Conversation with Edward Carlson

Conversation with Edward Carlson

EDWARD f dward Carlson is the man who turned United took Airlines. A major over as chief cember Its market ployees executive were in De- in...

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EDWARD f

dward Carlson is the man who turned United took

Airlines.

A major

over as chief

cember

Its market

ployees

executive

were

in De-

in its his-

share was shrinking,

A vast centralized

he

had just suf-

loss, the biggest

demoralized

around

When

officer

of 1970 the company

fered a $46 million tory.

feat!

its em-

and discouraged.

bureaucracy

was stran-

How

did he accomplish

Obviously,

neither

that Carlson’s

with

the system

Carlson

himself

Kaiser:

“Find

he devised

that philosophy,

a large part of the answer. ascribes

The

provides philosophy

to the late Henry

the smartest

people

you can,

pay them well, give them lots of autonomy and they words,

will make you look good.”

but only part of Carlson’s

management

Organizational American Management

The

the turn-

this brief intro-

duction nor the conversation that follows will provide a definitive answer. We believe however,

together

Wise

corporate

wisdom.

gling in its own red tape. around?

ophy,

for implementing

philos-

United

Airlines

complementary

system

installed

at

was based on a number

Carlson

of

and interlocking

elements.

First, it was decentralized around a number of profit centers, with the top executives in

Dynamics, Sprifzg 1979. @ 1979, AMACOM, a division of Associations. All rights reserved. 0090-2616/79/0013-0049/$‘02.00/0

49

these profit

centers

competing

based on the profits to their

efforts.

extended

for bonuses

that could be attributed

Moreover,

agers, each of whom competed

and promotions

ference

station man-

headed

profit

in both performance

centers

for recognition,

raises,

system

based on the success of their

Other

key

include

what

agement”U.A.L.,

As Professor the Stanford Carlson

Richard

Pascale

of of

Business

School

has written

in his paper

“Three

Chief

Execu-

Results,”

“Carl-

How

Style

son’s system pushing

Effects

centers

on initiative,

responsibility

and

information

relevant

diffusion

ty, in turn, during

a working

business,

lifetime

(This interview

DOWLING:

and

agement”

that

was conducted

This

eralization

with a report

on the action

Dowling,

editor

of Organizational

Neustadt’s

book

presidents,

but I think

to chief

executives

in general.

and move

the argument

might

in

The first is whether own experience,

be that any chief

you think and second,

the statement in terms

you tried to move it, and the way in which the new thrust?

a bit of truth

to the story,

that

from

to secure

in a new direction-which

or dramatized

comment

stirrups

in his ability

tion in which

initial

the gen-

is vastly

in sneakers,

say five years, is limited

an organization

are also flaws in it. Relating

50

The

chief executive

lines, from the time you took over in 1970, can you identify

There’s

on presi-

people to climb aboard.

sense, based on your

CARLSON:

Dynamics.)

about American

the image of a president

in a given period,

to two questions.

more to the sys-

for the rest, we will let Carlson

To put it more concretely, commitment,

or

to me by Richard

could be extended

He uses, instead,

executive,

contem-

speak for himself.

He was talking

hand, persuading

Someone

up to the em-

as a result of his or her suggestion

was that the image of the all-powerful

overdone.

it is accompa-

feedback.

ployee

was suggested

generalization

unless

visible

plated

tem-but

be-

power.

to emulate

also realizes that ‘“visible man-

There’s more-lots

rests on

question

executives

to

level,

complaint.

by Dr. William

dential

throughout at every

aZways follows

in authority

forged

difference

of employees

is hollow

spent in the hotel the

constantly

man-

the ideas and listening

nied by equally

and the

support

in Carlson’s

he calls “visible

his senior

ing.” Carlson

and accountabili-

that wholehearted

participation,

and urging

forever

rests on his conviction,

dif-

his example and to do their own “base touch-

to it.” This downward

of responsibility

support

and the bottom

elements

traveling tapping

the grievances

accountability

out to those closest to the problem

and wholehearted

line.

efforts.

tives:

confidence

in a service business makes a tremendous

decentralization

to the 1,700 individual

and who

tween

but like so many until

of United

about

Air-

the new direcyou symbolized

generalizations,

it to my own experience, the mid-fifties

leads

makes any

I would

there

make the

1962 or 1963, the

Western

Hotels

Kaiser.

Corporation

It was a wonderful Cement,

and so forth.

drive.

