The keys to resurrecting a dying brand are much simpler than you think

Ted McCarty transformed Gibson Guitars by listening to his team

When guitar manufacturing icon Gibson Guitars was on the ropes they called an audible, hiring an unknown outsider who transformed the company by listening to his team.

When was the last time you watched Undercover Boss? I became aware of the show in 2013 when the company I was working for announced our CEO would be on the show. My co-workers and I thought this ought to be good, being that employees in our property restoration business respond at all hours of the day (or night) to various damages including water, fire, mold and blood. How would our CEO, who started in the trenches, respond to the everyday challenges that our technicians faced as he interacted with our counterparts in other parts of the country?

Long before Undercover Boss popularized the concept of executive level leaders donning terrible wigs and getting their hands dirty in their own operations, there were innovative leaders like Ted McCarty. Who is this Ted Mc-WHO-ty? We will answer that question but before we do let’s take a brief walk through the time period and the organization to which he was called, the iconic guitar manufacturer, Gibson guitars. If you have observed any value from leaders going undercover in their businesses, wait until you see what Ted can do by being an out-of-cover manager and listening to his employees.

Gibson Guitars in the pre-McCarty era

If you know anything about rock and roll, would you be surprised to know that Gibson had initially passed on the option to usher in the dawn of the solid body electric guitar? Could you imagine Jimmy Page of Led Zepplin or Slash of Guns N’ Roses without their Les Pauls?

In 1930, Les Paul brought his ugly little innovation “the log” to the Michigan based manufacturers and they wholeheartedly rejected his idea. An inventor who wasn’t yet a player in the instrument market, Leo Fender, soon rose as the first to market in the absence of Gibson’s collaboration with Mr. Paul. Even though Leo was first, neither Fender nor Gibson would be strumming for success in this market segment for several years. At the turn of the decade, Gibson wouldn’t even be producing instruments at scale as they transformed their factory into a wartime production line.

World War 1 officially ended in 1918, but things in Europe and abroad were still simmering with tension. Many point to September 1, 1939 when Adolf Hitler’s German forces invaded Poland as the final straw that brought the reluctant nations of England and France back into the fray of opposing Nazi expansion. For two years, up until December of 1941, the United States was resolute to avoid participation in the Allied efforts of World War 2. The bombing of Pearl Harbor in Hawaii on December 7, 1941 by the Japanese quickly changed that decision.

“Yesterday, December 7, 1941 a date which will live in infamy the United States of America was suddenly and deliberately attacked by naval and air forces of the Empire of Japan.” — President Franklin D. Roosevelt

A proud history of working women rising to the challenge

By early 1942, The United States was in full swing to mount a defense against the advancing threat of a Japanese invasion as well as assisting their Allies to recapture land taken by the Axis forces in Europe. Gibson guitars, like many other manufacturers in the States, transformed their operations into wartime production plants. At their headquarters in Kalamazoo, Michigan, Gibson hired over 200 women between 1942 to 1946 to make munitions. The Kalamazoo Gals were also responsible for producing upwards of 25,000 of the highly sought after Gibson “Banner” guitars.

Necessity gave hard working women an opportunity to display their abilities in the workplace. When the world went to war, even those who were not fighting on the front lines were enlisted to help the military efforts. Our allies in England set the example as, “The British government mobilised civilians more effectively than any other combatant nation. By 1944 a third of the civilian population were engaged in war work, including over 7,000,000 women.” Gibson, joined factories across the Allied nations, to produce wood and metal products for the wartime effort.

Gibson Guitars in a downward spiral

Chicago Musical Instruments (CMI) purchased Gibson Guitars in 1944. Mauric Berlin soon discovered that there was trouble in Kalamazoo. He was sitting at the helm of a company that had an iconic image but was hemorrhaging upwards of $10,000 a month (estimated equivalent to $175,000 in today’s dollar). Berlin called upon a former business acquaintance, Ted McCarty, who was an engineer by trade and had been working for the musical manufacturer Wurlitzer for the last 12 years.

