How Did Masco Become A Good Leader
Lets take this opportunity to study the “MASCO FIASCO” and step into the shoes of Richard Manoogian, the CEO of Masco Corporation, a highly successful company on the verge of a momentous decision. Its 1986, Masco is a successful $1.15 billion company that has just recorded its twenty- ninth consecutive year of earnings growth. Its ability to wring outsized profits out of industries that are neither high tech nor glamorous has won it the moniker of “Master of the Mundane” on wall street. Its portfolio includes faucets, kitchen and bathroom cabinets, locks and building hardware, and a variety of other household products. Masco expects the business to generate $ 2 billion in free cash flow over the next few years, if it enters the furniture industry. …show more content…
Two years later, operating earnings from furniture came to $ 80 million on sales of $ 1.4 billion, an operating margin of 6 percent, versus 14 percent for the rest of the company. CEO Manoogian admitted, “The decision to go into the home furnishings business was probably one of the worst decisions I’ve made in 35 years. So lets ask ourselves now, was Richard Manoogian a super leader or just another bad leader?
Even if you were undecided or skeptical about the furniture industry, I’m willing to bet that some part of you supported Masco’s move. No one respects timid, passive leaders. Bold, visionary leaders who have the confidence to take their firms in exciting new directions are widely admired. Isn’t that a key part of strategy and leadership?
In truth, it is. But the confidence every good leader needs can readily balloon into overconfidence. A belief that is unspoken but implied in much management thinking and writing today is that a highly competent manager can produce success in virtually any situation. Richard Farson calls this “the sense of omnipotence that plagues American management, the belief that no event or situation is too complex or too unpredictable to be brought under management control.” One philosopher at Harvard University, Martha Nussbaum describes the balance in a system as a “ fragile integrity”, it is “ impossible to build water-tight ships that will withstand all contingencies,” she wrote. “You cannot remove ungoverned chance from human life.” And trying to is
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