Quite

the Hawaiian

position

in Kaiser Steel, Kaiser Aluminum,

I would

neville and Coulee dams, the shipbuilding steel?” The one thing

he wouldn’t J.

DOWLING:

Where,

CARLSON:

He wasn’t successful.

Kaiser

in business, about

how is it possible

in one man’s business

and his car, the Henry

interest

get him to reminisce

ences. Once I said to him, “Mr. Kaiser, in so many endeavors

for Henry

with Mr. Kaiser.

because it came at a time when he had retired

But he still had a consuming

often,

Village

of being the liaison officer

experience

from an active leadership great

operated

I drew the assignment

to be as successful

lifetime-construction, program

talk about

and

his experi-

during

the Bon-

the war, cement,

was the automobile

business

as I recall, he wasn’t successful. He said, “Eddie,

is to try and find the smartest lots of autonomy.

Their

people

successes

I don’t propose ern Hotels, assemble

person,

smart people to compare

in and having

myself

in consequence,

them challenge

with Mr. Kaiser,

skilled

and very

the group

responded

professional.

I provided

group

of Iead-

some leadership

and

to direction.

No one, in my judgment, have the support

him.

but in West-

in 1970, we were able to

who were then, and still are, a very strong

ers-highly

more dependent

I’d have to add

a great leader;

after the war, until I went to Chicago

a group

I’ve always done

make you look good.”

a point to that. H e was a very strong he had no fear of bringing

it’s very easy. What

I could find, pay them well, give them

of people

can be successful

around

them.

you are on the people

cago in December

The

around

1970 to take over United

a little late to learn a new business.

The

in business,

larger

you. When

Airlines,

company

unless they

the company, I went

the

to Chi-

I was 59 years old-

had lost $40 million

in

1970. People

asked me, “What

do you know about the airline business?”

My answer was that I didn’t know anything ever, it has two points businesses,

in common

and both are heavily

years’ experience

about the airline business;

with the hotel business. influenced

by people.

in working

with

people,

aggressive

step

we took

and

how-

Both are service

I ha,ve had 25 or 30

I do know

the

service

business. The been there United

most

three

or four

months,

and their wives to the Century

to get them out of Chicago tions.

I wanted

them

out of it and work night.

During

the company

/

so we could

on the “profit-center”

decision

after

created

a policy

debate,

committee,

regions, concept.

make

we made which

Having two

I chaired

of

I wanted

socially

at

to decentralize

to place maximum

unanimously

subsequent

I’d

a weekend

each other

and we agreed

after

by the distrac-

we came up with the decision

major

emphasis

much

wives,

be influenced

the day, but get to know

that weekend, into three

their

days,

management

Plaza for a long weekend.

so they wouldn’t

to bring

during

in the early

was to take the senior

reached

moves;

that

first,

for seven years before

we

I gave

51

up the day-to-day

operations

It was the corporate Second, my closest agement

committee,

we created

associate,

McErlean

implemented

running

the name implies.

the

decisions

decisions.

committee,

as chairman.

We had to make a distinction

day-to-day

It was what

and it made policy

an operations/management

Chuck

committee

committee.

of the airline.

policy

The

with

operations/man-

of the corporate

between

policy

policy

de&ions,

and the

of the airline.

The concepts

worked

vided some leadership

well. We put together

in turning

a lot of skilled people

the company

who were looking

a strong

around,

for someone

team. I pro-

but with help from

to provide

the leader-

i ship. Your support

earlier

statement

of the people

pends

on what

line, think chance

around

the people

is correct. you.

The

working

of you. Again,

because

around

ing. I traveled

anything

about

you,

without

the

effectiveness

and those

de-

on down

ought

the

to have a

up one day as chief executive the airline

200,000 miles a year,

about

powerless

of your

I felt that the people

to look at this guy who showed

cer, and didn’t know

You’re extent

business,

to express

I started

my concern

offitravel-

for what

~ I called “visible management.” I often weekend,

used to say to Mrs. Carlson,

that I felt as though

an airplane,

and I’d shake

when

I were running

hands

with

I’d come

for public

any United

home

for a

office. I’d get ofI

Airlines

employees

I

could find. But I wanted sufficiently

these people

comfortable

to make

that’s what they felt like doing. tions is the reluctance round

himself

There’s

club. When

I call corporate

But you’ve

various

other

someone

a lot, practicing those

you do. They they’re

in middle

playing

industry,

way or a worse

because

to sur-

golf, or at his what

those

people

wrong

employees,

have the

but, by and

and

people

people

that this is particularly could

way. And in a service

way, no amount from

of formal within.

