How the Mighty Fall_And Why Some Companies Never Give In Page 18
276. Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005); Kathy Mulady, “Nordstroms Again Take the Reins,” Seattle Post-Intelligencer, September 1, 2000.
277. Kathy Mulady, “Another Move At Nordstrom,” Seattle Post-Intelligencer, September 12, 2000; Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005); Robert Spector and Patrick McCarthy, The Nordstrom Way to Customer Service Excellence (Hoboken, NJ: John Wiley & Sons, Inc., 2005), 91, 144.
278. Bill Kossen, “A Good Fit?” Seattle Times, May 29, 2001; Nordstrom, Inc., Annual Report 2002 (Seattle: Nordstrom, Inc., 2003); Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005).
279. Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005).
280. Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005); Carol Tice, “Bringing Nordstrom Back,” Puget Sound Business Journal, December 26, 2003; Bill Kossen, “A Good Fit?” Seattle Times, May 29, 2001; Robert Spector and Patrick McCarthy, The Nordstrom Way to Customer Service Excellence (Hoboken, NJ: John Wiley & Sons, Inc., 2005), 143; Nordstrom, Inc., Annual Report 2003 (Seattle: Nordstrom, Inc., 2004).
281. Nordstrom, Inc., Annual Report 2002 (Seattle: Nordstrom, Inc., 2003); Bill Kossen, “A Good Fit?” Seattle Times, May 29, 2001; Nordstrom, Inc., Annual Report 2003 (Seattle: Nordstrom, Inc., 2004), 11; Devon Spurgeon, “In Return to Power, The Nordstrom Family Finds A Pile of Problems,” Wall Street Journal, September 8, 2000.
282. Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005).
283. Jon Rhine, “Refashioning the ‘Nordstrom Way,’” San Francisco Business Times, June 8, 2001, 3; Amy Merrick, “Nordstrom Accelerates Plan to Straighten Out Business,” Wall Street Journal, October 19, 2001; Rajiv Lal and Arar Han, “Nordstrom: The Turnaround,” Harvard Business School, case study #9-505-051 (Boston: Harvard Business School Publishing, 2005).
Index
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Note: Page numbers in italics refer to charts.
A&P, 8, 14, 128, 133, 135
competition against, 91, 154
complacency in, 47, 154
early years of, 37
and Hartford brothers, 36–37
Kroger contrast with, 141
preserving the culture in, 37, 39
Rise and Decline of The Great Atlantic & Pacific Tea Company, 37
Stage 2 in, 20, 154
Stage 4 in, 155
Abbott Labs, 128, 132, 140
acquisitions:
as binary decision, 45–46
game changing, 22
addiction to scale, 55
Addressograph Corporation, 14, 128, 133, 135
bankruptcies of, 99
competition against, 97
core capability of, 98–99
jobs lost in, 99
panic and desperation, 97–99
Pitney Bowes contrast with, 141
Stage 2 in, 149
Stage 4 in, 155–56
age fit, 136–37
Alexander, Caroline, The Endurance, 115
Allaire, Paul, 114
Amazon, 84
American Express, 128, 132
Ames Department Stores, 14, 23, 128, 133, 135
bankruptcy of, 46, 156
CEO turnover in, 91
liquidation of, 46, 156
Stage 2 in, 150
Stage 4 in, 156
Wal-Mart contrast with, 15–16, 16, 39–42, 46, 141
Zayre bought by, 45–46, 150, 156
Anders, George, Perfect Enough, 84
Anna Karenina (Tolstoy), 19
Apple, 48, 139, 152
Applied Materials, 140
