Tomas Bata was a man who possessed this key. He was the ninth generation in a family clan of shoemakers from the town of Ziln, in what was then Austria-Hungary, now Czechoslovakia. Tomas and his brother founded a shoemaking “factory” in their house at Ziln in 1894 with two sewing machines and some hand tools.
Despite this rather modest beginning, Tomas’s ambition was to transform shoemaking from a cottage handicraft into a modern industry run with shoe machinery. Inspired by the American system of mechanized production, which he studied during two visits to the United States, and by Henry Ford’s idea of an inexpensive car for the masses,
Bata dreamed of producing shoes in quantities large enough and at prices low enough to shod the feet of all humanity. By the end of World War I, he had built up a medium-sized shoe industry employing 2,000 workers
and producing a half-million pairs of shoes annually, part of which was exported to other European countries.
In 1922 Europe was in the midst of the first great postwar depression, which drastically cut Czechoslovakia’s export trade, creating widespread unemployment throughout the country. The newly formed Czech government
adopted a policy of tight monetary controls to fight inflation on the home front, resulting in a 75 percent devaluation in the currency in a single year. As a result of these factors, demand fell, purchasing power declined, and exports decreased to a fraction of their former level. Debtors, which included most businesses that had expanded on bank credit during the war, were suddenly faced with high levels of debt and falling incomes.
Production declined. Layoffs multiplied. More than 400,000 Czechs were unemployed. Bata’s business suffered badly. His exports dropped by 75 percent. Stocks were accumulating until his warehouses were full to
overflowing. There was enormous pressure to cut production and lay off workers.
In August of 1922 the national manufacturers’ association of Czechoslovakia called an urgent meeting of its members to discuss the government’s policies and formulate recommendations to avert economic disaster.
Those who attended felt they were helpless victims of external forces and government actions. They were nearly unanimous in condemning the government and demanding relief, but none could propose a viable
solution to the problems facing the nation.
On the second day of the conference. Tomas Bata rose to speak. Bata saw the futility of the government’s policy and industry’s response to it. He believed that some radically new strategy was needed to break the vicious cycle of economic decline. He was a man who firmly believed in seizing adversity by the horns and wrestling it into submission. He was also motivated by a deep sense of commitment to the thousands of people who depended on him for their livelihood and very survival. When Bata addressed the conference, he did not
strike the familiar refrain demanding government action. Rather, he called on the business community to act courageously for its own preservation. He ended his speech with a dramatic announcement that startled the entire gathering. Bata refused to lay off a single worker. He chose instead to seize the initiative and act decisively. The first necessity was to stimulate market demand. “Gentlemen,” he said, “we are going to cut the prices of our shoes in half and we are going to sell them for half the present price.”6 Bata’s announcement
brought a hushed silence, which was followed by squeals of derisive laughter. He was dismissed as a lunatic or a fool. How could a company cut its prices by 50 percent and survive? How could it ever repay its creditors by
Bata returned to Ziln and explained his radical decision to his employees. It was the only possible solution to save the company and preserve their jobs. All costs had to be reduced to the absolute minimum. Waste of all description had to be completely eradicated. Efficiency and productivity had to be raised to much greater levels.
He imposed across-the-board 40 percent wage cuts for all employees, despite the opposition of a powerful union, but he promised to supply all workers and their families with food, clothing, and other necessities at half
the present price to ensure their maintenance. He divided his factory into profit centers and promised incentives for higher productivity. Having put his internal operations on a war footing, Bata launched a national poster
advertising campaign depicting a huge fist crushing the Czech word drahota, which represented the high cost of living.
The public response was overwhelming. Shoe stores that had been languishing for months were suddenly invaded by mobs of people seeking an affordable pair of shoes. Police had to be called in to restore order and
regulate traffic. Orders poured into the warehouses until they were almost empty of stock. The workshops were geared up to full production capacity. Within a week, the sense of uncertainty and despair was replaced by one
of urgency, excitement, and purpose. In the coming months Bata not only maintained full employment but actually started to expand. He continuously introduced improved production techniques, administrative systems,
and employee incentives to increase productivity.
Over the next five years, employment in Bata’s factories more than doubled, and production multiplied 15-fold. Between 1922 and 1932 the average retail price of Bata shoes fell by 82 percent, while wages in Bata factories
rose by 200 percent. Like Henry Ford, Bata succeeded in producing so efficiently that a former luxury became accessible to the masses for the first time. By 1928 Bata operated the largest tanneries, shoe-making factories,
and shoe machinery industry on earth. Czechoslovakia led the world in footwear exports, and the Czech people were the best shod in Europe.
During this period Bata succeeded in releasing enormous energies latent within his small company and in tapping equally great energies from the world around him. He was a man who knew how to mobilize some of the infinite powers of an organization.