May 4, 2008

The Way It Was: Michael Ruettgers

If there is one trend that stands out in case studies of successful CEOs, it is that most of them spend time in blind alleys before they get to the executive suite.

Michael Ruettgers is a typical example. An indifferent student at the University of California, he spent most of his time at the beach or playing bridge. Cal sent him packing.

He got the message. He finally got a college degree and went on to Harvard Business School.

Fast forward to the late ‘80s. Ruettgers is executive vice president of EMC, a computer storage company that was on the ropes. The company was trying to stay afloat after shipping faulty products to customers.

Ruettgers met the challenge head on. The company guaranteed replacements even if the product was working just fine. It was a near run thing. The company, which was doing $123 million in sales, went through all but about $3 million of its bank loans to stay in business.

Ruettgers earned a reputation as a tough, aggressive competitor. By the mid-1990s, EMC had knocked of IBM as the number one provider of high end storage.

He made bets on new markets and acquisitions throughout that time. Ignoring doubters, he pushed storage boxes into non-mainframe servers, connecting to different types of servers. Soon that market made up more than half of EMC sales. Today, EMC’s market capitalization is more than $30 billion.

Posted by Hank Cox at 10:16 AM | Click here to comment | Send to a Friend

April 6, 2008

The Way It Was: J. Brandenberger, Cellophane

We live in a world of marvelous products that make our lives immeasurably easier and more enjoyable, and usually we don’t give them a second thought.

Take for example – cellophane – that wonderful clear, clinging plastic that is found in every kitchen, and lots of other places. It did not spring into being of its own accord, and it doesn’t grow on trees.

Actually, cellophane was invented about a century ago by a Swiss chemist and textile engineer named Jacques Edwin Brandenberger. He was seated at a restaurant in Paris in 1900 when he saw a patron spill a bottle of red wine on a pristine white tablecloth. He decided to develop a way to make such fabrics impervious to wine, and other stains.

He never did, but one of his failed experiments left him with a plastic coating that kept sloughing off the cloth in big sheets of thin, transparent film. Brandenberg decided this film had potential and spent almost 10 years designing a machine to make it. Voila! Cellophane.

In 1912 he formed a company, La Cellophane, combining the words “cello” from cellulose with "phane" from the French word diphane meaning transparent. In 1923, he cut a deal with Du Pont to make and distribute the new material throughout North and South America.

Posted by Hank Cox at 2:17 PM | Click here to comment | Send to a Friend

March 30, 2008

The Way It Was: George Hearst

George Hearst was 26 years old when he inherited his father’s debt-ridden farm in Missouri in 1846. But he noticed some people nearby were making money with a lead mine. Hearst could barely read, but he got some books on geology and became an expert.

When the California gold rush got underway, Hearst was ready. Perhaps because he knew what he was doing, he found gold – lots of it. By 1857, he had developed his first large scale mine, the LeCompton near Nevada City, California. He took profits from there to the Comstock Lode in the state of Nevada where miners were taking the gold from black ore and throwing the silver away. Hearst focused on the silver.

Hearst was also focused on efficiency and he turned the Comstock into a showpiece of cutting-edge mining technology. Later he went to San Francisco and made more money in real estate. He made even more money as a consultant to various mining interests. And then hit paydirt again at a mine in Utah.

Hearst got interested in politics, and eventually served as a Senator from California. He died in office leaving his widow and son filthy rich.

The TV show “Deadwood” on HBO portrayed Hearst as an evil robber baron who had people shot right and left. The real Hearst was tough, all right, but he was all business. When he had a problem, he called in lawyers, not gunfighters. The results were the same.

Posted by Hank Cox at 8:23 AM | Click here to comment | Send to a Friend

March 23, 2008

The Way it Was: John Wanamaker

Probably few people ever had more influence on the American marketplace than Philadelphia’s own John Wanamaker.

Born in 1838, Wanamaker pioneered the concept we know today as the department store. You may have thought they dated back to the Garden of Eden, but it all began in the 1870s. Along with his brother in law Nathan Brown, Wanamaker opened a multi-purpose clothing and specialties store – called Wanamaker’s -- in an abandoned railroad depot in Philly.

