Psychoanalyzing the Corporation
Who is it that can tell me who I am?
"One mark of a great man is the power of making lasting impressions upon people he meets," wrote Churchill.2 Johann Wolfgang von Goethe was one of the greatest literary figures the world has ever known. A poet, playwright, scientist, statesman, philosopher, novelist, journalist, educationist, critic, painter, and theater manager—he was one of the last outstanding Renaissance personalities. Goethe and Napoleon were contemporaries, two giant figures of their age, both intellectual geniuses. Goethe followed Napoleon’s career and admired him as the greatest mind that ever lived. But Napoleon knew very little of Goethe and had no inkling of his greatness until they met for the first time at a peace conference in 1808. Napoleon was seated at a breakfast table surrounded by guests when Goethe appeared in silhouette before the open door and was invited to enter by the emperor. When Goethe stepped in, Napoleon fell silent, full of amazement at the sight of the man before him, too full of admiration to speak. Only three words escaped his lips: "Voilà un homme!" ("Here is a man!")
We have already seen in Chapter 1 that great individuals possess great intensity. But it was not Goethe’s energy alone that so impressed Napoleon. It was the beauty, harmony, and graceful majesty of Goethe’s personality reflected in the radiant expression on his face. Energy is only a force—which can be used for creation or destruction, depending on how it is directed. Personality determines the direction in which the energy flows and the manner in which it is expressed. It is personality, not just energy, that distinguishes the great builders from the great destroyers, Augustus Caesar from Attila the Hun; the great emancipators from the great tyrants, Abraham Lincoln from Adolf Hitler; the great benefactors of humanity from the great enemies, Albert Schweitzer from Al Capone.
Human personality is an enigma that is more easily experienced than explained. There is something about it that eludes definition. It is that in a person which makes a unique individual. Yet although it defies description, the experience of it can be quite overwhelming. A friend of Goethe’s once wrote to him of her first meeting with Beethoven. "When I saw him of whom I shall now speak to you, I forgot the whole world."3 After meeting Teddy Roosevelt, a visitor remarked: "You go to the White House, you shake hands with Roosevelt and hear him talk—and then you go home to wring the personality out of your clothes."4
The Corporate "I"
Individuals have personalities; corporations do, too. "I think almost every enterprise—even the smallest ones—have personalities," says Thomas J. Bata, chairman of the world’s largest shoe company. "I don’t believe, even if you take two service stations, that they are entirely the same." Jim Weaver, vice-president and treasurer of General Mills, agrees, "Every company has a personality." In company after company that we visited, we talked with dozens of people, and always the answer was the same as that of Brooke Tunstall, corporate vice-president of American Telephone & Telegraph Company: "Absolutely, there is a corporate personality."
At Intel the company is conscious of a corporate personality and teaches new employees about it. "Every organization has … a personality that develops and evolves over time."5 Larry Hootnick, senior vice-president at Intel, described the company as "tough, demanding, honest, result-oriented, self-critical, a little paranoid—I think you have to be paranoid to succeed in a field like this—insecure, bright, aggressive people, very fast moving." Jim Jarrett added, "spartan, non-paternalistic, straight-ahead focus, goal-oriented." Dick Sermone, personnel manager, used three terms to describe Intel’s personality: "Energy, discipline, high intelligence." What about family feeling, of which we hear so much nowadays? "I don’t know if I like the word family," he replied. "I think it’s a very business-oriented environment here, very open."
We were struck by the similarities and differences between the personality of Intel and that of its younger crosstown cousin, Apple. Jay Elliot, Apple’s vice-president for human resources, depicted Apple as "very bright—it’s almost like an adolescent—free spirited, having great ideas, fighting this Goliath in the marketplace. It doesn’t think it can’t win, which is sort of incredible when you think of 5,000 people versus 400,000. It sort of has this brash attitude that it can do anything it wants. The people here love it. We’re headed by Steve Jobs, who is almost like a messiah to us, a very bright young person having the vision of where we’re going. It’s a place where you can be free, you can express yourself and do things you’ve never been able to do before."
Del Yocam, executive vice-president of the Apple II Division, commented: "The personality shows itself as being young, aggressive, risk-taking, bright, intelligent. You know we are going to give it our all. If we fail, we’ll fail together. But we are going to succeed, and we’re all going to share in that success. We think we allude to the American dream. We think we can do it, and we all believe that. I’ve read in the paper that it’s a cocky or ego-oriented situation, but it’s not really that way from within. We really believe in what we’re doing, so I think you get that kind of feeling and personality about the company."
