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-
’