Corporate history may contain a few lessons for today's managers
Family Firm to Modern Multinational: Norton Company, a New England Enterprise, by Charles W. Cheape. Cambridge, Mass.: Harvard University Press, 424 pp. $25. Nowadays most corporate biographies are slick jobs. They are generally written by professional writers. Some are hatchet jobs that are not fair but may make exciting reading. Others are puff pieces in which the author has been hired by the company to engage in some corporate and executive self-glorification.
This book on the Norton Company, a maker of abrasives and other industrial supplies, is different. Author Charles W. Cheape, associate professor of history at Loyola College in Baltimore, has an academic goal in mind: to provide the history of a leading American industrial enterprise and thereby illustrate in careful detail many of the most important aspects of the evolution of a large-scale business in the United States.
This is the latest of the Harvard Studies in Business History, a series of 36 books begun in 1931, most of which are biographies of individuals or firms. Most books in the series probably don't sell more than a few thousand copies.
The commercial publishers of corporate biographies would hope to sell many more than that. Their books are usually designed to entertain by portraying the intrigues of internal corporate politics, external battles for markets, and other business dealings as high drama.
Norton gave Mr. Cheape both its cooperation and access to its historic records. But the author also had complete editorial freedom.
In the book that resulted, Cheape has clearly attempted to be balanced in his analysis -- sometimes praising corporate executives, sometimes criticizing them in a reasoned and calm manner.
Once past the introduction and the background on the company and its industry, the book begins to grab one's curiosity and attention. How did this company evolve from a pottery shop in Worcester, Mass., in 1885 to a modern multinational firm that by 1980 employed over 25,000 people in 120 plants in 28 countries, made $1.28 billion in sales and more than $86 million in profits, and ranked 261st among Fortune's list of the 500 largest industrial firms in the United States?
Mr. Cheape has gathered such fascinating material from his research that the corporate story pulls the reader forward. There is drama and interest without the effort to be dramatic or interesting.
There may be some management lessons in this book: For example, four of the original seven partners ran the firm for many years. Comments the author: ``Teamwork and cooperation rapidly became a Norton hallmark. The company was never a one-man operation. For the founders and their succeeding generations, sharing top management among two, three, or four men blended abilities, values, and interests to establish the firm's course and character.''
Like New England merchants of the 17th century, the four ``believed that business required careful attention, enterprise with close scrutiny and risk avoidance, and growth by reinvestment while maintaining a strong cash reserve. The classic values of diligence, prudence, and thrift were very much a part of Norton enterprise and could be found in production, labor relations, sales, and finance as well as in the company's strategy.''
This strategy permitted owner control and moderate growth. And it guided the quartet as Norton became a larger enterprise.
The last chapters of the book deal with Norton's somewhat painful transformation from a family firm to a modern multinational corporation run by professional executives with no links to the owner families.
By the mid-1960s, the author concludes, Norton was definitely due for reorganization. Rapid changes about this time ``had exposed the weaknesses of, and outmoded the Worcester-oriented, centralized, owner-managed firm. Going public had shoved the company into a new arena that did not prize the old New England values.''
A more systematic management was introduced to Norton by Robert Cushman, a professional manager who began leading the company in 1967 as executive vice-president and assumed the presidency in 1971. Cushman called his program ``management by results,'' reflecting the analytical management-by-objectives philosophy popular in American corporations in the 1970s.
The change revived the company by expanding its position as the manufacturer of industrial supplies. Norton's stock nearly quadrupled in value between 1974 and 1979 while the Standard & Poor's index rose 58 percent.
Mr. Cheape concludes that ``the problems of corporate identity, social responsibility, multinational operation, and continued growth and profitability are not unique to Norton. It no longer sees the world with the peculiar view of a privately held, owner-operated business. Its long experience as an alternative model has ended. Like most other large American firms, Norton Company will face future challenges as a modern, diversified, professionally managed multinational enterprise.''
David Francis is a Monitor financial columnist.