Men Who Built America

The History Channel’s “Men Who Built America” documentary recaps the history of the creation of key American industries: railroad, steel, petroleum, automobile, and finance. Covering a period from roughly 1850 to World War 2 it offers reenactments of key events in the evolution of American business. It’s worth an entrepreneur’s time to reflect on the lives on Cornelius Vanderbilt, Andrew Carnegie, John D. Rockefeller, Henry Ford, and J. P. Morgan.

There are better individual biographies available for each of these entrepreneurs but the 8 part six hour series offers a good overview that’s about half history, a third myth, and a sixth recap–the last due to the direct transfer of a six part series meant for broadcast. It would have been nice to see a version that flowed without recaps, but there are a fair number of insights here if you spend the time and view it as a point of departure.

I watched it in early 2013 after renting it on Netflix and was reminded of how much I had enjoyed the series and found it thought provoking when I read Gregg Boroday’s “Kicking Off Startup Lessons” today. He offers the following takeaways:

1. It takes vision and big thinking to build a business.
Each of these individuals had a vision and big idea that they pursued. For Vanderbilt, it was to unite the country by providing transport of people and goods across the country via rail. For Rockefeller, it was providing a reliable source of kerosene for people to light their homes. Carnegie’s goal was to make steel a cost-effective building material for the nation’s infrastructure. Morgan and Edison saw electricity as a safer way to bring the power of light to the masses. Ford wanted a car that any person could afford. These were not small ideas, but grand visions that took a tremendous amount of determination and work to realize.

Each man clearly conceived of their businesses as systems. In many cases they created networks–railroads, pipelines, electrical grid, assembly lines and supply chains–that were the basis for value creation networks.

2. Create value, and the money will follow
The vision each person pursued created lasting value for their customers and society as a whole. By creating value, they were rewarded with wealth. In other words, creating value should be the goal of the business. If value is created with a product or service, then revenue and sustainable profits will follow.

Each exploited demand for a new good or service and built the systems to supply it reliably and at low cost.

2. Have a passion for the business
In order to create a great business, you have to have a passion for what you are doing. Each person had a passion for their business. They understood what made the business tick which drove them to discover and implement new ideas ahead of their competition.

To all appearances each of these “titans of industry” devoted several decades to mastering key aspects of their operation. They were able to locate management and operating talent they would delegate to and engineering expertise that allowed them to continually refine and improve not only the basic product or service but the systems needed to develop and deliver it reliably.

3. Success requires drive, determination, and persistence
It takes a tremendous amount of drive to win at business. Every one of the individuals profiled ran into multiple setbacks over the course of their career. They could have easily packed it in and called it quits.

Many times they had not only bad luck but made bad decisions that they had to recover from. It’s easy to look at a business functioning at scale and see it as a single clean thrust but real entrepreneurship starts in recovering from setbacks and improving your decision process.

4. Embrace competition and thrive on it
Business is a competition. You have to want to compete, and you have to want to win. If you aren’t driven to win and be the best, you will be overrun by someone else who does.

This is the strength of the free market, it imposes a discipline for quality and rewards innovations that add value. It’s only when their firms grew so large as to stifle competition that the government needed to step in to promote competition.

5. Don’t be afraid to make the tough decisions
There are decisions to be made every day in the course of running a business. Whether it’s deciding to abandon a segment of the business, take a risk on a new service or product, or firing a close confidant, you have to be willing to do what is in the best interest of making the business successful.

Especially for engineers and scientists it can be daunting to navigate the ambiguity and uncertainty of negotiating with prospects, identifying their needs, and managing competitive response.

Lessons For Today

Although most of the events depicted took place more than a century ago, I see four key takeaways for today in addition to the insights that Gregg Boroday offered.

Today’s technologies will get applied to warfare. Railroads transformed logistics and troop movement for the Civil War, steel made created heavy artillery and battleships for World War 1, and petroleum and automobile technology enabled blitzkrieg or maneuver warfare tactics in World War 2. Low cost video, social media, and massive profiling is likely to factor into not only asymmetric warfare but a conflict between major powers.
Today’s behemoths are likely to become much more highly regulated. Google’s ability to change search algorithms without warning, Facebook’s “psychology experiments” and all of the semi-autonomous vehicles (e.g. drones, “self-driving” cars) are likely to be subject to considerably more regulation in a decade or two. Carlota Perez‘s “Technology Revolutions and Financial Capital” offers the best crystal ball I have found so far.
The alternative to a new dynamism and continued revolution is stagnation. We have to provide incentives and support for more entrepreneurial activity, not only to spur innovation but to encourage existing established players to continue to increase quality and the value of their offerings. We have to focus regulation much more on equality of opportunity not equality of outcome.
Another way to unleash new growth and dynamism is to redesign work to take advantage of new communication, coordination and collaboration technologies. This is what Ford, Rockefeller, and Carnegie did in different ways to drive their unique value creation networks. Paul David’s thesis, in “The Dynamo and the Computer” is that the older technologies have to be amortized out before businesses can afford to make the structural changes necessary to leverage new technologies.