Part IThe Story
Sinatra in the Hotel Room
In the early years of Harman/Kardon, the company's founders had a trade-show routine. Rather than stack their equipment on a table under fluorescent lights, as most exhibitors did, they rented a hotel room and dressed it to look like somebody's living room. Then they put a Frank Sinatra record on their hi-fi and let visitors walk in. As Sidney Harman told the story in his 2003 memoir, Mind Your Own Business, confused guests would look around the room and ask where the singer was.
That small piece of theater contained most of what made Harman successful in business. He understood that the product was the experience of the sound in an ordinary home, not the circuitry. He understood that ordinary buyers, not engineers, would decide whether high fidelity became a mass market. And he was willing to do something slightly unusual to make the point.
Harman lived to 92 and packed several careers into that span. He co-founded one of the defining brands of American home audio and, in 1958, introduced one of the first stereo receivers. He ran a Quaker college, taught Black children in Virginia after their county shut its public schools to avoid desegregation, and earned a doctorate in social psychology in his fifties. He turned a run-down mirror factory in Tennessee into a nationally watched experiment in worker participation, then watched it fade. He served as deputy secretary of commerce under Jimmy Carter, sold his company to avoid a conflict of interest, and bought most of it back for about half the price after its new owner mishandled it. He built that company into a multibillion-dollar supplier of audio systems for cars, concert halls and living rooms. And at 91 he bought Newsweek for a dollar.
The threads connecting these episodes are consistent. Harman believed that people do better work when they are treated as responsible adults, that business leaders should read widely and think across disciplines, and that age was never a reason to stop starting things. He was not always right, and several of his boldest ventures ended in disappointment. But the pattern of his life is unusually instructive for anyone who builds companies and wants them to be decent places as well as profitable ones.
By the Numbers
Sidney Harman's Career
$5,000Amount he and Bernard Kardon each invested to found Harman/Kardon in 1953
$189.50Price of the Festival D-1000, the company's first integrated receiver, in 1954
$100MWhat he received from Beatrice Foods for his stake in 1977
$55MPrice he and investors paid in 1980 to buy most of the business back
$1.17BHarman International sales in fiscal 1995, up from about $80M in 1981
$1Nominal price he paid for Newsweek in 2010, plus its liabilities
$8BPrice Samsung paid for Harman International in 2017
A Hearing-Aid Salesman's Son
Sidney Mortimer Harman was born in Montreal in August 1918. He was a twin in a large family; his twin was a sister, and by the end of his life he had outlived all of his siblings. His father managed the regional office of a hearing-aid company, and in 1923 the family moved to New York City, where his father took a similar job. Sidney grew up there.
He showed an entrepreneurial streak early. As a teenager he had a paper route, and he collected discarded magazines and resold them for a nickel in candy stores. He later described the merchandise, with a salesman's wit, as "pre-owned but reasonably current." He studied at a branch of the City College of New York that later became Baruch College, and graduated in 1939. The New York Times reported that his degree was in physics, a background that fit the work he went on to do.
His first job was as an engineer at the David Bogen Company in New York, a leading maker of public-address systems. The work taught Harman the practical electronics of sound: how to make it louder, clearer and more reliable in real rooms. He stayed at Bogen for about fourteen years, moving from engineering into sales and eventually becoming general manager. The combination mattered. He learned both how audio equipment worked and how it was sold, and that dual fluency would shape everything he did in the business that followed.
During the Second World War, he served as a second lieutenant in the Army Signal Corps in 1944 and 1945. His skill with sound kept him away from the front. He worked instead at a secret installation in Watertown, New York, on what he described as a "sonic deception" program. Engineers recorded the sounds of military activity and broadcast them over powerful loudspeakers in the field. In his memoir he explained the aim: to persuade enemy listening posts that a significant movement was coming from the direction of the broadcast while the real operation developed elsewhere. According to accounts of his service, the techniques were used in Europe, including around the Battle of the Bulge, and in the Pacific.
