Plain Talk: Lessons From a Business Maverick by Ken Iverson

Summary
  1. Ken Iverson took over Nucor when he was 39 and compounded the business  at incredible rates for decades. On top of it, he did it in the steel industry which is not known for its attractive returns. Iverson lays out his management principles which center around employee trust and loyalty, decentralization, honesty, limited hierarchy and bureaucracy and aligning the employees and manager’s interest through partnership.
Key Takeaways
  1. “We have little tolerance for politics, the pettiness, the fixation on rank and status, or the insensitivity to employees’ needs that people in most big companies endure as a matter of course.”
  2. “Today’s leader must maintain sensitivity to the views of everyone who has a stake in the company and realize that each one can make a special contribution to meeting the company’s goals.”
  3. “Good leaders must be good followers. Leaders and followers share certain characteristics such as listening, collaborating and working out competitive issues with peers.”
  4. “Specialized management is an enemy of hope and good management. I think what we need, if anything, is deep generalists.”
  5. “What we did was push aside the notion that managers and employees have inherently separate interests. We’ve joined with our employees to pursue a goal we can all believe in: long-term survival”
  6. “Equality, freedom and mutual respect promote motivation, initiative and continuous improvement.”
  7. “Every manager should be something of a psychologist…I’ve found that, as employees, many people want first and foremost to be appreciated for who they are. They want to be acknowledge as unique individuals – each with immense and unrealized potential. All too often, though, their managers cast them as drones.”
  8. “Don’t fall into the trap of ruling out failure. Risk, by definition, carries the possibility of failure. See that possibility. Study it, but never, ever hide from it.”
  9. “You have to realize that your fears and ambitions are the lenses through which you view and assess risks, and that the image those lenses convey may not always be true.”
  10. Central tenets
    1. Choosing the right people and earning their loyalty and trust
    2. Reallocating manager’s time
    3. Letting employees guide their own development (cross-trained to do multiple jobs)
    4. Providing information to employees (share everything)
    5. Letting employees invest in technology
    6. Active listening
    7. As little hierarchy/bureaucracy as possible
    8. Weighing mergers and acquisitions from employees’ perspective
    9. Shaping the work environment is the manager’s primary job
  11. Iverson took over Nucor at age 39 as he was the only one who ran a profitable segment
  12. Whole company shared in the pain during tough times with senior executives taking an even bigger pay cut than the employees
  13. Run company for investors, not speculators
  14. Every single decision made with long-term view – simple but not easy
  15. Never laid anyone off – employee loyalty is of utmost importance (pair with The Loyalty Effect)
    1. “When is laying people off the practical and sensible thing to do? Can we expect employees to be loyal and motivated if we lay them off at every dip of the economy, while we go on padding our own pockets?”
  16. No job descriptions at Nucor – employees can define their jobs in their own way in order to be the most productive possible
  17. Each division is run as its own enterprise – trust your instincts, decentralized, responsibility and accountability for everyone
  18. Try to keep business small (less than 400-500( as management loses touch with employees as it gets larger
    1. Iverson talked to every manager every day
    2. Fan of formal surveys – anonymous and forces manager to think how the current situation truly is
    3. Policy for managers to meet with every employee at least once through the year
  19. Delegation without information is suicide
    1. Delegating gets people to buy in and most likely to a much better job than if the manager was hovering over their shoulder
    2. Streamline information – too much is as bad as too little
    3. Find early warning signals
    4. Differentiate between objective and subjective info – cause and effect
  20. Centralized and decentralized operations are better in certain situations. Uniformity and consistency leads to centralized; innovative and flexible needs more of a decentralized approach. Either way be decisive
  21. Healthy tension in sr. executive meetings is usually a good things – shows people care, have thought about issues, brings up issues early before they have a chance to bubble over
    1. Know that their motives are healthy, objective and coming from a good place
  22. Great management is situational. Hard to take a great manager in a certain business/industry and expect that same result in a completely different situation
  23. Corporate culture sets the tone for interactions between all stakeholders
    1. Nucor removed hierarchy and was very egalitarian. Sustained employee motivation
    2. Eliminates noise to focus on essential – senior management not worried about perks, corner offices and other distractions
    3. Only 4 layers of management at Nucor lead to short lines of communication
  24. People often don’t need answers, simply to be heard
  25. Share all information with employees
  26. Show how much they truly cared and valued their employees by hand delivering birthday cards and had all employees names in the annual report
  27. Pure equality brings out pure effort
  28. People jump on the chance to shape own lives and take responsibility
  29. Nucor’s biggest competitive advantage is its culture and it always will be (has to be consistent)
  30. The work place shapes people’s state of mind – both physical and cultural
  31. Give employees the freedom to innovate – they are the engine of progress
  32. Compensation incentives are vital. Give employees a stake in the company! Partnership aligns values and brings out everyone’s best effort and productivity
    1. Try to make profit sharing timely and immediate
  33. Helping employee’s families is a huge win-win (college bills, medical bills, etc.)
  34. Small is beautiful – can operate on the fringe, innovate and slowly take market share from bigger players
    1. Are able to learn all aspects of the business when small
  35. It’s not easy to change people
  36. No shortcut from big and bureaucratic to small and nimble
  37. Be careful not to criticize failure as this stifles good risks and innovation
  38. Experimenting and failure is necessary before success
  39. Be conscious that senior management tends to be more risk averse, comfortable and complacent
  40. Ethics – look for options that are equitable, right and practical
  41. Peter Principle – people will rise to the level of their incompetence
  42. Simplicity is integral to Nucor’s success
    1. Honesty leads to stability and credibility
    2. No hierarchy or bureaucracy
  43. MBAs tend to lack communication skills, how to relate to and lead people
What I got out of it
  1. Awesome principles and amazing read. Iverson has put The Loyalty Effect into action at Nucor