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The Artesian Spring

There is no saturation point in education.

—Thomas J. Watson, Sr.1

A famous Indian scholar and statesman once said that it takes centuries of human experience to make a little history, centuries of history to create a little civilization, and centuries of civilization to distill a few drops of culture. Culture is something acquired over millennia; but one man had the ambition to compress all that history into a few months through education.

Everyone knows the story of Eliza Doolittle, the poor, illiterate flower girl who was trained by Professor Higgins, a linguistics expert, to acquire the behavior of an English aristocrat. Through an intensive, rigorous, and painstaking effort, Eliza was taught to dress elegantly, walk gracefully, pronounce words aristocratically, reply to questions appropriately, and otherwise conduct herself with the charm and poise of a highly cultured person. Her training was so complete that at her debut in society, another linguistics expert mistook her for a princess of the Hungarian royal family.

Eliza's father stumbled upon a fortune by good luck, but Eliza discovered something infinitely more valuable through education. She developed some of the latent potentials of her own personality. The same sort of miraculous transformation that Higgins brought about in Eliza education is doing today for millions—helping them expand their mental horizons, develop their talents, and enrich their personalities.

Higgins' formidable accomplishment contains two important lessons for business. The first concerns the power of education; the second, the power of training. What if Eliza had been an educated middle-class girl rather than a "guttersnipe"? Instead of wasting his time teaching her the fundamentals of speech and human conduct, Higgins could have helped Eliza acquire greater intellectual knowledge, sensitivity to other people, or useful and productive skills. As it was, even after the training, Eliza barely knew how to add or subtract. An educated girl would have received the training in much less time and with far greater perfection than Eliza, who was able to maintain her poise only until she got home from her debut in society and then reverted to throwing shoes.

Eliza's training was in the external forms of cultured behavior. Education makes the inner content of personality more cultured. Higgins chose an uneducated girl to teach because he wanted to illustrate dramatically the power of systematic linguistic training. But companies are not after dramatic proof of principles. They are after dramatic results. For that, there is no substitute for education.

The American Revolution

Education is far more than just a process of acquiring useful knowledge. Education makes the ordinary mind more active and alert. It converts physical energy into mental energy. Education trains the mind to consider many possibilities, to see things from a new and wider perspective, to question and challenge the status quo, to think and imagine, to innovate and invent, to make decisions for oneself, and to act on one's own initiative.

In his time Thomas Edison was one in a million. But today education has institutionalized the talents of the genius, so that great inventions and innovations can be made by far more ordinary people. The transistor and computer represent advances at least as great as the light bulb, but how many people even know who invented them?

Education is the foundation and driving force for two of America's greatest assets—entrepreneurship and innovation. Education has probably been the single most important factor in making America the world's leading industrial power. The American people themselves cannot be anything unique, since nearly all of us came from other countries at one time or another. But long before the nations of Europe, our leaders recognized the importance of education and developed a national system that extended education to all levels of the population.

America's postwar success was supported to a great extent by the tremendous expansion in higher education generated by the GI Bill of Rights. The aim of the law was to keep the returning GIs out of the workforce. The result was to provide American commerce and industry with a highly educated pool of personnel to fuel an unprecedented economic boom just at a time when educational systems in other nations had broken down. By 1981, 58 percent of the American youth in the 20-to 24-year age group were enrolled in higher-education courses, compared to 37 percent in Sweden and 20 percent to 30 percent in other West European countries.

Whatever the deficiencies of our system may be, education has widened our horizons and stimulated freedom of thought, a scientific outlook, original thinking, imagination, social tolerance, an experimental temper, technical innovation, and dreams of perpetual progress. It has also been used as a conscious instrument by the nation for absorbing and assimilating immigrants of widely diverse cultural backgrounds, inculcating in all these various peoples the common values of American culture.

The Sun Rises in the East

Education has demonstrated its tremendous power elsewhere, too. When Admiral Perry sailed into Tokyo harbor with the American fleet in 1857, demanding the opening up of Japan to foreign traders, the traditionally isolationist Japanese were rudely awakened to the reality of their backwardness and impotence in the face of Western industrial technology. One of the very first strategies they adopted to correct this imbalance was to introduce a Western system of compulsory education in 1872, long before many countries in Europe. By the 1930s, education had become a craze in Japan and came to assume even greater importance than it had acquired in the United States. The rise of Japan to its pre-eminent position in the world today is not the product of chance or a miracle. It is the natural result of a century-long endeavor to educate its people.

