I have been asking myself this question for years: At what point does a growth-oriented company get too big where culture and performance start to slip in wrong direction? Then I was sent a book from a client that made me realize I have been asking the wrong question the whole time.
Plain Talk by Ken Iverson has quickly become one of my favorite business and leadership books I have ever read. A quick summary, Ken pioneered a new model in the steel industry that at the time had a thesis that bigger is better and the only way to control bigger steel mills was via a command-and-control style of leadership. This led to almost every other steel company facing union formation and there being a stark divide between the management class and working class. Ken wanted to build Nucor via an opposite management philosophy, so he embarked on a journey to design a middle market steel company that empowered those doing the work every day to have personal agency of their day-to-day production with a small cohort of peers that have the same.
Thus launched the mini-mill model. He quipped in the book that his peers would like to say that Ken fly’s to a big city, puts on the most popular radio station and then drives until the signal went out. Once the signal was gone, he found the next small town and decided that this is where he would like to build a mini-mill in partnership with hard working rural Americans.
Once the site was selected, 3 things must be true for this work in the community:
- The General Manager of each mill must have complete authority to lead and manage the mill.
- Everyone in the mill will have the same incentive plan designed around a daily production formula. They were able to pay significantly above average wages through a highly incentive based compensation model that was a win for the employees, customers, and company.
- The size of each mill will be designed to have a team between 200 – 400 people so that the camaraderie and peer to peer accountability can remain high.
This model enabled a tremendous era for Nucor and Kens term in leadership ended proudly with a corporate team of just 22 people running a company of $4 billion in revenue in the late 90s. I just checked the stock price of Nucor this morning and their market cap is now almost $60 billion. It made me wonder how much of Kens philosophy is still guiding Nucor’s leaders today.
There are a hundred other lessons from this book but most importantly it made me reframe the question I’ve been chewing on for a decade. At what point does a growth-oriented company decide to take agency away from those closest to the problem and why? If this has happened already, what would need to be true to swing the pendulum back in the other direction toward agency and autonomy in the field?
More to come…
BUILT TO LEAD 