Rev. September 5, 1986
Steinway & Sons
Gents: I have decided to keep your grand piano. For some reason unknown to me it gives better results than any so far tried. Please send bill with lowest price. Yours,
Thomas Alva Edison
June 2, 1890
Peter M. Perez, president of Steinway & Sons, piano makers, looked up as William T. “Bill” Steinway, director of research and development, walked in for their ten o’clock meeting on July 16, 1981. The meeting was an important one, scheduled to discuss the company’s plans to reintroduce the Model K. This upright, or vertical, piano (so called because its strings and sounding board were mounted vertically, rather than horizontally, as was true of grand pianos) was last produced by the firm during the 1920s. The Model K was being considered to meet competitive threats posed by Yamaha and Kawai, the leading Japanese piano makers, whose success in the American market, particularly in sales of high-quality verticals, had been considerable.
Perez knew Steinway’s R&D group had already invested $200,000 in working up the Model K, and Bill Steinway had personally devoted nearly two years to the project. Still, he could not help wondering whether the reintroduction of a long-discontinued product line was the appropriate way to meet the Japanese challenge. Would it stand up to the competition of the 1980s? Would extensive modifications of the production process be required? More important, would the Model K distract Steinway from its traditional focus on grand pianos? Perez hoped his meeting with Bill Steinway would provide answers to these questions.
Steinway & Sons had long been recognized as a leader in the market for high-quality pianos. Established in New York City in 1853 by Henry Engelhard Steinway, a German immigrant, the firm had prospered from the very first, largely because of its technical excellence. A year after its founding, the company won a gold medal at the Metropolitan Fair in Washington, D.C., for one of its square pianos; a year later, it introduced the cross-stringing technique in a piano with a cast-iron frame and won another first prize at a New York industrial exhibition. Orders grew rapidly, and in 1860, a new and larger factory was constructed on Fourth (now Park) Avenue in New York, a site chosen, according to Steinway family lore, because “the Harlem and New Haven Railroad cars passed directly in front, making thousands of people acquainted with the name of Steinway.” Assistant Professor David A. Garvin prepared this case as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 1981 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
Steinway & Sons
This promotional flair continued with the opening in 1866 of Steinway Hall, which served as New York City’s major concert facility for many years. The firm also dabbled in artist management, bringing to the United States such piano virtuosos as Anton Rubinstein and Ignacy Jan Paderewski for their first American performances.
Henry Steinway died in 1871, leaving the leadership of the firm to his son, William. William continued many of his father’s practices, meanwhile consolidating and expanding operations. A London sales branch opened in 1875, while a new factory, to service the international trade, was built in Hamburg in 1880. Today, both remain important elements of the firm. In the spring of 1871, William embarked...