Japan learned its lesson from us very well, and now we are relearning it from the Japanese. In his book Japan as Number One: Lessons for America, Ezra Vogel writes, "If any single factor explains Japanese success, it is the group-directed quest of knowledge."2 The Japanese drive to extend formal education has been as vigorous as the country's efforts to increase its GNP. In 1955 only about one-half of Japanese youth entered high school, and less than 10 percent went on to college. By the late 1970s over 90 percent were completing high school, compared with 80 percent of Americans. Japanese students attend school about one-third more than their American counterparts, for 240 days a year compared to 180 days in the United States; and virtually all Japanese who enter a school complete it. Although the same percentage of college-age youth are attending a university in both the United States and Japan, many more Japanese complete their education. And they do not stop there. In Japan education is an ongoing social activity that continues throughout life—in study groups, educational tours, and educational courses on television. The Japanese have understood the value of education better than their teachers.

The American Higgins

The importance of education in business has been endlessly debated in this country by just about everyone except Thomas J. Watson, who refused to discuss what he considered an obvious fact. The controversy focuses on the relative value of education and job experience. The old-timers in every company who have worked their way up through the ranks without education resent the value placed on a young greenhorn with a piece of parchment from a college or university. Education is not a substitute for experience, but it enriches an individual in a way that experience alone rarely does. It broadens the mind and makes a person more open to new ideas and new ways of life. It expands and develops the whole personality rather than just giving some specialized skills and working knowledge. Work experience can greatly enhance the effectiveness of an educated person, but it cannot develop the potentials of human personality the way education can.

Despite all the controversy, Watson never doubted the truth for a moment. Oddly enough, he first recognized the importance of education for sales and customer service rather than for research. Nearly 60 years ago he hired 140 college graduates as sales reps, selecting them mostly on the basis of personality and character, which he considered the prime requisites for a good leader. He then put them through a three-month orientation course on the company's culture and its products, six months of field training, and another two-month course on selling, before appointing them as junior sales reps. He also recruited graduates from technical and engineering colleges to become customer engineers (that is, to repair equipment) after a five-month course in the shop and classroom. Women with college degrees were hired to teach customers the use of the punch-card machines.

Because IBM's sales reps possessed a high level of general education, they could acquire a high level of technical competence regarding the company's products and a highly professional manner of conduct in marketing. Their education also enabled the sales reps to better understand the needs of the customer and to identify untapped potentials in the market. These three endowments based on education have made IBM a superb marketing organization in whatever field or country it competes.

Watson made education and basic training the foundation for a continuous learning program. In 1932 he established a corporate educational center to provide systematic education to existing employees. As Peter Drucker said: "Watson trained, and trained, and trained. All employees were expected to continue to learn while on the job. But for the men who were considered `IBM's business'—that is, for salesmen, servicemen, and sales managers—continuous training was a way of life."3 By 1940 more than 7,000 factory employees had attended educational courses at the company's school. Because of this ongoing program, managers who joined IBM when it was still selling manual punch-card machines were able to adjust to the move into electronic computers during the 1950s. As Drucker wrote, "Having grown up in continuous training, they had learned to learn."4 Or as Harry Bernhard, IBM's program director for advanced management development, put it: "Education has made change normal." Nor did Watson stop there. In 1936 he established the first training school for customers, which, as Fortune commented, "achieves the almost incredible sales feat of luring the quarry into camp and fattening it up before dispatching it."5

After World War II, IBM built up a rich reservoir of technically educated people in its research division as well. The company expanded its engineering force by over 400 percent, recruiting mostly new people with M.A.'s and Ph.D.'s. It also promoted a large number of advanced degree holders into high management positions to ensure that management could stay abreast of the rapid changes in technology. When Tom Watson said, "Think," he really meant it and wanted to be sure his people did it. He understood that education is one luxury you can never have too much of. He said, "There is no saturation point in education."

