What Titans Can Teach Us

First things first: I’m not going to make the case in this article that the legendary titans of American business offer a template of leadership lessons for all of us to follow. Many were individuals we wouldn’t want to emulate, at least in every particular. They could be scheming and, more than occasionally, ruthless. Indeed, in many instances they were as titanic in the problems they created—especially the interpersonal problems—as in the empires they built. Furthermore, most of us couldn’t emulate these legends even if we tried. They were wildly opportunistic, ambitious beyond measure, and often just plain brilliant. While these attributes are useful and even admirable for business-people, the genuine giants of enterprise had them to a unique degree—which partly explains why they were titans and most other people are not. That said, a business leader doesn’t have to strive for titanhood to benefit from the lessons a titan has to teach. We can pick and choose the characteristics that will help make our companies more successful. Perhaps just as important, we can learn to spot titans in the making, a valuable skill for leaders scanning the landscape for potential business partners or successors—or on the lookout for dangerous competitors. What do I mean by “titan?” For me, the term encompasses those executives—there have been perhaps 30 or 40 in the history of American business—who created or transformed industries and in the process changed the world. All of them grew rich as they did so. Most of them became household names. Is someone like Jack Welch a member of this elite club? The answer: We just don’t know yet. You can only identify a titan with historical perspective—which is what makes the subject so fascinating for me, a business historian. For the past three decades, I have studied the giants of American enterprise. Using my database of detailed biographical and company information on 250 outstanding business executives, I have identified the individuals whom I call titans and then looked for common denominators among the select few. This article draws on the experiences of seven of the titans: steel magnate Andrew Carnegie; George Eastman, the father of mass-market photography; automaker Henry Ford; IBM’s Thomas J. Watson; Charles Revson, founder of cosmetics maker Revlon; Wal-Mart’s Sam Walton; and Robert Noyce, the cofounder of Intel. These seven were very different people. Eastman and Noyce led primarily through inspiration; Carnegie and Watson led mainly by intimidation. Walton, the optimist, could light up a room; Revson, the pessimist, could light up a room by leaving it. Noyce helped ensure a successful future for Intel by working in close partnership with two successors, Gordon Moore and Andy Grove, whose talents complemented his and suited the company in its next stages of growth. Ford, by contrast, became vindictive as he aged and nearly destroyed his company. (Different though they were, we must note that they were all not only male but also Caucasian. There are women and minorities in business today whom future generations will regard as titans, but their impact on the business scene is too recent to permit the historical perspective we need to make that judgment.) A defining characteristic of the titans was their ability to tell the difference between the seemingly impossible and the genuinely impossible. Though titans are a varied lot, we can still tease some common traits out of their disparate personalities and lives. Some of these reflect their particular genius. For example, a defining characteristic of these men was their ability to tell the difference between the seemingly impossible and the genuinely impossible. Other traits are similarly relevant to their business success but are more replicable by mere mortals. In studying their careers, we can see a handful of principles that were woven into their lives: Have the courage to bet on your vision of market potential. Shape your vision of the market into a mission for the company and consistent messages for customers, employees, and investors. Deliver more than you promise. Be dedicated, even to a fault, to your company. Don’t look back. The following stories—yes, stories; I’m a historian, not a management consultant—illustrate ways in which the titans lived these five principles. I would not advise anyone to try to mimic a particular titan. But they did drive their companies to success with stunning power. What they did worked, and there is plenty they can teach us. A Camera for Everyone George Eastman seems an unlikely creator of mass-market photography, an innovation that enabled ordinary people to create visual records of their lives without the expense of hiring professional photographers or portrait painters. His first job was as an office boy in an insurance firm—the death of his debt-ridden father and the straitened financial circumstances of his family had forced him to go to work in 1868 at the age of 13. He was paid $ 3 a week, and his responsibilities included cleaning out the cuspidors. Not long thereafter, Eastman took a job as a clerk at the Rochester (New York) Savings Bank, where he quickly moved up to second assistant bookkeeper. In 1877, after spending almost a decade in the working world, he bought a camera. Four years later, he left the bank to devote himself fully to starting a photography business. Eventually, his business would transform the complicated contraptions used by professional photographers into light little boxes anyone could afford. Even after he