Lessons of history
What Meriwether Lewis and William Clark can teach business students about leadership
As the Lewis and Clark bicentennial (2003-06) approached, Associate Professor of Business Jeffrey Matthews added a case study of Thomas Jefferson and his famous Corps of Discovery to his course BUS 385 Paradigms of Leadership.
“Business students should not disregard history as a tomb of dead facts,” says Matthews. “The marketplace that businesspeople encounter today is not altogether unlike the frontier encountered by the Lewis and Clark expedition. Now, as then, there are risks and uncertainty, intricate problems, and tremendous opportunities.”
In the course, Matthews’ students analyze the expedition as a capstone case. Assignments include extensive readings from the Lewis and Clark journals, and the class treks southward to Oregon to survey the Fort Clatsop National Memorial Park, the site of the expedition’s Pacific Coast base camp.
Here, in an excerpt from an article forthcoming in Essays in Economic and Business History, Matthews shows how Lewis and Clark’s inspiring organizational climate was instrumental to the success of the Corps of Discovery, and how the leaders of IBM applied the same principles as the pioneering American company grew.
From the beginning of their expedition, Lewis and Clark made a conscious effort to construct a high-performance organization, one capable of succeeding in extremely stressful and unpredictable environments. The first step in the building process was a stringent approach to recruitment. They needed followers who possessed requisite experience and skills. Recruits also needed physical strength and psychological hardiness. Clark understood that the proper selection of recruits was of vital importance to the enterprise. Lewis agreed, stating that the success of the mission would “depend on a judicious selection of our men; their qualifications should be such as perfectly fit them for the service, otherwise they will rather clog than further the object[ives] in view.”
By April 1804 most of the expedition’s members had been selected, and thereafter the captains worked diligently to create a cohesive, elite unit that was prepared to meet the daunting challenges ahead. The men came to understand the purposes of their mission. They were well organized into three detachments and gained a clear definition of their individual roles. Throughout, Lewis and Clark closely monitored and actively managed the corps’ morale and performance. Their leadership style and tactics varied significantly depending on circumstances. At times, they were dictatorial and coercive; at others, democratic and compensative. The captains frequently rewarded the men with whiskey, rest, praise, and music. And they limited the use of coercive power for those rare occasions when a follower threatened the group’s safety or overall cohesion. By spring 1805 the Corps of Discovery had become tightly bound, held together by mutual trust, respect, and dedication. For the remainder of the expedition, some 16 months, there were no serious subordinate infractions. On April 7 Lewis described in his journal any leader’s ideal situation:
The party are in excellent health and sperits [sic], zealously attached to the enterprise, and anxious to proceed; not a whisper or murmur of discontent to be heard among them, but all act in unison, and with the most perfect harmony.
The unit’s cohesion was severely tested on June 1, 1805, when the corps came upon an unexpected fork in the Missouri River. Which tributary was the true Missouri, leading to the Pacific? There was little room for error as the expedition needed to cross the Rocky Mountains before winter set in. Moreover, a powerful and potentially hostile tribe controlled the territory. Lewis feared that making the wrong decision would so demoralize the party that the entire expedition would be jeopardized. While Clark and Lewis believed that the southern branch was the true Missouri River, everybody else in the corps disagreed, thinking they should head north. Yet later, when the group was ordered south, there was not the slightest hint of rebellion. The party, after having expressed its collective opposition, trusted its two leaders. According to Lewis, the men “said very cheerfully that they were ready to follow us any wher[e] we thought proper to direct but that they still thought that the other [river] was the [ Missouri] river.” The captains had made the right choice, and they named the northern tributary the Marias River.
Like Lewis and Clark, IBM’s three transformational leaders, Thomas J. Watson Sr., Thomas J. Watson Jr., and Louis Gerstner fully comprehended the value of developing an organizational climate that inspires high performance. No American corporation, in fact, is more renowned for its cultural heritage than Big Blue. The company’s culture, as business historian Richard Tedlow writes, became “so firmly embedded...that employees found themselves viewing not only their job but their lives through the prism of their place of work.”
