Forget Peter Drucker. Forget Tom Peters. Forget your favourite guru.
The book I’ve just read – and I bet you haven’t read it yet, for a reason I’ll explain at the end – is dynamite. But for now I want to keep the guy’s identity hidden.
He makes four interconnected points.
First, he takes a hard line on bankers. “Money chasing,” he says, “is not business.” He argues that, high finance aside – and his contempt for the financial world is evident – entrepreneurs and managers should not be much interested in profits. “Being greed for money is the surest way not to get it.” So what is the way to make a fortune? “Money,” my friend states, “comes naturally as the result of service.”
So what does he mean by “service”, which has a curiously old-fashioned ring to it?
His second point is this – “It is the function of business to produce for consumption and not for money. Producing for consumption implies that the quality of the article produced will be high and that the price will be low – that the article be one that serves the people and not merely the producer.” This echoes Bruce Henderson’s great point – business should keep reducing the price of its goods through continual cost reduction.
The new guru’s third point is even more vital. Business is all about the product or service. If you can’t make great products, don’t bother. “People seem to think that the big thing is the factory or the store of the financial backing or the management. The big thing is the product.”
He says you should spent years and years perfecting the product or service before you launch it. His advice is not to even “try to produce an article until you are fully satisfied that [its] utility, design, and material are the best.” Keep on searching until you are 100% confident that the product is wonderful.
That’s what he did, and it cost him a lot. (Oh, didn’t I mention that this man is not just a writer, but also a doer. He is one of the most successful entrepreneurs of our time and his firm made him one of the richest men in America. In February 2008, Forbes estimated his fortune at $188 billion.) But when the product was launched, it took the world by storm.
Once launched, he kept improving the product, making it more sophisticated and also cheaper and simpler.
And simplicity is his fourth and final point. The product must be as simple as it possibly could be. “Real simplicity,” he says, “means that which gives the very best service and is the most convenient in use.” As unnecessary features are eliminated and necessary features are simplified, the cost of the product comes down enormously. So the product should be simple in two ways – simple for the customer to use, and simple for the supplier to make.
Everything else is beside the point.
So have you guessed who my new guru is?
His name is Henry Ford. The book? My Life and Work, published in 1922.
Ford had an unattractive side. At one time he employed 50 investigators in his “Social Department” to snoop on employees and check that their private lives were blameless. He also wrote nastily about the Jews. And in the 1920s, he refused to update the Model T Ford – in direct violation of what he had written on innovation – and lost most of his market as a result.
So what a pity that this writer was also a powerful industrialist. If he had stuck to being a guru and launched himself on book promotion tours, he would have been fondly remembered and perhaps even more influential than he was.
But whatever the dark side of Henry Ford, remember his four points. I haven’t seen as good a management philosophy from any writer, or one so succinct. Do as he says and you too can change the world.