upset, they get angry, they get lost, they get confused, they get hot, and
they take it out on you.
And you don't deserve it.
How do you do it?
How do you maintain friendly, smiling, polite people?
You know, we get letters every day, all the time.
Like everything else in the park, the training itself is a performance, scripted, rehearsed
and faultlessly delivered by the trainer.
And I'm going to stand here and we're going to fill a pixie dust over here.
Folks, it doesn't work that way.
How does Disney do it?
By making certain everyone understands his role in the show.
When Traditions One has been completed, new hires go into the park for three days of operations
training.
Disney chooses terminology for the image it projects.
Rides aren't rides, they're attractions.
And the script, in a hats off to the carnival barker, is called the spiel.
That's not spiel, but spiel.
At the Jungle Boat Cruise, the spiel is nine pages long.
To discourage ad-libbing, it includes a list of approved variations and three pages on
the philosophy of the ride.
Nothing is left to chance.
If you can, try to act like you're steering, okay?
It's hard to remember.
Maybe I'll come home.
And it looks like we've stumbled into the sacred bathing pool of the elephant.
Whole herd of playful Indian elephants migrate here every day.
Okay, look out, look out ahead.
He's coming up.
Oh, he's kind of on the left.
You better get down on the left.
He's coming up.
He's coming up.
He's coming up.
He's coming up.
He's coming up.
He's coming up.
He's coming up.
He's coming up.
He's coming up.
He's coming up.
He's coming up.
He's coming up He's coming up.
Oh, he's coming up.
He's coming up.
Okay.
Turn around as much as you can.
Lean in, lean in, lean in!
Okay, make it look as dramatic as you can.
You gotta make it look like, they're gonna get wet.
Okay.
Lean in, lean in.
You're scared as they are.
You're just driving a boat.
You want them to lean in as much as they can, because that water's gonna come right at them.
Okay.
You're just driving the boat. You want them to lean in as much as they can because that water's gonna come right at them.
From working with my trainer, he showed me a lot about different things you can do to line them up, to get their mind off of it.
When they start out on the Jungle Cruise, they're going into the jungle. They're no longer anywhere except for the jungle.
And it's my job to take them away and put them there.
When is the show supposed to start? What is the show gonna be about?
Well, it's the Donald Duck Parade, and what it is is it's a tribute to Donald Duck because it is his 50th birthday.
But it isn't only the obvious performers who are trained.
To make a customer feel special as you point the way to Fantasyland or the nearest restroom requires its own kind of training.
Okay, Frankie. You're welcome.
The minute you walk through City Hall and you're out here on Main Street, then we're on stage, you need to be all smiles.
That's what the guests remember. They remember what that person said to them, what that cast member told them when they were in front of City Hall,
and that you were smiling or that you took extra time with them. Those are the important things.
Okay, Alan, plus, of making your rounds, you need to keep...
Everyone is taught a role. Sweeping up the park seems a simple task,
but Disney knows that these custodial crews will receive more questions from customers than anyone else in the cast.
At the same time, you have to be courteous, you know, and be aware of the guests around you and their questions.
And even though you get the same question asked three or four times, you know,
you gotta remember each time that it's a different guest asking you.
Those trained longest and hardest are the Disney characters,
and watching them learn the steps and gestures that make each one of them unique is a real treat.
But this part of the training we are not allowed to show.
Disney knows that these creatures are the wellspring of the enchantment which is its stock in trade, and protects them fiercely.
The most strictly enforced rule in the park is that no one outside the cast shall ever be permitted to see a character with its mask off.
The illusion must be maintained.
These players are taught never, under any circumstances, to break character.
We tried to peek behind the mask by filming Goofy in the underpark before he went on stage.
But even down here, because we were there with our cameras, Goofy played Goofy.
The key to Disney's success is its commitment to making sure that people who come here have a good time,
and the training program the company has developed to achieve that end.
Disney will go to any lengths to make certain that every one of its 19,000 employees understands its credo,
and the importance of his or her role in the show to creating the world of make-believe.
The payoff is plain to see.
The Magic Kingdom truly becomes a magical place.
["Happy Birthday to You!" plays in the background.]
Try resisting, Disco Donald. It isn't easy.
Crowds flock here as if lured by the Pied Piper, and once inside these walls, no less than the children of Hamlin, they are enthralled.
This isn't Walt Disney World. It's a family-owned food store in Norwalk, Connecticut, Stu Leonard's dairy.
But Stu Leonard, in his own way, knows every bit as well as Disney how to make his customers feel special.
He achieves that by listening to them.
This phenomenally successful family business is a delicious example of how a simple thing like listening to the customer can pay off.
I'm from Cleveland, and I've never seen anything like this in all my life.
What is so different? What is it that you like?
It's just fabulous. It's different. There's just nothing like it.
And it's the only grocery my husband will come to.
Is that right?
The muck is still the greatest muck ever.
I think.
An average supermarket with 16,000 items on its shelves may do $200,000 of business in a good week.
Stu Leonard's grosses a million and a half dollars a week with only 750 items, an astonishing $80 million a year.
Part of the attraction are the prices.
Stu buys directly from the producer by the trailer truckload, meat from Iowa, fruit and produce from California.
Milk is processed right in the store, originally a small dairy opened by Stu's father in 1921.
Why don't you put a boat over here so that it's an aisle for the customer, right?
Stu Leonard is out on the floor every day, working the crowd like a politician on the campaign trail.
Like all successful businessmen, his work is his passion.
He can't keep his hands off the merchandise or the customers.
Stu styles himself a monomaniac with a mission, and he is crystal clear about what his mission is, to make every customer that enters his store feel special.
What we did here is we went around on the customer side of the table,
and we said, what exactly do they want? They want better stuff at a lower price.
They want a fun atmosphere. Most people think that food shopping is a drudgery. They dread it.
When we did that, and when we started to really get our ear to the ground and listen to the customers and keep giving them what they wanted,
before I knew it, I had to put an addition on.
And then another, and we put on 24 additions, and it's nothing more than listening to the customer and doing what they say.
Stu Leonard Jr. has been working in the store since he was a boy and shares his father's love for the business.
Thirty years old, with an MBA from the University of California,
Stu Jr. is in charge of company finance and the overseer of customer relations, the number one priority here.
Thank you, Worm Fork.
Every other Saturday afternoon, Stu Jr. leads a focus group with customers who volunteer their time to let management know what they like and don't like about the store.
When I first started to come here, you carried your own brand of ice cream in plastic tubs that I could take home.
It's hard to imagine customers caring enough to take the time, but if they didn't care, they wouldn't be here.
They were like this, they were round with the lead on them.