Sue Espinosa described her first impression on joining Apple in 1980: "I didn’t have to wear a business suit or anything special to establish a credibility there. Apple cared more about what you could do than what you looked like. Getting the job done, and doing it really well, and really creatively, was what Apple was all about." How does Sue describe Apple’s personality? "We dare to do things that we should never have dared to do. There has never been an attitude at Apple that we’re not big enough to do this, or we’re not important enough to do this, or not well enough known. Somehow in 1978, ’79, and ’80, we were able to create a cult. Apple is a cult now. There is something beyond the machine, which is magic. I don’t know how we did it, but there is something. It happened." Sue frequently repeated a word used by every person we talked to at Apple—fun. "It’s just fun to be here. We’re encouraged to have fun. Work hard, play hard. We are a force!"
The contrast between Intel and Apple is strongly influenced by the differences in the personalities of their founders and their products. Intel was founded by scientists Robert Noyce and Gordon Moore. The products it makes, silicon chips, are mass-produced and sold in a highly competitive market where even a few cents in production cost can mean the difference between big profits and heavy losses. The company operates with clockwork precision and discipline, necessitated by the technical complexity of the production process and by competitive pressures, principally from the Japanese. It is informal and free from external status symbols. Hootnick’s office is an immaculate cubicle. Not even the chairman has a reserved parking space. Everything is measured to the nth degree—even the number of square feet that a janitor can clean—to keep costs at the absolute minimum.
Apple, on the other hand, was started by Steve Wozniak and Steve Jobs, the latter having recently returned from wandering around India in search of spiritual enlightenment. It entered a market where the customer is an individual consumer, not another manufacturer. Competition was very intense here, too, but the primary factor was not cost—Jobs and Apple President John Sculley debated back and forth on whether to price the Macintosh personal computer at $1,995 or $2,495.6 The primary factor is customer appeal. Being able to attract the buyer through marketing was the key. Apple set out to capture the imagination of the consumer with its vision of the future. To do so it had first to capture the imagination of its own employees through a combination of inspiring ideas, exciting challenges, enormous freedom for individual initiative, lucrative compensation, and fun. At Apple "many employees see their work as an evangelical calling to bring computers to the masses," reports Business Week. In the words of John Sculley: "At Apple we have a chance to change society."7
Personality and Culture
What people described to us at Intel and Apple was a varied assortment of beliefs, values, attitudes, customs, and behaviors that are frequently referred to these days as the main constituent elements of corporate culture. But there is something more than just culture here. The word culture, as it is generally applied to a company, refers to "the amalgam of shared values, behavior patterns, mores, symbols, attitudes and normative ways of conducting business that, more than its products and services, differentiates it from all other companies."8
What we found was something much deeper than beliefs and behavior, though encompassing them both. Beliefs and behavior are characteristics of a living being, but who is that person who so believes and so acts? We come face to face with what Don Schuenke, president and CEO of Northwestern Mutual, described as "something living here, a personality."
Every human being has a rich assortment of ideas, values, attitudes, and various recognizable ways of conducting himself or herself. The person’s beliefs and opinions are influenced by education and life experience, by people met, books read, movies watched. His or her patterns of behavior also change according to the time and place, the people he or she is with, the social and work environment. But through all these changes of thought and action, the basic personality—the individual’s motives, character, temperament, habits—remains the same.
Personality: Energy and Direction
Beliefs and values strongly influence the formation of personality, individual or corporate, but they are not the personality itself, only attributes of it. In Personality and Organization, Chris Argyris writes: "Personality is something different from the sum of the parts; it is an organization of those parts."9 Personality tells us who a person is, not just what the person thinks or how he or she acts. Personality is the source of the energy that drives the individual. As Argyris put it, "Personality manifests energy."10 It is also the character or will that channels the energy into action. It includes the traits and skills through which the energy is expressed in behavior and that give a distinct personal color to each gesture and action.
To the extent that the personality is developed and integrated around some central core of values and goals, it controls and directs all the available energies, channels them through its traits of character, expresses them through its habits and skills in actions aimed at the fulfillment of its life purpose. In the process, raw energy is converted into intensity. The more powerful and well integrated the personality, the higher its aims, the stronger its organizing will, and the more varied and developed its skills, the greater is the energy it can harness and the intensity it can generate, and the greater the results it can achieve in life.
