The building of the world's biggest conglomerate, as related by Harold Geneen in his book Managing, is a testament to his faith in hard numbers rather than in human resources, says Stuart Crainer.
The management gospel according to Harold Geneen was encapsulated in his book, Managing. It was unforgiving, built on a degree of intellectual rigour that borders on ruthlessness. Geneen pinned his managerial faith on hard work and knowing every single figure possible. He was the archetypal workaholic - 'Putting deals together beats spending every day playing golf' - and even into his late eighties he worked a 10-hour day at his office in New York's Waldorf Astoria Hotel. For Geneen, detail was all. Once an accountant, always an accountant.
Geneen (1910-97) was born in Bournemouth, but he became the quintessential hard-nosed American businessman. He qualified as an accountant after studying at night school, then began climbing the executive career ladder, first at American Can, then Bell & Howell, Jones & Laughlin and Raytheon, which was taken over by ITT.
ITT had started life as a Caribbean telephone company in 1920. Geneen joined its board in 1959 and set about turning the company into the world's biggest conglomerate - and along the way, according to Business Week, he became the 'legendary conglomerateur'.
The conglomerate was not Geneen's invention, but he brought to it an almost obsessional belief it could be made to work. He believed ITT could manage any business, in any industry, if it knew the figures.
His career with ITT, as described in Managing, is a pageant of acquisition and diversification.
ITT's spending spree took in 350 companies, including Avis, the car-hire company, Sheraton Hotels and Continental Baking. By 1970, ITT was composed of 400 separate companies operating in 70 countries. One acquisition funded another.
With such huge numbers of companies in such vastly different fields, ITT was hopelessly diversified. To contemporary eyes, in particular, the company was a managerial nightmare. Yet, Geneen made the nightmare work. He did so by fanatical attention to detail. He micro-managed - but only micro-managed the numbers; the people were generally overlooked. 'The very fact that you go over the progression of those numbers week after week, month after month, means that you have strengthened your memory and your familiarity with them so that you retain in your mind a vivid composite picture of what is going on in your company,' said Geneen.
If you knew the numbers inside out, you knew the company inside out.
From 1959 to 1977 when Geneen stepped down as chief executive, ITT's sales went from $765 million to nearly $28 billion. Earnings went from $29 million to $562 million and earnings per share rose from $1 to $4.20. Such success could not be argued with.
As part of Geneen's formula, every month over 50 executives flew to Brussels to spend four days poring over the figures. Day and night they sat, leaving no financial stone unturned. To minimise disorientation, clocks were kept on New York time.
Over 200 days a year were devoted to management meetings held throughout the world. The point was to amass all the facts available so that the decisions became self-evident. If you knew everything, you would then know exactly what to do.
Facts were the lifeblood of the expanding ITT, and executives sweated blood in their pursuit. 'The highest art of professional management requires the literal ability to smell a real fact from all others and, moreover, to have the temerity, intellectual curiosity, guts and/or plain impoliteness, if necessary, to be sure that what you do have is indeed what we will call an unshakeable fact,' said Geneen.
'I want no surprises,' he announced with solemnity - frivolity was not Geneen's style. Indeed, there was a strong strain of dictatorship running through his management. He was blinkered in a similar way to Henry Ford. Geneen hoped to make people 'as predictable and controllable as the capital resources they must manage'.
Ford moaned: 'How come when I want a pair of hands I get a human being as well.' The methods of both worked, for a while at least. Geneen constructed a labyrinthine house of corporate cards. While others would have watched helplessly as the pile eventually collapsed, Geneen kept adding more cards, while managing to know the pressures and stresses each was under.
Much of Geneen's managerial philosophy and practice would appear to be anathema to today's executive. After all, this is the era of human resources management rather than planning and strategic management.
This is only partly true. The obsessional excesses of Geneen - such as his involvement with the CIA in Chile under Allende - are now consigned to history. But his fundamentalist style of management remains. Management consultants, for example, continue to trade their rational models: pour in all the figures you can find and the right decision will emerge. There is still a temptation to manage by numbers rather than through and with people.
On the positive side, Geneen can be said to have elevated management to a new level. His system required a cadre of highly numerate, professional managers. 'Managers must manage,' said Geneen. They had to take responsibility.
The Geneen legacy is most notably evident in the conglomerates that survive. General Electric under Jack Welch has been one of the most lauded corporations of our age, but it is also a conglomerate which has interests from financial services to washing machines to nuclear reactors. Geneen would have regarded the survival of such a diverse company as vindication of his methods.
Others would point to ITT's decline after his departure as a true measure of the long-term validity of Geneen's approach to management.