Monday, June 11, 2012

Will Steve Jobs Be Forgotten?


Malcolm Gladwell was back in Toronto recently and said about Bill Gates, "I firmly believe that 50 years from now, he will be remembered for his charitable work.  No one will even remember what Microsoft is.”  

“And of the great entrepreneurs of this era,” Gladwell added, “people will have forgotten Steve Jobs. Who's Steve Jobs again? There will be statues of Gates across the Third World."

My first thought was: When famous women are between movies or albums and need to up their celebrity, they can pose naked and pregnant on the cover of Vanity Fair.  However, male authors caught in the drought between books, lacking such considerable advantage, have only outrageous statements at their disposal.

But then I got to thinking. . .

As blasphemous as these opinions sound, Mr. Gladwell may have hit on a very interesting point.


Word Association

Let’s play a word association game.  When I say, “Andrew Carnegie,” what do you think?  Carnegie Hall?  The Carnegie Endowment?  Carnegie-Mellon?

Me, I think “libraries.”  As Carnegie was building one of the greatest business empires in the history of the world, he was also building libraries.   2,500 Carnegie libraries were constructed between 1883 and 1929, and I had the privilege of using one when I was young--probably the first time I ever heard the Carnegie name.

That to me is Carnegie’s modern legacy--one of the world’s greatest philanthropists.

So, thinking about the legacy of Steve Jobs and Bill Gates, it would be interesting to understand how Andrew Carnegie’s contemporaries sized him up during his lifetime.  What was his “brand” when he was alive and in his business prime—and how much did it change after he died?

I think I know.

One of the most fascinating business autobiographies of the 19th century is that of Arthur B. Farquhar, a York, Pennsylvania, businessman who lived the Industrial Revolution almost from its beginning right through WWI, built a successful farm machinery business, and seemed to know virtually every famous or important man in America--and more than a few around the world. 

Farquhar was born in Maryland, 18 miles from Washington, D.C., and among his earliest memories was hearing the military salute given President William Henry Harrison when he died just 32 days into his term in 1841.   Farquhar went to school with Robert E. Lee’s son and was able to save York during the Civil War by riding into Confederate lines and negotiating with his friends, the Generals.  He was present at Pickett’s Charge (“I saw the men rushing forward and dropping, wave after wave”) and later at the Gettysburg Address (“the President looked very, very weary”—“the audience did not really know what they had heard”).  He knew every president personally from Abraham Lincoln (“after having met many of the leading men in most of the countries of the world during the past half century, I believe he was one of the few supermen”) to James Garfield (whom Farquhar visited after he had been shot and lay dying) to Chester Arthur (“very polite and attractive”) to Grover Cleveland (“a fine bulwark against the economic lunacy of the times”) to McKinley (the third president assassinated in the lifetime of Farquhar, who attended his funeral) to Roosevelt (“one of the best informed men I ever knew”) to Herbert Hoover (before becoming president, "one of the greatest men living in the world today...he has Lincoln's idea that we are in the world to do good"), Warren Harding (“he has gathered around him an exceptionally strong cabinet, and I prophesy a successful administration) and every chief executive in between--providing advice to many. 

Forrest Gump of the 19th Century

Farquhar had a grand perspective, enough to compare the country’s build-up to the Civil War (“neither side really believed that there was going to be a fight”) with the build-up to World War I, and contrast the Panic of 1873 (“the Christmas of 1873 was about as cheerless a festival as has ever been intoned”) with the depressions of 1884 (“people simply got tired of rising prices and quit buying, thereby to my mind showing common sense”) and the Panic of 1907 (when J.P. Morgan “called the most powerful financial interests of the country to his library and cut off a rising young panic at the very outset of its career”).

Farquhar even saw the rise of golf in America in 1885: “When I first saw the game I regarded the idea of rational men leaving their business and walking over a field to hit a ball with a stick as being quite absurd, but Mr. [Grier] Hersh invited me to try a round with him.  Within ten minutes after we commenced I was infatuated with it.”

When Farquhar was 20 years old in 1858 he read an article in Harper’s magazine about the richest men in New York, hopped a train and simply walked into the offices of a half-dozen of them to ask how to make a million dollars. This included the single richest man in America at the time, William B. Astor who--busy collecting the rents on the property his father, John Jacob, had accumulated in Manhattan--told Farquhar, ““I do not have enough fun.  I am too afraid that people will cheat me and, in spite of everything, they do cheat me.”