Armacost, Samuel, 9–11
arrogance, 43, 145
Astor, Lady, 121
atrophy, 111
Augustus Caesar, 58–60
Bank of America, 7–11, 14, 18, 128, 133, 135
as Bank of Italy, 6–7
bureaucracy of, 58
CEO pick of, 8–11
and Charles Schwab, 9
and Merrill Lynch, 76
net income (1972–1987), 9
responsibilities in, 57–58
and Seafirst Corp., 10
Stage 2 in, 150
Stage 4 in, 156
Wells Fargo contrast with, 141
Bank of Italy, 6–7
Bear Stearns, xiii, 23, 76, 146
Beethoven, Ludwig van, 36
Bell Atlantic, 29
Best Buy, 33–34, 35, 36, 91, 139, 141, 157
Bethlehem Steel, 128, 133
BHAGs (Big Hairy Audacious Goals), 182
big bets, unwarranted, 68–70, 81
blame, externalizing, 79, 81, 109
Blockbuster, 91, 157
blockbuster product, 22
Boeing Corporation, 116, 128, 132
Boston Globe, 52
Box, George E. P., 20
Bristol-Myers Squibb, 128, 133
Built to Last (Collins and Porras), xiv, 28, 33, 54, 94–95, 128, 148, 179
Bull Corporation, 110
bureaucracy, 56, 58, 63
Burger, Ralph, 36–37
Burroughs, 128, 133
Burrows, Peter, Backfire, 84
business fit, 136
BusinessWeek, 10, 29, 51, 85, 87, 92, 109
Caesar, Gaius Julius, 58–59
Caesar, Octavian (Augustus), 58–60
Caligula, Roman Emperor, 59
capitulation to irrelevance or death, 22–23, 103–23, 103
cash shortages, 104–5
denial vs. hope, 111–12
giving up, 105–7
running out of options, 107–11
CarMax, 30–31, 33, 151
cash:
easy, vs. cost discipline, 63
shortage of, 104–5, 118
cell phones, 65–68
CEOs, outside, 85, 87–88, 95, 98, 100, 155, 157, 158
Challenger, 71–74
Chamberlain, Neville, 121
change, consistency vs., 38
character flaws, 49
Charles Bruning Co., 149
Charles Schwab, 9
Chase Manhattan Bank, 128, 131
Chase National Bank, 7
Chief Executive, 83
Chrysler Corporation, 128, 132
Churchill, Winston, 120–23
Circuit City, 8, 14, 60, 128, 133
arrogant neglect, 32
bankruptcy filing of, 31
Best Buy vs., 33–34, 36, 139, 141
CarMax, 30–31, 33
CEO replaced in, 91
core business of, 32–34
Divx, 30–31, 33
employees fired in, 91
hubris born of success (Stage 1), 30–34
profit margins in, 31
Radio Shack vs., 139
Stage 2 in, 150–51
Stage 4 in, 156–57
Wal-Mart vs., 139
Cisco Systems, 140
Citicorp, 128, 132
Citigroup, 144
civilization, declining, 2
Clark, Dick, 116
Clausen, A. W., 150
Cleopatra, 59
clock building, 182
Colgate, 128, 132
Columbia Pictures, 128, 131
commitments, 160
companies in recovery, 14–15
Compaq Computer Corporation, 89, 157
comparison company criterion, 129–31
complacency, 46–47, 49, 151, 154
Conference Board, 1
conflict, cult of, 152
confusion, 101
consistency, change vs., 38
contrasts, study of, 15–16, 16,135
core business, 32–34, 35–36, 43, 55, 182
core values, 55, 101, 111, 159, 166, 171–72, 182
correlations, 16–17
cost discipline vs. easy cash, 63
Countrywide, 146
Cowles, Virginia, 121
Crockett, Roger O., 29
cultural revolution, 22
culture, preservation of, 37, 39
customer loyalty, 76
customer priority, 87
cynicism, 101
decision analysis, 4
decision making, “waterline” principle of, 74
decisions, irreversible, 73–74, 76
decline, chronic, 132–33
decline, five stages of, 13–23, 24
applied to entire industries, 147–48
capitulation to irrelevance or death (Stage 5), 22–23, 103–23