threw himself exclusively into photography, it took time for Eastman to comprehend that there was a mass market for picture taking. When he started in the business, cameras were expensive, costing roughly $ 50. They required considerable expertise to operate. Few people in the early 1880s even thought about taking photographs. But what if photography could be made both cheap and easy? No one knew. No one even knew this was a question worth asking. In the late 1880s, though, Eastman began to believe that he “could reach the general public and create a new class of patrons”—that is, democratize photography while creating a lucrative new market. “Success,” he wrote in 1890, “means millions.” In 1894, he said that “the manifest destiny of the Eastman Kodak Company is to be the largest manufacturer of photographic materials in the world or else go to pot.” In 1900, Eastman brought out the Kodak Brownie, which sold for $ 1. One of the great product introductions in American business history, the Brownie allowed Eastman to realize his vision: photography for everyone. How did Eastman know there was a mass market for photography when few people had ever seen a camera? Similarly, how did Carnegie know that steel, once sold by the pound, would in the new industrialized world be sold by the ton? How did Ford know to stick with low-priced cars in the early years of the industry when rival automakers in America and Europe kept moving up-market? How did Watson know that the future lay in the small branch of his company that made tabulating machines? How did Revson know in 1932, during the depths of the Depression, that there was a profitable market for high-fashion nail polish? How did Walton know that small towns could support big stores? How did Noyce know that the integrated circuit, of which he was the coinventor, would change the world? They just knew. They sensed they were on to something. It’s as simple, and as complex, as that—not very encouraging for those trying to emulate their success. An intuitive sense of market potential is not the sort of thing you can study hard to learn. But if the titans possessed that jagged streak of lightning called genius, they also had something else: Each had the courage to bet on his vision. Achieving a breakthrough insight is one thing. Acting on it is quite another. These monumental figures were more than men of potential, they were kinetic. They refused to be scared off by precedent. Eastman’s actions reflected his belief that his company’s “manifest destiny” was to succeed on a grand scale. Walton, who built giant Wal-Mart stores across the land and around the world, wasn’t deterred by the fact that no one saw a huge retailing opportunity in rural areas and small towns. Ford didn’t care that the United States had few passable roads for his new automobile. As Noyce once said, “Don’t be encumbered by history. Go out and do something wonderful.” Hula on Wall Street The date was March 15, 1984. The place was Wall Street, the financial capital of the world. The man was Samuel Moore Walton, at the time the nation’s second-richest citizen. The event was a hula performance. Walton had made a bet with his chief operating officer, David Glass, that Wal-Mart could not achieve a pretax profit of 8 % on sales. In 1983, the company met that target, and Glass insisted that Walton keep his promise to do the hula on Wall Street. And this bet was not going to be paid off on the sly in the dark of night. Glass saw to it that there was a grass skirt for Walton to put on over his suit, musicians and young professional hula dancers to accompany him, and, of course, full media attention. By this time, Walton and Wal-Mart were well known and respected in the investment community and throughout a large part of the nation. But here was the company’s CEO flying in from Arkansas and engaging in what Walton himself later characterized as a “pretty primitive publicity stunt.” Although such stunts—at stores, at headquarters, for customers, for suppliers, for employees, for the media—were a staple at Wal-Mart, Walton had to confess that this particular display genuinely embarrassed him. Why, then, did he do it? True, he had made a bet and had lost. But no one could have forced Sam Walton to pay up. He could have said that it wasn’t appropriate for the CEO of one of the nation’s fastest-growing companies to make a fool of himself in the middle of the financial district. He could have cited his age, 65, and his recent bout with leukemia—not to mention the 28-degree temperature on the day of the dance. Or he could have simply let Glass know that if he liked working for the leading retailer in Bentonville, Arkansas, he’d better let the bet die a quiet death. But despite his wealth and power, Walton kept his promise—and he did it to make a point. Or rather several points. Sam (one naturally falls into referring to this multibillionaire by his first name) originally saw a market opportunity in offering customers outside big cities quality goods at low prices. This vision became the company’s mission, which was articulated in a memorable message: “Always the low price—always.” Clearly, a key to maintaining low prices is keeping costs down. So instead of taking out an ad in the Wall Street Journal, Walton publicized Wal-Mart’s achievement with a publicity device that cost almost nothing. A penny saved on advertising was a penny that could be passed along to the customer. In fact, the main cost associated with the event was to Walton’s dignity—which he would never have placed above the good of