Napoleon was one of the most powerful and well-integrated personalities of all time. Will and Ariel Durant describe him as "an exhausting force, a phenomenon of energy contained and explosive."11 But energy in him ceased to be a raw, unbridled force of nature. It was tamed and trained, restrained and disciplined, made orderly and obedient by an indomitable will and a strong, unified character. He was gifted with many skills and capacities. All his energy, will, and talent were directed toward the fulfillment of one lifetime goal—the quest for power. His ambitious character developed, mobilized, coordinated, harmonized, and integrated all of his manifold skills, talents, capacities, and traits to achieve this single aim. Napoleon, as Will and Ariel Durant put it, "was the finest master of controlled complexity and coordinated energy in history."12
In physics the resultant effect of a physical force is determined by its energy and its direction. The force of a personality in life is also determined by its energy and direction. Napoleon had one direction, Mahatma Gandhi another. Gandhi was also a powerful and integrated personality, a man of incredible energy and endurance, but his motives and goal were quite different. He directed all his energies toward the liberation of India from British rule. Like Napoleon, Gandhi was absolutely fearless. During battles Napoleon often rode along the front lines of his army and exposed himself to enemy fire without any apparent concern. In Wellington’s judgment, "his presence on the battlefield was worth forty thousand men."13 Gandhi walked unarmed into Indian villages where raging communal warfare between Hindus and Muslims had taken thousands of lives and quelled violence by his very presence.
Napoleon tried to create a new empire by force of arms, and in the end he failed. Gandhi tried to destroy an old empire by force of words and ultimately succeeded. Napoleon, unsatisfied with being ruler of France alone, craved dominion over all of Europe. Gandhi’s sole ambition was to see his country free; when absolute power was offered to him at the time of Indian independence, he turned away from politics. Both men possessed energy, willpower, and total dedication to the mission of their lives—one to serve humanity, the other to make humanity serve him. Gandhi, like Napoleon, harnessed the raw energies of nature; disciplined, mastered, and directed them with an unflinching will toward the achievement of one goal; and generated in the process an intensity of personality that inspired an entire nation and won the admiration of the whole world. These two great personalities differed mainly in the directions their souls pursued for self-realization.
Individual and corporate personality are constituted in much the same way. Both are living forces characterized by energy and direction. Direction in the individual is determined by the dominant values, motives, and goals that constitute the core of personality that psychologists call the self or psyche. Each corporation has a psychic center, too, which consists of the beliefs, values, mission, attitudes, and objectives that determine its long-term direction and short-term goals. Its organizational structure and hierarchy of authority act, like character and will in the individual, to harness the available energies and direct them in pursuit of the company’s aims and objectives. Its systems, like the temperamental traits in the individual, are the channels through which the energies flow and the habitual ways in which the organization responds to recurring situations. Its skills are the means by which it refines the energies and expresses them in well-measured and precise actions. All these things together—beliefs, values, mission, attitudes, objectives, structure, authority, systems, and skills—are components of the corporate personality, which also possesses a physical body, consisting of the facilities, machinery, and other assets at its disposal.
As in the individual, the effectiveness of the corporate personality depends upon the extent to which energies are released by some powerful centralized motive or goal, harnessed by the organization, clearly focused in a given direction, disciplined by authority, expressed through coordinated and integrated systems with the necessary skills, and thereby converted into a controlled intensity for constructive action. The more developed and integrated the corporate personality is, then the higher are the values and goals it aspires to, the more powerful the energies it releases and harnesses, the more effective its control and direction of those energies, the greater its coordination of activities and skill in their execution, and the more powerful the intensity it manifests in work. The corporate personality is the most important person in the life of an organization—the person we alluded to in the previous chapter. The corporate personality holds the key to the process of converting energy into intensity.
Companies, like individuals, vary enormously in the quality of their personalities. We are all familiar with one great corporate personality that looms large today on the American scene—a vigorous, assertive hero to respect and admire, a giant tower of strength and self-discipline, a protective parent to its friends, an awesome opponent to competitors, as systematic and methodical as the machines it makes, of prodigious intelligence and varied skills, with an indomitable persistence and consistency, prudent and thoughtful, ambitious without limit, exuding confidence and inspiring trust, hard-driving, persuasive, and practical—Big Blue, the spirit and substance of IBM.
By contrast, the best way we can characterize the personality of Delta is as a happy southern country family. A warm friendliness and wholesome feeling permeate the atmosphere at Delta. There is an abiding sense of security and acceptance. There is strong pride, but it is not arrogant or assertive—a family pride based on loyalty and a sense of belonging. There is a simplicity and thrift—the executive briefing room is furnished with molded lounge chairs removed from Convair aircraft 20 years ago—yet no sense of deprivation or asceticism. There is an informality that masks but cannot conceal a high level of skill and professional competence. There is a keen practical intelligence, free of pretensions but perceptive and shrewd, that only rural folk possess. There is a deeply rooted work ethic, intense energy, and an unceasing drive for higher performance motivated by a commitment and dedication to people.
