01 Nov 2012  Research & Ideas

Book Excerpt: Judgment Calls

In their book Judgment Calls, Visiting Professor Thomas H. Davenport and independent consultant Brook Manville share the tales of several organizations that made successful choices through collective judgment. Read our excerpt on growing pains at Tweezerman.

 

Editor's note. Organizations are living, growing, learning things, but this depth of experience and knowledge can be difficult to tap into. The secret, according to the authors of Judgment Calls: Twelve Stories of Big Decisions and the Teams that Got them Right, is to bring collective judgment to bear. Written by Harvard Business School Visiting Professor Thomas H. Davenport and independent consultant Brook Manville, the book shares the tales of organizations that made successful choices through team-led decisions. This excerpt explores the entrepreneurial history of Dal LaMagna (HBS MBA '70), founder of beauty tool company Tweezerman.

"Tweezerman: Should We Take the Business to the Next Level of Growth?"

From Judgment Calls: Twelve Stories of Big Decisions and the Teams that Got them Right

By Thomas H. Davenport and Brook Manville

In the late 1990s, the small but successful women's beauty products enterprise Tweezerman faced the dilemma that every entrepreneurial growth company eventually confronts: "How much bigger can we get—can we handle the risk, the scale, the exposure, and the demands on our capacity—if we now 'really swing for the fences'?" The particular challenge the company faced was about selling its line of prestigious, professional beauty tools to chain drugstores—risking dilution of the brand, losing existing core customers, and taking on financial commitments way beyond anything it had known before. That everything built over years of blood and hustle might come crashing down was a nontrivial possibility. But so was an increase in revenue that would elevate the company to a whole new league of wealth and market share.

Judgment Calls: Twelve Stories of Big Decisions and the Teams that Got them RightFounder and CEO Dal LaMagna chafed at the potential decision, and regularly paced the floor of his Long Island industrial location, talking and asking about the question with the nervous energy for which his team had always known him. By his own words, LaMagna was "a risk addict and … a compulsive capitalist," and deep down knew that he wanted to take his company to this next, bigger level. But he also wanted to avoid turning Tweezerman into one more failure in what had been a previous career of multiple entrepreneurial misfires. What if this last and greatest airplane, which had finally begun to fly—and fly high—now crashed and burned like so many other LaMagna ventures before? Besides, LaMagna had a lot of other interests too—humanitarian, political—and he had almost sold his company a few years before, thinking of pursuing something completely different. His leadership team reflected some of the same ambivalence. A few members continued to believe that widely expanded distribution and growth had always been the Tweezerman destiny, while others saw very clearly the risks and headaches that would come with trying to sell their distinctively branded professional products to the likes of CVS or Walgreens.

Earlier in his career, Dal LaMagna had always made such decisions alone. For many of his earlier ventures, he had de facto operated as a solo entrepreneur, so any kind of collaborative decision making was not even an option. In the early days of Tweezerman, things started out the same. But with the evolving success of the company, and the growth that followed, he began to see things differently. Over time, he had established a group of trusted executives around him, which formed a "steering committee." And they all had their own points of view, which they regularly voiced. The tension of the big-growth decision was always before them. "For years, I was a like a horse champing at the bit to do this, and the steering committee held me in the corral so we could really think it through," recalled LaMagna with a smile. "I know how reckless and impatient I can be, and these people kept me in check." In the end, the CEO and the leadership team made the final decision together—in fact, a series of interrelated and difficult decisions leading to the all-important outcome. What follows is the story of how the collective judgment they called upon was built and embedded in the entrepreneurial soul of this company, enabling what ultimately became a multimillion-dollar enterprise—and wealth for all of them beyond their wildest dreams. Of particular note is the context for better judgment that LaMagna built around him: the cultural values and sense of mutual accountability within this company that he, as founder, encouraged and reinforced steadily.

"Like so many entrepreneurs, Dal LaMagna pursued his new idea with a vengeance, but insisted on doing it all himself."

