Most (Least) Valuable Players, 1988
Leveraged buy-outs of the wildest variety grab the business (and non-business) headlines near year's end. Greed was the theme of the year (Ross Johnson of RJR Nabisco, Michael of Drexel Burnham). But other tales of winners and losers and new ideas give a more accurate picture of where we stand. Hence, my Fourth Annual Most Valuable Player Awards.
1. COMPANY OF THE YEAR. Walmart should pass Sears in retail revenue in 1989. It's already scared the older firm enough to force a fire sale of Sears' 110-story tower on the shores of Lake Michigan. Bentonville, Ark.-based Walmart is a model for the future. Though exceeding $20 billion in revenue, it has accrued little bureaucracy and few layers of management. Walmart has pioneered in information technology, but maintained a hands-on approach and retained youthful zest among its more than 1,000 store managers.
2. CHIEF OF THE YEAR. Ralph Stayer of Johnsonville Foods (more than $100 million revenue, Sheboygan, Wisc.) takes top honors. Though his business is sausage, Stayer's commitment to the limitless potential of every employee, spurred by an obsession with life-long learning, provides a model that can and should—be applied universally.
3. SERVICE COMPANY AND PIONEER OF THE YEAR. Rosenbluth Travel (a travel agency) of Philadelphia has catapulted its billings from $30 million to $700 million in the last decade. About once a month the company introduces a proprietary software program that saves its big corporate accounts millions a year in travel expenses. Rosenbluth's reservation database keeps up with fare and schedule changes faster than the fabled United and American systems. It also spots peak travel patterns of clients, using such information for continuous rate negotiations with airlines and hotels. Rosenbluth defines service-firm excellence.
4. QUALITY PROGRAM OF THE YEAR. First Chicago (the $45 billion-assets financial services firm) is obsessive about bird-dogging service quality and rewarding those who improve it. Some 650 aspects of service are tracked; updated performance measures are reviewed each week in an open forum with corporate customers.
5. JUST-IN-TIME INVENTORY MANAGEMENT STARS. AMOT Controls ($20 million in revenue, Richmond, Calif.) has cut machine set-up time from eight hours to ten minutes; one operation has slashed time to produce a complex part from 22 days to 1.5 days. Harley-Davidson and NUMMI (the Toyota-GM joint venture) boast similar records. The three firms have something else in common: The stunning improvements were mainly achieved through worker ideas for reducing wasted time, not via automation. There's a lesson not to be missed here.
6. IDEA OF THE YEAR. Competing in time (CIT) is the latest concept to turn longstanding management practice upside down. Time, say an increasing number of theorists and practitioners, is becoming the chief basis for competitive advantage. Cutting product-development cycles and delivery schedules by 90 to 95 percent (or more) is proving possible for insurers, retailers, and manufacturers alike. Those who miss this high-tech (information technology) and low-tech (people and organization) boat may be stranded on the wrong shore for good.
7. IDEA OF THE DECADE. I'm appalled by the excess of the Greed Decade, but I am nonetheless an unabashed fan of so-called junk bonds and LBOs. Solid research is demonstrating that performance in the wake of a junk-bond-financed LBO generally takes off. Decisions to cast blubber and misfitting parts aside, that the firms had postponed for decades, are made overnight. The critics' biggest bugaboo, failure to reinvest after taking on a mound of debt, turns out to be myth. LBO firms invest in the future, on average, much more aggressively than their non-LBO kin.
8. GOOD IDEA WITHOUT FIZZ. The Malcolm Baldrige National Quality Award (after the late Secretary of Commerce) is intended to be the U.S. equivalent of the highly prized Deming Award in Japan. The Deming Award garners much national Japanese press attention and generates obsession by employees in candidate companies. The stillness surrounding our first quality award suggests that Americans are not yet hepped up about this supreme attribute of competitiveness. What to do?
9. BOOK OF THE YEAR. Leadership Is an Art, by Herman Miller CEO Max DePree grabs the gold. It is thoughtful, personal, human, persuasive—and not a hint of ego mars the theme. Give it to a daughter, son or Fortune 500 chairman for Christmas. They should bless you for years to come.
10. BOOK OF THE DECADE. Sure it's premature to grant an award for all the 1980s, but I'm ready to take the plunge with Future Perfect by Stan Davis. His description of the firms and markets of the future has no close peers. Learn about the commanding role of time in management thinking, the growing importance of intangibles (e.g. information) in every product, and life in organizations without hierarchy.
11. APPOINTMENT OF THE YEAR. Three cheers for Richard Darman, our newly nominated Office of Management and Budget boss. The inventor of "corpocracy" is now in a wonderful position to attack economic excess from the Pentagon to the board room. Let's just hope he stays irate and keeps his lips unzipped.
12. FINALLY, THE GOATS. Many competed for this dubious award, but three stand out. First, MIT's Charles Ferguson, for having the cheek to say we have too many entrepreneurs. Second, the Defense Science Board for suggesting that the Department of Defense should play a bigger role in national economic planning. And third, Senator Lloyd Bentsen for pushing the most protectionist trade bill in half a century through Congress.
Happy New Year.
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