Democratic Capitalism-A Team Sport
Four years of high school team sports, including being co-captain of the football team, taught me that human associations work better when based on individual development in an environment of cooperation and trust. Each player was responsible for skill training and conditioning, but each was also responsible for contributing to the team spirit that makes the whole larger than the sum of the parts. This combination of individual responsibility and group support seemed natural and obvious to me in Gardner, Mass, where I grew up.
My subsequent education at Holy Cross College certainly confirmed the religious principles of worth of each individual in an environment of mutual love, but did not relate these values to the prevailing economic system. Later at Harvard Business School, there was no examination of a management theory that harmonized individual ambitions within a cooperative whole.
In my twenties, when I became plant manager, and later president of the Electro Dynamic Division of General Dynamics, I knew that my job was to invest in the people and build team spirit. The company was very old, a persistent loser, with dirty, dark buildings full of sullen people. Investments in training, lighting, painting, safety, and open house for the kids changed this perennial loser into a successful leader in a high-tech part of the electric motor industry. The same people accomplished this but now they were listened to and respected.
After six years of successful growth at ED, the whole operation burned down, all fourteen buildings, equipment, and drawings. Corporate officials saw it as the end of this complex business, but the ED people united to rebuild the company in a matter of months. This experience gave me a unique appreciation of what people united in common purpose can accomplish.
When I became CEO of ADT, Inc., I knew that my job was the same: provide the circumstances for the people to reach their full potential and build an environment of trust and cooperation. Lessons learned in Gardner and confirmed at E D, were repeated at ADT. My new associates responded naturally and changed a stagnant company into the industry leader.
After a few years of reorganization, building technological momentum, and changing the work culture to one of cooperation, it was time for ADT associates to share in the improvements. Our new profit-sharing and ownership plan was called Care and Share, named by a woman who said that “ the more people care, the more they will have to share.” Thousands joined the voluntary plan and within a decade, 13% of the company was owned by the people who worked there. Twenty years later, I still get cards signed Care and Share from ADT associates living well in their retirement!
The management template at ADT comprised four elements: integrity fundamental to the culture; maximum freedom for people to participate; minimum but sophisticated structure to discipline the freedom;and finally competence and intensity to execute well. Intensity is emphasized because team spirit is not enough without people with the ability to make things happen.
How does a large company with branches all over the world assure integrity? It must be merchandised relentlessly in all company meetings as a simple matter of right and wrong; the source of long-term better profits, the ethic that feels good from the CEO to the most recently hired, and is easy to remember.
Minimum structure included the policy, for example, that the head of the internal audit responsible for monitoring company integrity reported directly both to the CEO and to the Chair of the Board Audit Committee. This function, previously part of the finance department, was strengthened by this reporting relationship with immediate access to the CEO followed quickly by action.
Shortly after joining ADT, a lunch with local managers was interrupted by a caller from Texas describing a large order that was ADT’s if we gave a hunting rifle to the purchasing agent. Was this a test? Without hesitation I told him that we do not do business that way and “would not even give him a peashooter.” This exchange reverberated throughout the company.
After eighteen years running ADT, I began my study of why the simple principles that changed ED from a loser into a winner, and made ADT the industry leader, were not equally applicable in all human associations: companies, schools, nations, the world. I found that the Way To A World Of Peace and Plenty had been well defined by Smith, Marx, and Mill. This discovery changed my mission: if the way was so clear why was it not being followed?