Consciously or subconsciously IBM came to recognize that there is a qualitative as well as a quantitative difference between education and training. Whatever a person's inherent capacities, training improves the level of skills available for expressing those capacities; but education increases the level of capacity itself. Training refines the tools of expression; education improves the person. The most intelligent mechanic who has acquired technical skills without a general background of indepth technical knowledge rarely attains the level of competence achieved by the most mediocre engineer. The mechanic may be very effective in repairing a machine; but when it comes to designing or inventing a better one, the engineer's knowledge will usually prevail over the mechanic's skills. Companies that mistake technical training for a more practical version of technical education introduce built-in limitations and inefficiencies in their work.

IBM continues to invest heavily in its scholastic tradition. There are several thousand people involved in providing over 4 million student-days of training a year to IBM personnel at a cost of more than $100 million. All of IBM's 42,000 managers are required to have at least 40 hours of additional training a year, including 32 hours of training in people-management skills. There are also special outside programs for executives at leading educational institutions. According to Ed Krieg, corporate director of educational programs, "IBM believes that without its intensive educational program, the company would lose maybe 35 percent of its effectiveness." This enormous investment in the education and training of IBM employees lends credence to Watson's claim: "You can take my factories, burn up my buildings, but give me my people and I'll build the business right back again."6

An Asset More Valuable than Money

Watson was not the only business leader to discover the value of education. Tomas Bata did, too. But Bata did not have the luxury of recruiting college-educated people for his company because there were virtually none available in Czechoslovakia at the time. Instead, he decided to educate them himself. His son, Thomas Bata, explained: "One of the crucial events and decisions which made it possible for this organization to grow explosively in the thirties and again in the fifties and sixties was really the establishment of a college in 1924."

The college offered a three-or four-year course that involved a full day of work in Bata's factory followed by classes every night. These classes covered general subjects like economics and accounting as well as technical subjects related to the shoe business. The first year, the college received 600 applications for a class of 80. Within a few years the class had grown to 1,000, and the number of applicants was around 35,000. Initially, all the students were from the local area, but by 1930 about 200 students a year were coming from foreign countries. Most of the graduates of the college became managers within the company; the brighter ones were appointed department heads; and some with unusual abilities were sent overseas in search of raw materials or markets and to establish Bata's foreign subsidiaries.

When the Nazis sealed the Czech borders and later when the Communists expropriated the company's assets, it was this core of managers, who were raised and educated at the college in the Bata tradition, that ran Bata's foreign companies without any control or support from headquarters and then united to rebuild the company after the war. Education proved to be a more valuable asset than all the company's buildings, money, and machines.

The Well

People have a way of believing in possibilities only after they have become actualities. We can understand the skepticism that the Wright brothers aroused when they first announced their intention to fly. But what about after they had already flown? In fact, for a full five years after Wilbur and Orville made their first successful flight at Kitty Hawk, the newspapers and the public were both firmly convinced that flying was not possible!

People also have a way of believing only in things they can see with their own eyes. Geologists tell us that only 3 percent of the earth's fresh water is on the surface in the form of rivers and lakes. The other 97 percent remains as a huge subterranean reservoir down below. During the last century in Artois, France, a hole was dug 2,000 feet into the ground, and from it a fountain of water rose 290 feet into the air, gushing forth 1 million gallons of water per day. The term artesian is derived from the name Artois.

The potentials of human personality are much the same—only 3 percent on the surface and 97 percent below. Training takes the 3 percent that is on the surface and utilizes it much more efficiently by imparting skills to improve performance. Education digs deep below the surface and taps the infinite reservoir below, so that the concealed potentials of the human personality can overflow onto the surface in rich, creative profusion, like the waters of an artesian spring.

The Challenge

A century ago managing a business was like running in a cross-country race. The most important qualities for success were endurance, persistence, and a willingness to work hard. Fifty years later the race had become a sprint. Life began to change more rapidly, and the speed of response became a major factor. Today managing a business is more like competing in the decathalon. Not one or a few but a very wide range and depth of capacities are needed even to enter the contest. It requires not only speed and endurance but also a multiplicity of skills and an infinite reservoir of energy.