He went after an upscale market and promised all wool clothing and money back guarantees – radical concepts at the time. He printed the first ever copyright store advertisements. When people discovered that its promises were true, his reputation was made.
I know half my advertising money is wasted, Wanamaker said. Trouble is, I don’t know which half.

Wanamaker just kept innovating: the first in-store restaurant, the first electric lights in a store, the first elevator, the first White Sale. He worked constantly to keep quality high and prices low. People like that sort of thing.

In 1911, Wanamaker expanded the Philly store, featuring a 150 foot high Grand Court with the world’s second largest organ and a great eagle from the 1903 World’s Fair.

Wanamaker’s store became more than a store. It was a place where people went to see and be seen, rather like the malls of today.

And it all started with John Wanamaker

Posted by Hank Cox at 7:06 PM | Click here to comment | Send to a Friend

March 16, 2008

The Way it Was: Ransome Olds

There is a popular myth that Henry Ford invented the automobile assembly line. It was actually a fellow named Ransome Olds who was the first person to mass produce cars in the U.S.

Olds began making steam and gasoline engines with his father, Pliny Fisk Olds, in Lansing, Michigan, in 1885. Olds designed his first steam powered car in 1887, and 12 years later, armed with growing knowledge of gas powered engines, started the Olds Motor Works in Detroit.

Unfortunately, before production began, his factory burned down. Exactly one prototype – a single cylinder buggy – survived. But he set up another factory and soon the Oldsmobile Gas Buggy – that’s what it was called – was selling very well.

The name Oldsmobile was first used in 1900, though the cars were known simply as Olds. It was the nation’s leading manufacturer of cars from 1901 to 1904, when Ransome Olds left the company to start another car company making something called “Reo” cars, or R-E-O, derived from his initials. The Reos were similar to Oldsmobiles but for some reason never sold very well.

Despite the departure of Olds, or perhaps because of it, the Oldsmobile Company prospered, and in 1908 was purchased by William C. Durant. Along with Buick, it became the foundation of General Motors.

UPDATE (10:50 p.m.): Corrected the reference to William Durant. Will Durant was the historian.

Posted by Hank Cox at 12:44 PM | 1 comment; click here to read it or submit your own! | Send to a Friend

March 9, 2008

The Way it Was: Ida Rosenthal

Ida Kaganovich was 18 years old when she emigrated from Russia to the United states in 1904. She changed her name to Cohen, and later changed it again when she married William Rosenthal.

Ida didn’t like to work for other people, so she bought a Singer sewing machine on the installment plan, and hung out her shingle as a seamstress. She did well, and by 1921 she was running a dress shop in Manhattan, along with a friend named Enid Bisset.

The Jazz Age was in full bloom. Women had won the right to vote and were working outside the home in increasing numbers.

But the so-called “flapper look,” which was the rage at the time, had them all trying to appear flat-chested.

Ida hated that look. “Why fight nature?” she asked. So she and Enid came up with the first brassiere fitted with cups that separated the breasts.

The idea took off immediately. Within a year, the company registered the name Maiden Form and hired a salesman. Soon they quit making dresses and focused solely on brassieres. In 1928, they sold 500,000.

Ida was soon introducing new designs, managing the manufacturing process, negotiating with unions and coming up with racy ads. The company prospered and continued to prosper after her death in 1973.

This is truly one of the most uplifting stories in the history of U.S. manufacturing.

Posted by Hank Cox at 11:28 AM | Click here to comment | Send to a Friend

March 2, 2008

The Way It Was: Henry Miller Shreve

One of the pivotal figures in developing the American economy was a guy named Henry Miller Shreve.

In the early 1800s, Shreve made a fortune running keelboats between Pittsburgh and New Orleans. There were no trains back then, and roads were primitive. You shipped your goods by water if you could, but it was a tough haul upriver with horses pulling the boats from the shore with ropes.

Shreve was the first to build a steamboat with a high pressure, non-condensing engine. It had 100 horsepower. He was the first man to drive a steamboat upriver from New Orleans to Pittsburgh. He made the trip in only 34 days which was a major breakthrough.

But Shreve’s real claim to fame was as inventor of the snag boat. Snags were trees that had fallen into the river creating obstacles to boats. The main tributaries – the Arkansas, Ohio, Missouri, and Mississippi Rivers – were obstructed by tens of thousands of them accounting for three fifths of boating accidents.