Dal LaMagna's early personal and professional life—recently chronicled in his entertaining autobiography, Raising Eyebrows: A Failed Entrepreneur Finally Gets It Right—would not have suggested he was slated to make millions on the basis of building a special kind of beauty products company. From a young age, he had tried this and that clever angle for a quick buck, most of which either fell short or utterly failed, whether selling church raffle tickets in local bars, starting a computer dating service (almost before there were computers), selling and installing waterbeds, launching discotheques in drive-in movies, trying to invent a new kind of lasagna pan, producing a just-miss Hollywood movie, or running a restaurant, which taught him, among other things, that this kind of enterprise "is the worst business in the world. Period. The end." He was smart and ambitious enough as a young man to get himself into the Harvard Business School—though he also managed to lose his student loan on the first day of class by gambling it away on a bogus stock tip (and thus becoming the only student ever to owe Harvard twice as much as it cost to attend the school!). But, ever buoyant, Dal LaMagna soldiered on year after year, relentlessly trying this or that new business idea, and steadily learning—albeit the hard way—with every new lap around the entrepreneurial track. Finally, in 1980, he launched Tweezerman—that went on to disprove the rule that Dal LaMagna always struck out.

Like so many of his other ideas, Tweezerman was an idea that grew out of an accidental insight. Thanks to an adventurous romantic frolic on a wooden deck one day in the mid-1970s, young Dal ended up with a backside full of splinters. His penance, as he searched for a pair of tweezers with needle points to pull out the painful shards of wood, was to discover the difficulty of finding any kind of suitably surgical tweezers. This led to research about a better pair of tweezers that might be available, something more precise than the normal and blunt dime-store instruments that most people used in those days. He became intrigued with tools used in industrial applications. After a series of twists and turns—characteristic of innovation when ideas from one industry are translated to another—he hit upon a pair of tweezers that was being used on the assembly line of an electronics company. He was able to adapt these tweezers to the more medical use of removing splinters. Time passed and the idea took another turn, as LaMagna, at the suggestion of an ex-girlfriend, stumbled into an even bigger market: precision tweezers for women's personal beauty care. It turned out there was a real need for a more sophisticated and specialized tweezers among the trade who served beauty-conscious women. Before long, the initial tentative purchases of a few buyers turned into a steady stream of orders.

Like so many entrepreneurs, Dal LaMagna pursued his new idea with a vengeance, but insisted on doing it all himself. Working out of a small family bungalow in Long Island, he made deals with suppliers, figured out how to create packaging, and went door-to-door pitching his product in small-scale beauty salons and then also to electrologists. He also started up a mail-order business, all out of the 400-square-foot bungalow. He was tireless and worked hard to earn some early successes; one day, one of his better beauty shop customers joked to her colleagues as he came in the door, "Here comes the Tweezerman!" Ever iconoclastic, LaMagna decided the name was better than the current Dal LaMagna Grooming—and just irreverent enough to become a new and distinctive brand. With his customer's joke, the new name of the company was born.

In the early 1980s, Tweezerman began to grow steadily, and it seemed as if Dal LaMagna might at last be on his way to creating a business that would do more than merely support him. In the first year, he pulled in about $1,800; five years later, he was booking close to $1 million annually. But he was basically working himself to a frenzy to make that happen.

However, during those first few years, LaMagna began to be more reflective. He thought back to his earlier ventures, both the many failures and the occasional brief successes he had known, working with other people. Though he had operated largely as a solo entrepreneur, he had overseen employees in a few of his earlier jobs and ventures, and had developed some appreciation of the difference that good people—or bad people—could make to a company. As he recalls, looking back, "I sort of had this epiphany. I suddenly realized what my own time was worth, and I wasn't taking advantage of what I could do when I had to do everything alone. All along I had really just been sort of a promoter, selling this or that crazy idea. And it hit me then. I had to build a company. I needed to start to hire people, and I needed to get good at picking people I could trust and who could do the job. And then keeping them. And delegation became my new mantra." Lisa Bowen, who eventually became the president of Tweezerman, remembers her boss from the early days: "At first he was a micromanager. Tried to do everything. But as he brought on more people, he changed. He realized the power of trusting people. And he did. That kind of trust of employees is priceless."