in than

In short, it pays to listen.

about the fact that the president

where

to

with success.

idea of what’s good for the company

headquarters.

had to come

and talking

will argue with you.

they’re

office

And you stressed

in a service

employees

right and sometimes management,

sitting at corporate

motivation

at home,

arguments

point

The

too isolated,

visible management,

pany has a constituency. better

to get out and travel,

on the way to developing

want to be associated

jobs have a better

to do it in a better

52

you’re

You made an interesting tant

officer

me, if

corpora-

cancer.

Sometimes

DOWLING:

in the company,

got to accept

people

with

in American

to become

you will take a lot of heat, because

same objective large,

a tendency

that happens,

If you travel people,

One of the problems

argue

with people who won’t argue with him. He hears only things

he wants to hear, whether private

or even

of the chief executive

to listen to criticism.

me and to feel

to be ab!e to identify suggestions,

elect

industry, controls They

of a comimpor-

to do the job in a if they didn’t want were going to work.

couldn’t

be coerced.

In

terms

of “visible

ments.

management,

” it seems

One was the base touching,

The other

element-and

of the Stanford soliciting zation,

here, I’m referring

Business

information were

to me that

the sheer

School-is

and inputs

you consciously

lower

and deliberately

Pascale

of command.

down

bending

ele-

involved.

by Richard

the chain

people

two

of travel

to a paper

bending from

it contains

amount

In

in the organi-

the chain of com-

mand? CARLSON:

Sure. No question

about

port of the people

in the senior

name of Robb

Mangold

the Eastern

division.

or Newark,

then what

work.

These

trying

to undermine

guy, someone

positions.

works

I practice

knew

my visits

them. What executive

A man by the

for United

to Boston,

Airlines

out for personal

I was trying

officer

wouldn’t

glory.

I wasn’t

to do was to create

the feel-

of the company

talk to. Often

in

or LaGuardia,

by way of visible management

that I wasn’t

you could

if you have the sup-

Let’s be specific.

is the senior vice-president If he resented

people

ing that the chief

it. But the approach

they’d

was an approachable

chat with

me. In no case

did I sense any resentment. DOWLING:

Even

though,

obtained

been making CARLSON:

Not form

there

from

must have been occasions

lower

levels would

imply

when

There’s

100 percent

no way in the world

that an individual

were

them

He had trouble

they weren’t with

being

done right.

a different

different,

management

for example,

from

tant is the end result. In a service

done precisely style.

another

can per-

business,

to make a different If somebody

especially,

was so valuable.

to your

He didn’t

said, “I’m interested

style.

do

that we style

What’s

is

impor-

you can’t have a rigid

but you must allow people

the

interpretation.

does something

does it make, except

as he would

recognizing

My management

person’s

set of rules. You can have some guidelines, freedom

you up had

of what you ideally might want him to. I had an associate

who, for years, felt that unless things

quite

higher

mistakes.

necessarily.

all operate

the information

that some people

a little

differently,

own ego ? This is why tell people

to do things

in their being successful.

what

difference

Mr. Kaiser’s his way.

attitude

Instead,

he

I don’t care how they do it.”

And I think that’s what we’ve tried to do. DOWLING:

I’m thinking

of presidents

velt or John

Kennedy.

on in Rumania, phone thereby

of the United If they

States, such as Theodore

wanted

to use a hypothetical

to find out about

example,

and talk to the man at the Balkan bypassing

they would

what

pick up the tele-

desk in the State

four or five levels of hierarchy

Roosewas going

Department,

in their search

for first-

hand information. CARLSON:

Unless you’re careful, ing relations,

however,

have any trouble.

you can have problems. with

Whenever

the people I picked

If you maintain

in line positions

up some information,

good workyou

shouldn’t

I would

call

53

the senior officer of the division land, Reno, and Las Vegas, a letter to the people

and say I just got back from visiting

and here’s what I picked

who gave me this information

and tell them I’ve been

in touch with you, and that you are going to follow

through

In that

with

way,

you

don’t

destroy

your

Oak-

up. I’m going to write

credibility

on the matter. your

sources

of

information. D~WLING:

You were

providing

two kinds

of feedback.