It is an odd and telling apprenticeship. Harman spent part of the war learning that sound, well reproduced, could make people believe something was physically present when it was not. A decade later he would sell the same illusion to American families, this time as entertainment.
The Bet on High Fidelity
By the early 1950s, a new market was emerging. Improvements in recording, the arrival of the long-playing record and the spread of FM radio had created a small but passionate community of listeners who wanted to hear music at home with something like concert-hall fidelity. The equipment they used was mostly built for hobbyists. A serious system typically meant a separate tuner, preamplifier and power amplifier, often in industrial-looking metal cases, wired together by the owner.
Harman thought this could become a much bigger business, and he tried to persuade Bogen to pursue it. The company was not interested. So in 1953 he resigned and took Bogen's chief designer, Bernard Kardon, with him. Each man put in $5,000, and they set up Harman/Kardon with a production facility in Westbury, on Long Island. The division of labor was clear: Kardon ran engineering, design and production, and Harman handled sales, merchandising and advertising.
Their first products appeared in 1954. One was the A-100, an AM-FM tuner priced at $70.50. The other was the Festival D-1000, which the company advertised as putting "all the critical electronic elements of a deluxe high-fidelity system on one compact, controlled chassis." It combined the radio tuner, preamplifier and amplifier in one unit, sold for $189.50, and is widely described as the first integrated high-fidelity receiver.
The engineering was good, but the conceptual move was more important. Harman/Kardon designed its products to look like furniture rather than laboratory equipment. They were meant to sit in a living room and be operated by someone who did not own a soldering iron. Harman once recalled demonstrating an early system to friends and leaving them "trembling with Shostakovich's Fifth," because nobody had heard anything like it in a private home. The trade-show hotel rooms with Sinatra playing were an extension of the same idea: show people what they would experience, not what they would be buying.
Harman's family lived with the experiments. His daughter Barbara later remembered the house being full of ugly public-address speakers and wiring, and her father playing test records of a train crossing from one side of the room to the other or a drop of water splashing. Neighborhood children would come in and sit in amazement.
In 1956 Kardon retired, and Harman bought his share. From then on the company was essentially his. Two years later, in 1958, it introduced the Festival TA-230, one of the first stereo receivers. It achieved stereo in a clever interim way, known as simulcast stereo, by receiving one channel from an AM station and the other from an FM station broadcasting the same program. The product was again aimed at nontechnical buyers, and it helped establish the receiver, a single box combining radio and amplification, as the center of the American home stereo for decades.
Over the following years Harman expanded. In 1969 he acquired JBL, the Los Angeles loudspeaker maker founded in 1946 whose speakers were respected by professionals and audiophiles alike. The combination of Harman/Kardon electronics and JBL speakers turned his business into a serious force in the industry, and the company, by then called Harman International Industries, grew into a group of brands selling to home listeners and professional studios. By the late 1960s Harman was a wealthy man. By 1976 the company's annual sales were reported at about $136.5 million, with profits of about $9.1 million.
Lessons from Prince Edward County
Success in audio did not absorb all of Harman's attention. He had strong liberal politics and a lifelong interest in education, and in the late 1950s and early 1960s those interests led him to one of the starkest episodes of resistance to school desegregation.
In 1959, rather than comply with court orders to integrate, officials in Prince Edward County, Virginia, closed the county's public schools entirely. White children largely moved to private academies set up for them. Most Black children were left with no formal schooling for years. Harman became involved in efforts to provide an education for them. His daughter recalled that he shuttled between Long Island and Virginia at his own expense to teach Black students who were being denied public schooling, and a company history credits him with helping found and teach at a "free school" there.
It is easy to pass over this episode in a business profile, but it shaped the rest of his life. Harman came away with a conviction that education could be structured differently, and that people given responsibility for their own learning usually rose to it. Around the turn of the 1970s, while still running his company, he became president of Friends World College, an experimental Quaker institution on Long Island that described itself as a college "without walls." Students traveled, pursued their own projects and took responsibility for their own education, working with faculty as collaborators rather than as supervisors.