The Individual and the Corporation
The kinship between individual and corporate personality is more than just an analogy. It is a symbiotic relationship. Hal Geneen, former CEO of the ITT Corporation, observed, "All organizations, large and small, … reflect the personality and character of the man or men who lead them. The chief executive establishes the personality of the whole company."14 Usually it is the founder’s personality that is the dominant influence. A vice-president of IBM once said of Tom Watson, Sr., "His personality and force have saturated … IBM until now the personality of the man and the personality of the corporation are so closely identified as to be practically one and the same."15 IBM’s enormous energy, high intelligence, limitless ambition, strict self-discipline, serious demeanor, tough and driving nature, methodical approach, premier marketing skill, conservative social values, and sober and conventional conduct are direct reflections of its patriarchal founder’s personality.
Psychologists tell us that personality is a product of many influences—biological, familial, social, educational, environmental, and experiential. Geography and timing certainly played a significant role in the development of Delta. Delta was founded in Monroe, Louisiana, in 1928. Monroe was located near the vast cotton fields of the Mississippi Valley, which served as the market for Delta’s original business as an aerial crop duster, and the company has never fully lost the rural flavor of it origins. Delta’s first commercial flight was in June 1929, just months prior to the crash on Wall Street. The strained financial conditions of those early years undoubtedly contributed much to its proverbial cost-consciousness.
But the personality of C. E. Woolman probably had much more to do with it than the Great Depression. Woolman came from a Scottish Presbyterian background and had a passion for thrift and efficiency that was legendary. Assistant Vice-President Clint Sweazea still types on a 50-year-old black Underwood and fondly refers to Woolman’s resistance to purchasing new typewriters. Woolman believed in spending lavishly on the customer and airplane maintenance but sparingly on everything else—a tradition Delta continues to this day.
Thrift was only a small part of Woolman’s legacy to the personality of Delta. The founder bestows not only ideas and values on the company but also his or her ways of dealing with people and exercising authority. Woolman was a big, broad-faced, good-natured man with a homespun manner reminiscent of Will Rogers. He was hearty, outgoing, and gracious in public but quiet and humble in private—a description equally appropriate to a company known for its warm in-flight hospitality to the customer and unassuming management style at home. Woolman was fond of affecting an innocent, gullible, country-boy manner that veiled a shrewd mind and an inexhaustible ambition. The same informal manner, keen shrewdness, and incessant urge to excel characterize the company today.
The founder influences the corporate personality not only by his or her own traits but also by the type of people the founder recruits as subordinates. Woolman recruited individuals like himself—hearty, open, unassuming, and hardworking. Even today you could hardly mistake a Coca-Cola* executive for one from Delta—they are people of different casts. Woolman worked incessantly but told others to spend their weekends at home. His preoccupation with the safety and welfare of his employees won their loyalty and dedication to the company, released their energies and enthusiasm, and resulted in the creation of a friendly, secure, and highly productive work environment, where there has never been a strike or a significiant layoff. In the words of corporate biographers Lewis and Newton, "In a paternalistic tradition already well established in the South, Delta became not simply a business corporation but something of an extended family as well."16
* In quotations Coca-Cola and Coke are used interchangeably to refer to The Coca-Cola Company and to its cola product; we hope the context will make it clear which is meant each time. In text Coca-Cola denotes the company name, and Coke is the name of the beverage.
A Southern Aristocrat
In some cases it is not the founder, but subsequent leaders with greater vision and more developed personalities who mold the corporation and leave the stamp of their personalities upon it. Such an individual was Robert Woodruff, the grand old patriarch of Coca-Cola, who headed the company from 1923 to 1955 and was chiefly responsible for its growth into a multinational, worldwide phenomenon.
Across town from Delta at the headquarters of Coca-Cola, we felt we were in the presence of a wealthy, aristocratic southern plantation owner with strong ties to the nobility of Europe. The luxurious executive offices—which one journal referred to as a "southern mansion," with elegant high-backed chairs, plush carpets, spiral wooden stair-cases, and oil paintings on every wall—contributed something to this feeling; but it went far deeper than the decor. Carlton Curtis, assistant vice-president for corporate communications, explained: "The overall culture and style of a southern institution is far more European than it is northeastern. The best analogy is the one of the duck floating placidly on the water, looking so serene and gentle, until you look underneath the water and see its feet beating away. It is part of the culture here that everything is more genteel and gentlemanly." Coca-Cola is polished, gracious and charming, sophisticated and formal—staff members button their jackets just to walk through the executive floor here, while at Delta they come in shirt sleeves to meet the president. Coca-Cola is cosmopolitan and conservative, honest, patient and reliable, extremely intelligent, highly professional, a stickler for quality, private, but still dynamic despite its long history of supremacy in the world of soft drinks. There is somehow an incongruity in this unusual blend of aristocracy and soft drinks that is reinforced by the custom of serving paper cups full of Coke in elegant surroundings, where one might rather expect crystal glasses full of champagne.