Thomas Watson Sr.’s approach to building a high-performance culture blended paternalism, charisma, autocracy, and generosity. For decades, IBM was a cult of his personality. Watson’s corporate thinking and rhetoric frequently rested on “the company as family” metaphor, wherein he was the father and the employees were his “boys.” Watson could be domineering and benevolent, kind and cruel. From the time that workers were hired, they were indoctrinated into Watson’s way of doing business. IBMers subscribed to three “Basic Beliefs”: excellence in all areas, superior customer service, and respect for the individual. More important was unswerving loyalty to Watson. Workers sang company hymns, dressed conservatively, and behaved dutifully. They revered Watson’s omnipresent photograph and many philosophic slogans. They read his editorials in the company magazine, listened to his “fireside chats,” and, when worthy, attended alcohol-free sales conventions to celebrate individual and company performance.
In return IBM employees received first-rate professional training, job security, and above-average pay and benefits. Moreover they gained a sense of pride in belonging to one of the most successful and respected business organizations in the United States. Lou Mobley, a former IBM executive, found the pioneering culture downright inspiring, and he concluded that Watson’s demanding, yet rewarding, paternalism was perfectly suited to his employees. In 1956, the year Watson died and his son assumed full control of IBM, the company booked a record $892 million in revenue and $87 million in profits.
Thomas Watson Jr. faced the difficult task of reorganizing IBM to better meet the business challenges of the electronic era while still preserving the distinct culture that had been pivotal to its success. He discarded the song singing, for example, but maintained the company’s commitment to job security, attractive salaries, and generous benefits.
“I knew exactly the attitude I wanted to cultivate in ordinary IBM employees,” Watson wrote in his memoirs. “I wanted them to feel a proprietary interest, and to have some knowledge of each others’ problems and goals. I also wanted them to feel that they had access to top management and that no one was so far down the chain of command that he couldn’t be kept aware of where the business was heading.”
Watson completely revamped the company’s long-lived centralized structure by creating four semiautonomous divisions. He also oversaw the standardization of job descriptions and compensation, and systematized the employee evaluation process. A large corporate staff was created to act as a coordination center and a six-person management committee was formed to make strategic decisions. Crucial to the evolving culture was a new appreciation for differing and competing ideas. Unlike his father, who preferred sycophants in executive positions, Watson promoted men of intelligence who were “fierce, strong-willed decision makers.” Moreover the younger Watson believed that the best way to motivate his executives was to create a competitive internal environment. This approach, combined with a penchant for bold risk taking, launched IBM to unprecedented heights. In 1971, the year before Watson retired, IBM earned $1 billion in profits from $7.5 billion in sales.
After operating under several of Watson Jr.’s handpicked successors, IBM’s profits peaked at $6.6 billion in 1984. But the tide began to turn during the next decade. From 1991 to 1993, the corporation lost $16 billion and laid off more than 100,000 workers. When Louis Gerstner became CEO in April 1993, he soon discovered that a key factor in IBM’s decline had been the onset of a stagnant, stultifying culture. He set out to reshape and reform the culture to better fit the digital age, not unlike the adjustment orchestrated by the younger Watson decades earlier.
“Until I came to IBM,” Gerstner wrote, “I probably would have told you that culture was just one among several important elements in any organization’s makeup and success. … I came to see…that culture isn’t just one aspect of the game—it is the game.”
Gerstner shrewdly rejuvenated many of the company’s first principles, such as the three Basic Beliefs, which he determined had been corrupted over time. The commitment to excellence, for example, had devolved into costly and unnecessary perfectionism. Respect for individualism had deteriorated into a sense of “immunity” and personal “entitlement,” and superior customer service had declined into inattentiveness and corporate chauvinism. Gerstner’s comprehensive revitalization of IBM’s culture contributed to impressive financial results. During his eight years as CEO, IBM’s annual profits and return on stockholders’ equity averaged $6 billion and 29.2 percent, respectively.
As historian Richard Tedlow concluded in 2003, “IBM survived a near-death experience. It took an outsider to save it by, in part, returning it to its [cultural] roots.”
Human organizations need to develop leaders who can maximize group performance in complex environments. Because business problems typically involve elements from many academic disciplines (mathematics, science, communications, psychology, government, etc.) the most effective organizations will be those that appreciate and attract liberally educated people. To make optimal decisions, business leaders must discard the tendency for “single loop learning” and open their minds to new sources of information and different ways of knowing. Leaders need to develop the ability to analyze from multiple perspectives. In other words, liberal education and lifelong learning are essential complements to practical experience in the leadership development process.