Later, in 1973, he earned a PhD in social psychology from the Union Graduate School, an institution designed for adult, nontraditional students. His dissertation was titled "Business and Education: New Experiments, New Hope." He was in his mid-fifties and already rich. He had no need of the degree as a credential; he pursued it to work through a question that had come to absorb him: whether the principles he had seen work in classrooms could work on factory floors.
The Buzzer in Bolivar
The test came in Bolivar, Tennessee, a small town in the western part of the state where one of Harman's subsidiaries operated a plant making side-view mirrors for cars. By the early 1970s the factory was old, grimy and unhappy. Harman later wrote that if Charles Dickens had visited it, he would have thought he had never left the worst parts of London.
The incident that forced his attention, as he told it in his memoir, was trivial. Workers on the line took a scheduled ten-minute coffee break, signaled by a buzzer. One day the buzzer failed. Managers decided to postpone the break until it was repaired. A worker named Nobi Cross refused. "I don't work for no buzzer," he said, in Harman's retelling. "The buzzer works for me." The workers, who had watches, took their break at the usual time, and in Harman's words all hell broke loose.
For Harman the episode exposed a contradiction in his own life. At Friends World College he was preaching that people should be trusted to take charge of their own work. At his factories he was running a system that treated adults as components to be switched on and off by a bell.
— Sidney Harman, Mind Your Own Business, 2003Somehow I had not recognized the disconnect between what I was learning about supervision and responsibility at the college, and the very different way I supervised and managed my employees.
In 1972, while testifying before a Senate subcommittee about the frustration of American factory workers, Harman met Irving Bluestone, a vice president of the United Automobile Workers. Harman argued that the core problem was that corporate America treated employees like interchangeable machine parts. Bluestone, by Harman's account, asked him whether he was for real. Having satisfied himself that he was, Bluestone agreed to work with him at Bolivar.
The result became known as the Bolivar Project. With funding from the Ford Foundation, the Alfred P. Sloan Foundation and the federal National Commission on Productivity and Work Quality, the plant was reorganized around joint worker-management committees. Its best-known feature was "earned idle time", a direct appeal to intrinsic motivation and autonomy: teams that met their daily production quotas early could go home. The plant also set up an on-site school for its workers, most of whom were African American, along with day care and a newspaper run by the workers and not censored by management.
For a time it was a sensation. The plant drew so many visiting executives, union leaders and academics that it had to limit visits to one group a week. The Bolivar Project became a case study in business schools and is often described as one of the first serious American attempts to replace the adversarial relationship between labor and management with a cooperative one.
The Experiment That Faded
The later history of Bolivar is less celebrated but more useful. In 1998, as the plant headed for final closure, the New York Times business writer Barnaby Feder published a long retrospective under the headline "The Little Project That Couldn't." His account and Harman's own later reflections point to the same weaknesses.
The early gains were real, but they depended on a small group of enthusiasts at the top and the bottom of the organization. The plant's middle managers and supervisors, whose authority the new system reduced, never fully committed to it, even when they said they did. A reward like earned idle time also carries an obvious risk of Goodhart's law: once going home early depends on hitting a quota, the quota itself becomes the thing to protect. And the plant remained what it had always been: a marginal supplier of low-margin auto parts in an industry that was about to be battered by foreign competition and recession. When Harman sold the company in the late 1970s, the experiment lost the direct involvement of its most important sponsor.
Harman did not pretend otherwise. Reflecting on the project, he said he had not recognized soon enough how critical a role the managers play, and that nothing goes anywhere unless they passionately sign on. His short version was blunter: "You overlook the middle managers at your peril."
He kept the core conviction, though. In 1988 he published Starting with the People, written with the public-opinion researcher Daniel Yankelovich, a book on productivity and the quality of working life. Decades later he still credited his company's success to three things: it built its products in factories it owned, it marketed them around the world, and it treated its workforce with respect. In 2001, after an employee at the company's Northridge, California, plant was killed by her husband, Harman and his eldest daughter, Lynn, then the company's corporate counsel, set up one of the first workplace programs aimed at preventing domestic violence.