From the beginning Coca-Cola was characteristically southern. The product was invented by an Altanta patent-medicine maker, Dr. John Pemberton, a century ago, with its successive owners all having deep southern roots. Back in 1931 Fortune commented facetiously that "The Pause That Refreshes" was ideally suited to the South because "The Southerner exhibits an inexhaustible capacity for pausing and an equally inexhaustible capacity for being refreshed."17 The aura of an aristocratic plantation owner can be traced back to Robert Woodruff, the son of a wealthy financier and the grandson of a self-made nineteenth-century millionaire, who bought a 30,000-acre plantation in southern Georgia for hunting and recreation about the same time he took over as president of Coca-Cola.
Woodruff was known as "Mr. Anonymous," always putting Coca-Cola in the limelight and himself behind. He was a vigorous, energetic, robust man, always very private and reserved, a man of few words, who had a warm personality and a good sense of humor. "Laugh with others, laugh at yourself, don’t let anything get you down." There was nothing very exceptional about him, other than his exceptional success. One of his successors as president, who saw the company as a reflection of Woodruff’s personality, described him about 35 years ago: "Bob has no particular talents. He’s not a technical man or an advertising man. He is fumbling in his talk, and when he tells you something’s wrong and you ask him what, he simply can’t explain, though he nearly always turns out to have been right. But he has an ability for finding good men and for binding them to him, for developing in them an extraordinarily deep sense of loyalty. I am dedicated to Woodruff as to no other man alive."18
Although Woodruff did not assume charge at Coca-Cola until it was more than 50 years old and handed over the reigns to his successor 30 years ago, his influence was alive in company affairs at the time of his death in early 1985. "His presence is still very much felt," Coca-Cola President Don Keough said a few months before Woodruff’s death. "If you look around at the worldwide Coke system, his stamp is still on the system. It is a very real one."
Coca-Cola’s perennial dynamism derives partly from the energetic line of entrepreneurs in the Woodruff family and partly from the present and relentless efforts of Pepsico, Inc. to overtake the leader. But there is another driving force behind Coca-Cola’s century of continuous growth to become a $7 billion a year enterprise—the product itself.
For decades the enormous popularity of the drink was as surprising and inexplicable to the company’s owners as to anyone else. A mystique grew up around the product, since no one was really sure whether it was the drink itself, or the shape of the 6½-ounce bottle, or the tradename, or a combination of them all that was responsible.
Coke established an image of quality and an aura of mysterious appeal that enabled it to withstand the onslaught of more than 1,000 competitive products—most of them lower-priced imitations—that attempted to make inroads on its domain. Somewhat on a parallel with King Midas, everyone who touched Pemberton’s secret formula turned to gold (except the inventor himself, who sold it for $2,300). Coke has made untold numbers of shareholders, bottlers, and distributors rich beyond their dreams.
Coke was once described as "a sublimated essence of all that America stands for, a decent thing, honestly made, universally distributed, conscientiously improved with the years."19 But today Coke represents more than just America. This is the century of the common people. All over the world people have emerged from centuries of hard labor and suffering with a passionate aspiration for success, leisure, and enjoyment. Coke is "the common people’s champagne"—refreshing, pleasant, and affordable. In every country where it is sold, it is identified as a symbol of the values of that nation.
One executive described Coke’s personality this way: "In my view the personality is the American flag in America. In Brazil it is the Brazilian flag. In Argentina it is the Argentine flag. The world owns Coca-Cola. One time some visitors from a foreign country who had never been outside their country came into Atlanta, and they said, ‘Oh, you’ve got Coca-Cola too!’ It is a symbol of what is good and growing in each country." In fact, Coca-Cola is an even more dominant force overseas. It controls from 40 percent to 70 percent of the carbonated soft drink market in most the countries where it is sold—in Japan the figure is 67 percent—compared to its 38 percent market share in the United States. As Fortune wrote 50 years ago, "Coca-Cola is not so much a drink as an institution."20 Coke has become a symbol of the better life in an age when people everywhere are moving up. As Woodruff liked to say, it is "the people’s drink."
The symbolic identification of the product with humanity’s aspirations is a key to the personality of Coca-Cola and its phenomenal success. "There is an absolute fascination that people have with Coca-Cola," says Keough. "It is a sort of mystique which surrounds this particular product. That name, Coca-Cola, has somehow penetrated the psyche of hundreds of millions of people around the world." Doug Ivester, one of the few finance people we met who spoke more about other things than about money, said, "The Coca-Cola business is a little bit of a religion." Coca-Cola’s chairman insists, "It’s more than a religion. The people here have Coca-Cola in their veins instead of red blood."
