Once in a while, companies make changes which
seem counterintuitive: to defy all conventional wisdom. Doubling your entire work force's salary
overnight may seem like madness, but that's the high risk strategy that made
Henry Ford a household name today. Here
we will take a look at two of the highest drama decisions and the people behind
them. As businessman Tony Freeman will agree, the commercial
world is a constantly evolving. Here we
take a look at two of the biggest leaps made by business revolutionaries.
Boeing's
launch of the 707
When Boeing's CEO launched the 707, he didn't have a single order. He just believed in the product: he knew that
customers would want to buy it. It takes
a huge amount of courage and conviction to put the company you have, in bricks and mortar, on the line for a dream of the
company you could have: something much bigger.
In 1952, Boeing was a virtual nonentity in the business of commercial
aircraft. The company was primarily
involved in manufacturing military aircraft, such as the famous B-52
bomber. The aircraft maker was heavily
involved in the development of jet technology, but in those days the use of
jets in commercial aircraft was not considered viable by the industry as a
whole. Converting to jet technology
would require massive investment which would seriously affect the airline
industry's profitability.
The safe choice for the company would have been to stick to its
operations in the defence industry.
Boeing's post-war President, William McPherson Allen, had other ideas. In one of the most talked about "bet the
company" moves of all time, he effectively put all of Boeing's eggs in one
basket, risking it all on the success of a single product. He was convinced that the 707's convenience,
speed and comfort would win over consumers and that the civilian aviation
sector was ripe for expansion in a booming global economy.
In 1952, William McPherson Allen managed to persuade Boeing's Board of
Directors to invest $16 million in the Boeing 707. This was the first United States based
transatlantic commercial jetliner. The
plane altered the course of Boeing's future completely. The 707 became much more than a
transportation vehicle - it became a cultural icon - Jantzen even named a range
of swimwear after it. Dwight Eisenhower,
George Bush and every United States President in between flew on a modified
version of the 707, the world famous Air Force One.
Boeing was founded in 1916. The
company's headquarters are in Chicago, Illinois. Today it is ranked #97 by Forbes in their
list of the World's Most Valuable Brands.
Boeing employs over 168,000 employees worldwide. The company's sales are estimated to be in
the region of $86 billion.
Henry Ford doubles
his workers' wages
In 1914, Henry Ford faced a problem.
As ridiculous as it may sound, his car production company was becoming
too successful, too quickly. A surge in
popularity of the Model T motor car caused Ford to question his strategy of
mass production. He had introduced a
moving assembly line at his Highland Park, Michigan plant in 1913 and it worked
far better than he had ever imagined, but to the detriment of his workforce.
Since installing the moving assembly line, the Ford Motor Company was
haemorrhaging employees. Workers' morale
plummeted: the mundane, repetitive, physically demanding work causing the
factory's operators to walk out in huge numbers.
After talking things through with his assistant, James Couzens, Ford knew
he had to take action. On 5th January 1914,
Ford and Couzens summoned the press to Ford's Highland Park plant. They announced changes in employment policies
which they hoped would improve worker retention. These consisted of:
1.
Reducing the working day from nine hours to eight.
2.
Moving from two shifts a day to three, thereby creating many new jobs.
3.
Subject to certain conditions, doubling the basic rate of pay to $5 a
day.
The 11 year old car manufacturing company was willing to spend an extra
$10 million a year to improve the lives of its workers, thereby improving their
productivity and the productivity of the company.
News spread quickly about Ford's "magnificent act of
generosity" as it was hailed by the New York Evening Post. His $5 working day turned out to be a shrewd investment,
annual labour turnover falling from 370% to 16% within the year and
productivity increasing from 40% to 70%.
This enabled Ford to reduce the price of the Model T from $800 to $350
between 1910 and 1919, solidifying the company as the world's greatest car
manufacturer, and making Ford a billionaire.
The Ford Motor Company was founded by Henry Ford on 16th June, 1903. Today, the Ford Motor Company manufactures
and distributes cars across six continents.
Through its subsidiaries the company also engages in other sectors,
including vehicle finance. The company
is divided into two sectors: Automotive and Financial Services. The Automotive section is further divided
into four subsidiary companies: Ford Europe, Ford South America, Ford North America
and Ford Asia Pacific Africa.
