How We Will Operate
This is the fourth in a series of posts that will describe what the CEO Reliance Electric thought about basic commitments, how the organization was going to operate and ground rules for managers. Once again, all the content of this article is based on the work of B. Charles Ames as outlined in his management manifesto titled Basic Management Concepts dated January 14, 1974.
Reliance Electric was a $1 billion conglomerate at the time our company was acquired. They had been on a run of successful acquisitions for several years. They owned about a hundred companies producing electric motors, power transmission equipment, retail food packaging and weighing equipment, telecommunications equipment, and more.
How do you run a conglomerate with a wide range of diverse businesses . . . effectively? Ames wrote the following.
- In light of Reliance Electric’s girth, the Divisions of the company needed to work together to take advantage of lessor endowed competitors.
- The company centralized “certain functions” when it was economically advantageous. The interests of the corporation trumped those of any individual Division.
- Reliance followed a uniform set of administrative policies throughout all operations. Human Resources, for example, would be managed consistently throughout the organization.
So far, so good. Here is where it gets interesting. Ames was clear here:
- The company would not force integration where it didn’t make sense or seek consistency among the Divisions without regard to individual differences of the Divisions.
- The company would not impose corporate policies on decisions without seeking into from the Divisions.
What Ames wanted us to do was gain a competitive advantage from our size and diversity, without messing around with the basic integrity of the divisional profit center concept. An interesting balancing act, to be sure. And, the basic business strategy of the company. Because Ames wrote it down and distributed it all of us, we knew what was expected.
B. Chuck Ames and his wife Jay currently manage the Ames Family Foundation. They divide their time between a home in Vero Beach, Florida and a second home in a suburb of Cleveland.