Shreve designed a steam powered monster boat with giant claws, cranes and a heavy battering ram on an ironclad beam. Huge trunks were hauled up on deck and put through a saw mill right then and there.

Perhaps Shreve’s biggest feat was clearing the Red River that was clogged for 160 miles, opening up for cultivation some of the richest farm land in the nation. They named Shreveport after him.

Posted by Hank Cox at 12:08 AM | Click here to comment | Send to a Friend

February 24, 2008

The Way It Was: George Bissell

There is something about the name Bissell that prevents people from getting credit for their contributions. There was a man named Israel Bissell who rode much farther than Paul Revere rode on that fateful night long ago, and warned more people about the British movement, but his name didn’t sound poetic.

Listen my children and you shall hear of the midnight ride of…Israel Bissell? Just didn’t work.

Not many years later there was another important man named George Bissell who founded the nation’s first petroleum company and financed the first substantial oil well.

Bissell actually started out life as a scholar. He came from humble beginnings but somehow worked his way through Dartmouth College, graduating in 1845. He went on to write for newspapers and later served as superintendent of public schools in New Orleans. He learned other languages and studied law and by 1853 was practicing law in New York City.

In those days, there was growing demand for lighting materials – mainly whale oil and candles. Bissell saw the potential in petroleum because it burned. He rounded up some investors and founded the Pennsylvania Rock Oil Company.

He hit on the idea of using derricks to drill for oil, as was then being done to extract salt. It was Bissell’s group that funded the famous Drake Well in Titusville, Pennsylvania, in 1859.

So make a note of it. The real pioneer in oil was not named Rockefeller, he was named Bissell, George Bissell.

Posted by Hank Cox at 7:40 AM | Click here to comment | Send to a Friend

February 17, 2008

The Way It Was: George Eastman

In 1877, a slim young bank clerk named George Eastman bought his first camera and set out to photograph a natural bridge. He took along a tripod, a darkroom tent and bottles of chemicals. In the darkness of the tent, he coated a glass plate with a thin solution of egg white, and then laid on an emulsion of gun cotton and alcohol mixed with bromide salts. When the emulsion was set but still moist, he dipped the plate in a solution of nitrate of silver and shielded it from light as he put it in the camera.

Whew! That was what you needed to do back then to take a photograph. Eastman thought, hmmm, there’s got to be a better way.

Eastman went to work. In 1888, he went to market with a handheld camera with a light-sensitive roll of treated paper inside. He called it Kodak because he liked the sound of the K. He sold 13,000 cameras for $25 each, a lot of money back then. You took 100 shots and sent the camera back to Eastman. He sent you your photos and another roll of film.

It was still too complicated. In 1900, he came out with the immortal Brownie that he sold for $1 each. Within a year, he sold 250,000. Eastman had made photography an everyday event for the average consumer.

Eastman kept inventing all his life and gave away $100 million for education and racial advancement.

Posted by Hank Cox at 10:00 AM | Click here to comment | Send to a Friend

February 10, 2008

The Way It Was: Mason and Dixon

Most of us have heard of the famous Mason Dixon Line that separates Pennsylvania from Maryland. It is generally regarded as the dividing line between north and south, though of course Maryland was actually a Union state in the Civil War.

But the Mason Dixon line preceded the Civil War by a century. In the 1760s, when we were still a British outpost, wealth landowners in Pennsylvania and Maryland commissioned a survey to settle a decades old dispute about boundary lines.

Charles Mason and Jeremiah Dixon were actually trained astronomers and mathematicians in Britain, well known for charting the transit of Venus when it passed near the Earth in 1761. Thomas Penn, the proprietor of Pennsylvania, and Cecilius Calvert, otherwise known as Lord Baltimore, came to England looking for someone to settle their border dispute. Mason and Dixon got the job.

It was no small undertaking. They headed into the American wilderness with 115 ax men and cooks dragging along tents and 500 pound stone markers. They hired dozens of Indian scouts to protect their flanks as they cut an eight-yard wide swath 230 miles into the wilderness.