Yes, I use them in my freezer. Would you buy the round plastic tub if it was...
Stu's younger brother, Tom, is in charge of produce.
The whole family, including Stu's two younger sisters and a number of uncles and aunts, are involved in the business.
I would prefer it in the plastic, it's much neater and it doesn't drip in my freezer.
Would everybody like that? Yeah. Let's do it.
The family's access to customer opinion on a daily basis is this oversized suggestion box.
Our customers tell us what they don't like.
Traditional wisdom has it that suggestion boxes are useless because people are conditioned to expect that no one cares about their two cents.
This one is stuffed to capacity every business day.
Somebody takes these out of here first job in the morning.
They open this up and by 11 a.m. every morning we have them typed up and there's 30 copies of them distributed throughout the dairy.
Here's one, how about stocking jars of baby food, a customer wrote in.
That's a good idea, we'll look into it.
There's another person wrote the tuna salad.
They say it's more like tuna soup, so we changed that. We're adding less mayonnaise to it.
Everything is okay, I'm from Tennessee and love it.
But we get all these. Here's one that someone wrote, I bought a bag of jelly donuts.
The raspberry jelly was fine, but the dough of the donuts was awful.
It wasn't moist, so we talked to the donut guy this morning when he came in about that.
The concept is that only happy customers come back.
We don't go back to restaurants that we don't like and we don't go back to food stores.
That's the basic thing. How do we know what they don't like, they tell us.
The reason they tell us is that we react to it.
One month we had a meeting and we sat around and we said, okay, tell us what you don't like about our store.
One of the ladies stood up and she said, I'll tell you what I don't like.
She said, I don't like your fish.
We said, what do you mean you don't like your fish?
She said, well, it's not fresh. She said, I like to go to a fish market and buy fresh fish.
The fish guy who was there, Nick, stood up and he said, what do you mean it's not fresh?
We get that fresh every morning from Fulton Fish Market.
We get that fresh from the Boston Piers every morning.
He said, I guarantee that's fresh.
The person said, what do you mean?
She said, it's packaged.
She said, this is a supermarket package.
Here's some blue fish that's packaged.
What we did was we set up a fish bar with ice on it.
We took and built this right after that painting.
And now here's the blue fish for the same price right over here,
but some people like to buy it fresh right off the ice and with the service and everything.
So it's the same price as over in the package.
Our packaged fish didn't decrease at all, but we doubled our fish sales.
We were doing about 15,000 pounds a week. Now we're doing 30,000 pounds a week.
But we used to sell the strawberries like everybody else in little quart baskets.
And a customer suggested that we let her pick them out of the big tray as we brought them out.
And we tried it.
And we put the display out with all the strawberries just out of the box from the farmer.
And you can't believe what's happening down there.
The sales went up like triple.
And now, you know, people are buying more than they even think.
For example, look at that.
Well, look at that woman in the yellow down there.
She's gonna get to the register and find she's got about a $9 bag of strawberries here.
But they're thrilled and they're happy, you know, that they're getting what they want.
And it's back to the old store to give the customer what they want.
Nobody walks in the door and says, what can I do for Stu Leonard today?
I mean, they walk in here and say, what can he do for me?
And if he doesn't do it, I'm not gonna come back.
And I don't blame him. And why should they?
What does Stu Leonard's dairy have in common with the 3M company of St. Paul, Minnesota?
An extraordinary responsiveness to the customer.
3M develops hundreds of new products every year, 90% of them in direct response to customer needs.
But how does a multibillion dollar corporation with over 40 divisions maintain this level of product innovation?
If 3M is any indication, by creating a climate expressly designed to nourish its innovators,
the product champions.
Every one of 3M's 6,000 scientists worldwide is expected to steal 15% of his time away from authorized projects
for use in developing new technologies, a practice the company refers to as bootlegging.
Money, equipment, and personnel may also be appropriated from projects underway
without going through proper channels.
This variety of lawlessness is institutionalized.
Everyone looks the other way.
Louis Lair, chairman of the board and chief executive officer,
founder of 3M's medical products division, was a product champion and bootlegger par excellence in his own day.
When we have a technology that doesn't have a defined need,
there has to be someone within the organization who fights the battle
of finding a need for the product, of supporting it, of believing in it.
And if they believe in it, nine times out of ten,
we are successful in commercializing that technology into one or perhaps many more products.
The story of the sticky yellow notes called Post-It is a prime example of how innovation happens at 3M.
No matter how many years it takes or how many dead ends are encountered along the way,
a new product idea is not abandoned.
It all started in church. I was singing in a choir at North Church.
And we would sing for two different services.
And I would mark the pages with little pieces of paper normally.
And sometimes they would fall out in between services, the first service, the second service.
I'd get up there, big scramble.
I thought, what I really need is something that's going to,
a bookmark that's going to stick to those pages to the right spot
and still not damage the book when I pull them off.
And it will mark the right spot in the book.
And there was, I knew that Spence Silver, back in our laboratory,
had just developed an adhesive that would do that.
And I made samples. They were rough samples of the bookmarks.
And took them back and tried them out at church.
Now they were small size, but when I was making them up,
I'd also made up some larger size and found, hey, these are really handy for notes.
This material that we had made with these new monomers,
it had very peculiar properties in that it did not meet any of the criteria we had set as goals for a program,
which were, for example, very high shear adhesion, very high peel adhesion,
very aggressively tacky material.
It was, in fact, a very poor adhesive in all respects.
It failed all the peel tests. It failed the shear tests.
It failed a lot of the other conventional 3M adhesive tests that one employs.
So rather than throw it away, we decided to investigate some of its properties because it was rather unique.
The main problem is attaching notes temporarily and yet permanently temporary.
This product is permanently temporary.
Thirty years from now, you can take that note off even though you put it in a stack of books.
And it will come off and not damage your product.
Now it took a lot of very careful design to do this.
Here, let me show you.
Just a bar graph here, and this is adhesion or tackiness, how tightly something sticks.
Okay, this would represent, say, a packaging tape.
Okay, this might represent magic tape, the kind that you use in your office, in your desk, and on papers.
Now, this represents the force required to pull paper apart.
If we stick packaging tape or magic tape on paper, rip it off, it's going to pull it apart.
So we had to fit a range like that.
And this is for post-it.
If it's too low, it falls off. If it's too high, it pulls it apart.
So this is a product that is very easy to use, but very tricky to make.
But there's got to be a believer who will put his career on the line, who will, as a matter of fact, bootleg
a little bit of time so that he can work on the product and the program.
Post-it Notes was a prime example. It was an adhesive which didn't stick.
And the whole history of 3M has been to develop adhesives that stick better.