McCarty had hit his growth ceiling at Wurlitzer and was ready for a new challenge. Whether Berlin knew it or not, Ted was ready to sign an agreement to become the assistant treasurer with the Brock Candy Company. Maruric was available for lunch and hungry for talent. By contrast, Brock’s decision making ability had stalled out when the owner could not be reached while he was on vacation. In that void of decision making ability, the Candy Companies lapse became the first break for Berlin and the future of his new acquisition at Gibson. Gibson was quicker to get the pen into the hand of emerging talent than Brock, which brings up a few nuggets for those in a position of leadership to take note of:

• Unnecessary bureaucracy will slow your organization down and inhibit your ability to attract good talent
• Networking is valuable, you never know when your next lunch appointment could lead to a breakthrough.
• If you don’t provide ongoing opportunities for your team members they will seek these challenges elsewhere.

Mr. Berlin asked Ted visit Kalamazoo to, “Find out what’s going on over there, and why I’m losing so much money.” Ted took the challenge head on and began his investigation in the heart of the action, the production floor. We are back to where we started with respect to the values unearthed by Undercover Boss. It turns out, if those in a position of leadership are willing to walk the floor and listen to employees they may be able to gain the same valuable insights as CEOs who go undercover extremes. In the span of a week, McCarty was able to observe and glean enough information to acquire a clear picture of what he thought was wrong with the operation at Gibson. He summed up his findings in a report:

1. The organization was top heavy
2. The labor force had low morale
3. There were poor employee relations with the current general manager

“We decided that every day we would go through the factory and find one operation that we thought could be improved.” — Ted McCarty on his relationship with John Huis

Listening to and empowering employees might just work

McCarty was hired by Gibson in 1948, the same year that Leo Fender started producing his Broadcaster solid body electric guitar. Ted’s first visit was back to the production floor where many of the issues revolved around poor management by then general manager Guy Hart. If morale continued in its low state, the transformation Ted was orchestrating would not generate any harmony. His visits at the ground level allowed him to identify a 15 year employee, John Huis, who expanded his understanding of the problems while also helping Ted to identify solutions.

Listening to employees enabled McMarty to make progress in the process of improvement. Ted believed that there were too many foremen and without a central superintendent who was responsible for oversight of all the sections there were glaring inconsistencies. This lack of clarity was prohibitive. McCarty promoted Huis to this new role and Hart resigned. The overlooked diamond in the rough was promoted and the cancer (Hart) was removed. Freeing Ted to move on to bigger issues within the Gibson organization and empowering Huis to improve the production systems while establishing a strong working environment for the team.

“We were growing, from 150 employees, growing and growing and growing, and we had about 1,200 when I left in ’66.” Ted McCarty on growth

When leaders empower their people, everyone wins

Not only did Ted listen to employees, he Ted believed that being friendly with the staff was important. He even went so far to make it his goal, with only 150 employees, to remember the names of individuals as well as something significant about them as people. This commitment transformed the attitude of the employees towards management. McCarty and Huis continued to collaborate and decided to walk the floor daily, “To find one operation that we thought could be improved (Bacon, 2018).” Ted understood the impact of leading by example, to hold himself and his core leaders accountable for the change in culture as well as the commitment to growth.

By identifying issues, taking action and empowering people, McCarty and Gibson went from bleeding money in March to making a profit by May of 1949 (Price). Ted was Vice President within a year and President of Gibson by 1950. How refreshing is it to see that a leader who is committed to making their organization a good place to work can find the means to revolutionize a dying brand? Ted had clarity, consistency and accountability working in the organization. He was enjoying his work, employees were thriving in a positive environment and the organization was firing on all cylinders.

“I was working with the rest of the engineers, and we would sit down, like in a think tank, and we would talk about this guitar: Let’s do this, let’s try that.” — Ted McCarty on innovating with his team

Once the core of the organization is healthy, the possibilities are limitless for innovation

With Gibson back in the business of making guitars it was now time to improve the position of the business in their market. They weren’t the first to the market for the solid body electric guitar but Ted was instrumental in building an innovative culture. They started by partnering with Les Paul to be the public face of their electric guitar which bore his name and came to market in 1952. Ted pioneered many of the features and worked out the deal with Les on a napkin, a deal that held when reviewed by the lawyers.