with the man who had the formal time you were

reassuring

the man who

first place that he had performed

You were

responsibility

getting

in touch

for the area. At the same

gave you the information

a service

and you personally

in the

had followed

up on what he had told you. CARLSON:

There’s

another

naming

senior

point, people

said to all these people, to do everything proach,

because

select the wrong

which

is essential.

in United

I can to help you succeed.” if they succeed,

In a way,

it’s a selfish

it makes my job that much this isn’t working

I’ve

I’m going ap-

ea’sier. If you succeed,

out for you, or

You’ve got to take him out. If you have the right credi-

the people

that

you

they feel that any suggestions of them won’t resent phone,

company.

man, and you work with him, and he still doesn’t

for the company.” with

deal to do with

and in the hotel

“I have a great desire to see you succeed.

you’re going to have to say, “You know, bility

I had a great

Airlines,

helped

select

for their

positions,

from you are made in a positive

the telephone

and say to themselves,

call. Of course,

“Now

why

and if

vein, most

they may hang up the

the hell did Carlson

have to

find that out?” DOWLING:

That’s only human.

CARLSON:

Sure. The other of our senior day-to-day sources.”

day I picked

people.

operation

up some information

for two

And I said, “People

and a half years.

visiting

You’ve

been

You’ve

I always

out of the

got unbelievable

feel free to talk with me because

and it gets into the mainstream.” thing like, “I enjoyed

and passed it on to one

He said, “Ed, it’s amazing.

I pass it on,

get back to them and say some-

with you on the plane the other

what I’ve done. I’ve passed your comment

on to so-and-so,

day. Here’s

and you’ll hear

from him.” DOWLING:

That’s

the sure way

the word

got around

your sources

54

Another

that talking

of information

your neck out-nothing’s CARLSON:

of keeping

consideration,

where

people

going

to be discharged

would

your

sources

to Carlson

dry up. People

going to happen as I said before,

feel free to communicate because

of information didn’t

they

flowing.

If

make any difference,

would

feel, “Why

stick

anyway?” is that you need to create a climate with you, and not fear that they’re

went

over

their

boss’s head.

I’m a

realist.

Often

when

to the supervisor,

something

he has said to his subordinate,

do, make yourself

look good?

me?”

Usually,

about

it.” It might

If you were

says, “I told

the person

be little things,

seem so little to the person DOWLING:

has come to me and then gone back down

who would because

to disagree

without

complain

the

something

resorted

I don’t feel strongly

about

In any large company They

about

encouraging

do it out of

of communication

any

to playing

devil’s advocate.

top people

of what I would

important

issue-so How

much

so

strongly

do

devil’s advocate?

the specific

influenced

feel very

your

You were fearful

virtue

of playing

you have a policymaking

is heavily

should

around

but it didn’t

to you, probably channels

discussing

you feel about the virtue of playing

that group

do anything

a washroom,

normal

being disagreeable.

unanimity”-in

that you sometimes

CARLSON:

didn’t

to

you tell

out.

You mentioned call “initial

didn’t

with the gripe.

By and large, the people haven’t worked

are you trying why

you and you

like painting

a sense

of frustration

“What

unhappy,

by the chemistry

comfortable,

devil’s advocate.

group,

regardless

and the success

of the individuals of who

might

of

in it.

be sitting

the table, to say, “I don’t agree with you,” and to initiate

a strong

discussion. During know

my early

days

with

United,

me very well, so it was desirable

and to solicit views from highly company

for many

years,

professional

before

people

I expressed

first, I wasn’t sure that I knew enough

in those

early days, if I said what think

“He’s already

people

really

didn’t

who had been with the

my views.

reasons, would

these

for me to put an item on the table Why?

For two

about the business.

I felt too soon, other

people

made up his mind and I might

Second, inevitably

as well go along

with him.” DOWLING:

In effect,

it was a form

of closure

for you to comment

early

in the dis-

with age, is putting

an idea on

cussion. CARLSON:

And another the table. meeting. start

method,

We

I had a pretty

the discussion,

think

which

always

dead right.”

any more credit.

an idea, and the policy they’ve

idea of what

on any major should

the table

said, “You know,

across

to do,” I would

Let the other fellow had already occurred when

they

committee

I’m familiar

say, “I haven’t

had a new idea. They

thought

a I’d I

of it,

and in the business

say, “I came up with

it.” Some chief

are scared to death to let anyone reserve

be done.

