An Important Anniversary: The Cortés Principle


495 years ago today the Spanish Conquistador Hernán Cortés with 11 ships and some 500 men landed in Mexico and launched one of the most audacious escapades in history: The conquering of the Aztec empire with its population numbering in the millions and dominating army of over 300,000 warriors.

Now there is not much a leader can learn from Cortés. By all accounts he was a greedy, arrogant and generally crappy human being whose very goal was theft and destruction (granted, the Aztecs were no band of angels either), but Cortés provides one very, very valuable lesson.

Cortés had good reason to be worried that not all of his 500 guys were completely committed to the idea – they may well opt to cut and run when the going got tough; so he did something incredible: He destroyed his ships. Historians quibble as to whether he actually burned them or merely sank them, but those are details. Either way he changed the game completely. By that act he took the easy way out off the table. When things got difficult, the quick and obvious solution – to skedaddle back to safety – was no longer one of the options. He and his commanders would have to dig deep and come up with creative solutions, and with going back no longer one pf their options, going forward was the only path left.

This story is worth telling because it is the answer to the question how do lean companies do it? How do they operate like SC Johnson and go close to 130 years – through the Great Depression and multiple recessions and through two World Wars - without ever laying anyone off? How do these companies stick with suppliers through thick and thin when they could save so much money by dumping them and buying from Asia? How do they stay in one community when there are better locations for logistics and labor climate?

Business leaders ask those questions seeking some accounting or logical strategy answer, but the answer is really just the Cortés strategy. They view laying people off and replacing major suppliers as the obvious and easy solutions to tough times, but solutions that would effectively kill their chances of long term success. So they take those options off the table.

By very publicly proclaiming their commitment to their employees, partners and communities their leaders paint their management into a corner. When the economy turns down or some competitor puts unforeseen pressure on their sales revenues management has to dig deep into the creative well and come up with new and innovative plans and strategies. The easy solutions – the ‘follow the leader’ responses – layoffs and outsourcing – are not available to them. They have to figure it out some other way.

It is really that simple. There is no trick, no secret business scheme that Toyota or SC Johnson uses to go for decades without layoffs. They simply don’t do it. And their leaders simply don’t accept the idea that their no layoff policy means profits must suffer. They demand both: No layoffs and continuing profits, and their managers have a long track record of conjuring up ways to make that happen.

From a leader’s perspective, then, the Cortés principle is a simple test of commitment. If you want to change the culture and drive the organization to success or die trying (literally for Mr. Cortés / metaphorically for you), publicly and formally burn your ships and take the destructive, easy solutions off the table and demand that you and your managers do the hard work of thinking creatively for better solutions.

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