Or let me rephrase the title question: which businessmen have had the most influence on American history as businessmen? That is, because of the activities they pursued in the course of their doing business, not because, say, they were appointed to political office.
The more influence they had outside the realm of business itself, the better.
I’m hardly an expert, but I’d imagine John D. Rockefeller (founder of Standard Oil), Henry Ford (Ford Motor Company, cheap cars), and Andrew Carnegie (U.S. Steel, lots of philanthropy) all have to be close to the top of the list.
And though he’s only had a couple of decades for his influence to be felt, I’d think Bill Gates is way up there as well.
I think one man stands alone, not just because of the businesses he founded, but because he pretty much created the Federal Reserve system, which still exercises a large measure of control over the American economy.
Well, you mentioned #'s 1 and 2 (Rockefeller and Ford), and Morgan is the likely #3. You specifically forbade mention of activities done while in government service, so Alexander Hamilton is out. But there’s a strong list of people whom you’ve likely never heard of, so here goes:
Theodore Vail, President of ATT, 1907-1919. Theodore Vail spearheaded the strategy of convincing the government to grant ATT quasi-monopoly status over the nations telephone network, convincing the government that only through monopoly protections would ATT be able to develop universal access. This decision, the Kingsbury Committment, was made in 1913. This decision gave ATT the excess capital to fund Bell Labs, a subsidiary unit that did nothing but invent the laser, cell phone, transistor, UNIX, C, faxes, the LED, and discover the Big Bang.
Alfred Sloan, President of General Motors, 1923-1956. Sloan instituted a number of business innovations that were picked up by modern businesses - in fact, the very definition of “modern business” entails some of the concepts perfected by Sloan. The most important is the use of financial controls in decision-making, a process frought with implications far beyond the factory. The next was the concept of independent operating units, each unit responsible for its own profitability. This prevents, say, Buick, from shoving its losses onto Chevy’s balance sheet. A third was bringing the concept of the product line to big-ticket items: each of GM’s divisions were aimed at differing segments of the marketplace. Compare that to Ford, Packer, etc, who were cranking out either millions of one car, or hundreds of custom built jobs.
Charles Bates “Tex” Thornton, Robert McNamera, Ed Lundy, and the rest of the Whiz Kids. Beginning in 1946 they completed the revolution Sloan had begun by bringing America’s most backward corporation, Ford Motor, from the dark ages of corporate control by a senile founder to the light of statistical analysis and control. Ford Motor was in such bad shape, only the intervention of WW2 kept it from collapsing by 1945 - and even then, it was touch and go. Henry Ford was charitably described as being addled with age, increasingly paranoid and delusional, a man who destroyed his own son, Edsel. In 1943, the US Government literally ordered Henry Ford II to take over the company, to save it from his grandfather and Harry Bennett. By the time the crisis of wartime production was over, H2 was ready to look ahead.
He did this by hiring the Whiz Kids, a group of Army Air Force statisicians and mathematicians who wrote to H2, offering their services as a group to “Help save your company.” Knowing that they had something he (and his company) did not, nor even really comprehended, he hired them on the spot.
This is one of those good news/bad news situations, one with implications far beyond Ford Motor. When the Whiz Kids got there, they did as they said they were going to do - they turned Ford from a company that literally weighed it’s accounts payable to determine the amount of the invoices* into a company that could, 10 years later, state how many extra cars were sold by the introduction of a new three-state slogan. (It was this slogan, “$56 for '56”, that helped launch Lee Iacoccoa’s career).
The bad news was that it brought finance and financial management to the forefront of American business, moreso than product design, manufacturing, quality, customer satisfaction, or almost anything else. Now if you ask your grandmother, she’ll tell you that a little bit o’ hard times never hurt anybody who wanted to learn to live “within their means”, but in the corporate world, the overemphasis on financials, to the exclusion of looking up and seeing what the decisions implicated, were disastrous to American heavy-industry manufacturing. In time, Finance and the financial departments of many, many corporations became the most powerful units within them, as they were the ones who commonly ended up deciding who got funding and who did not.
One example was Ford’s Profit Improvement Program (PIP), started by Lee Iacocca with the full backing of Ford’s finance department (for by 1965 nothing happened at Ford w/o the Finance departments full backing). For starters, read that again: it’s a profit improvement program. Not a product improvement program, not a process improvement program, but profit improvement - you were incentivized based upon how much you improved the gross margin on an automobile.