get the credit for the idea, to you. I didn’t need to get

leave that table, endorsed

issue before

I tho’ught

I had made my mark in the company

Let the people,

cers with whom

papers

and if someone

even if the same solution world.

good

this is what we ought

but you’re

I guess comes

had position

new ideas for themselves.

executive

offi-

else feel that

55

DOWLING:

I see your

point.

hog credit

no longer

exists. In fact, it’s the reverse.

tion

effective

by stressing

more

When

you get to be chief executive

officer,

the need to

You make the organiza-

the contributions

made

by other

mem-

bers of top management. CARLSON:

When

you run a major

company,

unless you’re

careful,

pretty

This is why I prefer

heady.

nates get the credit. may be smarter

people

you can begin Don’t be afraid

I don’t claim to have a great IQ; there

smarter

am. But over a period

competent

in holding

by superior

You made a comment

that different

ently.

Therefore,

in your

group

of complementary

are people

I’ve developed

and not feel threatened

by someone

who are smarter a capacity

Let me expand

my own in the business

personalities

personalities.

important

to assemble

level, because

was woefully

being

a highly

man, and being

a

You didn’t want all of them formed

but most of them

United

between

with world

see the same facts differ-

it was very

on that point. The rotation

or operations.

than I

expertise.

top team,

management

skilled professionals,

marketing

who

to work

out of the same mold, all of them with a similar personality

ference

it can be

in a given area.

of years

a,nd to become

at the senior

ego. And

Let your subordi-

of being challenged

CARLSON:

CARLSON:

your times

than you.

Or at least someone

DOWLING:

stroke

them-at

.Mr. Kaiser’s method.

DOWLING:

people

constantly

to believe

bent.

of senior people United

were

in finance,

flight,

weak in generalists.

skilled

the chief

financial

executive

was important

had a number

of highly marketing,

There’s

a big dif-

man and a highly officer

skilled

of a company

like

United. In order to take these people tise and make sions. We centers.

also made

Each

Braniff-they of those

generalists

maintenance

of those

divisions

were major

divisions

overlapped

airlines

began

to make

with finance,

marketing,

When orities.

First,

black.

Second,

I first talked

we created

and flight

operations

was larger

than

decisions

exper-

individual

Northwest

diviprofit

Airlines

or

manager

as a generalist-decisions

that

and operations. board,

the leadership

I had to develop

of vertical

the geographic

in their own right. The general

to United’s

I had to provide

that at an appropriate

with a high degree

out of them,

I said there

were two pri-

to get United

back into the

a management

succession

time I could step aside and have people

program,

so

prepared

to

take over. To do the latter, quired

the perspective

into a position

56

dozen generalists

we had to develop

of a generalist

of overall

responsibility.

a pool

by moving We

in the more senior positions.

ended

of people

who

out of the vertical with

acline

a pool of half a

The

the people

second part of your

involved.

There’s

of us to be surrounded

questions

deals with the personalities

an understandable

by people

of

desire on the part of most

we like-people

who don’t give us a bad

time. DOWLING:

People

CARLSON:

This is dangerous,

that you relate to very easily.

fellow

effectively. quick

if you let it get out of hand you won’t have the

In the corporate

first-class

see their order

because

who will argue with you, which minds,

point

of view.

committee

committee

and they became On the other

to get a discussion

policy

policy

that

going meets

every

made by the staff. You’ve

shouldn’t

be a challenge

carefully

thought

out-like,

hand,

with

their

Monday

those who didn’t

views

no point

were

“Is this really

morning

stamp

Of course,

The questions risks?”

of discussions

to do?” “Have

“How

locked

that we go ahead?”

got to have people DOWLING:

You talk about functional

CARLSON:

you have to have. And

in are

“What’s

the financial

aspect

invited senior

the general and senior

such

on public

in the meetings because

marketing

the executive

the senior officer.

as senior

of the corporate

Then

policy

officer officer,

there

What

in charge senior

on legislative

committee.

They

in a very important

affairs

but they

petent

the financial

man, the legislative

officer,

and so forth.

