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.