The Charles Schwab Prioritisation Process: A True Story

In 1904, man called Charles Schwab was standing in his office late one afternoon staring out of a window pondering over all those things that needed doing before he could go home to entertain his visiting friends. He could not think of a way to get away any time soon. After all, the buck stopped with him because he ran this steel mill.

Bethlehem Steel Company was hardly a name known to any one except its suppliers or a few customers, not that Schwab lacked any ambition. About this time, his secretary informed him of the arrival of Ivy Lee, a management consultant, for a pre-arranged meeting. Mr Lee was visiting to pitch for his company’s services. He ended his presentation with the statement: “With our service, you’ll know how to manage better.”.

Ivy’s presentation was slick but his last statement struck a cord with Schwab. He asked: “Mr Lee, we are not doing badly at present but we can do better, of course. If you can show me a way of achieving more in my working day then I will be interested in your services”

“Alright, but then you will have to do what I ask you to”, said Ivy, aware that successful men are more used to giving rather than taking orders, “and I can guarantee that you will increase your as well as your company’s productivity by at least 50%, if not more.”

“I’ll gladly listen to you and pay you anything you ask”, said Schwab.

Lee opened his briefcase and pulled out a blank A4 sheet of paper and handed it to Schwab.

“Write down the six most important tasks you have to do tomorrow”. Schwab took about 3 minutes to do as told.

“Now think which is the most important task on this list”, said Lee. “Number all these tasks in the order of their importance, starting from one to six.” It took another 2 minutes.

“Tomorrow morning when you come to the office, start the task that you have prioritised as number one. You are NOT allowed to start any other task until you have completed this task”, said Lee, “after task one is complete start the second task, then task number three and so on.”

“But I have hundreds of other things to do too”, protested Schwab

Lee said, “it does not matter. I want you to work only on the most important tasks, and none others because they can wait. If you can’t finish your most important tasks by this method then you couldn’t with any other method either. And without a system like this you probably wouldn’t even decide which are the most important ones”.

Then Lee added, “Spend the last five minutes of every working day making out a “Must Do” list for the next day’s tasks. This must be done the night before.”

Schwab was in deep thought, thinking ‘will it work… or will it not?’ Since he had made a commitment to Lee, he decided to give it a try.

“About my fees Mr Schwab”, said Lee while extending his hand to say good bye, “send me whatever you think my advice is worth — but only after you have tried it”.

The whole meeting lasted under half hour.

In two weeks Lee received a cheque of $25,000 from Charles Schwab with a note saying that this was the most profitable advice he had ever received.

Within weeks, Charles Schwab asked his management to start prioritising their tasks Lee’s way. He called it the ‘Rule of Six’.

Did the advice work? Within five years the unknown Bethlehem Steel Company became the biggest independent steel producer in the world making Schwab a hundred million dollar fortune, and the best known steel man alive at that time.

Lee’s advice helped Bethlehem management to develop the H-beam which revolutionised the building construction and made possible the age of the skyscraper.