Farquhar spoke on the telephone when it was first introduced to the public in 1876 at the Centennial Exposition in Philadelphia, and later had dinner with Alexander Graham Bell (the majority of those present believing the phone “would be only a toy to amuse people”).  He was trading with South Africa in 1866, Uruguay in 1870 and before the turn of the century with Japan, Russia and Turkey.  He helped coordinate Pennsylvania’s activities at the 1893 Columbian Exposition in Chicago.  He knew Daniel Webster (“scrupulous about paying his gambling debts but he did not bother with little bills”), Harlow Higinbotham (one of the geniuses behind Marshall Field with “an almost uncanny ability to estimate the character of men”), Lloyd George (his head being “the strongest, most leonine that I ever saw” next to Daniel Webster, of course), Johns Hopkins (“a hard, austere sort of man” and "one of the most peculiar figures of all time"), Mexican President Diaz (“he reminded me a good deal of Colonel Roosevelt”), Wu Ting-Fang (the Chinese minister to the US, “a remarkable man”) and Queen Eleonora of Bulgaria (“a beautiful character”).

And, of course, this Forrest Gump of the 19th century knew, and well, Andrew Carnegie.

Carnegie the Entrepreneur


One of my former bosses had a recipe for the successful career: Spend the decade of your twenties working for the best people you can find, learning about business and leadership.  Spend the decade of your thirties striking out on your own, being entrepreneurial.  Then, once you are 40, you are ready to decide what it is you really like to do--and you possess all the tools to do it.

Andrew Carnegie must have been listening.  Before he was 30 he had worked in the three great industries of the times: textiles, telegraphy, and the railroad. He then dabbled in investments--railroads, sleeping cars, bridges, bonds--amassing a small fortune before he decided he wanted to do something permanent--which is when he invested in steel.  By the 1890s the Carnegie Steel Company was the largest and most profitable industrial enterprise in the world. Carnegie sold it in 1901 for $480 million to J.P. Morgan, who created U.S. Steel.

“It may surprise many to know,” Farquhar wrote, “that this young man was first a telegraph messenger, then an expert telegraph operator, then an expert railroad man who would probably have been president of one of our biggest systems if he had not desired to get into business for himself, and who was already a power in iron before he was thirty,” adding, “by the time the other boys had finished playing, Carnegie had almost finished working and was ready to play.”

Andrew Carnegie was a true entrepreneur, a business genius and far ahead of his time.  “He was among the first to apply scientific brains to business,” Farquhar wrote, “to know that results are not to be gained merely by luck.”  He employed “experimental chemists and experts and thereby accumulated overhead that we could not at that time have comprehended”--the first R&D labs.  He turned business thinking on its head because he understood “the possibilities of economies to be gained by increasing the overhead.”

Carnegie saw the future when he invested in iron and steel.  He was, Farquhar said, “as keen a business man as ever lived, and he was keen in the large way—he saw not merely to-morrow but the day after.”

Among other innovations, Carnegie was among the first to vertically integrate his operations.  While others hid during the Panic of 1873 he invested, taking advantage of low costs to build capacity.  He led the industry in moving to cheap and efficient mass production of steel by adopting and adapting the Bessemer process for steelmaking.   In one particularly important initiative, Carnegie supplied the steel for the landmark Eads Bridge project across the Mississippi River at St. Louis, Missouri, completed in 1874. This project was a critical proof-of-concept for steel technology and marked the opening of new steel markets.  By 1889, the U.S. output of steel exceeded that of the UK, and Carnegie was responsible for most of it.

Perhaps equally impressive, Andrew Carnegie understood delegation and practiced a kind of management that would not become acceptable until well into the second half of the 20th century.  When Farquhar mentioned that he typically worked ten hours a day, Carnegie replied, “You must be a very lazy man if it takes you ten hours to do a day’s work.  What I do is to get good men, and I never give them orders.  My directions seldom go beyond suggestions.  Here in the morning I get reports from them.  Within an hour I have disposed of everything, sent out all of my suggestions, the day’s work is done, and I am ready to go out and enjoy myself.”

It’s as if Carnegie had thrown one of the huge switches of the Managerial Revolution, moving from a world described by Farquhar as “the old expert owner who was always there and always insisted upon knowing all about everything that was done” to one of delegation and personal autonomy.  In turn, "no business head had ever commanded more loyalty from his managers and men,” Farquhar wrote.  In fact, “Carnegie conspicuously differed from the other big figures of his day in being a manager of men rather than an expert on his own account.  Many men knew more about iron and steel but none knew so much about iron and steel and men and business.

