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Conversations in Management

John Wanamaker

Checks taken from buyers. Change given in cash.

1873 wasn’t turning out to be a good year for John Wanamaker. Twelve years earlier he’d opened the Oak Hall Clothing Bazaar and by 1872 had become the nation’s largest clothing retailer. He’d recently renamed the business John Wanamaker & Co., and had plans for a major expansion. Now, the Financial Panic of 1873 threatened everything. The panic began when Jay Cooke and Company—one of the nation’s largest banking firms—abruptly declared bankruptcy as a result of over-investment in the railroad industry. Cooke wasn’t alone. The nation plunged into depression as one after another bank failed and financial markets crashed. Within two years, 18,000 businesses had closed, 25% of American railroads were in bankruptcy and 14% of all workers were unemployed. As the resulting depression dragged on, the country simmered on the edge of anarchy. Neighborhoods organized armed militias to coerce action from local government and wildcat labor strikes brought industry to a standstill. Conditions didn’t look optimal for the Philadelphia retailer.

Wanamaker, however, wasn’t the kind of man to wait for optimal conditions. Instead, he created his own conditions for success through optimism and relentless innovation. When conditions showed slight improvement, he opened what was billed as “the largest space in the world devoted to retail selling on a single floor.” His promise of quality goods with a money-back-guarantee drew initial crowds. He kept them coming back with amenities such as an in-house restaurant and electric lighting. To keep inventory turning, he introduced the first-ever White Sale and seasonal Opportunity and Midsummer sales. Over the years, Wanamaker kept finding new ways of exciting his customers. In 1896 he erected one of Philadelphia’s first skyscrapers to house his thriving department store. It included a 150 foot atrium, the great eagle from the St. Louis World’s Fair and the second largest organ in the world (Atlantic City had the largest). With the popularization of the automobile, he added a Ford dealership and in a display of cutting edge technology, he put a telegraph receiving station on the roof. That station would be the first to receive word of the Titanic’s sinking. But for all of his entrepreneurial showmanship, it’s the small, copyrighted ad promising cash in return for checks that best illustrates the foundation of Wanamaker’s success. It was a bold move to make during the financial panic and a clear indication that he had what many others lacked—confidence. He had ample self-confidence, of course, but more importantly for his business, he had confidence in his customers. It was his confidence in others that made Wanamaker’s prosper while scores of retailers failed.

Confidence is the number one predictor of success. The belief that you can achieve something is the best indicator that you will achieve it. That’s why effective leaders actively work to build the confidence of their teams. Less discussed, however, is the fact that individual success is often a matter of having confidence that other people will fulfill their obligations. That means giving up some control and trusting in someone else’s skill and integrity. No doubt about it—that can be a frightening prospect. Yet, failure to have confidence in the team can turn an otherwise good leader into the dreaded micro-manager! You can lessen the anxiety by making sure your folks have the training they need, clear performance standards and an appreciation of the values that drive your organization. There’s an added benefit, too. When you display confidence in others they have confidence in you. So try it. Unlike 1873, there’s no need to panic!

—Ebert