Bolivar did not transform American industry, but it helped start a conversation about worker participation and the "quality of work life" that ran through the 1970s and 1980s. Harman's honesty about why it faltered is part of its value.
Selling to Beatrice, Buying It Back
In 1977 President Carter appointed Harman deputy secretary of commerce, the department's second-ranking post. The rules governing appointees required him to give up direct business interests, and he did not try to get around a plain conflict of interest. He sold his stake in Harman International, reported as roughly 25 percent, to Beatrice Foods, the Chicago-based conglomerate, for about $100 million.
Beatrice was then famous for its appetite for acquisitions. It owned a sprawling portfolio of food and consumer businesses. Harman International became one of roughly two hundred units under its umbrella, and the conglomerate had little feel for the audio business. It sold off pieces, including the original Harman/Kardon receiver business, which went to a Japanese company, Shin-Shirasuna. It mismanaged much of what remained. By 1980, according to a company history, only about 60 percent of the original organization was left, and sales of the remaining business had fallen.
Harman watched from Washington. He left government in the late 1970s, and in 1980 he and a group of investors paid $55 million for what was left, principally JBL and the international distribution companies. A line often attributed to him summed up the arithmetic: there are two ways to get rich, one is to sell your company to Beatrice Foods, and the other is to buy it back.
The comeback was far from assured. Harman was in his sixties, the American consumer electronics industry was being overwhelmed by Japanese competitors, and many observers doubted there was room for a U.S. audio company at all. He set up a lean headquarters in Washington and began rebuilding by acquisition. In 1982 he bought a small car-stereo business with about $8 million in annual sales, which he renamed Harman Motive; by the end of the decade it was generating around $100 million a year and had pointed the company toward what became its most important market. In 1985 he bought the original Harman/Kardon operation back from Shin-Shirasuna, a rare case in that decade of an American company acquiring a Japanese electronics business.
In 1986 Harman International went public on the New York Stock Exchange, and it used the proceeds to keep buying: the British mixing-console maker Soundcraft in 1988, the Utah electronics company DOD in 1990 and many others. Sales rose from about $80 million in 1981 to more than $200 million in 1986 and more than $500 million in 1989.
Back in Charge at Seventy-Three
Harman's acquisition strategy gave each brand wide autonomy. By 1990 the company was a loose federation of some twenty-one divisions, with duplicate departments and overlapping operations, each serving its own niche of loyal customers. When the recession hit, the weaknesses showed. In fiscal 1991 the company lost $19.8 million on sales of $587 million.
Harman had by then stepped back from daily management. In 1992, in his seventies, he took it over again. He replaced the company's president, moved to California to be closer to the operations and took personal charge of a restructuring. He merged the twenty-one divisions into five units, eliminated duplicated functions and put the savings into marketing. He also made a strategic bet that the consumer market was moving away from ultra-high-end audiophile gear toward good-quality products sold in mass retailers, and he began selling through chains such as Circuit City.
Asked about his age by the Los Angeles Times, he was combative, describing himself as flatly uninterested in retirement.
— Sidney Harman, Los Angeles Times, 1993I don't give a damn how old I am. I can run the pants off everybody working in this place.
The turnaround worked quickly. The company earned $3.5 million on sales of $605 million in fiscal 1992. By 1994 sales had reached $862 million and net income $25.6 million. Harman then made another important move into the car: in the mid-1990s the company bought Becker, the German maker of automotive radios and electronics. It also added the high-end Mark Levinson brand, founded Harman China and opened an advanced technology center focused on digital audio. Sales passed $1.17 billion in fiscal 1995.
That automotive push defined the company's next era. Harman became a leading supplier of branded audio and, later, infotainment and navigation systems to carmakers around the world. By fiscal 2007 its net sales were about $3.55 billion. That year, as he approached 89, Harman recruited the technology executive Dinesh Paliwal as chief executive, and in 2008 he retired as chairman. In 2017, six years after his death, Samsung Electronics completed its acquisition of Harman International for about $8 billion, largely for its position in connected-car technology. The company that two engineers had started with $10,000 in 1953 had become one of the most valuable audio businesses in the world.