denial of risk and peril (Stage 3), 21–22, 65–82
framework of, 19–23, 20
grasping for salvation (Stage 4), 22, 83–101, 155–58
hubris born of success (Stage 1), 20–21, 27–44
research process, 13–19
self-inflicted, 25
study of contrasts, 16
undisciplined pursuit of more (Stage 2), 21, 45–64, 149–58
way out of, 23–26, 117
Dell Corporation, 139
Deming, W. Edwards, 118
denial of risk and peril, 21–22, 65–82, 65
accentuate the positive, 81
blaming others, 79, 81
culture of, 76–80
eroding team dynamics, 81
imperious detachment, 82
making big bets, 68–70, 81
markers, 81–82
Morton Thiokol, 71–73
Motorola, 65–68
obsessive reorganization, 79–80, 81
taking risks, 71–76, 81
detachment, imperious, 82
DiMicco, Daniel R., 167, 168–72
discipline:
culture of, 56, 181–82
management, 117, 118, 119–20
self-discipline, 160
disciplined action, 180, 181–82
disciplined people, 179, 180, 181
disciplined thought, 180, 181
disease, hidden, 3–4
Disney, 116, 128, 133
Divx, 30–31, 33, 151
dogmatism, 39
Drucker, Peter F., 118
Dunlap, Al “Rambo Al”; “Chainsaw Al,” 105–6
Eckerd, 128, 133
El Capitan, climbing on, 75
Eldorado Canyon, Colorado, 74–75
Eli Lilly, 140
Emerson, 140
Engibous, Tom, 69, 94
entitlement, 43
entrepreneurial phase, 104
escape, 23–26
excellence, passion for, 166
exclusions:
for chronic decline, 132–33
for founder effect, 132
for industry effect, 132
for pre-1950, 132
facts, confronting, 181
Fagan, Garrett G., 59
Fannie Mae, xiv, 15, 76, 128, 132, 143–48
Fears, J. Rufus, 29
financial crisis (2008), 143–48
financial institutions, downward spiral of, 147
financial strength, erosion of, 101
Finkelstein, Sydney, 66
Fiorina, Carly, 85, 86, 87–88
Tough Choices, 88
flywheel, 182
Forbes, 8, 30, 85, 86, 94, 151
Ford Motor Company, 128, 132
Fortune, 48, 85, 87, 91, 114, 136
founder effect, 132
Freddie Mac, xiv, 144, 147
Galvin, Paul, 28, 54
Galvin, Robert, 27–28, 66, 67
Galvin Manufacturing Corporation, 28
Gandhi, Mohandas K. (Mahatma), 121
Geek Squads, 34
General Electric (GE), 128, 132, 140, 151
General Instruments Corporation, 92–93, 157
General Motors (GM), 104, 133
Georgia Pacific, 79
Gerstner, Louis V., Jr., 85–88, 95–96, 161
assessing brutal facts, 78, 163–64
and core values, 166
disciplined focus of, 85, 86–87, 97, 164–65
inner drive of, 117
Level 5 leadership of, 162
and succession planning, 165
Who Says Elephants Can’t Dance?, 86, 162
Giannini, Amadeo Peter, 5–6
Giannini family, 7
Gillette, 128, 132
Gilman, Herb, 42
Gilmartin, Ray, 50–53, 116
giving up, 105–7
Glamour, 85
Glass, David, 41–42
Glass-Steagall Act, 9
Goldman Sachs, 91
Good to Great (Collins), xiv, 4, 94, 128, 143, 179
good-to-great framework, 179–83
building greatness to last, 180, 182
diagnostic tool, 179
disciplined action, 180, 181–82
disciplined people, 179, 180, 181
disciplined thought, 180, 181
Gore, Bill, 74
Great Depression, xiv
greatness test, 138–39
Great Western, 128, 131
growth:
disciplined quest for, 54
obsession with, 50–54, 55
unsustainable quest for, 54, 55, 63, 84
Hall, Rob, 66
Hansen, Morten, 118
Harris, 128, 132, 140
Hartford, George, 36–37
Hartford, John, 37