Needless to say, this sounds an awful lot like Carnegie pioneered the modern CEO.

Farquhar summarized his opinion of Carnegie by saying, “He conducted the largest business of his time, made the best product, sold it at the lowest price, and paid the highest wages, making America the iron and steel centre of the world.”
                                       
Andrew Carnegie wasn’t Steve Jobs; he was Steve Jobs and Bill Gates and Henry Ford and Warren Buffett and a few exceptional people I can't think of all rolled into one. 

What Happened to Carnegie and "Steel"?

And yet--

Why isn’t he remembered for his pioneering work in strategy and leadership, or his entrepreneurial success in a global industry?  (Why doesn't word association instantly conjure "steel"?)  Could it be because what Carnegie did is now, to us, antiquated, old hat--taught and practiced in every business school in the country?  Run-of-the-mill Management 101. Everybody learns it, everybody does it.  Been there, done that.

Now, if you will, jump forward 50 years as Gladwell suggests.  The iPad and entire “poke the glass with your finger” era is museum stuff-- just another way-station to much, much better products.  Steve Jobs is a bright light, but only one in a string of bright lights.   Our great-great grandchildren might take their 8th grade History of Technology test, focused on the relatively slow era of innovation from 1990 to 2010.  A question appears:

Steve Jobs was a technology entrepreneur who introduced the world to:

A. the Walkman
B. the Palm Pilot
C. the Google "search engine" (an antiquated way of accessing data)
D. the Linux “operating system” (an antiquated way of controlling a “computer”)
E. Gangsta rap
F. Red Bull (an antiquated way of staying awake)
G.  the iPhone
H. All of the above

This seems like an unlikely possibility when Jobs’ brilliance is right on top of us, and we, his legion, are so in awe.  But did Arthur Farquhar ever think there would come a day when the average person would not instantly associate Andrew Carnegie—possibly the single greatest leader in American business history--with steel?

So, Malcolm Gladwell may be correct when he says Steve Jobs won’t be especially memorable.  Products fade--even genius, which has a way of becoming the commonplace.   And we also know that good works have legs: if Bill Gates gets vaccines to Third World countries and saves generations of children, he may well have statues erected to him.  

And you’ll still be able to read about him in one of Andrew Carnegie’s libraries.

Maybe the moral of our story, of Farquhar and Carnegie, Jobs and Gates, is this:  Do well and you’ll be famous with your contemporaries.  Do good and you might be famous forever.

A Few Notes

One of Arthur Farquhar’s final adventures was getting caught in Europe at the start of WWI.  He finally (and barely) made it home after a tortuous route through Constantinople and Rome.  His trunk made it home seven years later, still intact.  (Could he have flown American?)

The only president he didn’t like was Andrew Johnson.  His best comment on Lincoln: “The world seems a lonesome place since he has gone.”  Astute readers will note that Harding's administration fell into the Teapot Dome scandal about two years after Farquhar's praise and went on to be remembered as one of the most corrupt in American history.

Arthur Farqhars’s autobiography, The First Million the Hardest (1922), was ghostwritten by Samuel Crowells--who also worked extensively with Henry Ford--and is free online at Google books.  Thank you, Google, for helping preserve this gem.  See here.


Malcolm Gladwell’s Toronto remarks are here.
  His website is here.

Information about the Gates Foundation, which really does do incredible work, is here

If you are still skeptical about how monumental business genius fades rapidly into obscurity, try this.   The following nine men are all among the twenty wealthiest Americans of all time.   Do you know how each made his money and impacted the world?  John D. Rockefeller, Commodore Cornelius Vanderbilt, John Jacob Astor, Stephen Girard, A.T. Stewart, James G. Fair, William Weightman, Moses Taylor, Russell Sage.   (Hint: mining and real estate, puts and calls, pharmaceuticals, banking, furs, oil, steamboats and railroads, shipping, department stores.)  For help see the great graphic here from The New York Times.  (OK, I'll make the test more recent and easier this time. . .Harold Geneen, John Paul Getty, Alfred P. Sloan, Thomas J. Watson, Lee Iacocca, Jack Welch. . .yes?  No??  You remember Jack Welch, yes??  No??  Eric Schmidt?  Yes?  Yes!  Good--now we're making progress!)