Modern technology is unveiling new discoveries and improved inventions at a lightning pace. Products have become highly sophisticated. The time interval between the day a new technology is discovered and the day it becomes obsolete is shrinking rapidly. Labor is no longer the uneducated, unskilled, and unsophisticated resource measured only in numbers that it used to be. The supervisor and the plant manager are no longer mere assistants who execute the will and whims of the proprietor. The individual has become the single most important factor in the success of a business. The quality of the person counts first. Money is no longer the proprietor's. It comes from banks and bonds, investors and investment groups. It carries with it greater responsibilities and obligations. The public is no longer ignorant and uninformed. It is alert and aware. Companies are projected before the public eye in a hundred ways, and the image they cast determines their future, like the carefully chosen words and gestures of a presidential candidate during a nationally televised debate; only in this case, debate is perpetual, and every one of a company's acts is carefully screened by consumers, investors, employees, the government, and competitors.

Gone forever are the days when a manager could afford to behave like a proprietor running a one-person show. Gone, too, are the days when hard work was sufficient even for survival. No company can meet today's demand for quality, service, speed, and efficiency unless all its systems are faultless, all its activities are smoothly coordinated, all levels of its structure are finely integrated, and all the requisite skills are present in the requisite measure. Gone are the days when a manager could just push or bluff along the path to success with lots of energy and a loud voice. Management today is a very sophisticated activity that requires comprehensive knowledge, superb skills, and precise execution—like a perfect score of 10 on the parallel bars.

In the good old days, people learned a business by working as apprentices under experienced individuals or in established firms. Gradually they acquired whatever knowledge and skills of the trade their boss possessed or cared to teach them and in the course of time were upgraded to managerial positions or set out to establish their own business. For modern corporations the price of learning by experience is very high. Companies can no longer afford a long, slow learning process that provides managers with partial knowlege and incomplete training.

It is no longer enough that the manager be strong, intelligent, and alert. The basic stuff of human personality has to be developed through higher and higher levels of general education, and the multiplicity of essential business skills has to be further refined and upgraded by constant and continuous training.

We have already seen in Chapter 6 that there are a lot more skills and types of skills that contribute to making a business successful than many people and companies realize. Physical and technical skills are essential, but social, organizational, managerial, and psychological skills are equally essential or more so. There is also a great deal more to acquiring a skill than mere physical proficiency. True mastery involves in-depth knowledge of the process, principles, and rationale for each action. When this mastery is present, individual workers are far more interested, enthusiastic, and productive; and the organization is many times more efficient. Highly developed skills are absolutely indispensable for properly translating corporate values and goals into action. A company can be said to possess a high degree of skill only when its lowest-level workers have acquired essential elements of top-level executive skills and its highest-level managers have acquired an essential knowledge of the lowest-level skills for execution. This is the challenge.

It may sound like a good theory of skills, but is it really possible for companies to practice it? The fact is that consciously or unconsciously, companies do practice it, and the most successful companies practice it very successfully. That is why they are so successful.

There may not be much debate about the possibility of imparting a very high level of physical and technical skills, because we have been doing it successfully in schools and in companies for many decades. But what about the higher-order skills—social, organizational, managerial, and psychological?

We refer to Professor Higgins' second important lesson for companies: Any skill can be learned through proper training. The cultured behavior of an aristocrat is an expression of many highly refined skills acquired and developed by the upper classes over hundreds of years. Like any other skills, they can be learned by almost anyone who is willing to make the required effort and who has the proper guidance. It takes centuries to develop an aristocratic culture. Successful corporate cultures are built up in a few decades. If the behavior of an aristocrat can be acquired by training, why can't the behavior of successful companies be learned the same way? If a flower girl can be trained to acquire the social skills of the English nobility, is there any skill that cannot be taught?

Upward Corporate Mobility

The greatest challenge before management is coping with the accelerating pace of changes in the world today. Some companies, like IBM, have accommodated to the pace by increasing the speed of growth within the company through continuous education and training. Another company that has accommodated to rapid change is Merck. A few decades ago the marketing of prescription drugs in the United States was almost as aggressive as any other commercial hard sell. Merck was one of the first to see that times were changing and that a purely commercial approach to marketing drugs would no longer suffice. Twenty years ago the company introduced what was then one of the most sophisticated training programs in the industry. Now it is the standard. The aim of the program was to upgrade drug marketing to the highest level of professional activity. This meant raising the technical competence of the professional representatives until they were on a par with that of the physicians, at least in specialized areas. It also involved refining their presentation and communication skills until the relationship between physician and representative became a free exchange of knowledge rather than a sales pitch. Finally, it required the adoption by the representatives of a standard of objectivity and integrity rarely associated with the art of selling.