Reprinted by permission of Harvard Business Review Press. Excerpted from Judgment Calls: Twelve Stories of Big Decisions and the Teams that Got them Right by Thomas H. Davenport and Brook Manville. Copyright 2012. All rights reserved.

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Comments

    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited

    The story contained in this book excerpt reveals the concerted steps taken by the company to grow. Initiatives taken by entrepreneurs coupled with a bit of luck bring about healthy results. I consider luck to be incidental which is bound to favour well planned and hard worked projects. I am now trying to catch hold of a copy of the book for indepth study of what it has in store as far as the other case studies go.

     
     
     
    • Paul Lepley
    • Retired, HBS MBA '71

    In addition to hiring a new employee to gain that person's skills, that person also brings along a different perspective. Some leaders look for a person similar to himself (or herself), but that can be a mistake that leads to "Group Think" where people agree with the boss rather than bring up conflicting thoughts ("Devil's Advocate"). A better approach, in my view, is to seek a competent individual who brings a divergent (but not destructive) perspective, and to involve that person in major decisions. One approach that I admire is an intentional balancing of key personnel along the lines of Myers Briggs personality types -- an introvert, for example, to balance the usual extroverted founder. Of course, it is essential to be sure that such a person be shown respect for his opinions even if they are not eventually followed. Another example, as chronicled in Doris Kearns Goodwin's book The Team of Rivals, is the Lincoln Cabinet where different policy advocates where assembled as the President's advisers. I wish you well with sales of your book. It sounds quite interesting.

     
     
     
    • d. parker
    • owner, Twelfth Night Press Corp.

    There is no such thing as 'perfect knoweldge' in a 'perfect world'... There is always the unexpected bonus called Serendipity or the unexpected disaster. In the long run, firms get in and out of bad decisions not by hiring and firing but by sticking with it. The longest cost overrun for a computer was Stonehenge. The Business Plan for that year consisted of 18 smaller oboliskts inside the main tall stones. Halfway through the building consturction, an eclipse came after 17 years not 18. Appaently the Chief Astrnomer did not realize that 18 was a 'leap year' for ecilplses. They had to map the sky again for ove 50 years to get it right. By then the builders the Wessex were out of cash. So the Plannersy had to dig holes in the ground (add a few fake stones to confuse onlookers and spies) and then put in a 'counting stone'. That computer predicted correclty the next eclipse of the moon which was a major Festival. Stonehenge ende d a major cost overrun and the completion was and late of schedule. The correct calendar made the Festival again famous from Europe to Greece but gave eclipse prediction a bad name. When done the Festival "made the headlines" in Europe and in Greece which happily recorded the myth of the Festivals of the Moon god "who cam e down every 18 or 17 years to dance withthe lyre with the happy Hyperboreans of England." A second catrastrohe also halted building for a cnetury. The volcano at a Greek island where King Minos and the home of Atlas-- a volcano thought to be extinct --erupted. Falling ash destroyed most of the Minoan and Phoneician and Hebrew fleet. (Very similar to the modern volcano that erpted a few years ago in Iceland. Falling ash caused the airports all over Europe to ground the jets and airplanes.) The Myceneans invade Crete as civil war an anarchy occurs. They are the Greeks that emerge later as the democracy of Athens and later produce the in sciences and theatre of ancient Classics Period of Plato. the soldiers and navy of Mycenean Greece establsh order and they carve a Mycenean axe into one of the monolith standing stones at Stonehenge to indicate their soldiers and navy have restored order in the Mediterraean --all the way to England. So we have a new computer going online late and costing double the projected budget amount & then takes 50 years longer that expected in the Busienss Plan to debug the program.... and meanwhile there is a coup in Greece. OK finishing that computer was quite a judgement call, wa it not?