Sunday, September 13, 2009

Best Business Decisions Ever

I gave you the worst, and here are the best:

7. Andy Grove was the President of Intel when their business had grown on the back of memory chips. Seeing Intel's market share being lost to competition in Asia, Grove asked his CEO what the Board of Directors would do if Grove was fired and a new President was hired. The answer was that the new CEO would get the company out of the memory business, an idea that was inconceivable to the company's managers. So, Grove symbolically fired himself, and returned as a "new" CEO with a directive to move into a new business. That new business: semiconductor processors.

6. Ed Washburn franchises a couple of automotive businesses to his military buddies in Utah. Two thousand miles away, a self-made millionaire named Jim Hinman was working as an unpaid football coach in Maryland when one of his players bet him he couldn't make another million dollars. Hinman sent a representative to Utah, bought Washburn's automotive businesses, and created Jiffy Lube International.

5. A small electronics company called Computer Tabulation Recording Corporation decides they have good products but they need a more regal sounding name to accompany their expansion into Canada. Company President Thomas Watson decides the company new name will be International Business Machines--IBM.

4. At the turn of the century, Americans were thrifty (much like Mrs. Politics, to the benefit of yours truly). A bottle cap salesman recognizes the value of throwing something away after one use--the value being that customers keep coming back for more. So, King Camp Gillette invents and sells the disposable razor.

3. Amadeo Giannini formed the Bank of Italy in the early 1900's with the philosophy that banks should serve the customers, not themselves. Offering loans as low as $10, this microcredit was a century ahead of its time. When fires blazed in San Francisco in 1906, Giannini decided to take all the gold from the bank's vault and hide it in his fireplace, enabling the bank to give loans 2 days later using for a desk a piece of wood on top of 2 barrels! The bank quickly became the biggest in the state, and today Bank of America is the biggest in the country.

2. Henry Ford, known as a great innovator but also a great asshole, decides to reduce hours in the workweek and double the salary of his workers to $5 a day. The move reduces Ford's 370% employee turnover rate, and marks the beginning of the idea that an employee-employer contract is more than just paying the employee the lowest wage possible.

1. The McDonald brothers opened their first restaurant in 1940, following a normal business model. Ray Kroc, a Multimixer Milkshake machine salesman, hoped to sell 1 milkshake machine to any given customer. The McDonald brothers needed 8 machines! Intrigued at how a restaurant could be so busy as to need 8 milkshake machines (each producing 5 milkshakes at a time), Kroc goes to meet the brothers. He convinces the brothers to sell him the McDonalds name and starts franchising food "factories" that amassed $28.8 billion in sales last year.

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