Harvard Book Store: Competitive Advantage Speakers: Ken Iverson

Ken Iverson
is the chairman of Nucor Steel, which is the third largest producer of steel products in the United States. He is also the author of Plain Talk: Lessons from a Business Maverick. Iverson has served on the boards of Wal-Mart Stores, Inc. and Wachovia Corporation. President Bush awarded him the National Medal of Technology, America's highest award for technological achievement.

Ken Iverson spoke at our Competitive Advantage Breakfast on December 10, 1997.
Mr. Iverson introduced his talk by stressing that the purpose of business is not necessarily to maximize profits, but rather to perpetuate itself and survive, so that it can continue to provide jobs for its employees. He then addressed the questions "What makes Nucor different?" and "What are they doing that has led to their incredible growth rate?" by making these points:

Nucor uses the latest technology.

Their prices are competitive.

They have the fewest number of management layers -- they run a company with over $4 billion annual revenue with only twenty-five people (including clerical staff) in their central headquarters.

Nucor is strongly loyal to its employees, which is repaid by their deep commitment to company success.

Employees are encouraged to let managers know when they think bad decisions are made.

A significant portion of employee compensation is based on company success -- Nucor has an aggressive bonus system with weekly payouts based on production metrics. Bonuses resulting in 200% of employees' base pay are not uncommon (the average employee made over $60,000 in 1996).

As a result of this bonus system, peer pressure among employees strongly promotes efficiency and high production levels.

Nucor minimizes differences among employees. No privileges go with rank -- everyone has the same color hardhat and the same benefits, everyone flies economy class, and no one has a special space in the company parking lot.

Mr. Iverson concluded his talk by pointing out that, not withstanding their high compensation rate, Nucor's production cost is $30 per ton in an industry where the cost of production is more typically $100 per ton. They have gone thirty-two years without a loss or a layoff.
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