This office product, of course, really didn't get the excitement of our marketing department.
So we in the laboratory, we knew that we had to get that excitement.
So the way to do that was to hook them.
And the way we did that was to sample those people throughout the company, but particularly on the 13th and 14th floor.
And I looked at it, and as far as I was concerned, it was just a piece of yellow paper with some adhesive on the back.
And I thought, well, leave some with me, Jeff, and I'll see what I think of them.
And I just threw them on the desk, and I found that I started to use them,
stick them on a piece of paper, scroll a note to someone on them, and they were just plain handy.
And eventually I found I was real addictive.
And it wasn't long before my secretary was getting all kinds of phone calls requesting further more and more samples.
Well, it mushroomed. They all wanted them. They wanted more. They answered back. They called. Please send more.
It was a problem. I didn't have enough supply to respond to all these people, and I was caught right in the middle.
Short on supply, too many customers, trying to please everyone.
And it was at that point that I went to Jeff and said, I can no longer handle this.
There's too many requests, and I don't have enough supply.
And all I'm doing is sending out post-it notes. I'm not getting my work done.
And I said, that's it. From now on, stop all shipment of this product to the rest of the company.
Redirect all those telephone calls to the marketing department. We're going to get their interest. And we did.
So we developed the idea that if we could get this simple little product used in the offices of the CEOs of the major Fortune 500 companies,
hopefully they would become as addicted as we and 3M had.
The program was developed whereby my secretary sent samples to the executive secretaries of the top, I think, 500 CEOs in the country.
She got a very nice response because there was an explanation of how they should be used.
Then at meetings I attended, I began to hear from some of my peer CEOs, what's this little yellow product you've got in my office?
I keep hearing my secretary talk about it. She's sending me notes.
And now I'm beginning to hear from our purchasing agents that people within the organization want the product.
I knew in my bones as soon as I'd gotten hooked on it that that was going to deliver 3M margins.
It's that kind of product. It was unique enough and special enough.
And if you go out and be the firstest with the mostest, you're going to get there on something like that.
And the proof is it does deliver margins.
People comment to me more about Post-It notes than any other product we make.
And they tell me what I like to hear, which is that they are addictive.
And addictive they are to the tune of an estimated 200 million dollars a year in sales.
Post-It illustrates how tenaciously 3M seeks a product application for a new technology.
And it exemplifies something else, the continuity within the diversity of 3M's product line.
Like Post-It, the company originated with a mistake.
In 1902, five Minnesota entrepreneurs bought a corundum mine and dubbed their new venture the Minnesota Mining and Manufacturing Company, 3M.
They planned to sell the corundum as a commercial abrasive, but the ore was hopelessly low grade.
In desperation, the company developed an improved sandpaper for use in Detroit's automobile plants and then invented masking tape.
Today, tape and allied products account for 17 percent of 3M's over seven billion dollars in sales.
But coating and bonding, attaching things to flat surfaces, is involved in many of their products.
This continuity has helped 3M make the right choices as it diversifies and has shaped a self-image central to the corporate personality.
No one puts it better than Dave Davies, a physical chemist at work on a new 3M product line.
One of the things I have found in a relatively short time with the company is that it thinks of itself as a company that's expert in what I'll call two-dimensional products.
By that I mean flat, thin products.
And so, when I go to pitch my laser discs, which are a little different and come from a very different industry, the electronics industry,
to make them feel comfortable, make them feel like I'm really in the mainstream of their activity,
I like to convince them that I am also a two-dimensional product.
So what I like to do is I like to convince them of that by always having a prop, and by always showing them the prop at an angle,
so they see it as a two-dimensional product, looking like, for example, sandpaper or a post-it note or tape, for example, something that's sort of thin and flat.
So I'm careful. I try to avoid holding the product out this way so that they see it as something alien and hold it up this way so subconsciously they feel comfortable with it.
Dave Davies and his laser discs are a recent 3M acquisition.
Three years ago, Davies was co-owner of a small Silicon Valley company developing the discs.
3M bought the company, designated it the Optical Recording Project, and installed Davies as project manager.
This kind of modest acquisition is typical. 3M likes to get to market first with products based on new technologies.
The discs are processed in clean rooms, chambers sealed against even microscopic particles of dust.
The value of a laser disc is its vast capacity for data storage.
A laser beam can inscribe the Encyclopedia Britannica several times on the surface of one 12-inch disc like this, and the data can be accessed in a fraction of a second.
Laser discs are expected to replace a whole line of floppy and hard discs now used in computers, a multi-billion dollar market.
We all believe in this plan, right? We don't think it's sandbagged, so what do you think I should say in response?
Davies is now at a crossroads in his operation. To mass-produce the discs and bring them to market, he needs a scale-up allocation of $20 million.
The final decision will be made in just a few days at corporate headquarters in St. Paul.
To prepare for the meeting, Davies and his team hope to pinpoint the objections likely to arise when he makes his pitch.
Jim Toites for sure is going to be very concerned, as he has been all along, about the amount of capital that the project's chewing up
relative to the amount of cash that it's bringing back.
We have to be able to establish the credibility of what we can produce farther down the pike relative to what we're using up front.
Yeah.
So it's hard to avoid the margin issue.
That's right. I think you're right. We probably underestimated it.
Yeah.
And it's already a significant factor, so I'm a little nervous about who we should do. Do you agree?
Yeah.
For Davies, the stakes are high. If he can build his project into a profitable business, he can count on 3M turning it into a new division
and allowing him to run it as if it were his own company within the larger parent, a powerful incentive to succeed as an entrepreneur.
In his bid for funding, Davies has already passed two major hurdles, reviews at the group and sector levels of the corporation.
But what awaits him here in St. Paul is an intimidating encounter with 3M's highest court, the Executive Operations Committee.
Ah.
Good luck, Dave.
Oh, thanks. Come on in behind me, guys. I need help here.
Good luck.
Yeah.
Ah, here comes the Welsh champion.
Oh.
Good afternoon.
Good afternoon.
What I'm here, gentlemen, to ask you for is approval for the expenditure of $20 million.
Now, to request approval for $20 million in this kind of product area, it's really a fairly simple issue, in my mind.
There are three questions. Can we make it? Will someone buy it? And can we make a decent margin on it?
That I think we'll spend most of the time analyzing in depth the financials.
Lou Lair, a veteran product champion himself, knows this game as well as anyone.
Jim Twaits, president of International Operations, is known to be unhappy about Davies' projected profit margins.
Bob Adams, in charge of all 3M research.
Al Jacobson, industrial and consumer sector.
Al Huber, Davies sector chief and major ally on the committee.