That’s

how

and the

are at the table

function,

group,

the lawyers,

of op-

planning

they participate

of a broader

to challenge

who feel quite

they

key

members,

also sit at the table as a member the planning

you’ve

committee?

are ancillary

wear two hats when

policy

officers

financial

officer

affairs. They

they are the senior

aspect.

on your corporate

officer,

counsel,

on occasion, officer

and the marketing

are represented

You have the chief executive officer,

These

to have them,

say I don’t agree with you.

specialties

erations,

it

need to be

it going to cost us to get out of it, if we have to turn tail and run?” are the type

in

a corporate

to rubber

whalt we want

risks, assuming

essential

in having

got to have challenges.

are the downside

are the financial

any business

we had two men with very

just to be controversial.

this? ” “What

to running

impatient

There’s

proposals

you explored we?” ”What

is essential

function

com-

man, or

in a group

this large. DOWLING:

There

CARLSON:

No, eight regular

DOWLING:

are seven people

altogether?

members.

I recall that when Alfred bilities

Sloan was running

of the top management

it was generally top manager,

understood but Sloan

group

were

General

Motors,

not formally

that in a given area, a particular

had the right

to override,

the responsi-

fixed. Of course, individual

if necessary,

was

the deci-

57

sions made by any one of these seldom CARLSON:

individuals.

On the other

hand,

he very

had to do it.

I’ve listened be right,

to arguments,

and finally

but really-we’re

have said, “Well,

you fellows

going to do like ‘John Harper.’

the vote and then we will try it my way.” Of course,

may

We will weigh

you’d better

be pretty

sure of your ground. DOWLING:

CARLSON:

I didn’t catch your reference. John

Harper

was chairman

to have an expression John’s.

of Alcoa.

When

I was on the board

at Alcoa. You counted

John’s single vote weighed

we used

all the votes, but you weighed

more than the total of the management

group. DOWLING:

I get it. Maybe you recall what happened about

the Emancipation

Proclamation.

against issuing the Proclamation. ing it. In the final count sought

your advice.

I’ve decided CARLSON:

DOWLING:

But Lincoln

my vote

counts

polled

for more

than

method,

but if you do it too often,

chance,

it can be beneficial

If you do it very often,

you destroy

and you prov-e to be wrong,

you fatally

an entirely

different

agers

whom

What

measured

role, if any, did the station

And how do you identify

which

with the premise

his expenses

kind

would

level, you had some

on a certain managers standards

of revenue

it was difficult We manager

charges

he could

trying

between over which

to present

so that at the end of a quarter,

say to his boss, or to his wife, incentive.

for the station

the profit-center

I made

the standards?

manager

philosophy,

generate

be, and what kind of a profit

to distinguish were

have in setting

man-

standards.

are key?

ating level, he could make to the company. for and the indirect

1,700 station

set of performance

that standards

loose. As we developed what

undermine

with the group.

To talk about

estimate

the people

and necessary.

DOWLING:

pretty

I

or worse,

that you want to take the

That’s why you have to be very sure of what you’re doing.

We started

all of yours.

for better

CARLSON:

C.~RLSON:

was

we’re issu-

it.”

you. On the other hand, if you’re satisfied

you

the Cabinet

of the Cabinet

said, “Gentlemen,

around

your own credibility

58

Lincoln member

You’ve given it to me. However,

to ignore

It’s a vaiuable

when Every

over

were

we tried

a year,

to

and what

contribution,

at the oper-

And it was tough

to do, because

direct

charges

he was responsible

he had no control. a realistic

challenge

or six months, a profit.

to each station

or a year, he could

It created

a performance

As time has gone dards for those

on, the technique

1,700-now

it’s more

for developing

proper

like 1,900 people-has

stan-

But

improved.

it’s not an exact science. DOWLING:

Let me nail down tion managers

one point.

are judged,

In terms

of the standards

by which

did they have any part in helping

the sta-

to draw them

up? CARLSON:

Yes. It was essential

to get their input.

plan that was being better

prepared

plan if the people

They

represented

had to get the feeling their

who participate

best thinking.

in the profit

that the

You get a

centers

have an in-

put. A profit plan is a tough thing to put together. In the airline company, the profit

picture

you’ve got so many factors

that it’s harder

to challenge

the input

that enter into

at the lower

than it is at the top level. But there has to be contribution

level

all the way along

the line. DOWLING:

Well

let’s take a specific

unload CARLSON:

example-the

Everyone

monitors

the airline

industry-has

baggage

handling

closely,

For example,

of time it takes to

time. You get peaks and valleys.

an off-peak

time, your

baggage

three

747s at gates within

dards

for measuring

I receive

That’s

morning.

which

on time,

what has been bothering

on time,

has stan-

and length report

1’11have the operating

me. With

of the station

what are the key standards A whole

lot of them-being

operates,

that the ramp that

or on, to service

carrier

of that

book

for

will give a whole list of statistics.

on the performance

to the airplane,

at

than if you put

Each

are all on the operating

afternoon,

at

if you arrive

quicker

arrivals

in

like. It pre-

of trips that arrive

Oibviously,

of each other.

calls. These This

it as they’d

gets to you much

20 minutes

departures

reservation

every

the weekend,

but no one in United-or

the number

a particular

time to service

CARLSON:

length

done as good a job with

sents all kinds of problems.

