George Martin, sometimes referred to as the “fifth Beatle” by band member Paul McCartney, died this month at age 90. As the Beatles’ producer, he not only signed the group to its first record contract even though top record company executives had rejected them, but he also was instrumental in developing the musical special effects that helped them sell a billion records. Was Martin a great manager who made a “brilliant mistake,” given the industry consensus against him? Paul J. H. Schoemaker, co-author of Brilliant Mistakes: Finding Success on the Far Side of Failure, assesses Martin’s management challenges in this short essay, adapted from his book (co-authored with the late Robert E. Gunther). Schoemaker is also the former research director of Wharton’s Mack Institute for Innovation Management.

The recent death of George Martin at age 90 offers a reminder of his genius as a pop music pioneer, after formal training in classical music, as well as an innovative manager who early in his career was willing to swim against the tide. Much has been written about how Martin became Beatle No. 5, in the words of Paul McCartney and others in the band, because he took studio recording – with all its special effects, redubbing, and synthesizing – to new heights.

Martin developed deep personal relationships with Lennon, McCartney and others in the band, who trusted his musical instincts and followed his advice, resulting in a string of top hits. Martin’s illustrious career, mostly behind the scenes where he felt most at home, started with some gutsy moves.

Let’s pretend you had never heard of George Martin or the Beatles and we presented the following business case study. How would you score Martin’s performance?

Anonymous Background

On a frigid New Year’s morning, an obscure music group auditioned for a senior executive at one of the world’s leading record companies. After years of modest success playing local clubs, this band was looking for its big break. In order to make it to this audition, band members braved a 10-hour ride through a blinding snowstorm. Their driver had gotten lost, but they still arrived before the executive, who had been toasting in the New Year the night before. This band was one of many he would audition that year, including at least one other audition later that same day. Both the band and the executive were both exhausted. The band’s equipment was dilapidated from months on the road; the studio executive substituted his own amplifiers. It was not an auspicious beginning.

“The Beatles’ discovery story sharply illustrates the degree to which assumptions deeply held by the best and brightest can be wrong and the enormous potential benefit of seeing past them and making a brilliant mistake.”

Once in the studio, the band spent an hour taping a dozen songs. This tape ended up in the hands of the seasoned head of the artist and repertoire (A&R) department for Vox Music, a prominent label. He turned it down. The style of the band’s music, he felt, was on the way out. He was in good company. A few weeks earlier, the general marketing manager of Epsilon Records, another top recording company, had also checked out this same band and came to the same conclusion. In a letter to the group, Epsilon’s general marketing manager made the following curt assessment: “While we appreciate the talents of this group, we feel that we have sufficient groups of this type at the present time under contract. It would not be advisable for us to sign any further contracts of this nature.”

Around the same time, two other recording companies listened to the band, and the reply was the same: a polite or impolite but emphatic no. In total, the band was turned down by at least four respected recording companies after getting a fair hearing at each.

That should have been the end of the story. One card, however, remained in play. The head of A&R for one of Epsilon’s smallest labels was out of town during the general manager’s deliberations. His absence seemed a small matter at the time, since this label was known for its comedy records. With the exception of a label devoted to Salvation Army Bands, it was Epsilon’s poorest performer. What could this manager possibly add to the evaluation of an up-and-coming rock band? More respected executives, closer to this genre of music, had already rendered a verdict of thumbs-down.

But six months later, the band’s persistent manager brought its audition tapes through the back door of Epsilon and appealed to the head of this small label. The head, a young maverick, was both passionate and ambitious. After a stint in the navy, he had joined Epsilon as an assistant to the manager. He sought out new and untapped bands and developed niche markets, such as comedy records, into profitable businesses. Five years later, at age 29, he would assume leadership of the label, making him the youngest label chief in Epsilon’s history. He had a prescient understanding of how new recording technologies would have an impact on the future of the music industry. Because he was forced to feed on the scraps of the corporation’s artists, he developed close working relationships with talent, in contrast to the typical arm’s-length relationships of most managers. He was eager to change the world.

This manager was intrigued by what he heard on the band’s demo. He decided to invite them back for another audition. During the audition, he was more impressed by their wit and potential than by the music they played for him, but he decided to sign them nonetheless. All this happened just six months after the best minds of the very same recording company had turned the band down. There had always been independent decision making at Epsilon labels, but this reversal came as a bit of a surprise to Epsilon’s general manager, who was responsible for multiple labels. How could a comedy album executive be signing a rock band, against the better judgment of senior colleagues who truly had their fingers on the pulse of the industry? This was surely a mistake, right?

Lessons Learned

Most managers who read this case vignette conclude that it was a mistake for the label to sign the band — that is, unless they are fans of music history and recognize the details of the story.

This story is indeed about the discovery of the Beatles. The young executive was George Martin of the Parlophone label at EMI (disguised as Epsilon Records above). By ignoring conventional wisdom and making a move most would deem a “mistake,” Martin helped his company become a dominant player in the recording business. As Beatlemania spread across the globe, the band started by John Lennon, Paul McCartney, George Harrison and Ringo Starr became one of the most successful groups of all time, selling over a billion records internationally. They sold more albums in the United States and earned more number one albums on U.K. charts than any other band.

“Many stories of great discoveries can be interpreted as entirely reliant on dumb luck. It’s also possible that he (George Martin) saw that the world was changing and that the assumptions his industry was built on would not continue to hold in the future.”

Decca, the recording company that passed on the Beatles after the January 1962 studio audition (disguised, in this anecdote, as Vox), is now famous for what seems to be the most glaring oversight in music history. Especially ironic, in hindsight, was their incorrect belief at the time that guitar groups were going out of style. Instead, they signed Brian Poole and the Tremeloes. How many people still remember that group?

The Beatles’ discovery story sharply illustrates the degree to which assumptions deeply held by the best and brightest can be wrong and the enormous potential benefit of seeing past them and making a brilliant mistake. Assumptions can be wrong for numerous reasons, ranging from changes in the world in which the assumptions were formed to lack of humility among those at the top. In the case of all of the Vox executives, and all but one of the Epsilon executives, many of these factors were probably in place.

That leaves us with George Martin. What did he know that nobody else knew? In truth, we know too little about Martin’s inner thought process to be sure. He could have simply been foolish and lucky. Many stories of great discoveries can be interpreted as entirely reliant on dumb luck. It’s also possible that he saw that the world was changing and that the assumptions his industry was built on would not continue to hold in the future. To the extent that the latter is true, he’s a great example of someone who was able to understand himself and the world around him well enough to make the risky, high-reward move of a brilliant mistake.

Martin certainly wouldn’t have viewed his signing the Beatles as a mistake. No self-respecting manager would ever knowingly make a mistake. Like Martin, managers view their role as taking calculated risks that yield, on average, a positive payoff.

But if the Beatles had indeed been a huge flop, as many in the industry expected, we would now consider Martin’s decision a mistake. Luckily for him, the opposite happened. The Beatles rose to global dominance in pop music.

In retrospect, Martin is viewed as a visionary who made a brilliant decision. Later, he proved his musical genius many times over by adding studio-recording innovations to many of the Beatles’ top hits, such as adding a Bach-like string quartet to “Yesterday” and a piccolo trumpet solo in “Penny Lane.” Martin knew when wrong was right, had the courage to follow his musical instincts, and followed his path to brilliance with modesty and genius – a rare combination indeed. Our guitar gently weeps at his passing.

Image credit: By Capitol Records – Public Domain,