Desi Desimone, life sciences, and Ken Shane, graphic technologies.
Is this agenda acceptable to you, gentlemen?
Fine. Go ahead.
We stand in a leadership role to do it. If we do it right, we can make margin on it.
Good margin, traditional 3M margin, and it'll be a big business for us.
Notice how, even in the heat of battle, Davies remembers to hold his disc flat.
Nobody questions that. The question is, when you get into it,
how long can you stay with it without losing your shirt?
What we have to rely on is the significant barrier to entry.
But will it... happens. We are, for example, today the only producer of laser video discs, an American company, in the States.
That's because the investment, both in technology and in hardware and capital equipment, is very large.
As you gentlemen know, you've already invested it. So there's a significant barrier to entry.
Dave, do we have patents or patents applied for? Do we have a position?
We have patents applied for, and indeed some granted, on all the critical elements that make up this particular disc construction.
They were continuing to let me roll, and I thought we were doing very well there.
And I just got an over the point with Mr. Lair about the patent position, which is always a difficult one,
when in comes Mr. Twaites, again, on pricing and profitability.
Why isn't the long-term profitability a lot higher?
Initial price is not high enough. I've already come to that conclusion.
I think the key answer to your question on which Mr. Twaites is that it is Japan.
Because Japan will be in a very strong position in this industry and will have an influence on the pricing.
That's fine. But excuse me interrupting. That's fine.
Somewhere along the line, if you're going to be out in front and you're going to be ahead of them, and you should be,
in the cycle you've got to get better pricing than you're showing in the book.
What's your degree of confidence? I go back to the question I'm still trying to get an answer to.
What's your degree of confidence in the forecast you've made?
Every one of these men has been in Davey's shoes earlier in his own career,
gambling that he can develop a successful venture from a new technology.
They want Davey's to win, but there is no fooling them where the numbers are concerned.
They've been here before. If they order less, they pay a lot more.
You have just written my mind. When you talk about pricing.
Now, we get serious about it, though. This team, they sound pretty innovative,
and the fact is that the forecast projections are not going to give us the kind of yield
that we need to do the job and to make the investments that this type of business justifies.
And the customers are going to do very, very well out of it.
3M Company need to make more money to be able to invest more and make the program a success.
That's the point where they threw you guys out of the room and really began to cream me
with twaits leading the charge. For 30 minutes they put me through the hoop on pricing,
profitability projections, and the return on investment.
I really thought that I was not going to get the money at that point.
In my assessment, to do this project right, it's going to require significant upfront pre-investment.
And that's where my program probably differs from a lot of others that you see.
I have factored in heavy investment in development costs, in scale-up costs,
in pre-investment costs into this program, and it makes the next four years of the program look quite bad.
If we ran this to the sixth, seventh, and eighth, and ninth year, I think it would look a very attractive program.
Chairman, I'd like to move approval of the proposal that we looked at today.
I'll second it.
Are there any questions or other suggestions?
I move.
Comments?
All in favor?
Aye.
Opposed?
Very good.
Thank you very much, gentlemen. I appreciate your attention.
Next subject.
3M Company has built its success on knowing how to maximize the talents of men like Dave Davies.
At once an innovator and an entrepreneur.
By encouraging him and Art Fry and a thousand others like them to take risks,
and rewarding them handsomely when they succeed, 3M continues year after year to bring new products to market.
Oh, look at that!
The youthful exuberance here seems a long way from the mannered halls of 3M,
but this is also a Fortune 500 company renowned for product innovation.
These very young men and women are on the task force that created the Macintosh at Apple Computer
and put the company back in the running with IBM.
In California's Silicon Valley, time seems to be compressed, and Apple is a perfect example.
In 1976, two computer whiz kids, Steve Wozniak and Stephen Jobs,
designed a personal computer in Jobs' garage
that managed to bring it to market a year later as the Apple II.
In 1980, only three years later, Apple went public as a $118 million company.
The following year, IBM entered the new market with its own personal computer, the PC.
Industry analysts predicted that Apple, like many other smaller companies, would be forced out of business.
But Stephen Jobs, now all of 28 years old and chairman of the board, was not prepared to step aside.
You know, they have a third of a million people at IBM. They've got like 350,000 people.
We've got 6,000 people. Makes you wonder.
I think IBM is a national treasure, what they've been able to do.
And they're sort of like a jewel in many ways.
And I have a great deal of respect for them. They've made Apple a lot better.
By competing with IBM, we're becoming better and better each month.
But there is a problem. And the problem is that they are so large and dominate certain markets so completely
that I think Apple is the only thing standing between them and total industry dominance.
Apple's response to the IBM threat was the Macintosh.
This Jolly Roger actually flew above the project building, which was isolated from the rest of the company.
Jobs wanted his new task force to behave like pirates outside corporate law.
He was determined that this team would be free to innovate unencumbered by Apple's bureaucracy.
And he led the project himself. Jobs was a perfect model of the new manager as coach, cheerleader, and nourisher of champions.
He's a maniac. He's a maniacal genius. His job is to stir up everything.
He's a muckraker in the classic sense of the word. He will not leave anything alone.
He will not allow inadequacy or compromise to exist.
New Jobs was a catalyst for us. He gave us space. He sheltered us from the corporate noise.
There's nothing like a group effort toward a common goal to unite people. I think that was the deal.
We wanted people that were insanely great at what they did, but were not necessarily those seasoned professionals,
but who had at the tips of their fingers and in their passion the latest understanding of where technology was and what we could do with that technology,
and who wanted to bring that to lots of people.
So the neatest thing that happens is when you get a core group of, you know, ten great people,
it becomes self-policing as to who they led into that group.
So I consider the most important job of someone like myself is recruiting.
We agonized over hiring. We had interviews. You could go back and look at some of the interviews.
They would start at nine or ten in the morning and go through dinner.
A new interviewee would talk to everybody in the building at least once and maybe a couple times,
and then come back for another round of interviews, and then we'd all get together and talk about it.
And then they'd fill out an application.
No, they never filled out.
The most critical part of the interview, at least to my mind, was when we finally decided we liked them enough to show them the Macintosh prototype,
and then we sat them down in front of it, and if they just kind of were bored or said,
this is a nice computer, we didn't want it, we wanted their eyes to light up and them to get really excited,
and then we knew they were one of us.
And everybody just wanted to work, not because it was work that had to be done,
but it was because something that we really believed in that was just going to really make a difference,
and that's what kept the whole thing going.
We all wanted exactly the same thing, and instead of spending our time arguing about what the computer should be,
we all knew what the computer should be, and we just went and did it.
The greatest people are self-managing. They don't need to be managed.