The Polymath
Harman never believed that business was a sufficient education. He was an insatiable reader and could recite long passages of Shakespeare, Lincoln and the playwright Maxwell Anderson from memory, often at dinner parties. He married Jane Lakes, a Carter administration staffer, in 1980; she was elected to Congress in 1992 and served nine terms. Profiles of the couple noted his habit of reciting at the dinner parties they hosted, a practice he defended on the grounds that he knew the material and liked to share it.
He put money behind these convictions. In 1998 he endowed the Sidney Harman Writer-in-Residence program at Baruch College, his alma mater, which brings poets, novelists, playwrights and journalists to teach and work with students. At the program's tenth anniversary he called it the single most creative impulse in his life, arguing that the arts should be intrinsic to education, not treated as decoration or an extracurricular extra.
In Washington he was a major patron of the Shakespeare Theatre Company, and a gift of about $20 million from the Harmans helped fund the Harman Center for the Arts. Its main stage, Sidney Harman Hall, opened in 2007. He was a fellow of the American Academy of Arts and Sciences, a board member of the Aspen Institute and a member of the Council on Foreign Relations. The Consumer Electronics Association inducted him into its Hall of Fame in its first class in 2000.
His final academic project was the Academy for Polymathic Study at the University of Southern California, which he founded and chaired and where he held the title of professor of polymathy. It was designed to encourage students and faculty to think across the boundaries of academic disciplines. He admired figures such as Galileo, Leonardo, Jefferson and Franklin, and wanted to understand what had allowed them to produce so much work that changed the course of history. The academy was preparing to launch its first certificate program in early 2011. He had lectured at USC's schools of law, medicine, architecture and public policy, and liked to note that he was in particular demand at the School of Gerontology.
A Dollar for Newsweek
In May 2010, the Washington Post Company, the publisher long led by Katharine Graham, which had owned Newsweek since 1961, put the magazine up for sale. It was losing heavily; reports put its operating loss in 2009 at close to $40 million, and circulation and advertising were falling fast. When the New York Times reported that Harman was among the possible bidders, his daughter Barbara emailed to ask if it was true. He replied that of course it wasn't, since he was 92. She concluded that he was completely serious, because he never used age as an excuse.
In August 2010 the Post Company agreed to sell Newsweek to Harman for $1, with Harman assuming the magazine's liabilities and committing new operating capital. Donald Graham, the Post Company's chairman, admitted he had not taken the approach seriously at first but said Harman had real business experience and might end up being very good at it. Harman's lawyer, Robert Barnett, said his client had made clear he was not buying the magazine to make money.
Harman had little journalism experience, and he moved quickly to find partners who did. In November 2010 he agreed to merge Newsweek with The Daily Beast, the website owned by Barry Diller's IAC. The two sides each took half of the new Newsweek Daily Beast Company. Tina Brown, the Beast's founder and the former editor of Vanity Fair and The New Yorker, became editor of both, and Harman became executive chairman. He predicted the combination might help lead a renewal of American media.
The deal attracted plenty of skepticism, some of it gleeful. Harman was stung by the coverage but unrepentant.
— Sidney Harman, interview with the Los Angeles Times, 2010Nobody ever suggested this would be a walk in the park. I never did. But it is damn well worth the effort.
When asked what reminded him of his situation, he recited from Abraham Lincoln's December 1862 message to Congress: "The fiery trial through which we pass will light us down in honor or dishonor to the latest generation."
The Last Venture
Harman did not live to see how the experiment would end. In March 2011 he was diagnosed with acute myeloid leukemia, and he died in Washington on April 12, 2011, at 92. Tina Brown described him as a magical man, full of intellectual curiosity. His family initially pledged to carry on his commitment to the magazine.
The venture struggled. Losses continued, and in July 2012 the Harman family trust said that, given his death, it would make no further capital contributions, leaving IAC in control. At the end of 2012 Newsweek stopped printing and went digital-only, and in August 2013 IAC sold the brand to IBT Media. By most measures his final bet failed. It is also true that Harman approached Newsweek more as a public-service project than an investment, and that he took it on at an age when most people have long since stopped taking risks of any kind.