During our visit to Coca-Cola, we were frequently reminded of another company three thousand miles away that belongs at a dramatically opposite end of the product spectrum—Apple. What could a hundred-year-old soft drink manufacturer and an eight-year-old computer maker possibly have in common?—A streak of mysticism. On hearing us repeat Sue Espinosa’s comment that "Apple is a cult," one Coca-Cola executive replied, "Well, when they grow up, they can become a religion, too." For all their differences, we came away with the conclusion that Apple is in some essential respect a younger version of Coca-Cola, appealing to the deeper aspirations of people in a new age in much the same way as Coca-Cola has done since the beginning of the century.
Coke addressed people’s need for relaxation and enjoyment, for relief from the nervous stress and the straining pace of modern life. Apple addressed a deeper psychological need in society. In an age when people are in danger of becoming mechanized by the impersonal machine, Apple has humanized the machine and made it not only personal but personable as well. Apple has converted the machine from a de-humanizing threat into a source of enjoyment. Apple’s biggest strength is its identification with a fundamental need of modern society, which opens up to a company the possibility of endless expansion. Such needs and possibilities exist in every field and can be served by any company—no matter how small it may be—that has the vision to perceive them.
Changing the Corporation
When Coca-Cola introduced its new low-calorie soft drink in 1982, it broke with a hundred-year-old tradition by attaching its precious trade name to another product for the first time and called it Diet Coke. The same year, the company ventured into an entirely new industry with its acquisition of Columbia Pictures Industries, Inc. Then, in April 1985, Coca-Cola astonished American business by changing the secret formula of the world’s largest-selling soft drink.
These moves have been labeled by outsiders as evidence of a dramatic change in Coca-Cola’s corporate culture. A Merrill Lynch analyst said that Chairman Roberto Goizueta has "transformed Coca-Cola." Beverage Digest described it as "an extraordinary metamorphosis."21 International Management ran a cover story on the shake-up in Coca-Cola’s corporate culture.
Does a change of product or entrance into a new field really reflect a fundamental change in the character of an organization? When an individual changes jobs, his or her dress and actions may change—the person may shift from being a tax collector to running an orphanage—but the individual’s basic personality remains the same. Changes in product line are more like the annual model changes at Detroit. The appearance and price are different, but the engine and the chassis remain pretty much the same.
Roberto Goizueta has no illusions about it. He loves to point out the degree to which things at Coca-Cola remain exactly the same. "I think that the idea of a new Coca-Cola company has been overplayed in the press. We have the same strengths today that we had ten years ago." To him, the company’s diversification into pictures is a logical extension of a process that began in the early 1950s. Coca-Cola has always been a company that excelled in marketing images, and that is precisely the business Columbia Pictures is in. The entertainment industry provides relaxation and enjoyment for the mind, as Coke does for the nerves. When Goizueta first discussed the idea of entering the entertainment field with Woodruff 3½ years ago, the 92-year-old man replied, "If I were 50 years old today … this is precisely the sort of thing I would be doing."
People frequently change their opinions, their behavior, sometimes even the values and beliefs they espouse, but their personalities remain essentially unchanged. The same is true of companies. Psychologists have always been leery of sudden conversions, because they usually prove quite superficial and temporary. Permanent changes are most often very gradual and rarely radical. This, of course, does not mean that people and companies do not change. They are constantly changing. But deep-rooted changes are not brought about merely by a change in the goals top managment seeks, the strategies it adopts, or the actions it initiates. A company’s personality is rooted in every one of its beliefs, values, and attitudes; in its structure; in the way it motivates and controls people; in its systems; in the type of people it recruits; in the way it trains them; in its relationship with suppliers, customers, and shareholders; and in the products or services it markets. Management can and must act to constantly modify, and hopefully improve, functioning in all these areas. In the short run, it can motivate people to work hard through greater rewards or greater discipline, it can shuffle managers or fire them, it can reorganize divisions and enter new fields, it can buy or sell subsidiaries—but none of these actions necessarily has a deep and lasting impact on the basic personality of the company. Institutions do not evolve by themselves. They need leaders who extend and widen their vision, who release and mobilize their energies, and help them evolve. The challenge faced by all leaders is whether their personalities are going to imprint a greater vision, dynamism, discipline, and expansiveness on the personalities of the organizations they guide in order to foster company growth, or whether the company is going to impose its own personality on the leader in order to preserve its present character.
The Great Dame
The most dramatic example of a sudden, radical change in the life of a major corporation was brought about by the breakup of the Bell System at the end of 1983. Until that time, AT&T was the largest corporation in the history of the world and the greatest corporate personality of them all.