Once they know what to do, they'll go figure out how to do it, and they don't need to be managed at all.
What they need is a common vision, and that's what leadership is.
What leadership is, is having a vision, being able to articulate that so the people around you can understand it,
and getting a consensus on a common vision.
You can click on a tool like a paintbrush and say, just real quickly, flip out a little image of someone.
You can say, draw an eye.
Grab it with a lasso. Pull it over. Peel off the copy. Get another paintbrush.
The Mac team's vision was an inexpensive computer as powerful and sophisticated as IBM's PC,
with an added playfulness that would make it attractive to young people like themselves.
And they wanted it easy to use.
With Macintosh, there are no complicated commands to be memorized and typed into the machine.
All you do is move an arrow with a selection device called a mouse,
and point to what you want from a menu of options presented on the screen.
Then the nice thing is you can copy a whole section, peel off a copy, flip it over, move in.
One of the neatest things about Macintosh was we had a chance to change the way people thought of computers.
I think prior to when the personal computer stuff started happening, you know, five or six years ago,
everyone thought of computers as big, cold, impersonal, generally negative connotations associated with a computer.
No one would associate the word fun and computer together.
You know, they look at the machine and they say, it gets me in the gut.
You know, I don't know exactly how to articulate it, but it's, you know, cute and fuzzy and warm and motherhood, you know, I want it.
And it's so funny to hear your friends say this, you know, and your enemies say this.
You know you've conveyed something very, very intangible through this bunch of electronics, really.
I mean, very unemotional little pieces come together to form something that draws you, that's very approachable.
You ask yourself, why are you doing it? I'm certainly not doing it for Steve Jobs.
I'm doing it for something that I think is much greater good than that,
and that's the chance to change something really, honestly, truly, for the better.
Here is how we see personal computers, here is how we want the world to be, and here's how we're going to change it.
We have a vision of how we want it to be, we want to convert people, we want to make converts.
Apple bet heavily that McIntosh would attract converts.
Long before the computer was completed, the company invested $20 million in this assembly plant in Fremont, California.
To keep its price down, McIntosh was designed specifically to be assembled in high volume on an automated line.
At the Fremont plant, one McIntosh is assembled every 27 seconds.
The plant is currently producing 80,000 computers a month.
Designing a state-of-the-art plant for the first time was an overwhelming task,
and finding the right person to manage it proved to be just as difficult.
We went through that stage in Apple where we went out and we thought, oh, we're going to be a big company, let's hire professional management.
We went out and hired a bunch of professional management. It didn't work at all.
Most of them were bozos. They knew how to manage, but they didn't know how to do anything.
And so if you're a great person, why do you want to work for somebody you can't learn anything from?
And you know what's interesting? You know who the best managers are?
They're the great individual contributors who never ever want to be a manager,
but decide they have to be a manager because no one else is going to be able to do as good a job as them.
After hiring two professional managers from outside the company and firing them both,
jobs gambled on Debbie Coleman, a member of the Macintosh team.
Thirty-two years old, an English literature major with an MBA from Stanford,
Debbie was a financial manager with no experience in manufacturing.
I mean, there's no way in the world anybody else would give me this chance to run this kind of operation,
and I don't kid myself about that.
It's a credible high risk, both for myself personally and professionally, and for Apple as a company,
to put a person like myself in this job.
I mean, they're really betting on a lot of things.
We're betting that my skills at organizational effectiveness, you know,
override all those, you know, lack of technology, lack of experience, lack of, you know, time in manufacturing.
So it's a big risk, and I'm just an example in every single person on the Mac team.
Almost to your, you know, entry level person, you could say that about this is a place where people were afforded
just incredibly unique opportunities to prove that they could do, they could write the book again.
Apple released Macintosh on January 24th, 1984, hoping to sell 50,000 computers in the first 100 days on the market.
Seventy-two thousand sold, and sales continued to climb.
What began as a pirate venture, the bad kids in the company, has reinstated Apple as IBM's principal competitor in personal computers,
and is now accounting for roughly half the company's $1.5 billion in annual sales.
The best way I came up with to affect change at Apple was by example, and that was probably more than anything else.
The key reason that I spent two and a half years of my life on Macintosh was to try by example to say,
hey, here's a better way to do things, and it turns out it's worked.
I mean, almost everything at Apple now has looked at the Macintosh experience and come in and said,
hey, we can take a lot of these concepts and apply them, make them better in some ways, and model.
You know, every other factory we're doing now is modeled after the Macintosh factory.
Every other product team that's doing new product is being modeled after the Macintosh team.
The Macintosh example demonstrates how effectively a task force can innovate
when it is bound together by a shared vision and given the freedom within the corporation to find its own way.
The project also attests to what can be achieved when people are recognized for their contributions.
Inscribed inside the casing of every Macintosh, unseen by the consumer, are the signatures of the whole team.
This is Apple's way of affirming that their latest innovation is a product of the individuals who created it, not the corporation.
All the excellent companies understand that employee involvement is the key to increasing productivity,
improving quality, and winning in the marketplace.
But getting people to care about this kind of job isn't easy.
Dana Corporation is a car and truck parts manufacturer with 89 plants in 32 states.
Productivity throughout the automotive industry is notoriously low, but Dana is an exception.
Over the past 10 years, the company has grown from a one to a $3.6 billion business
and tripled its sales per employee, a phenomenal productivity gain.
How was this achieved? With a management policy which places people at the top of the list as Dana's most important asset.
Karen Strand runs the chassis parts plant in Oklahoma City.
Like every Dana manager, she spends a lot of her time on the shop floor, maintaining personal contact with employees.
But Karen is not a corporate watchdog. Every one of the 175 workers here is on salary.
There are no time clocks and only a handful of floor supervisors.
Dana's goal is to have all its plants self-managing.
Karen herself enjoys an autonomy rare in American industry.
So long as her plant stays in the black, corporate headquarters in Toledo will not interfere.
Jerry Mitchell, Dana's chairman of the board and chief executive officer, is intent on reducing levels of management at Dana.
In Mitchell's view, lean management means more room for everyone in the company to become involved, Dana's number one objective.
We set out to take our levels of management from some 14 or 15 levels from the shop floor up to me to reduce it.
And we just took a number of five and the logic is that five is better than six and when we get to five we'll go to four.
The corporate office that you're in today has 84 people, secretaries and everything.
Ten years ago it had 475. Ten years ago it did less than a billion dollars worth of business.
Today we do very nearly four billion dollars worth of business.
At biannual meetings of Dana managers from all over the corporation, Mitchell sets an example by making personal contact with everyone in the room.
He can handle shop talk as well as the next man. He began his own career at Dana as a machine operator 40 years ago.