the company. But Walton had more than customers in mind when he did his hula. For decades, he had been preaching to employees that rank does not have its privileges. In his mind, the thousands of salespeople on the floor were as important as top executives, because Wal-Mart’s primary contact with its customers was through these low-wage employees. His dance signaled that he was a down-to-earth guy who didn’t have an inflated view of himself. Walton also praised outlandish behavior among employees because it stimulated creativity and helped make Wal-Mart “a fun proposition.” He endlessly insisted that you could learn from anybody, and having fun was one way that the thousands of anybodies at Wal-Mart did their teaching. Walton had a special genius for transforming anybodies into somebodies. When the silly season rolled around, Walton didn’t merely cheer from the sidelines, he was a player-coach. Finally, Walton showed employees that he was willing to put the company’s interests above his own—just as he wanted them to do. He knew that the speed of the boss is the speed of the gang, and his sense of fairness would not permit him to demand that others sacrifice for the company if he were unwilling to do so. By showing up in a hula skirt on Wall Street, Sam Walton showed he was willing to put the company’s interests above his own—just as he wanted his employees to do. The hula wasn’t staged on Wall Street by chance. There was also a message for investors and analysts: I may not look like the most sophisticated executive in the world, but I’m a winner. Actions speak louder than words, and losers don’t pull stunts like this. Margaret Gilliam, at the time an analyst for First Boston and one of the first to realize that Wal-Mart was a company with a future, did not have to travel far to photograph Sam in his grass skirt. By walking his talk, Walton, in a single act, sent multiple messages to multiple constituencies. Although other titans may have used more conventional means, they all had a similar missionary zeal, which they communicated through clear and consistent messages. George Eastman’s ambition to bring photography to the people was reflected in the advertising slogan for the Brownie: “You push the button. We do the rest.” Pithy to the point of poetry, it communicated to customers that photography was no longer a mysterious black art presided over by secretive professionals telling you to keep perfectly still while they mixed miraculous concoctions of chemicals to make your image appear on a glass plate. Tom Watson’s mission for IBM employees was reduced to a single word: Think. Or, more accurately, think. The word reflected the intellectual foundation of the technology-driven company. Tom Watson’s mission for IBM employees was reduced to a single word: Think. Or, more accurately, think. The word reflected the technology-driven company’s intellectual foundation. (It also said something about Watson’s leadership style. When he plastered think signs all over the company, he wasn’t saying, “Think for yourself.” There was no mistaking he meant, “Think like me.”) A Giant Pay Raise On January 5, 1914, Henry Ford stood by quietly in his office as an associate read a news release to reporters from three Detroit newspapers: “The Ford Motor Co., the greatest and most successful automobile manufacturing company in the world, will, on Jan.12, inaugurate the greatest revolution in the matter of rewards for its workers ever known to the industrial world. At one stroke it will reduce the hours of labor from nine to eight, and add to every man’s pay a share of the profits of the house. The smallest amount to be received by a man 22 years old and upwards will be $ 5 per day.” The language of the press release was self-congratulatory, but deservedly so. Three months earlier, Ford workers had received a 13 % wage increase to $ 2.34 a day. Now, without violence, without pressure from a union, the company was more than doubling an already competitive wage. Ford saw the press release as merely a good local story, so he distributed it only to the local press. But it became the biggest news story to originate in Detroit up to that time, and it made Henry Ford famous around the world. There were, it should be said, business reasons for the big jump in workers’ salaries. Because of growing mechanization, work in the plant was becoming increasingly stultifying; the turnover rate at Ford was a staggering 370 % in 1913. A more stable and better-paid workforce could—and ultimately did—result in production efficiencies. But these were not the only reasons for the pay hike. Henry Ford simply felt it was the thing to do. As one newspaper described him at the time, he “has declined to forget that the distance between overalls and broadcloth is very short.” With the pay raise, he was delivering far more than he had promised—indeed, more than any of his employees might have reasonably expected. The titans delivered more than they promised to investors, as well. The sister of one of Ford’s first partners put $ 100 into his company. Less than two decades later, Rosetta Couzens Hauss, a schoolteacher in Chatham, Ontario, received $ 262,036.67 for that $ 100. And true titans could generate big rewards for investors even when their companies encountered bumps along the road. One Intel manager recalls the faith that the investment community placed in Noyce: “Bob could stand up in front of a roomful of securities analysts and tell them we were facing a number of major problems in our business—and the stock would go up five points.” More