Each of us has felt the presence of that personality in our own lives. She has been a mother to us all—kind, attentive, courteous to a fault, rich in talent, laden with skills, huge beyond conception but not overbearing, wealthy beyond calculation but not snobbish, confident of her strength and knowledge and capacity but neither arrogant nor vain: Ma Bell—for 107 years, the heart and soul of AT&T.
AT&T’s personality was a natural product of the kind of people who guided its early development, the field of the company’s activity, and the business environment of the day. When Alexander Graham Bell filed his patent application for the telephone in 1876, several other men were working on similar inventions, and it has never been clearly established whose was the first. But Bell and Gardiner Hubbard, who organized the original Bell Telephone Company, were the first to devise the system for utilizing this invention that has subsequently been adopted throughout the world. At that time, the only model available was the telegraph system devised by Western Union Corporation. But Bell had an even more ambitious system in mind. He envisioned installation of phones in every home and office in the country and gathering the local lines at local offices, which would be interconnected by cables. Hubbard knew that financing such a system would be impossible, so he conceived the plan of selling franchises to local telephone companies, which would raise their own capital, use the Bell patents, and pay royalties to the Bell company.
It was Theodore Vail who drew up a program to create a national telephone system interlinking all the local companies by providing long-distance services between them. AT&T was incorporated in 1885 as a separate company with Vail as its first president. Vail also proposed to affiliate local companies with the Bell organization by exchanging equity with them. In 1907 the various Bell companies were consolidated under AT&T, and Vail assumed leadership of the new firm. In the structure that emerged, a highly centralized parent organization controlled many regional operating companies on which it imposed common values, objectives, policies, standards, strategies, and behavior.
Just at the time of AT&T’s emergence as the dominant force in the industry, events were taking place that very powerfully influenced the development of the company’s personality. It was a time of great public outrage against the ruthless, illegal, and corrupt practices of giant trusts like Standard Oil, culminating in the breakup of the Standard Trust under the Sherman Anti-Trust Act.
Vail was keenly aware that in order to survive, a corporation had to do much more than just amass huge profits; it also had to be accepted and valued by the community, which the Standard Trust never was. He perceived service, not profit, as the guiding mission of AT&T and established as the corporate credo, "One system, one policy, universal service." His idea was to make AT&T a monopoly that would not behave as if it were one—a "publicly owned but privately managed institution," as one of his successors phrased it. Instead of using its position to extort greater profits from the public, Vail strove to distribute the benefits of AT&T’s size by giving lower phone rates to the company’s customers. Instead of concentrating ownership in the hands of a few, he succeeded in creating a very broad-based ownership. He also established a steady dividend policy in bad as well as good years to make the stock attractive to small shareholders as a lifetime investment that could be passed on to their descendants. He wanted the company to be perceived as a good neighbor and succeeded so well that while the public had angrily demanded the breakup of Standard, it hailed AT&T as a responsible corporate citizen and Vail as an enlightened entrepreneur. Ma Bell became the ultimate symbol of a benevolent corporation working in and for the public interest.
The personality of AT&T was strongly influenced by the personalities of the individuals who founded it. Most of them were wealthy Bostonian aristocrats. Hubbard was a regent of the Smithsonian Institution and founder of the National Geographic Society. AT&T’s conservative, respectable image undoubtedly had its roots in the cultured background from which it sprang. Vail was an outgoing and open man, who moved smoothly with others, freely delegating authority. He was the first of a new breed of managers who helped create the style of the modern corporate executive. Up to that time, it had been common to view the company as merely an extension of the individual who founded it. But Vail believed the founder is there to serve the company and willingly subordinate himself or herself to its interests. Vail was certainly ambitious, but he knew the limits of power, was sensitive to the growing public concern over big business, and voluntarily curtailed AT&T’s expansion, restricting it from entry into several related fields. He was a cautious man. "I don’t believe in ghosts, but I am afraid of them."22 From Vail, AT&T acquired both the thrust for expansion and the prudent self-restraint that have sustained it over the decades.
The rapid and continuous expansion of the U.S. telephone system throughout the first half of the twentieth century generated a constant need for additional employees and qualified managers trained in the Bell organization. Employment security, lifetime careers, and promotion from within naturally followed from this situation and imbued the corporate personality with the characteristics of a secure and accepting mother. "You know, you can laugh about ‘Ma Bell’ and that sort of thing," said Brooke Tunstall, corporate vice-president, organization and management systems, "but nobody ever felt that their job was in jeopardy. This benign protector, the thing called Ma Bell, made people feel secure. A workplace was created where the interest of the individual could be sublimated to the interests of the company, because people felt secure." When Tunstall appeared for a job interview at one of the Bell operating companies in 1948, he was so overwhelmed by the friendliness and cheerfulness of everyone he met that he said to himself, "I’d work for this company for nothing." The same atmosphere pervaded the entire system from coast to coast. AT&T evolved into a harmonious environment characterized by highly disciplined people working in an atmosphere of trust and committed to "something that was a little larger than the company."