Harvard Business Review, 7
Hasbro Toys, 128, 133
hedgehog concept, 170, 181
Hesselbein, Frances, 1
Hewlett, Bill, 54, 86
Hewlett-Packard (HP), 14, 128, 133
and Compaq, 89, 157
founding purpose of, 54
IBM contrast with, 139, 141
leadership succession in, 85, 87–88
restructuring, 88
searching for silver bullet, 88–89
Stage 2 in, 54, 55, 84, 151
Stage 4 in, 83–85, 157
stock price of, 84
success-contrast candidates, 139
turnaround, 116
and undisciplined growth, 54, 55, 84
Hills Department Stores, 156
historical analysis, 17–18
hope, 113–23, 113
abandonment of, 107
and Churchill, 120–23
denial vs., 111–12
and recovery, 25, 113–18, 120
in solid management discipline, 117, 119–20
housing market bubble, 75
Howard Johnson, 128, 131
hubris, multiple forms of, 30
hubris born of success, 20–21, 27–44, 27
A&P, 37
Ames, 39–42
approach 1, 38
approach 2, 38–39
arrogant neglect, 29–36
Circuit City, 30–34
confusing what and why, 36–42
and core business, 32–34, 35–36, 43
dogmatism, 39
markers, 43–44
Motorola, 27–30
overreaching, 39, 53, 68
hype, 100
IBM, 128, 132
competition of, 164
customer priority in, 87, 163, 164, 165
decline and recovery case, 116, 117, 161–66, 161
decline of, 78
discipline in, 164–65
HP contrast with, 139, 141
Motorola contrast with, 140, 152
passion for ex
cellence in, 166
right people in key seats, 163
succession planning in, 85–88, 165
turnaround of, 78, 88, 95, 97, 116, 117
value created in, 165
inconsistency, 92
industry effect, 132
innovation, undisciplined, 47–49, 151
Intel, 48, 69, 94, 139, 140, 151, 152
Internet Bubble, 84, 93
Internet economy, 84
investors, cumulative returns to, 54
Iridium, 66–68, 70, 76, 152
Iverson, Ken, 168, 169, 171
Japanese competition, “unfair,” 79, 108, 109
Johnson & Johnson, 25, 128, 132, 140, 141, 151
JPMorgan Chase, xiii
Julius Caesar, 58–59
Junkins, Jerry, 93–94
Kaufman, Marc, 52
Kennedy Space Center, 71
Kenwood, 128, 131
key seats, filled with the right people, 55, 56–57, 63, 76, 87, 159–60, 163, 169, 174–75, 181
Kimberly-Clark, 79, 105, 106, 128, 132, 141, 158
Kirkpatrick, David, 87
Kmart, 40
Kroger, 37, 128, 132, 141
launch decisions, 74
Lazier, Bill, 1, 103–4
Leader to Leader Institute, 1
leadership:
charismatic, 88
family dynamics of, 61
focused approach to, 97
level 5, 179, 181
multiple generations of, 182
outside CEOs, 85, 87–88, 95, 98, 100, 155, 157, 158
problematic succession of, 58–61, 63–64
refusal to give up, 116
visionary, 22, 88
leadership-team dynamics, 76–78, 77–78
leaps, discontinuous, 48, 63
learning vs. knowing, 39, 43
Lehman Brothers, xiii, 23, 76, 146
Lorentz, Francis, 110
luck, role of, 44
Manchester, William, The Last Lion, 121
Maney, Kevin, 114
Mark Antony, 59
Marriott Corporation, 128, 132
Masters, Brooke, 52
maturity, 160
Maxwell, David, 143, 145
McAuley, Kathryn, 105–6
McDonald, Eugene, 107–8
McDonnell Douglas, 128, 133
Medco Containment Services, Inc., 152
mediocrity, 56, 92, 111
decline to, 131–32
Melville, 128, 133
Merck, 14, 128, 133
core purpose of, 53
and generic drugs, 50
and hubris, 53
J&J contrast with, 141
new patents in, 47
obsession with growth, 50–54, 55
recovery of, 116