Merck's executive director of field administration explained the rationale for the training program this way:

Every company has access to the same computers. Our competitors all have access to the same textbooks on medicine. We have access to the same market research firms and the same everything. So how do we get a competitive edge? It is the quality of our people.

Recruit the best and continuously train them to be better is Merck's formula for successful marketing in a highly competitive industry.

Every Merck representative starts with a four-year college education as a minimum. Most new entrants have master's or pharmacist's degrees; a few even have Ph.D.'s. New representatives spend 15 weeks in basic training before they make their first call and another 35 weeks under close supervision. After that an additional 50 hours a year of classroom training are mandatory. The company also encourages representatives to continue their formal education, and it pays their tuition fees.

Ralph Goodison came to Merck 20 years ago with a B.Sc. in economics and has since acquired two master's degrees. "They encourage us to continue our education. When we stop learning, we stop growing. There is an atmosphere of growth here. If you take the time to become better, you are not only better for Merck but also for your family, your society. The sky is the limit."

While many drug firms still regard selling medicine as essentially a commercial activity, Merck has moved all the way to the other end of the spectrum—and all the way to the top of the industry, too.

How Much Is Too Much?

Every company believes that training is important. The real questions are: What should we train for? And how much training is enough? The answer to these questions is quite straightforward. Train for absolutely everything without exception, and keep on training—because there is no such thing as too much.

In the area of physical skills, Marriott's training covers every aspect of the job with a fine-tooth comb. The training system for a hotel limousine driver includes a study of the hotel property and surrounding area, defensive driving, vehicle maintenance, knowledge of the hotel staff, and guest relations. The drivers are made aware of how their slightest positive or negative action can influence repeat business favorably or unfavorably, so they realize the full importance of their job and feel a sense of responsibility.

In the area of interpersonal skills, Hertz has established a comprehensive training program to ensure that it stays No. 1 by providing the best customer service in the rent-a-car industry. In earlier years the company sometimes had customer-service representatives working at its counters who had not even gone through new-hire training; but not anymore. Hertz has recognized that every employee who comes in contact with the customer is a potential salesperson for the company and must be thoroughly trained. Shirley Gunzer, director of training and communications, says, "Top management really understands the value of training." Front-counter personnel now receive a total of four weeks of orientation and training. Approximately half of it focuses on interpersonal skills. They are taught to project a cheerful, positive image; to listen carefully to the customer; to deal with facts rather than emotions; to understand the customer's point of view; and to meet the customer's unexpressed needs.

The most comprehensive training program that we came across for interpersonal skills was at Northwestern Mutual, where maintaining the highest possible level of teamwork and internal harmony is a core value of the company. For the last 15 years, Northwestern Mutual has periodically conducted confidential surveys of all personnel to determine employees' perceptions and satisfactions concerning their bosses, peers, and work teams; from these perceptions it is possible to identify areas where each manager and work team can improve performance or acquire new skills. The survey results are translated for managers into a "training needs analysis." The training programs emphasize skills in communication, listening, empathy, supportiveness, goal setting, coordination, team building, and resolution of conflicts between managers and subordinates. There are also special training programs, such as the one to help customer-service representatives deal with irate customers on the phone. Wherever a skill is lacking or can be improved, Northwestern Mutual trains to provide it.

Making Mr. Watsons

In earlier centuries people commonly believed that the qualities of a successful leader were entirely innate and unique to the individual. But as we have come to understand the nature of human personality better, we have realized that many attributes of successful individuals—barring the rare genius like Einstein or the leader of superhuman power like Napoleon—are actually skills that they acquired by virtue of their upbringing, training, and experience. We have also recognized that these skills can be learned by almost anyone through proper training.

This is as true in the field of business as it is in war and politics. The aura of mystery and romance that surrounded the builders of the first industrial empires has given way to one of understanding and objective appraisal. There was nothing unique about the ability of individuals like Carnegie, Ford, Rockefeller, Sloan, or Vail—except perhaps their dedication to the goals they pursued, in some cases to the exclusion of all other considerations.