subtly, the breakthrough products or services that the titans created also delivered more than customers ever expected. During the Depression, Revson introduced the Revlon brand of coordinated nail polish and lipstick, which gave women “matching lips and fingertips.” Helena Rubinstein derided the brightly colored nail polish as trashy. But by turning nail enamel from a commodity into a fashion item, he gave women of modest means an unexpected way to feel special. As Revson said, “in the factory, we make cosmetics; in the store, we sell hope.” Split Personality Andrew Carnegie is one of the most seductive of the business titans. He embodied the American dream, rising from rags not to riches—but to richest. In 1848, Carnegie was forced to emigrate from Scotland, where his father, a hand-loom weaver, had been put out of work by the technology of steam power. Carnegie would go on to master, rather than be mastered by, technology. At 13, he got a job at $ 1.20 a week in a steam-driven textile mill in Pittsburgh. He left to work in a telegraph office and taught himself Morse code. His next move was to the Pennsylvania Railroad, the spine of American enterprise in the mid-nineteenth century. With the help of Tom Scott, a mentor who became a surrogate father, Carnegie quickly rose to become superintendent of the railroad’s western division. By the time of the Civil War, Carnegie had mastered the two forces that were changing the world: the telegraph and the railroad. After making a small fortune as an investor during the 1860s, Carnegie was hit with a searing insight. Technological breakthroughs, most notably the Bessemer process, opened up the possibility of producing steel in undreamed-of quantities. Knowing railroads and their desperate need for strong, all-weather rails, Carnegie was convinced that steel would change the material basis of civilization in the last quarter of the nineteenth century. His conviction proved justified. Carnegie was charming and witty with a puckish sense of humor. Unlike contemporary “robber barons” such as J.P. Morgan or John D. Rockefeller, he wanted to be liked and knew how to make himself likable. However, he had neither compunction nor hesitation about breaking the eggs that went into his omelette. Take his early mentor, Tom Scott, the man who lifted Carnegie out of the obscurity of a telegraph office and into the upper reaches of the Pennsylvania Railroad, who taught the unschooled immigrant how to invest and financed his first investment. In 1873, when Scott came to him for financial help to stave off bankruptcy, the wealthy Carnegie summarily turned him down. He could be similarly strict with his partners—who were partners in name only. Carnegie owned the majority of his company and doled out dividends parsimoniously. His partners worked long days while he took extended vacations. Perhaps most telling, Carnegie was ruthless with the workers in his gigantic mills. He fancied himself a great friend of labor. “My experience,” he wrote in 1886, “has been that trades-unions, upon the whole, are beneficial both to labor and to capital.” He also declared that there “is an unwritten law among the best workmen: ‘Thou shalt not take thy neighbor’s job.’” Not many employers were saying that sort of thing in 1886, and Carnegie was lionized among workers in many industries. Six years later, Carnegie, conveniently on vacation in Britain, allowed his partner Henry Clay Frick to break the union at the company’s Homestead Plant. Pinkerton detectives were hired. Scab labor was brought in. Lives were lost. The Amalgamated Association of Iron and Steel Workers met with complete defeat. As one of Carnegie’s executives put it, “The Amalgamated placed a tax on improvements, therefore the Amalgamated had to go.” Like most of America’s business titans, Carnegie paid a high personal price for his complete dedication to his company’s success and to his own ambition. The price for him was the sharp split between what he wanted to be—or at least saw himself as—and what tremendous success in business demanded that he be. Carnegie sought the affection of his friends, partners, and workers. Yet, in the end, he alienated many because his loyalty was to his company first, last, and above all. Carnegie was not alone among the titans in his single-minded dedication to his ambition. Most of them had wives, clubs, hobbies, and philanthropic endeavors. But they led their companies to greatness by thinking about them every waking moment and by expecting the same from their employees. They were willing to pay the price needed to create something new in the business world. Tom Watson retired from IBM in May 1956—and died in June 1956, having refused potentially lifesaving surgery for an intestinal problem. George Eastman committed suicide and left a note that read: “To my friends: My work is done—why wait?” Eastman’s note may have been a bit misleading. At 77, he hadn’t worked regularly for years. He had traveled extensively to foreign countries in his retirement. His health was failing. But the sentiments certainly captured the fact that, as with Watson, his company had been the center of his life. The titans led their companies to greatness by thinking about them every waking moment. George Eastman committed suicide and left a note that read: “To my friends: My work is done—why wait?” It is perhaps noteworthy that Eastman, unlike some other titans, didn’t let an all-encompassing focus on the success of his business undermine his personal values and friendships. As Eastman’s first financial