The rest of his legacy is easier to measure. His name is on a brand of audio equipment found in millions of homes and cars, on a theater in Washington, on a writers' program at Baruch and on an academy at USC. The Bolivar Project remains a reference point in the history of American labor relations, partly because of what it achieved and partly because its founder was candid about why it faded. And the pattern of his career, of repeatedly starting something new, of treating business as one part of a larger intellectual and civic life, and of refusing to let age define what was possible, is the part most worth studying.
Part IIThe Playbook
Harman's career offers an unusual set of lessons because it combines engineering, marketing, labor relations, turnaround management and philanthropy. He built a product category, lost his company and recovered it, ran a celebrated workplace experiment and admitted its failures, and kept starting ventures into his nineties. The principles below are drawn from what he did and what he said about it, including the parts that did not work.
The principles
- 1.Sell the experience, not the specification.
- 2.Take the market your employer refuses.
- 3.Design for the customer who is not an expert.
- 4.Close the gap between what you preach and how you manage.
- 5.Let people earn control over their own time.
- 6.Win over the middle managers first.
- 7.Pay the price of clean hands.
- 8.Buy back what a careless owner has undervalued.
- 9.Consolidate when autonomy turns into sprawl.
- 10.Follow your customers to the next room they sit in.
- 11.Borrow expertise when you enter unfamiliar territory.
Principle 1
Sell the experience, not the specification.
Harman's trade-show hotel rooms, furnished like a living room with Sinatra on the turntable, did what spec sheets could not. Visitors did not have to understand frequency response or distortion figures. They heard a voice in a room and asked where the singer was. That reaction was the product.
Many technical companies default to selling their features, because the features are what their engineers are proudest of. Harman had been an engineer, but he also ran sales, and he knew that most buyers make decisions based on what something will feel like in their lives. His demonstrations and his furniture-style designs both served that goal.
Tactic: Before your next product launch, design a demonstration that puts a prospective customer inside the finished experience in a realistic setting, and use it before you show any technical documentation.
Principle 2
Take the market your employer refuses.
Harman tried first to persuade Bogen to move into consumer high fidelity. When the company declined, he did not keep arguing. He left, took the company's chief designer with him, and founded Harman/Kardon with $10,000 between the two partners.
Established companies often turn down emerging markets for sensible reasons: the market is small, the margins are uncertain, and the core business needs attention. Those same reasons create an opening for someone with inside knowledge of the technology and the customers. Harman had fourteen years of experience in audio electronics and in selling them, which meant he left with a clear picture of what the incumbent would not do.
Tactic: If you have proposed a new market to your company and been turned down, write down why they said no. If the reasons concern the company's priorities rather than the market's potential, treat the refusal as evidence of an opportunity.
Principle 3
Design for the customer who is not an expert.
The Festival D-1000 combined three separate components into a single unit that looked at home in a living room. The Festival TA-230 did the same for stereo. Both were aimed at listeners who wanted great sound but had no interest in wiring together a rack of equipment.
The hobbyist market was loyal and knowledgeable, but it was small. Harman's integrated receivers traded some flexibility for convenience and appearance, and that trade opened the category to a much larger audience. The same logic guided his 1990s decision to sell through mass retailers rather than only specialist dealers.
Tactic: Identify the three steps a nonexpert customer finds hardest in using your product, and redesign or bundle the product so that each step disappears or becomes a single obvious action.
Principle 4
Close the gap between what you preach and how you manage.
The buzzer incident at Bolivar forced Harman to confront the fact that he was advocating responsibility and self-direction at Friends World College while running factories on rigid command and control. He called it a disconnect he had somehow failed to recognize.
Most leaders hold some beliefs about people that they do not apply inside their own organizations. The gap usually goes unnoticed until a small event, like a broken buzzer, exposes it. Harman's response was to treat the gap as a problem to fix in the organization, not as an inconsistency to explain away.