Ted McCarty was never a musician and yet he had a 60 plus year career with three successful companies in the industry and is regarded as a key figure in the golden years of Gibson as well as the evolution of the solid body electric guitar. How was Ted able to leave such a mark in the industry? When he wanted to fix the factory, he listened to the employees. So, he took the same approach to revolutionizing the guitar — listen to guitar players. His team focused on quality and made adaptations that addressed the needs of musicians.

Even though Gibson had passed on the guitar innovation back in the 1930’s, after Fender brought his unit to the market there were many manufacturers who still thought it was just a fad. Ted was undeterred when his competitors told him, “Anyone with a bandsaw can make a solid body guitar. Bandsaw and a router, that’s all you need.” Ted sought ways to innovate without sacrificing the quality that had built their company’s brand.

“Fender was talking about how Gibson was a bunch of old fuddie-duddies…I was a little peeved. So I said, ‘Let’s shake ’em up.’ I wanted to come up with some guitar shapes that were different from anything else.” — Ted McCarty on maintaining a competitive edge

Unleash your strengths and allow others to do the same

Ted left splashes of his fiercely competitive nature. One of the signature features of the initial Gibson Les Paul was the arched top which Ted incorporated primarily because he wanted, “To do something Leo Fender couldn’t do.” When rival Fender called Gibson out for it’s archaic approaches to the market, McCarty made it his personal mission to launch designs that had never been seen. The Flying V, Explorer and Moderne came out of this competitive drive, which weren’t commercially successful at the time but have experienced periods of popularity in more recent years.

McCarty developed key collaborations from within and without to the benefit of Gibson. He also was able to guide the successful acquisition and integration of their competitor Epiphone to drive his vision of expanding their capacity to compete in the market for bass guitars. McCarty led Gibson from hemorrhaging money to consistent profitability which steadily increased 15 times. His sales grew by 1,250 percent, the work force expanded tenfold and production went from 5,000 to 100,000 guitars per annum.

“I went there [to Gibson] on March 15, we lost money in March, we lost money in April, we made money in May, and we made it for the next 18 years — never had a loss. I left there in ’66, when I bought this company from Paul Bigsby.” — Ted McCarty on his achievements at Gibson

Old dogs don’t always need new tricks

McCarty continued his habit of walking the floor at Gibson where he could see the issues clearly. In later years, McCarty saw that trouble with leadership was on the horizon and he decided to look for opportunities elsewhere. Good talent can slip through your organization’s fingers in many forms including slow hiring processes, poor engagement, overlooking internal talent and devaluing contributors. Ted and then Vice President John Huis resigned at Gibson in 1966 and started a new venture as owners of Bigsby Accessories, Inc.

While Gibson and McCarty was not a relationship that endured the test of time, his relationship with Huis was. It should be no surprise that McCarty at 56 years old still had fuel in the tank and was successful at Bigsby, implementing many of the same core values in the new company. He was brought out of retirement by Paul Reed Smith who credits Ted as being a critical mentor to his own success even though Ted was legally blind by the time they met in the 80’s. As we said, while you may have never heard about Ted McCarty, there is much to learn from his story that can be applied to any organization.

Ted is no longer with us but you can still glean key takeaways from the methods of Mr. McCarty in transforming an organization into a competitive force in the market.

Six timeless keys for building success from Ted McCarty’s playbook:

1. Get in the trenches — roll your sleeves up and mix it up with your team members on the front lines.
2. Leaders must be humans — be friendly, talk with your employees and be willing to listen to their feedback.
3. Pull the trigger on talent — identify your key assets (some of whom may be currently overlooked) as well as your key detractors (some of who may currently have too much influence).
4. Keep your processes nimble — unnecessary bureaucracy will weigh you down, be ready to act upon what you find and follow through with what you say.
5. Disrupt yourself — be intentional with your habits and challenge yourself to change and grow both as a leader and as an organization.
6. Lead by example — keep your mind engaged by finding things that interest you in your business, be competitive and empower others to fill in with their areas of strength.