Mason and Dixon were the first true geodetic surveyors, which means they took into account the shape of the Earth when making their boundary calculations. Given the technology they had to work with, their calculations were astoundingly accurate. At last report, Maryland was still a Union state.

Posted by Hank Cox at 7:51 AM | Click here to comment | Send to a Friend

February 3, 2008

The Way It Was: Alfred Sloan, General Motors

No chronicle of American industry can be complete without discussion of the pivotal role of Alfred Sloan.

Sloan joined General Motors as a vice president of operations in 1918. He found a management mess. Financial controls were nowhere to be seen. He was tasked to design an effective reorganization.

Sloan believed strongly in decentralization to promote initiative, responsibility, and development of personnel. He wanted flexibility and decisions close to the facts – coordinated from a strong central office. He ended up creating five car divisions – Buick, Cadillac, Chevrolet, Oldsmobile and Pontiac, each division aimed at different price ranges, each free to create new models.

The first year of Sloan’s reorganization was 1922 when GM sold 457,000 vehicles versus 215,000 the year before. The next year GM sold 800,000 cars. Sloan became President and CEO in 1923. By the late 1920s, GM had overtaken Ford in sales, in part because Ford stuck with the Model T and stopped offering new models.

Sloan’s focus on decentralization helped GM weather tough times. Sales dropped dramatically during the Great Depression, but GM made a profit and paid a dividend each year.

Sloan was ahead of his time in management philosophy which was collaborative and inclusive. “I got better results by selling my ideas than by telling people what to do,” he said.

Sloan build GM into the world’s largest corporation before he retired in 1956.

Posted by Carter Wood at 7:53 AM | Click here to comment | Send to a Friend

January 27, 2008

The Way It Was: Min Kao

Perhaps the greatest asset of American industry is our openness to ambitious people from other countries.

An excellent case in point is a gentleman named Min Kao who grew up in a small town in Taiwan and moved to the U.S. in 1976. He brought a degree in electrical engineering with him and earned an M.S. and Ph. D. from the University of Tennessee.

By the 1980s, Kao and his friend Gary Burrell were working for Allied Signal. Kao had developed the first Global Positioning System for use in planes, and had ideas for other applications.

Kao and Burrell saw a huge opportunity to transfer GPS technology from aviation into the marine, automotive, outdoor and fitness markets. They left Allied Signal and managed to raise $4 million by hitting on friends and investment bankers, establishing Garmin Ltd. They hired a dozen engineers to design and build their first product – a GPS system for boaters. It cost $2,500 and was an instant hit. After its debut at a trade show, they had a 5,000 unit backlog of orders.

As Chairman and CEO, Kao has built an effective team at Garmin where everyone is encouraged to participate in making decisions. Today Garmin is the number one maker of navigation gear in the U.S. The company has 6,400 employees around the world and has shipped more than 22 million products.

Posted by Hank Cox at 8:18 AM | Click here to comment | Send to a Friend

January 20, 2008

The Way It Was: Levi Strauss

Let’s go back in time to California 150 years ago, the gold rush. Desperate men are hacking away at the earth. It’s hard work, sunup to sundown, with shovels and picks. Wool and cotton clothing don’t hold up very well. Everyone is walking around in rags.

Back in New York Levi Strauss loads up stuff he figures miners need, and sets out for San Francisco. In 1853, the city was a riot. There were 399 saloons, 28 breweries, hundreds of brothels and 1,200 reported murders in a population of 70,000, and another 2,400 newcomers disappeared, never to be seen again.

A tough town demands tough pants. Levi was selling rough canvas for tents and wagons. A miner said what he really needed was pants that would last. Strauss obligingly made some canvas into overalls.

Miners liked the new pants, but they chafed. So Strauss substituted another material that became known as denim.

A tailor from Nevada came up with the idea of rivets at key points to keep the pants intact. Voila, blue jeans were born.

Levi achieved immortality with blue jeans, though jeans is a word he never used. Long after his death, the company began using the term. Today blue jeans are everywhere.

Oddly, this product that was created in response to necessity didn’t fully come into its own until it became a fashion statement. It is the consumers’ preferences that drives the market, not their needs.

Posted by Hank Cox at 7:48 AM | Click here to comment | Send to a Friend