DOWLING:

average

an airplane.

manager,

over which

so many

variables

over which

he does have control?

sure that the airplane

is fueled,

that the jetway

service

people

are on the carts ready

the food

service

trucks

are there

are many

factors

the airplane.

There

that impinge

he has no control-

to drive up

to take food over which

off

he has

control. DOWLING:

In your

checklist

to measure

of them are obviously CARLSON:

Certainly. don’t

the performance

You can send a trip out without

like to. You can’t send a trip

isn’t working,

of station

a good deal more important

managers,

some

than others.

all the coffee

out if you’ve

or you don’t get all “go” lights when

services,

but you

got a compressor you check

that

all the sys-

59

terns. The captain

has overriding

crew goes over the checklist, The

DOWLING:

number-one

consideration

anything

that will jeopardize

In terms

of the station

above

control

standards,

on all departures,

if something

When

the flight

isn’t ok the plane doesn’t

of every

airline

is safety.

You

leave.

don’t

do

safety.

managers,

do they have a system

this is directly

tied to some

kind

where

if they are

of a bonus

system

of

remuneration? United

CARLSON:

has a bonus system,

but it’s restricted

ple who,

in the best judgment

stantially

influence

on profit.

If they

profit.

Individual

do a good

Also, they may be promoted You made a statement

DOWLING:

impact they

on things. hadn’t

job, they

previously

Could you be specific

managers

felt

they

management were

to sub-

increase

in pay.

felt it could

have an

station.

of the statement

that

of peo-

have less influence

may get a greater

to a more important

implication

number

have an opportunity

station

that now middle

The

to a limited

of the board,

was, obviously,

having

much

that

of an impact.

about that?

C

CARLSON:

This is a tough

one to do something

hourglass

If you draw a picture

story.

then narrow

at the center,

have senior management, in the narrow and saying,

part,

management

to have middle

we supervise

You must

support

have said that

leadership

responsible

should

ago, and it didn’t

part

do this.”

work.”

We

So, unless to the bot“Here’s

of the hourglass-and

develop

management

And

at the ideas

a good

rapport

was trying

ideas that otherwise

with

objectively

would

have died.

involves

too much

fight in a big company.

that it wastes

In the last couple

looking

below who say to the supervisor,

of my visible

management

People

longer

Part

into the hourglass.

management

you, the ideas can’t get through

go any further.

But it’s a constant

to provide

of years

supports

at the base. At the top you

this idea goes up to the center

managers.

traveling,

got middle

you’ve got the people

it doesn’t

middle

told what I call the it’s wide at the top,

some ideas down

“I’m not sure the people

middle

often

DOWLING:

you’ve

at this idea a couple

an idea.” And

I’ve often

of an hourglass

and then broadens pushing

looked

tom. Then

about.

my management

time. 1 don’t know

without

getting

of years, the nature for operations.

style

any way

in a large

into the field and talking of your

job has changed.

Has this affected

company to people. You’re

your pattern

no

of touch-

ing base? CARLSON:

Yes. Dick airline.

Ferris

Harry

is now responsible

Mullikin

GAB Business Services. operation

60

United

the hotel company,

employees

from

talking

operation

of the

and Irv Williamson

1 keep my hands completely

of the airline,

ever, prevent

for the day-to-day

runs the hotel company,

runs

out of the day-to-day

and GAB.

This

to me. They

doesn’t know

how-

me and

I think

we’ve got good rapport.

I picked

up a couple

; Ferris.

He will get back to them

was visiting

DOWLING:

Yesterday,

of ideas from

you made to him.”

There’s

reference

an intriguing committee

operates

get implemented.