backer and partner observed, “You are a queer cuss, Geo, and I know you never want any sympathy or comfort from your friends. But I want you to know that I, for one, appreciate the mountains of care and responsibility that you are constantly called to overcome. And if I never express it in words, it may be a source of comfort to you to know that I am always with you heart and hand.” Starting Over at 40 John Patterson, the founder of National Cash Register Company and Tom Watson’s first boss, dealt with people in three stages. First, he shattered a man’s spirit and obliterated his previous identity and self-conception. Then he built him up, buttressed his self-esteem, and paid him lavishly. Then he fired him. That’s a fair description of Watson’s career path at NCR. He joined the company as a salesman in Buffalo, New York, in 1895 when he was 21. He devoted himself to NCR and its mercurial leader, doing whatever it took to get ahead, for almost two decades. In 1913, he found his head on the chopping block. It wasn’t, to put it mildly, an easy period in Watson’s life. He was 40 years old and newly married with an infant son. He also had serious legal problems, having been convicted, along with other NCR executives, of criminal violations of the Sherman Act for his unquestioning adherence to some of Patterson’s less attractive business practices. Although the conviction was later overturned on appeal, Watson at the time faced a year in jail and a $ 5,000 fine. Watson took a job with an unknown company called Computing-Tabulating-Recording, a motley and directionless conglomerate that made scales (computing), adding and sorting machines (tabulating), and time clocks (recording). Soon he was running the company, rechristened International Business Machines. His focus on the relatively small tabulating division put IBM on the road to becoming the preeminent name in what came to be known as computers. Significantly, Watson didn’t carry a grudge against Patterson, who taught him many of the sales techniques that later contributed to IBM’s success. As Thomas J. Watson, Jr., Watson’s son and successor as CEO at IBM, once remarked: “Oddly, Dad never complained [of Patterson’s firing him] and revered Mr. Patterson until the day he died.” Titans don’t look back. When they suffer a failure, they get over it. Most know the valleys as well as the peaks—but they never perceive a chasm, no matter how daunting, to be the Valley of Death. They don’t ruminate. They are incapable of being discouraged. And whatever problems they have faced in the past, they’re not afraid of the future, because they plan to play a big role in creating it. While not necessarily arrogant, they do have staggering confidence in themselves. For example, when William Shockley, the famed coinventor of the transistor, asked the unknown Bob Noyce to interview for a job at his new semiconductor company, Noyce left his job at Philco in Philadelphia and bought a house in Palo Alto, California—before the interview. This self-confidence is contagious and serves the titan superbly well when things start going badly, as they did for every one of these men at one time or another. For example, Intel’s first two products, introduced in 1969, were technically advanced but commercially unsuccessful. Rumors began to circulate that if Intel didn’t have a success soon, it would be in trouble. Undaunted, Noyce pressed on, and Intel brought out the first in a long string of blockbuster products. Eastman was passed over for first assistant bookkeeper at the Rochester Savings Bank because of nepotism. Eastman, who had an acute sense of fairness, was outraged. Walton lost his first store—a thriving five-and-dime in Newport, Arkansas—to the landlord’s son because he failed to notice that his lease didn’t include a renewal clause. Ford founded two companies that failed before he created the Ford Motor Company. Revson was living hand-to-mouth, thanks to a string of dead-end jobs, when he founded Revlon in 1932. One clear lesson that everyone can take from the titans is that they didn’t blame others—or the universe—for their problems. They may have been downcast or temporarily angry with themselves. But they didn’t whine that life was unfair. They believed the world was essentially a just place that would reward their effort and, ultimately, yield to their genius. Any setback was a temporary misunderstanding by the cosmos. There is no formula for business greatness. There are, however, themes that recur in the conduct of business titans. Whether they led through inspiration or intimidation, a clear mission and consistent messages were keys to making their dreams a reality. So were a limitless sense of what they had to offer and an unflinching commitment to the fulfillment of their destinies. Their certainty in the face of an uncertain, sometimes derisive, world can be a beacon for attracting and motivating followers. Their message is not inclusive, however. The individuals I have studied didn’t create organizations designed for everyone. If you wanted to work for one of them, you had to buy into the mission and spread the message. Otherwise, you belonged elsewhere. As we have seen, there may be good reasons not to try to become a titan yourself. But whatever your aim, it’s good to be able to recognize a titan. We can also take inspiration and ideas from these giants of enterprise and their common achievement: business success through the writing (and enforcing) of their own rules.

What Titans Can Teach Us

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