Hi chief. Good to see you.
Looking after you? Are they?
It's unusual for the CEO of a four billion dollar corporation to be this familiar with middle level executives.
But the participation and sense of peerage Dana tries to achieve throughout the company begins here with Jerry Mitchell.
There are hundreds of years where people have grown accustomed to seeing the company as an antagonist or an adversary or relationship.
What we're trying to do is to get them to have a feeling of trust, of being part of it, of identifying with what we're trying to accomplish.
And if we do it, we'll survive.
One of Dana's approaches to promoting identification is keeping everyone informed.
Back in Oklahoma City, Karen calls a plant-wide meeting on company time to discuss a serious problem, an oil seal production line which is producing far too many rejects.
The chassis parts operation is running smoothly, but oil seals have pulled plant-wide efficiency down.
The far left hand column of course is our actual results for May.
The middle column is our forecast, far right is our year-to-date numbers.
It is rare for a large corporation to be as open as this with company books on the shop floor.
And you can hear a pin drop.
These workers know that the inefficiency in the oil seals department is affecting their lives directly.
We had a disappointing month compared to forecast.
Going over to year-to-date numbers and in the far right hand column is the trend of how we are now compared to where we said we'd be at Hell Week.
Our sales are at $6,941,000, which is down about $1,002,000.
The downturned arrows mean lowered profits for the plant and accordingly reduced bonuses for employees.
Since oil seals went into production here one year ago, no one has received a profit sharing bonus.
Of course oil seal is down also.
Something better by God works.
Because so far, if you look at the latest efficiency report, you see it's not working all that well.
And we're not going to be able to just go month after month and year after year with the kind of efficiencies that we're showing now in that molding department.
We have to do better.
And if we don't do better, you know, I said this is an opportunity.
This wasn't an ironclad guarantee that we had the business forever.
And if we can't make it work and make it work profitably, they're going to find another place to put it or go out of the business.
You have to explain to them that the company has to be profitable.
It has to be a viable company or their plant can't survive or the company can't survive or there is no future and you can't pay your mortgage and you can't put the kids through school.
You can't do it unless the whole thing makes a profit and is viable.
And the only way that you can do that is to be competitive.
And our approach to it is to get them to trust in each other, to trust Dana people,
and try and get them to identify with what it is we're trying to accomplish.
Yes, we was told that we would be allowed so much money for new molds about nine to ten months ago.
Well, in that amount of time, in ten months, we've seen two new molds come in.
With the molds we're running now, there's no way we're going to be able to get efficiency up.
The machinery we got back there is broken down and beat up.
We need better molds so we can run better parts and more parts.
It takes a long time. It takes 12 to 16 weeks to get new tooling.
To be sure, there is discontent.
But in this case, workers and management share the same concern, to make oil seals profitable.
I want to know why the cosmetic defects on the oil seals are so important,
you know, when it doesn't affect the functional part of the oil seal.
If the mold is doing it itself, it's all right.
If it's not clean because we haven't cleaned it, it's not all right.
And there's a lot of waste going out because the part is a good part.
If the part's going to work, why throw it away? That's a waste of money.
If worse comes to worse and they do shut oil seals down, what's that going to do to Chassis?
They, this mysterious they, are not going to shut oil seals down.
The thing that will shut oil seals down is us right here.
It's no outside influence that's going to do it to us.
If the decision is made that we cannot, we here in Oklahoma cannot profitably make oil seals,
that's what shuts it down.
The corporation is going to waltz in here and say, you guys blew it.
Dana stays competitive by creating pride of ownership in all its employees.
Profit sharing isn't enough.
The company wants workers on the line to assume responsibility for the future of the company
and to discover that objectives can be shared.
It tries to achieve this by keeping everyone informed about company affairs
and giving them the opportunity to speak out.
It would be foolish to suggest that antagonism between labor and management has disappeared.
But clearly, Dana workers are responding with productivity gains far beyond the industry average.
Was it Chassis or was it Ball Seal?
La-la, come on baby.
Applause.
Across the bay from San Francisco in industrial Oakland,
a more extreme experiment in productivity through people is underway.
One silver dollar for every year you're with us.
When Tom Malone bought North American Tool and Die in 1978, it was barely breaking even.
For Malone, this was an unlikely venture.
He had spent 25 years as a consumer products executive and claims he couldn't even hammer a nail.
But he was determined to prove that he could transform a failing business into a success
just by treating people decently and allowing them the opportunity to be their best.
Apple and other Silicon Valley companies depend on small job shops like North American
for the precision parts that go into their computers.
There are thousands of these operations and competition is fierce.
The only way to win is to keep cost low and quality very high.
The specifications for these parts are in thousandths of an inch, less than the thickness of a human hair.
Yet the tool and die industry is plagued by costly inefficiency and poor quality.
Much of the labor is unskilled and the work is at once demanding and a drudgery.
Malone tackled this challenge with the fervor of an evangelist.
What do we do different here? Well, a couple of things.
Number one, you've got to be absolutely honest, bone honest.
Every day, everything you say, everything you do, every night, every dealing with every employee,
every business dealing inside and outside the company, you've got to be straight.
Because those people have been conned for centuries and if you con them once, the credibility is gone.
Absolutely totally gone. And they're looking at you with a crooked eye until you prove it.
It took us probably two years until they finally realized that we were playing absolutely bone straight.
Malone sounds too good to be true, but there is no question that he has achieved stunning results.
In the six years since he has been running the business,
the reject rate on parts has dropped from five percent to a near perfect tenth of one percent.
Annual sales have increased from 1.8 to seven million dollars.
Most impressively of all, profits have soared upward 700 percent.
For this remarkable gain, Malone gives credit to the involvement and ingenuity of his blue collar workers.
One of the things we try to do when we create this caring climate, a climate of trust, is,
hey, go try it. Go try it. Maybe you have an idea. But implicitly in there, you've got to take away fear of failure.
Because if you put your head out and try something and it fails and you get your rear end kicked,
how often are you going to try it again? But if you let the gang know, hey, it's okay to screw up, it's okay,
then you fly. Because then they start to really dream and they reach out and that's what's fun
and that's when you get the big hits. What those people can do on their own
when nobody's second guessing them, you can't believe the results and you'll see it when we go out in the shop.
They do it on their own. I don't even know they're doing it. I don't understand it.
This is incredible. Dave, Dave, I hate, because this wrap thing is how old?
Twenty-six.
Twenty-six. He invented this thing when he was 24 years old.
Now this is a core assembly to the Matrix printer that goes into every printer that our customers sell.
This is the heart of it. And Dave figured out a way before we had to put these in one by one.