As a regulated company, AT&T was freed from many of the pressures of the competitive marketplace. Yet it still was able to operate the cheapest and most efficient telephone system in the world. It did this by encouraging internal competition between 20 Bell operating companies, which were evaluated and compared with each other every month on at least 100 specific measurements of productivity and quality of service.
The major characteristics of AT&T’s personality were closely linked to its stated mission of providing universal telephone service to all customers in the United States. The values it adopted, the attitudes it fostered, the organizational structure it created, the standardized systems it established, the uniform policies it enforced, the type of people it recruited, the skills it imparted through training, the internal atmosphere of coordination and teamwork it fostered between different departments and divisions and companies of the system, and the way it attuned itself to be in harmony with the needs of a changing society over nearly ten decades—all these were related to its mission of being the one company that provided all telephone services to practically every customer in the country.
Whatever Happened to Ma Bell?
In the past few decades, dramatic changes in the environment have altered many of the external conditions under which AT&T grew up. The development of computers and satellite communications eliminated the necessity of one telephone system to meet the needs of the entire country. AT&T’s corporate mission has become outdated. The breakup of the Bell System was the result.
After divestiture, AT&T has had to adjust to the shift from a regulated to a competitive environment. It has had to turn its attention away from interactions with regulatory agencies of the government to competition with other communications companies in the marketplace. Divestiture has necessitated a reformulation of corporate mission; a change in structure; a comprehensive review of corporate attitudes and policies toward employees, customers, and society.23 These changes have generated shock waves of disturbance throughout the company as well as deep anxiety among employees and have helped to popularize Chairman Charles Brown’s remark, "Ma Bell doesn’t live here anymore."24
If ever there were a classic case of an organization’s having to change its personality beyond all recognition, this is surely it. To those intimately involved in the process and sentimentally attached to the old AT&T, the changes appear like mortal blows falling on a dear friend. But in reality, the core of AT&T’s personality remains intact. It still possesses a highly motivated, dedicated, and committed workforce, which is perhaps even more motivated than before. "The energy level is higher," Tunstall observes. It still operates through the same communications network, though no longer exclusively anymore. It still possesses the most sophisticated industrial research laboratory in the world. It still possesses an impressive array of technical, managerial, organizational, and interpersonal skills. It is still one of the largest and wealthiest corporations in the world.
It is true that AT&T now faces heavy competition in the marketplace, that its assets are diminished, that its research budget is under far tighter constraints, and that is must acquire marketing skills that it did not possess earlier. But these things do not touch the core of the company’s personality. It may be true that the culture at AT&T is changing from a care-taking, secure environment to a more risk-taking, competitive one, but this is still a relatively superficial type of change. Culture is only a way of living and acting. Personality is the being that lives and acts, and the corporate personality remains essentially intact. Ma Bell still lives at AT&T.
Twenty-five years ago Frederick Kappel, then president of AT&T, wrote a book entitled Vitality in a Business Enterprise. He defined vitality as "the power a business generates today that will assure its success and progress tomorrow." What makes a vital business? "Vital people make it. … It is not to be found in things, in machines, or dollars, or material resources of any kind. Vitality is something people demonstrate through sustained competence; through creative, venturesome drive; and through a strong feeling of ethical responsibility, which means an inner need to do what is right and not just what one is required to do."25 Certainly AT&T still possesses all those attributes today.
AT&T’s greatest strength lies in its highly skilled and dedicated workforce, its ability to put service to the customer ahead of profitability as a corporate priority, and its capacity to identify with the larger national interests of the country. These are the roots of its historical growth and its incredible accomplishments. They remain intact. If only the top management does not abandon the company’s greatest strengths by casting off what is of lasting value in the process of shedding outmoded attitudes, policies, and structures, then Ma Bell is virtually assured of a future as impressive and accomplished as her past.
Corporations are as varied in their personalities as people are. Yet all successful corporations release, harness, direct, and convert human energy into corporate intensity through one or more of the powers of personality. It may be through the power of discipline, like Intel; through systems and skills, like IBM; through cooperation and loyalty, like Delta; through service, like AT&T; through harmony with a social need, like Apple and Coca-Cola; or through any combination of these powers. The powers of corporate personality are not the monopoly of the large and successful. All of these companies had small, entrepreneurial beginnings—Coca-Cola 100 years ago, Apple in 1977. They have reached their current status because these powers are present in every organization, though often unseen and untapped. Companies that mobilize one or more of them surpass others in the field and establish a record of enduring success.