Well, it’s easy to guess what happened: instead of the cars becoming “better”, stuff started disappearing. That little $.25 hood ornament you remember from last years model? It was deemed unecessary, and removing them would save $114,211.25 on the 456,845 cars Ford plans to sell this year. Full-sized spares went out the window, employees spent weeks trying to shave a pound off here, four ounces off there (in autos, weight=money), floor mats became smaller (then disappeared from the backseats… then became an “option” altogether). Etc, etc, etc, from about 1965-1982. Factories were left with decades-old equipment, the employees and management trapped into processes and procedures frozen by union contracts that were agreed-to by both sides for purely short-term reasons with little thought to the long-term impact on the business development process. Shit… I could go on forever.
I do not think I need to go into the negative “outside the realm of business” effects the management theory of “maximizing your corporate financials” had on post-1970 American historical development. However, many of the lessons of the Whiz kids were good ones… it was just that the theory eventually collapsed of its own contradictions (as financial theories are wont to do).
*I am not kidding. Each pound of A/P was $30,000, or something like that. If you had 12 pounds of bills to pay, on your books you would deduct $360,000 from your cash balance, regardless of whatever the actual bill came to. The person who found that out, Arjay Miller, was reassured that the system worked because occasionally the finance department would weigh up a pound of bills and adjust accordingly.
I am surprised no one has mentioned Edison. He started several major industries with his inventions and spin-off companies.
The Recorded Music Industry, Movie industry and Electrical Power Distribution make him a giant to stand next to Morgan. Edison was a major influence on Ford in addition to his own accomplishments.
That was a great post – thanks, and exactly the kind of thing I was looking for. For the record, I forbade mention of government activities mostly to rule out someone like (though not limited to) George W. Bush. Definitely a businessman, and definitely influential in US history, but the two aren’t really related – his influence has little to do with his business activities. If there’s a case to be made for Hamilton as influential businessman, I’d like to hear it.
Edward Deming wasn’t a businessman per se, but his ideas of statistical process control form the analytic core of modern quantitative management, even if it took the West some 30 years to appreciate it.
Thanks. Just for the compliment, I’ll give you one more:
Roger Smith, Chairman of General Motors, 1981-1990. Roger Smith, a front-runner for the title of Worst Corporate Chief (non-criminal division), did so many incompetent things in the 1980’s that Roger and Me barely scratched the surface… though a film really isn’t the place for financial analysis, true.
One fact remains above all: Roger Smith spent $42 billion dollars in his reign on both automation (i.e., robots) and Saturn. As GM executive Alex Mair noted, the amount of money spent on automation, with no positive effect on GM’s market share or costs, could have purchased all outstanding stock of both Toyota and Nissan. The culmination of everything that was wrong with Sloan’s system, Smith understood nothing but a balance sheet, having no feel for cars, people, social issues, nothing but the system he was groomed to serve and perpetuate.
His successor, Bob Stempel, was little better - GM lost billions during his reign at the top, but he was a car guy caught in a financial whirlwind, and was totally out of his league. He was actually pretty good when in the right position - Stempel lead GM’s successful effort to put a catalytic convertor on all its makes by 1975 - but an odd loyalty to particularly ineffective subordinates did him little good.
… since we’re on cars…
Edward Deming, the Man who Saved Japan by teaching them methods of statistical control and analysis, culminating in his development of Continuous Improvement processes, one where the line worker is valued for their mental contribution as well as their physical contribution. Ignored in his day, but “rediscovered” by battered American companies in the 1980’s, Deming was the one largely responsible for the ideas behind Kaizan, the Toyota Production System, Just-in-time inventories, etc.
Deming was actually an intellectual descendent of Frederick Winslow Taylor, the first “scientific manager.” Taylor founded the first time-motion studies - one of his more famous discoveries was that the 21-pound shovel was optimum for all sizes of men. He’s kind of snickered at now, largely for his efforts to promote the Efficiency Movement (Herbert Hoover was also a big supporter of the Efficiency Movement, which pretty much put paid to that idea), but the principles themselves remain kind of sound - it’s amazing it took millennia to codify them:
Scientifically study each part of a task and develop the One best way of performing it.
Select the best person to do the job.
Train, Teach and develop the worker.
Provide financial incentives for following the methods.
Divide work and responsibility so that managers are responsible for planning the work methods and workers are responsible for executing the work accordingly.
Point 5 is where Deming (and most “modern” managers, of which there are still depressingly few) disagreed. He also would’ve disagreed with point 2, arguing that many workers need to know how to do the job, not just the “best” two or three.
Not sure which ones to name, but certainly the men who built the movie studio system and the men who put together the television networks deserve some mention. No one can argue that movies and television haven’t had enormous influence on US culture.