Abrams focused on distribution channels. He told the sales force to persuade distributors to become exclusive dealers in Benjamin Moore paints. Abrams allegedly condoned strong-arm tactics, such as threatening to encroach on territory by opening company-owned stores nearby.30 Some distributors complained about more expensive terms for inventory financing or being charged for advertising that was never provided.31
As out of sync with Benjamin Moore tradition as such tactics were, Abrams’s downfall was negotiating deals with large chains. When these deals came to Buffett’s attention in June 2012, some completed and others pending, Buffett informed Abrams they were unacceptable.32 They violated Berkshire’s commitment of exclusivity to Benjamin Moore’s distributors. Abrams, who was in discussions with Lowe’s, a large retail chain, replied that such sales arrangements were essential to restore growth and regain market share.33 Buffett replaced Abrams with Robert Merritt, who quickly assured the troops of doing a better job.34
Merritt began to settle the company back into its traditions. Observers credited his efforts to rekindle the company’s special historical relationships with dealers.35 But he, too, soon was dismissed amid a flurry of rumors about gender bias and locker room humor among senior managers at the company. Underscoring the central issue facing Benjamin Moore, Buffett heralded the appointment of Merritt’s successor, Michael Searles, saying that he “understands the importance of the independent retailer” and “is committed to the strategy we have set forth and the commitment we have outlined to the dealer network.”36
Undoing 130 years of tradition is not easy, but the Benjamin Moore saga shows the fragility of intangibles like corporate culture. Keeping corporate culture strong, on the other hand, are the many distributors who continue to believe in the company. According to one such distributor, Kim Freeman:
I have been a Benjamin Moore dealer for the past 10 years in Canada. I sincerely hope Berkshire Hathaway and Mr. Buffett return the company to its original principles. We, as the frontline sales force to a cultivated niche market, need to be treated as business partners, not errant children to be controlled or dismissed in the quest for greater market share. Opportunity for more market exists further afield of the large centers. We can make the company grow, contribute to our communities, and realize a good [return on investment] when we are considered important to Benjamin Moore’s success. We have lost some great Ben Moore staff and dealers lately, and although it’s understandable there will always be evolution, I sincerely hope we can get back on track.37
Benjamin Moore’s history and its contemporary problems reveal some ways that values can collide, in this case between fidelity to distributors and profitable growth. But Freeman rightly observes that companies can harmonize contending values, as Benjamin Moore has done for more than a century. And Searles agrees. In a business environment where others saw adversity, Searles sees opportunity. As he put it in an interview for this book: “While rivals like Porter and Sherwin Williams shift to other distribution channels, Benjamin Moore gains a huge strategic marketing advantage: the only major brand committed solely to the success of the independent dealer network.”38
Johns Manville Corporation, a manufacturer and marketer of premium-quality building products, has explicitly adopted a commitment to forging a corporate culture of integrity. It strives to be a reputable business by stressing four core values: people, passion, performance, and protection. These values differ from those the company showed historically. For decades, corporate officials ignored or misunderstood the truth about its products, which had seriously injured thousands of people and caused significant environmental damage.
Johns Manville was formed in 1901 by the merger of H. W. Johns Manufacturing Co. and Manville Covering Co. It manufactured textile products and construction materials using asbestos. Manville was founded in Wisconsin in 1886 by Charles B. Manville. Johns was formed in New York in 1858 by twenty-one-year-old Henry Ward Johns, who died in 1898, an early death thought to have been caused, ominously, by asbestosis.39
The resulting company, Johns Manville, developed and marketed thousands of applications for asbestos, a natural mineral useful principally because of its fire-retardant properties. The company, which went public in 1927, was a highly centralized, hierarchical, and bureaucratic organization—not a Berkshire kind of company.40 It might have operated in relative public obscurity but for the fact that asbestos, despite positive uses, is a deadly carcinogen.
From as early as the 1930s to as late as the 1970s, Johns Manville’s management denied responsibility. Its efforts to warn employees, customers, or other users were belated. Its general counsel in the 1930s gained infamy for having attempted to squelch, downplay, or dodge the serious medical risks asbestos posed, hazards all scientists then understood and most lay people today are aware of.41