What he did is to figure out a way of doing it automatically.
It makes it kind of like a game because you're loading rivets in here while the machine's running by itself.
It's all spring loaded. So while the machine's cycling, the operator can put more rivets in here.
Well, it gets to where it's a game. You're trying to beat the machine all the time.
It's like trying to get the rivets in before the machine stops.
What I had to do, I had to speed the machine up because eventually the people start beating it.
Now the real implication here is not just his genius. We use old equipment here.
This isn't state of the art. The difference is his genius is going back to old-fashioned American ingenuity.
We're not competing anymore with job shops on the west coast or in Chicago.
We're competing against offshore. And the way we beat them is to out-think them.
And that's the personification of it right here.
We got a new award today. It's called the North American Two-and-I Freezer Award.
Now who knows what that's for and who won it? Anybody? Anybody got an idea?
Something in the freezer. Kelly, go on, look in the freezer. Go on, go look in the freezer.
Come on, hurry up.
When an employee contributes in any way to helping the company toward its goal of zero rejects,
Malone makes it an occasion for proclaiming his gratitude to one and all at what he calls a super-person ceremony.
Come on up here, buddy.
I warned you, kid. I warned you.
All right. I mean, oh, that's cold.
The mood of these celebrations is genuine. Sometimes Malone's effusiveness appears to embarrass his employees,
but it seems they do like and respect him.
The check is for $50.
Okay. Remember this job?
I went through the shop one day and I saw Kelly going in the freezer.
I thought, what the hell's going on? Is he goofing off or making margaritas for Joe or what?
You know what he did? He couldn't get this into here, so he said, hey, I'm going to put this in the freezer.
It'll shrink and then put the part together.
And it worked.
And I said, what the hell did you get that idea?
He said, what? Just part of the job, right?
Yeah.
What else can I say, gang?
God love you, baby. God love you.
God love you.
And remember, no rejects, no rejects, no rejects.
That's why we're here, gang.
Okay, that's the North American Dual Dive Freezer Award.
Malone's feelings for the people he calls his gang are harder to fathom.
These people are good. They are good human beings.
And they have been screwed their whole life.
And if I can create a climate where people enjoy doing what they're doing best and take pride in what they're doing, that ain't a bad legacy.
Art, come on, baby.
Is Tom Malone truly motivated by compassion for the working class?
Who can say?
What is evident is that the appreciation he lavishes on his employees is producing the bottom line results that are making his business a success.
And that's why Art got super person and naturally no rejects.
That's the part. God love you, baby.
Thanks, Tom.
North American Tool and Die is a modest business.
How does one of America's largest companies reward and motivate its star performers?
If it's IBM, by inviting them along with their husbands and wives for three days of fun in the sun on the Hawaiian island of Kauai.
Out here in Hawaii, where everything is heaven.
I'm from the land of the abyss, and I'm from Hawaii.
These men and women are the stars of IBM's national marketing division.
They handle the company's entire product line.
And by exceeding their sales goals for the year, they have earned admission into a select club called the Golden Circle.
IBM's ability to dominate markets is the product of many strengths.
But Big Blue's strongest suits are marketing and service.
It is fitting that the company should design its major recognition event of the year for its sales elite.
Francis G. Rogers, known to one and all as Buck, is vice president of marketing and IBM's most popular internal spokesman.
The greatest asset the IBM Corporation has happened to be its people.
We simply wanted to bring here to Hawaii the top performers of our marketing organization and simply say thanks to them for the job that they've done.
Now in the process, we also wanted to bring the spouses because we think they play a pretty integral part in the whole thing.
It fits under our overall theme in the IBM Corporation and a belief that we've had ever since we've been in business of respect for the individual.
And if you can give an individual a given set of objectives, measure them, and then reward them, then almost any target can be achieved.
Second idea of this Golden Circle is hopefully to have the people want to come back again.
I say that because since these are our top performers and if they are incented in some way to try to achieve something beyond what their normal quotas are,
then obviously the IBM Corporation is going to meet its overall revenue and customer satisfaction goals.
Buck Rogers, ladies and gentlemen.
Buck Rogers is more than simply the best public speaker in the corporation.
To the sales force that moves $40 billion of IBM products a year, he is a role model and a champion.
Mr. IBM.
Well, thank you very much and it's I who should be applauding you.
First of all, you and I work for the finest corporation in the world.
It's an organization that's doing more to improve and enhance the way we work and live than any other corporation I'm aware of.
We're also fortunate to be within an industry itself that's only at a point of infancy.
Buck has been delivering these pep talks for 20 years and the company has made them a tradition,
a major corporate channel for communicating IBM values to its employees.
In Buck Rogers, IBM has what every company longs to discover within its own ranks,
a personality that comes across as a living emblem of corporate values.
And there is little room for doubt that Buck is the hero of this division.
Observe the audience. These people are wrapped.
Leadership is the ability of a single individual through his or her actions
to motivate others to higher levels of achievement with the freedom and the opportunity to do so.
That's really one of the things that I enjoy about the company is that while you're a member of a much larger organization,
you also have the power, the authority, and the mandate, in fact, to take your part of the organization
and run it as if it's your very own.
And that's very important because you're very independent that way.
Every time you win, you're reborn, and every time you lose, you die a little.
Winning is an optimistic viewpoint. I've never felt there's any reason to be anything but optimistic.
There's a certain amount of competitiveness.
I think the individuals that have gone to the company may have that already in their personality,
and I think it just intensifies that.
Fear doesn't have to be a motivating factor in our business.
But in reverse, if somebody does something Herculean or heroic, you want to make sure as many people as possible know that.
I don't mean you run around, you slap everybody on the back on a glad-handing basis for everything that's done,
but you pick and choose your spots.
They have a lot of respect for you. They treat you really well.
And even if you're down, you know, in sales, you kind of go through these peaks and valleys,
and you have your ups and downs at times, and they're with you there.
When you're in your valleys, he's seeing me come home sometimes at night, and it's just so frustrating.
But I know that they're next to me, and my manager's there to help me and stuff like that, and that feels real good.
He's there to help me, too. I need him.
IBM is very good at motivating their people, and I see that through Anne.
And Anne might be brainwashed by some people's standards, but it's a good brainwashing.
I mean, they really do instill a loyalty and a drive to work in their people.
Because if you have the bedrock like we have in the IBM Corporation through all these years,
we change our chairman, we change our terms and conditions, but we never change our fundamental beliefs.
Because those that sustain us, I think those are the things that allow individuals and corporations to weather the test of time.
I feel as long as they maintain those principles and respect for the individual and keep their high ideals and morals and ethics,
that they'll be a great company, and that all the technology and all the other things that they're attributed with
are just byproducts of individuals working very well together.
