The 17 Indisputable Laws of Teamwork Ch 10

Montgomery Ward Bankruptcy and the Law of the Price Tag

• Montgomery Ward, a long-standing retailer, filed for Chapter 7 bankruptcy in 2000.
• The company's failure could have been avoided if leaders had understood and applied the "Law of the Price Tag."
• Ward was founded in 1872 by Aaron Montgomery Ward, a salesman who initially used mail-order catalogs to bypass middlemen and sell goods directly to consumers.

Early Success and Innovation

• Ward's business started with a one-page price list that was unfortunately destroyed by the 1871 Chicago fire.
• He re-established the price list and formed a partnership with colleagues to create the first general merchandise mail-order catalog.
• Ward's "Satisfaction Guaranteed or Your Money Back" policy contributed significantly to the company's rapid growth.
• The company experienced tremendous growth in a very short time, from a small capital base to a $300,000 revenue within a few years.

Decline and Failure to Adapt

• Sears, Roebuck & Co., a competitor, emerged in the late 19th century.
• A shift in population from rural to urban areas affected both companies' strategies.
• Montgomery Ward failed to adapt to retail store sales as Sears rapidly expanded its retail presence.
• Ward's management hesitated to invest in brick and mortar stores when doing so would mean making major structural changes in their business model.
• They failed to seize opportunities for expansion and improvement, ultimately costing them market share and profitability.

The Law of the Price Tag

• Team failure often stems from a reluctance to pay the price necessary for success.
• Success requires sacrifice from every team member; coasting is not an option - Everyone has to give up something.
• This price is ongoing, not just in the initial stages of growth. There is no destination where sacrifice stops.
• Improving, changing, and staying top-tier all need greater sacrifice and commitment to improvement. There is no price break for success.
• Companies or team members who miss this are likely to plateau, quit or fail.
• Teams must ensure continuous growth in ability, skill and market position to remain competitive.

The Price of Teamwork

• Key ingredients for teamwork include sacrifice, time commitment, personal development, and unselfishness.
• Teamwork takes time to build relationships and develop strategies – and isn't an instantaneous process.
• High-achieving team members should assess whether personal ambition must yield to collective goals for success.
• Leaders should model willingness to improve, invest and make sacrifices for the team. Praising sacrifice of team members helps to encourage it further.

Montgomery Ward's Failure: Example for avoiding mistakes

• Montgomery Ward's failure is portrayed as a cautionary tale about the importance of adaptability, innovation and continual sacrifice in business.
• The company prioritized short-term gains over long-term strategic adjustments, losing market share to competitors that adapted to changing market trends.

The Revolutionary War's Sacrifice and Success

• Historical example of the Continental Army facing hardship at Valley Forge during the Revolutionary War (1777).
• Despite terrible conditions and low morale, the army persevered and improved through training and strategic leadership, ultimately contributing to success in the long term.

Conclusion (Summarized)

• The "Law of the Price Tag" emphasizes the necessity of sacrifice, commitment, adaption and the continuous price paid for success and team-based growth. Montgomery Ward's story details the consequences of failing to pay the price for ongoing improvement.

Explore the rise and fall of Montgomery Ward, a historic retailer that filed for Chapter 7 bankruptcy in 2000. This quiz examines the company's innovative beginnings, the importance of the 'Law of the Price Tag,' and the failures that led to its decline. Test your knowledge on this crucial chapter in retail history.