Putting the Past to Work
IN AN AGE OF INFORMATION OVERLOAD, identifying the most useful information in a timely fashion isn't easy -- and it may be some comfort to know it never was. Yet by studying the adaptive skills of earlier captains of commerce, entrepreneurs in even the most cutthroat businesses can learn how to smack down the competition.
The key: Embrace invention -- even that of your competitors -- and use it better and faster than they do.
In the 1870s, John D. Rockefeller had a telegraph line run to his Euclid Avenue home in Cleveland. When he came home for lunch, he could stay in touch with his Oil City, Pa., contacts for updates on gushers and dry holes. He could then telegraph his brother in New York to adjust the price of kerosene for the European market, and his brother could pass the price on to Europe by trans-Atlantic cable.
Although Standard Oil employed telegraphers, John D. Rockefeller sent and received his own "e-mails." Sending and receiving Morse code at commercial speeds were not easy skills to master, but Rockefeller was "computer-literate." He had to be skilled in the current technology to have the best information and act on it.
The oil business of that day was not a fuel business. Standard Oil sold illumination. Tallow and whale-oil concerns were its competitors. Kerosene lamps, especially with mantles that burned white-hot, were a great advance in technology. Standard Oil produced a lamp-fuel kerosene of such purity that explosions were greatly reduced. Its five-gallon branded blue tins became known around the world. (Meanwhile, the byproduct of kerosene distillation, gasoline, was discarded as a nuisance.)
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![[illustration]](http://online.barrons.com/public/resources/images/BA-AK772_ov_fal_20071109165253.jpg) |
| In business, vanquishing obstacles and obsolescence require the same skills now as in the days of the sextant. |
John Patterson was a coal dealer in the late 1800s who was troubled by cash pilferage. To catch the thief, he purchased locked wooden boxes that required transactions be punched into paper-tape rolls before the cash drawer would open -- with a spring mechanism ringing a bell so management would know the drawer had been opened. At the end of each day, he could unlock the side compartment, count the holes and have accurate sales numbers for the shift. Patterson was then able to fire the right man for cause.
In retirement from the coal business, he bought the cash-register company since he was impressed with its product. Patterson renamed the company National Cash Register and began his quest to change the business world.
One of his sales managers was not to his liking, and as a man in a hurry, Patterson sacked him forthwith. Infuriated with what he viewed as the injustice of his termination, the fired man went with a competitor, gained control of that company and renamed it. If Patterson was to be National Cash Register, NCR, his ex-employee would one-up him and be International Business Machines, IBM. Tom Watson joined the business-knowledge arms race with a vengeance. Accounting machines became the battleground. Yet, much of the valuable information that was generated in the distillation of the numbers was discarded.
Similarly, before the 1970s retailers counted and recounted products on shelves. When NCR and IBM introduced universal product codes and check-out scanners, sales numbers were continuously available. Yet most retailers continued taking inventory as they'd always done, until someone (likely a paid consultant) showed them how to use the tracking information to improve shelf-stocking efficiency.
Now, product-tracking covers not only stocking, ordering, and inventory-tallying functions; it has advanced beyond the point of sale. CVS, the drugstore chain, has tens of millions of customer-information cards in use. CVS can adjust prices in accordance with customer acceptance and calibrate that information to mesh with vast amounts of other store data. Each of more than 6,200 CVS locations will have the needed amount of merchandise as predicted by recent histories of supply-and-demand flow, paring the likelihood of out-of-stocks and overstocks at the end of a sale.
Whether you're measuring by sextant or global-positioning system, the objective is still the same. Consider this exchange:
Irish radio operator to British ship: "Alter course 20 degrees right to avoid collision."
British ship: "Alter your course 20 degrees left to avoid collision."
Irish: "Negative, alter your course 20 degrees right to avoid collision."
British: "This is His Majesty's aircraft carrier Royal Oak. I demand you alter your course 20 degrees left to avoid collision."
Irish: "Sir, I am a lighthouse."
There have always been immovable objects in our world. Navigating around them is still a sound strategy. While our new knowledge economy requires different navigation techniques, we can't discard the basics of all that we know about what has gone before. Building on history is the way to get to new heights.
Santayana said "Those who cannot remember the past are condemned to repeat it." Those who don't understand history will be baffled by the future. The knowledge economy is not a new challenge.
JACK FALVEY teaches at the Boston campus of the University of Massachusetts. He founded MakingTheNumbers.com1. This article was excerpted from his forthcoming book, Getting it Done; Navigating in the Knowledge Economy.
Barron's welcomes submissions to "Other Voices". Essays should be about 1,000 words in length, and sent by e-mail to the Editorial Page editor at tg.donlan@barrons.com2.
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| Hyperlinks in this Article: (1) http://www.makingthenumbers.com/ (2) mailto:tg.donlan@barrons.com |
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