Common Purpose

Western Union: A Lesson in Poor Leadership

Companies suffer when their leaders insulate themselves from new ideas. Western Union is a prime example. By 1865, the year the U.S. Civil War ended, Western Union had become America’s biggest communications company. With its vast infrastructure of telegraph wires spanning the nation, Western Union was a commercial powerhouse and one of the first stocks listed in the Dow Jones Industrial Average. However, the company had two glaring problems: It was rigidly hierarchical and its leaders strongly distrusted fresh or innovative thinking. These deficiencies proved to be its downfall. In 1879, Western Union leaders dismissed Alexander Graham Bell’s telephone as an insignificant invention and refused to partner with Bell to transform their company into a national telephone provider. In the decades that followed, Western Union also passed on radio, television, the internet and cellphones. The company, bought and sold many times, is now in abject decline and swimming in debt. In fact, “Western Union’s leadership never missed an opportunity to miss an opportunity.”

This cautionary tale illustrates an important lesson: The leaders ...