Tactic: List three things you believe about how people learn or do their best work. For each, find one policy or routine in your organization that contradicts it, and change or remove that routine this quarter.
Principle 5
Let people earn control over their own time.
The most famous feature of the Bolivar Project was earned idle time: teams that hit their daily quotas early could leave. It gave workers a direct, visible reward for productivity and a measure of control over their own day, which is exactly what Nobi Cross had demanded when he refused to wait for the buzzer.
The scheme also carries a built-in risk. When a reward is tied only to hitting a quota fast, people have every incentive to optimize for speed and to resist raising the quota. Harman's approach worked best when combined with the school, day care and joint committees that treated workers as partners, not only as producers of a number.
Tactic: Where you can, replace fixed schedules with clear outcomes and let teams decide how to reach them, but pair each outcome with a quality measure so that speed alone does not become the goal.
Principle 6
Win over the middle managers first.
Bolivar's early success depended on the enthusiasm of senior leaders, union officials and workers. The plant's supervisors, whose authority the program reduced, never fully committed, and Harman later said this was the lesson he had learned too late. "You overlook the middle managers at your peril."
Middle managers translate strategy into daily practice. Any change that reduces their power without giving them a new role will meet quiet resistance, even if they voice public support. Harman's candor about this is one of the most useful things he left behind for anyone attempting organizational reform.
Tactic: Before launching a change program, meet every supervisor it affects, explain what their new role will be and what they gain, and do not proceed until you have their commitment in their own words.
Principle 7
Pay the price of clean hands.
When Carter appointed him to the Commerce Department, Harman sold his stake in his company rather than look for arrangements that would let him keep influence over it. The sale cost him control of the business he had built for more than two decades.
Avoiding a conflict of interest is often expensive in the short term, and people rationalize their way around it. Harman accepted the cost, and he later recovered most of what he had lost. His reputation for probity also served him in later ventures, from partnerships with a major union to taking on Newsweek as a public-spirited project.
Tactic: When a new role creates a conflict with an existing interest, decide what you would give up if the arrangement were reported on the front page, and give that up before anyone asks.
Principle 8
Buy back what a careless owner has undervalued.
Beatrice bought Harman International for about $100 million, broke it up and mismanaged it. In 1980 Harman and his investors bought most of what remained for $55 million. He knew the brands, the people and the market far better than the conglomerate that owned them, which put the purchase squarely inside his circle of competence.
Assets often lose value when they are held by owners who do not understand them. Someone with deep knowledge of the business can see what has been damaged and what remains intact. Harman's later repurchase of the original Harman/Kardon unit from Shin-Shirasuna in 1985 applied the same thinking.
Tactic: Keep a list of businesses in your field that have been acquired by owners outside the industry. Check on them regularly, and when one starts shedding units or losing people, be ready to make an offer based on your own valuation.
Principle 9
Consolidate when autonomy turns into sprawl.
Harman's rebuilding in the 1980s relied on buying companies and letting them run relatively independently. It worked for growth, but by 1990 it had produced twenty-one divisions with duplicate functions. When the recession hit and the company lost money, Harman came back and merged them into five units, redirecting the savings into marketing.
Decentralization is often the right choice early, when each unit needs room to find its market. It becomes a liability when duplicated overhead and inconsistent strategy outweigh the benefits of independence. Recognizing that moment and acting decisively is a core skill in managing an acquisitive company.
Tactic: Once a year, list every function your business units duplicate, such as finance, marketing or distribution, and estimate the savings from combining each one. Consolidate any where the savings clearly exceed the loss of local control.
Principle 10
Follow your customers to the next room they sit in.
Harman's early business was built around the living room. His 1982 purchase of a small car-stereo company, and the 1990s acquisition of Becker, moved the company into the car, where people increasingly listened to music. Automotive systems became the company's largest business and the main reason Samsung paid about $8 billion for it.
Customer habits shift over time, and the place where people use a product can change even when the underlying need stays the same. Harman recognized that the need for good sound would follow people into their cars, and he invested there while it was still a small market.