When the high court of history sits in judgment on each one of us as to how well we've fulfilled our responsibilities,
our success or our failure will simply be...
IBM knows perfectly well that Buck Rogers' persona and what he symbolizes is more important than anything he says at these appearances.
He may be talking platitudes, but coming from him, in a heightened setting the corporation goes out of its way to create,
the positive impact is profound.
I am so confident about the future of the IBM Corporation is simply because I know what your answers will be to those questions.
Thank you very, very much.
When IBM finds a hero, it makes certain he has a stage and an audience.
All the excellent companies celebrate superior performance, but when it comes to tailoring hoopla to fit its own needs, McDonald's is the master.
It's safe to say that the vast majority of Americans have at least sampled a Big Mac.
By the end of this year, customers all over the world, 17 million of them a day, will have gobbled 50 billion of these famous burgers at 8,000 McDonald's restaurants.
In the 29 years since Ray Kroc opened the first store in Displanes, Illinois, the company has grown quarter by quarter as regularly as Kroc worked.
Annual sales are now at $8.6 billion and climbing steadily.
Dining at the Golden Arches is not a gourmet experience.
What you do get in a world full of unpleasant surprises is the comfort of knowing what to expect.
The burgers are never burned or raw.
The service is sunny, and the restaurants are spotless inside and out.
McDonald's stays far ahead of the competition in the fast food industry by maintaining these standards throughout its worldwide system.
This is no easy trick.
Particularly when 75% of the company's 8,000 restaurants are owned and operated by independent franchisees outside corporate control.
How does McDonald's succeed where others fail in keeping its independent stores running by the corporate book?
With a never-ending behind-the-scenes campaign designed to ensure that employees know what is expected of them and take pride in doing it right.
The kids on this bus come from every state in the union and 31 countries around the world.
McDonald's employees, they are finalists in the crew decathlon, a system-wide competition brilliantly designed to tap into the excitement of the Summer Olympics in Los Angeles.
Contests like this one in Indianapolis began at the store level.
Crew members competed against one another at 10 stations, drive-thru, lot and lobby, bun dressing, quarter-pounders, fries, the whole McMenu.
Winners at all 10 stations, decathlon athletes, moved up to semi-finals at the district and regional level.
And now three months later, the gold medalists, 91 in all, have been brought to Los Angeles for a week of parties and studio tours and ringside seats at Olympic events.
These kids are more than motivated. They are inspired. To bestow upon them the highest compliment in McDonald's glossary, they have ketchup in their veins.
Proud, happy, you know, it's just like achieving perfection, you know. When you reach perfection or you're able to grasp it, you know, it's great. It makes you feel super.
The highlight of the trip is a final playoff to be held at a replica of a restaurant used for filming TV commercials.
This time, the kids will compete in teams against the very best in the system.
The winners will return to their stores in Texas or New Zealand or Japan with a heavyweight McTitle, best and fastest hamburger cooker in the world.
Like pool cues and bowling balls, these spatulas are custom-fitted to the contestants' hand. Whatever it takes, these kids are ready to grab the gold.
McDonald's has done everything possible to keep the voltage high.
The world press is in attendance, and the master of ceremonies is a real live game show host. In McDonald's corporate parlance, this event has sizzled.
All set back there with a whistle and go.
Whistle and a great medal in the catch state because they're releasing the grill in six.
All the patties are being laid down on the grill, and they're being laid down on the grill six at a time. At the same time, Bones will be putting the toast grill on.
In 20 seconds, you'll hear a beep. That means it's time to sear the burger. That means they push the hamburger down onto the grill to sear in all the flavor and get that base on.
The second buzzer will be the one-minute buzzer. That means it's time to turn the hamburger. When that happens, some of the people back in the bunks put in other portions of what they're operating.
And when the final buzzer rings, it means flip the burger, and it's a total operation of about three minutes.
The purpose of this exercise is getting the kids excited about what they're doing. But the contest benefits the company in another, less apparent way.
The judges in the field were independent owner-operators. And the criteria for judging come from the operations manual, a 700-page book detailing every step of the cooking process and every gesture and attitude to be used in dealing with the customer.
The point is, you can't judge the contestants unless you know the manual code.
What are the judges looking for here? We're looking for uniform symmetry of the buns, making sure that they're toasted right and caramelized properly, that the condiments are applied in the proper position, the right amounts. We're checking for the heat of the product, how well the meat is prepared, uniformity of product, heat, taste, and so forth.
That's 27.98. Okay, now the more points you get here, that'll be added onto your total. So let's take a look. Will we go for quality first? Yeah. The award is? One. That's very good. Okay. Very, very good. A zero is perfect, so one's the next step. And for taste, the judges have awarded?
Yeah! Alright! Alright! Ready to go. Congratulations. How do you guys feel? Okay, before we announce the final awards, the first, second, and third teams, we've got to tell you, you have all done a terrific job. Fantastic to get this far to Los Angeles, California, to the McDonald's Crew Olympics.
And we've got to say this, you've competed against people from 31 different countries. You are the best in the world. Let's hear it for yourselves.
And that means, of course, in first place at the time of 2.09, only one second behind this end was the gold team, number two.
The pride in this young man's face is the culmination of a campaign that took six months and cost half a million dollars.
When all is said and done, pride has a lot to do with excellence. Everybody knows that American business is in trouble. And in a world where technology is available everywhere and labor is cheap, business people are increasingly aware that quality is the only way to win.
The excellent companies know all this and something more, that the key to quality is people. And they behave accordingly. They make certain that everyone understands their values and their vision.
They do whatever they can to get employees involved, taking responsibility, identifying company objectives as their own.
Frank, come on back up, buddy.
And large or small, no matter what industry they are in, they take the time to recognize and reward people for what they do. From the outside looking in, some of this effort is hard to swallow.
It can look and sound like manipulation. And to be sure, theatrics are involved. These companies are not in business to make people feel good about themselves.
Like any other business, profit is their goal. What sets them apart is their consuming belief in the value of their products and services.
The leaders of these companies are impassioned. And their passion animates the whole organization and drives it to success.
Needless to say, the excellent companies aren't perfect. They have labor problems like anyone else. And down quarters. And deep uncertainty about how to handle the menace of foreign competition.
But by and large, by responding to customer needs, by caring deeply about what they do, and infecting everyone in the organization with their commitment to quality, they stay competitive and profitable year after year.
That little yellow poster, though.
Corporate America may not be your cup of tea. But like it or not, the business of America as we know it is business. And in these increasingly difficult times, it is the excellent companies that will survive and provide an invaluable model for us all.
Thank you.