History Ain’t Bunk

Studying history is a humbling experience, especially for those of us who make our living helping clients navigate changing times. History shows us that change was obvious, no matter how inevitable it may appear in hindsight. More specifically, the pace of change can be either explosively fast or so slow as to be unnoticed until it reaches an inflection point. Here are two of our favorite history books that offer relevant, timeless lessons:
The Anatomy of a Business Strategy: Bell, Western Electric and the Origins of the American Telephone Industry” by George D. Smith is a bland title for one of the most important technology stories of the last 200 years. Originally formed to license Bell’s technology to independent manufacturers, the Bell Telephone Company felt compelled within a few years to do its own manufacturing when its licensees failed to produce enough reliable, cost-effective equipment. This decision resulted in the purchase of Western Electric, enabling Bell to secure manufacturing capacity and quality. Far more importantly, this decision led to Bell’s strategy of controlling the leasing of its equipment, a strategy which drove the company’s success for a century. The rise of the Bell Telephone Company into a vertically-integrated telephone monopoly appears pre-ordained in retrospect, but it was hardly so. The company’s success hinged on a few strategic decisions that turned out to be prescient, and a good deal of luck, including Western Union settling various claims against Bell and exiting the telephone business. This book is 25 years old, but timeless as a business case.
Make a list of the most-disruptive technologies of the 20th century and it probably won’t include the shipping container – but it should. “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger” by Marc Levinson chronicles this complex and unlikely story. Containers had been tried on and off by various individual shipping lines, but it took a trucking magnate, Malcom McLean, to revolutionize sea and land shipping by envisioning the container as a standardized, interchangeable component across both modes of transport. McLean’s ambitious vision took in the whole transportation system from end to end, resulting in radical changes to ports, loading systems, ship design, labor, and even government regulation. In the decade following McLean’s brainchild in the mid-1950s, the shipping container drove down the cost of shipping by 90 percent and enabled companies to put their factories where labor was cheapest, not necessarily near customers or near ports. The shipping container was a key technology driving “inevitable” globalization, but Levinson’s book shows that it took McLean’s combination of vision, ruthless ambition, engineering, salesmanship, and leveraged buy-out pioneering to pull it off.

About Lee Greenhouse

Longtime strategy consultant focused on the business of information content, applications, and services.
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