Can it happen to me?

In the 1970s my Dad worked at Weirton Steel. They had over 14,000 employees! EVERYTHING used steel. Your car, your food cans, maybe even your toilet paper! What could go wrong? Weirton Steel had a substantial R&D center with smart people. But they focused on “interesting” topics, and were not focused on serving their customers by improving quality and lowering costs. Fast forward 10 years and National Steel has dumped Weirton Steel, so the employees buy the factory in what was at the time the largest Employee Stock Ownership Plan (ESOP) in the nation. Fast forward another 10 years and Weirton Steel is no more. The facilities have been bought and sold a few times, but today it’s essentially a rusting factory, with no production.

This type of decline has happened substantially in the materials and chemical industries. In the Figure (below), we see a list of companies on the Dow Jones 30, in 1979 and in 2018, a span of only about 40 years. The green companies are chemical or materials related. We see that in 1979, about 3/4 of the companies were materials or chemical, while just 40 years later, less than 1/3. Notably missing are General Electric and US Steel. They probably thought, “What could go wrong?”

And maybe (hopefully) YOU are asking, can this happen to me? Answer: Yes, decline and death can happen to ANY company that is not innovating new value for their customers.

Next week, we’ll look at one of the pre-requisites to innovating with higher speed, value, and repeatability.

Please forward the link to others who might be interested in the blog or signing up below. I’ll send out my weekly blog to everyone on the list.