Today there are other individuals, who are virtually unknown to the public, running enterprises far bigger than those commanded by any of the early industrialists. How many Americans even know the names of the CEOs of Exxon Corporation, GM, Mobil Corporation, Ford, and IBM? Of course, none of these individuals was a founder or empire builder. But that is not the only reason for their relative anonymity. The mystique surrounding the earlier leaders of business has been shattered. The veil has been lifted. We have discovered that success in business is very much a matter of skills—skills that can be taught.

This is the rationale for the entire management-development program at IBM, which has produced a series of new leaders from the ranks to direct the fortunes of a $40 billion business. When Frank Cary became president at the time of the retirement of Tom Watson, Jr., in 1971, Cary "seemed the very model of faceless bureaucrat so often found in the executive suites of major bureaucrat firms.…He tended to blend in with his background rather than to impress people by force of intellect or imagination." In short, he was what former employees described as "a perfect IBM product,"7 trained through the system and equipped with all the skills required to direct it. John Opel, who joined IBM in 1949 and succeeded Cary as chairman, considers himself an interchangeable part of the company. "I'm a product of the culture of IBM, of the way we do things."8 Cary and Opel may be outstanding managers, but they are also outstanding products of a training system.

Looking to the time when Bill Marriott, Jr., steps down as CEO, Marriott has established a management-development program to prepare other executives to take over. The program covers a wide range of organizational, managerial, and leadership skills, including time management; delegation of responsibility; and, most interesting of all, problem solving.

A Critical Skill

The ability to solve problems is one skill that many managers believe cannot be transmitted through training. Actually, there is a process or technique to problem solving that most managers follow unconsciously but that can be made conscious, systematized, and taught to others. In almost all cases, a solution can be found by viewing a problem in its wider context, tracing the problem to its original source, and making a firm commitment to resolve the problem at all costs.

Bill Marriott, Jr., related an incident in which he went into a Marriott hotel restaurant and found the service unsatisfactory. Instead of immediately calling over the manager to demand greater discipline, he called over a waitress to hear about the problem from her point of view. She explained that the hotel received many foreign guests who are used to a system in which tips are included in the bill, so the waiters and waitresses did not earn much on tips and the good ones quickly left. On hearing this explanation, Marriott instructed the manager to raise the salaries of the staff, and the problem was solved. He explained:

The manager of the hotel had been casting about for several months to get better service, and he never bothered to ask the people that were on the line. I'm sure that this happens a lot.

Marriott's problem at the hotel was a small one. Iacocca's problem at Chrysler was gargantuan. But the process of arriving at a solution was the same. As Iacocca soon discovered, the problem boiled down to the fact that "everybody at Chrysler was doing something he was not trained for."9 The design engineers, for instance, were telling the production people what to produce and the marketing people what to sell.

The problem could be traced back to the fact that the company's founder, Walter Chrysler, was a talented engineer who gave a greater emphasis to innovative engineering than to marketing. As a result, a bias developed within the corporation in favor of the engineering department, which became the most powerful and dictated policy to the production and marketing people. The company was turned inward and lost contact with the needs of the market. Iacocca took one look at what was going on and saw the cause of the problem. Chrysler was producing what the engineers designed, not what the market desired. The solution followed naturally: Find out what the customer wants and make it.

There was a lot of good common sense in what Iacocca did at Chrysler, but not much genius. Problems are created by ordinary people. They can be solved by ordinary people, too. What Iacocca did at Chrysler can be taught to anyone through proper training.

Whatever Happened to Eliza?

In George Bernard Shaw's original British play Pygmalion, Eliza eventually ends up married to Freddy, whose family has fallen from the heights of aristocracy into the depths of poverty. In Lerner and Loewe's American version, My Fair Lady, she decides to stay on with Higgins in the lingering hope of marrying him someday. Shaw was wise enough to know that Higgins—an aristocrat, the son of an affectionate mother, and a confirmed bachelor—would never marry a flower girl, no matter how pretty she looked or how sweetly she spoke. He also knew that no bright girl like Eliza would prefer spinsterhood with a gruff bachelor to marriage with a doting young man.

But Lerner and Loewe understood far better the power of education and training. Eliza had discovered that it was possible to radically transform her appearance and behavior with a little help from a good teacher. Having drunk from the waters of the artesian spring, she undoubtedly hoped that over time the same power could be used to transform a confirmed bachelor into an affectionate husband. Considering the power of the instrument and the intensity of Eliza's commitment to the goal, we tend to think she was right—as America has proved right about education.

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