By Christopher Farrell
GIANTS OF ENTERPRISE
Seven Business Innovators
and the Empires They Built
By Richard S. Tedlow
HarperBusiness -- 512pp -- $30
In 1870, Britain forged more steel than the rest of the world combined. Three decades later, the U.S. was producing twice as much steel as Britain--much of it from the mills of Andrew Carnegie.
At the turn of the century, hundreds of fledgling car companies were formed, including Ford Motor Co. (F) It wasn't clear which carmakers would survive--or that the automobile would ever be more than a plaything for the rich. Henry Ford himself had already failed twice as an auto maker. But within a few years, Ford Motor had put America on wheels, selling more than 15 million Model-Ts by 1927, when the Tin Lizzie was finally discontinued after nearly 20 years of production.
In 1945, Sears, Roebuck & Co. (S) and Great Atlantic & Pacific Tea Co. (GAP) dominated the nation's retailing landscape. That year, 27-year-old Sam Walton opened a variety store in Newport, Ark., a tiny town in a poor state in the poorest part of the country. At his death in 1992, the visionary behind the giant Wal-Mart Stores Inc. (WMT) discount chain had become the most successful retailer in American history.
The achievements of Carnegie, Ford, and Walton figure prominently in Richard S. Tedlow's engrossing gallery of executive portraits, Giants of Enterprise: Seven Business Innovators and the Empires They Built. The other brilliant risk-takers sketched by the Harvard Business School professor are George Eastman of Eastman Kodak (EK), Thomas J. Watson Sr. of IBM (IBM), Charles Revson of Revlon (REV), and Robert N. Noyce of Intel (INTC). The lives of these entrepreneurs are well-known, but Tedlow performs a great service by bringing their stories together in one volume. He also deftly explores their backgrounds and the psychological impulses that drove them. After all, these are men "who broke old rules and made new ones, who built new worlds, who were determined to govern and not to be governed, who exploited tools and techniques of which their contemporaries were only vaguely aware to serve markets which in some instances they had to create."
Such passionate and fluid writing makes Giants of Enterprise a pleasure to read. The book is mostly the stories of the individual men, but the professor is also eager to draw general lessons. What traits did they share that led to success, he asks? All of them, he finds, had an ability to create or adopt new technology faster and better than their peers. In general, they embraced change. For instance, prior to the 1880s, professional photographers and serious amateurs rejected technological advances toward a less complicated art. Eastman seized on the new techniques and developed a mass market for them, as embodied in the easy-to-use Kodak Brownie. Moreover, he found that the best way to maintain an edge over rivals was not through the monopolistic trade restraints favored by innovators of previous decades, but with an organization capable of "a rapid succession of changes and improvements." To build such a "learning organization," he forged close relations with universities, invested in basic research at Kodak Park, and hired college graduates.
Tedlow also plumbs each executive's personality, finding that entrepreneurial genius has a dark side. Tedlow's innovators succeeded through brainpower-- by thinking large. Yet eventually, he says, most of these tycoons suffered a mental "derangement," losing their grip on reality as a result of their tremendous influence. They were surrounded by people who made sure they never had to deal with any of the minor annoyances that trouble even upper middle-class households. Typically, their friends were equally protected members of the ultra-rich. In this account, only George Eastman, clearly Tedlow's favorite giant of enterprise, escapes this kind of mental imbalance.
Take Carnegie. The power the steelmaker had exercised since the 1860s persuaded him that he alone could solve the problem of human aggression. So after his retirement, Carnegie embarked upon a two-decade crusade for world peace. Among his many embarrassing missteps was an enthusiastic embrace of Germany's Kaiser Wilhelm II, who was in the midst of a huge military buildup just prior to the Great War. "In this quest [Carnegie] was as complete a failure as he was a success at making money in the steel industry," writes Tedlow. "He was worse than a failure; he was a fool."
At least Carnegie's intentions were noble. The same can't be said for Henry Ford, the figure Tedlow likes least--and with good reason. Yes, Ford was the "Copernicus of cars." But he was also a sadistic, vindictive man who drove his son to an early grave, and a vicious anti-Semite to boot. "Ford provides as stark an illustration of the derangement of power as one is likely to find," writes Tedlow.
Tedlow also ponders why Americans have proved so good at creating companies. Like others before him, he finds the key to be the nation's openness to talent. He acknowledges historic biases against women and racial minorities--but finds that today there are more opportunities than ever for brains, energy, and character, regardless of a person's background.
Put it this way: In America, a defining ideal is that everyone should get a chance to be unequal, to accumulate riches. It's likely that in another half-century a comparable history will profile an equally successful but far more diverse group of capitalists who will have transformed the way we live and work. Farrell is a contributing economics editor.