The

a specific

deadline

ticular

I got was, that

told me that he

don’t get lost and do in each

for the implementation;

stipulated,

and

that if you are given

decision,

Carlson

day, and here is what we’ve done

in Pascale’s paper to the way the corporate

impression

is held responsible

Los Angeles,

1’11pass on to Dick

to ensure that the decisions

individual was quoted

in from

that

and say, “Eddie

with you on a trip the other

about the suggestions

policy

coming

some pilots

the follow-up

an unidentified

senior

the assignment

brigade

hounds

instance,

moreover,

one

there

is

vice-president

of implementing

a par-

you to make sure that you

get it done, and done on time. CARLSON:

I have a fetish about meetings ing is accomplished. effective

you

wanted

where

had to have

good

to do. We initiated

meetings

were written

a paragraph

there is a lot of conversation

If the corporate

policy

discussions

the discipline 24 hours

within

that succinctly the action

taken

decision.

Of course,

sometimes

and then

very early;

decide

is responsible

to be

what

the minutes

the item under

and who

and noth-

was going

after the meeting

describes

describes

committee

you

of those

was over. There’s discussion,

and next

for implementing

the item is held over for another

the

week,

or

sent back for more information. You

mentioned

which

that

with

had been prepared

major

decisions,

in advance.

there

were

So one alternative

position

would

papers

be to decide

that there were still some pieces missing. CARI.SOK:

Then

the minutes

of that meeting

ble for supplying

the missing

for the hounding DOWLING:

The follow-up

CARLSON:

We

allow

should

reflect

that so and so is responsi-

at a time to be designated

by him. As

partbrigade.

a reasonable

length

be done immediately.

747s for example, firm cost figure panies

would

pieces

of time

for implementation.

If you’re going to retrofit

it may take 60 days before slow to respond.

heels, and while you’re thinking up the wall. The

challenge

Small always,

and

can give you a

companies

about something,

to United

things

all the DC-10s

engineering

and how long it will take to do the whole

can be pretty

Some

fleet. Big comcan nip at your

they can drive you right in spite of its size, will be

its ability to move quickly. Let me tell you a story to illustrate Western broke

International

Hotels

up, Mr. Kimmelman,

heard from

Roger

Sonnabend

board who

this point.

meeting

succeeded

(chairman

I was in Seattle

on a Friday.

me as chairman, of the board

at a

As the meeting said, “I just

of Sonesta

Corp.)

61

that the Plaza is up for sale.” I said, “\Ve ought to do something.” He added that the price is $25 million cash, and that Sonesta, the owners of the Plaza, wish to sell. Lynn Kimmelman and Mullikin went to Amsterdam and had a meeting with ,Mr. Sonnabend, Sonesta’s president, on the following Wedand I got a call nesday. They returned to the United States on Thursday, on I:rida, that Sonesta Hotel Inc. Lvas willing to deal \\,ith us, although the company was also negotiating with The Canadian Pacific Railways. On Saturday, I called the directors. hlullikin and IVestern Hotel’s attorne! flew to New \‘ork Saturdav night, and met at the Plaza on Sunda\.. Harrv called me Sunday night in Chicago and said he had a deal. The attorney for $onesta called me in Chicago on Sunday and asked what assurance did I have that these fellows arc prepared to act? I said, they’re bringing a check for $2 million dollars. We bought the hotel over the we&end. The point is, have a relationship with the board uhcrc they have confidence in you and you feel very cornfortablc with them i\love quickly when you have to. DOWLING:

To what degree can you specify guidelines that indicate to the divisional level, alternatively this is appropriate for you to act on. This you shouldn’t. This is something you must pass up. This is something ?,ou’d probably better pass up, and so on.

CARLSON:

You develop guidelines only in the broadest sense b?, Lvorking together. Dick Ferris (current chairman of Cnited) is now studying the responsibilities of the corporate policy conmrittce and to determine whether we should make any changes in our method of operations in light of current decision-making requirements. Organization charts of major companies constantly change. What’s effective for a business in 1970-1971 may not work in 1977-1978. Organization charts have to be fluid.

DOWLINC:

There is apparently this particular time.

CARLSON

62

:

a felt need to look

at United’s

organization

chart

at

Just to bc sure it’s updated. Only a couple of changes Inay be made. Often we ask consultants to COI~C in and do an analysis.

DOWLING:

You’re suggesting that larger organizations, at least, should review systematicall\ and on a periodic basis.

undertake

CARLSON:

Yes, skilled consultants should be asked to come up with a tangible ment of the organizational health of the cornpa+-a report card.

this

assess-