Tactic: Track where and how your customers use your product each year. If a growing share of use happens in a new setting, launch a small dedicated product or acquisition for that setting before competitors establish themselves.
Principle 11
Borrow expertise when you enter unfamiliar territory.
At Bolivar, Harman partnered with the UAW's Irving Bluestone and with foundations and academic researchers. When he bought Newsweek with no journalism background, he quickly merged it with The Daily Beast to bring in Tina Brown and IAC. In each case he recognized the limits of his own knowledge.
The strategy did not guarantee success; both Bolivar and Newsweek ultimately faltered. But entering an unfamiliar field without partners who understand it usually fails faster. Harman's instinct to pair his capital and energy with specialists gave each venture a better chance than it would otherwise have had.
Tactic: Before entering a field where you lack experience, identify the two or three people or organizations whose knowledge you most need, and secure their involvement as partners before committing significant capital.
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Part IIIMaxims
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Sound is sold in rooms, not catalogs. Harman's hotel-room demonstrations showed that people buy what they hear in a familiar setting.
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A small refusal can reveal a large system. One worker's objection to a broken buzzer exposed a management philosophy that treated adults like machinery.
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Honest post-mortems are worth more than celebrated launches. Bolivar's lasting value comes as much from Harman's account of its failure as from its early success.
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Conglomerates can be generous sellers. Beatrice paid about $100 million and later accepted $55 million for what remained of the business.
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Owning the factory is a strategy, not only a cost. Harman credited in-house manufacturing as one of three pillars of the company's success.
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Retirement is a choice, not a birthday. He took back control of his company in his seventies and bought a magazine at 91.
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The arts are not decoration. Harman argued that creative work belongs at the center of education and funded that belief in Baruch, Washington and Los Angeles.
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Breadth is a discipline. His academy for polymathic study grew from a lifelong habit of reading across fields and applying what he learned.
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A public-spirited bet can still fail. Newsweek did not survive under his family's ownership, which is a reason for clear eyes rather than for never trying.
In Their Own Words
We weren't just selling amplifiers and receivers. We were selling the experience of hearing music the way the artist intended it to be heard.— Sidney Harman
Democracy depends on an informed citizenry. When journalism fails, democracy fails. It's that simple.— Sidney Harman
The conventional wisdom is usually wrong. The trick is figuring out when.— Sidney Harman
Your job as an entrepreneur is to figure out where the crowd should be looking instead of where they're actually looking.— Sidney Harman
Every technological revolution creates both winners and losers. The winners are those who understand that new technology doesn't eliminate the need for quality—it raises the bar for what quality means.— Sidney Harman
Anyone can build a cheap amplifier. The question is whether you can build one that makes people fall in love with music all over again.— Sidney Harman
Trust is the ultimate competitive advantage. It takes years to build and seconds to destroy, but once you have it, it becomes a moat around your business that competitors can't cross.— Sidney Harman
The best leaders are teachers. They don't just tell people what to do—they help them understand why it matters.— Sidney Harman
Quality is like pregnancy. You either have it or you don't.— Sidney Harman
I realized that I had sold my baby too early. The audio industry was just beginning to explode, and I wanted to be part of that growth.— Sidney Harman
Innovation isn't about having the newest technology. It's about solving problems that people didn't even know they had.— Sidney Harman
The difference between good and great isn't visible in the specifications. It's audible in the experience.— Sidney Harman
Government moves at the speed of molasses. In business, if you have a good idea, you can test it in the market within months. In government, it takes years just to get a hearing.— Sidney Harman
I didn't buy Newsweek to make money. I bought it to make a difference.— Sidney Harman
Success isn't measured by how much money you make. It's measured by how much better you leave the world than you found it.— Sidney Harman
The greatest risk is not taking any risks at all. In a world that's changing rapidly, the only strategy guaranteed to fail is not adapting.— Sidney Harman
My father taught me that the conventional wisdom is usually wrong. The trick is figuring out when.— Sidney Harman
Age is just a number. Curiosity is what keeps you young, and I've never stopped being curious about what's possible.— Sidney Harman
