The Problem Is You

In 1931, Montgomery Ward was the nation’s number-two retailer after Sears, Roebuck and Company. But Ward had made some near-fatal mistakes. Over the past 10 years, the middle class had been growing. Cities were expanding. There was a growing market for mass-produced goods. Sears opened up retail stores to meet the demand in these growing cities. Ward focused on mail-order catalogs to rural markets instead. And now the company was facing bankruptcy.

Financier J. P. Morgan installed Sewell Avery as the CEO of Montgomery Ward to turn the company around. Avery called Ed Booz. The retailer rapidly became his highest-profile client. He helped design a first wave of reorganization and cost cutting that reversed Ward’s decline. By 1934 it was making money, and by 1936 profits reached $13.5 million annually.

Booz became Ward’s point person for planning, organization, and personnel. This often meant mollifying senior managers antagonized by Avery, a brilliant leader whose surly personality had the effect of driving many senior executives from the company. Sometime in the late 1930s Avery asked Booz to determine why so many managers were leaving. “The problem is you,” Booz told him. This was true, but nobody had ever said as much to Avery and survived at Ward. This would be no exception; Avery abruptly ended Montgomery Ward’s contract with Booz Allen.

On the surface, this was a disaster. But it became a springboard for new work. Departing Ward executives had moved to other companies that became future clients of Booz Allen. They knew that Booz not only had helped save their old company from death, but that he had done one of the most difficult and trust-inspiring things a consultant could do. He had leveled with the boss.