Christine B. Bartolata

A 2000-word essay on the film/documentary “The Men Who Built America” as it relates

to competition and the technological bubble

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A Reaction to “The Men Who Built America”

The documentary, “The Men Who Built America” told a story of five titans, mavericks, entrepreneurs who have transformed America from a destructive state after the civil war into the richest and most formidable nation in the earth. They are Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, JP Morgan and Henry Ford. They are the pioneers in their fields and are pillars of the American Dream.

Some of the ideas narrated in the story include:

(1) The nature and characteristics of the entrepreneurs; (2) The evolution of innovation from technology-push to integration of processes and to

open innovation bringing in the new breed of entrepreneurs; and (3) How important is competition in driving innovation.

In order to get huge pay-off, you have to start taking risks. Entrepreneurs if not all, are risk-takers and this attitude sets them apart from all other hopefuls. Everyone has ideas but not everyone will act on them and put the greatest effort to make them happen. Most people regard risk-taking behavior as a bad thing that could result to millions of losses but what they fail to realize is that the characters of Rockefeller and Henry Ford are risk takers because they have a vision – they see the future and they are passionate about making a positive difference. When Rockefeller first discovered what oil could do, he’s not only looking at it from a scientific perspective but he is envisioning a means to an end, of building an industry, creating jobs, powering railroads and essentially

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improving our way of living. When Henry Ford proposed more affordable automobiles for the masses, he was making transportation available to everyone not just the elite. He was challenging the status quo and defying the assumptions and he was willing to risk everything for that chance.

John D. Rockefeller was a revolutionary entrepreneur. He was always ahead of the game and was always aware of what was happening in his environment. He came from a humble beginning and built an empire on his own. The powerful likes of Vanderbilt and Carnegie did not sway Rockefeller from maintaining his dominance. In the end of it all, Rockefeller was charged due to his hostile takeovers and manipulating his competitors however there is no doubt that he has mastered the skill of being innovative. Unlike Vanderbilt who got stuck in the railroad bubble, Rockefeller continued on to discover a new way of using oil as gasoline when he faced the same plateau. This is what turning a threat into an opportunity means – taking all the challenges as motivation to exert double work instead of giving up and succumbing to fear.

The documentary also implicitly highlighted the change in discourse of the innovation process from Vanderbilt after the war to Henry Ford pioneering what was considered then a new breed of entrepreneurs. It all started with the 1st generation of innovation that is a technology pushed and driven by scientific discovery. Example of this would be Rockefeller’s discovery of oil and extracting kerosene as a source of light; Carnegie’s discovery of the strength of steel not just to manufacture small objects but ultimately as skeletons of the biggest skyscrapers and longest and strongest bridges in America; JP Morgan harnessing Thomas Edison’s discovery of electricity with direct current (DC) to power the city and eventually the use of alternative current (AC) as the dominant source of electricity and so on. The first generation model has linear sequential process with emphasis on research and design. As years go by and more inventions were commercialized as well the downpour of competitors, the innovation process became more advanced and are now utilizing parallel developments and strong upstream supplier linkages. Such was the case when two competitors, Vanderbilt and Rockefeller joined forces to expand the reach of kerosene by having the former’s railroads deliver them to various corners of America. The next phases showed new characteristics of the innovation model that has increased focus on quality and other non-price factors i.e. when deciding whether DC or AC will be the dominating source of electricity. It wasn’t

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just the price that was considered but also the efficiency level, the costs of building the infrastructure and the maintenance of the technology in the coming years. Henry Ford is a great example of what would become the ideal market leader in the next decades. In manufacturing Ford automobiles, there was stronger focus in the internal organization in order to maximize profits and decrease inventory turnovers. He introduced the use of assembly line as a core competency in producing the parts and machine of his cars. Ford represented the fifth generation of innovators who was not only expert on systems and simulation modeling but also someone who realized early on, the advantage of having strong linkages with leading edge customers, emphasis on corporate flexibility and speed of development, strategic integration with primary suppliers and for the lack of a better word, a sustainable work-life balance for his workers. This became the standard way of doing business and was widely applied in almost all types of industry.

Competition IS the Name of the Game

Competition is more positive than it is negative. For many years after the civil war, monopolists ran America and created a huge divide in class and income. Workers were dispensable and only the rich became richer while the poor became even poorer. Because competition challenges businesses, the focus is shifted from the masters to pleasing the customers. Business leaders must always think of doing things more effectively. Having competitors in the market also provides workers a second choice and this triggers companies to take a step back and also improve the quality of their employees’ lives. It’s a win-win-win scenario and only those who remain innovative, who remain passionate and who remain creative will sure to stand the test of time and bring the society and economy forward. It is a state of mind. To quote Jack Welch, a former CEO of GE, “Innovation is not a big breakthrough invention every time. Innovation is a constant thing. But if you don’t have an innovative company, coming to work every day to find a better way, you don’t have a company. You’re getting ready to die on the vine.”

In so many ways, the documentary has outlined some of the most important strategies and procedures that many of the high-tech firms are utilizing today in order to create their business and succeed. It is evident in the documentary the concept of ‘go big or go home’. In the high-tech environment, the product life cycles are short, competition is

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fierce and adoption is very steep. If you are an aspiring entrepreneur but do not portray the necessary qualities and the drive to win, there will be no place for you in the industry. Some of the issues discussed in the documentary include the problem brought forward by monopoly, the trickery of getting stuck in the bubble and patenting of inventions.

Monopolies impede technological advance. As seen in the documentary, monopolies enable the biggest companies to control profits and dictate prices. This is not to say that had there been no monopoly, kerosene, steel, railroads, electricity and automobiles would not be discovered at all. It is to say that these things are still possible with time and if there had been more competitors, growth of middle class would have been faster and there could have been better life for the workers. Monopolies do not have the incentive to conduct R&D because they are already dominating the market and are gaining huge profits regardless if they have the necessary funds to do so. Why fix what isn’t broken? Instead, monopolies hold back on offering or using other viable technology mostly because of the very large expenditures might be necessary to apply the new technology to the production equipment or products; such expenditures might provide little benefit to the monopolist and might merely cut into its profits. This is known today as the Innovator’s Dilemma. Another one is that it may make the products so efficient that users will need to spend less on them (e.g., products that are more durable and thus will not have to be replaced as frequently). In addition, a monopolist may want to wait to incorporate newer technologies only in the newest versions of products and thereby put pressure on users to upgrade at additional expense. Rockefeller has been accused of buying out smaller oil refineries in order to gain 90% of the entire industry by using his influence with other companies to discourage such companies, as well as companies doing business with such companies, from developing or supporting technologies that are potentially competitive. At one point, Rockefeller, JP Morgan and Carnegie even resorted to buying their way into the government in order to maintain their power. Government agencies can have a great deal of influence in the direction of technological development and utilization both through their purchasing decisions and through their funding of research and development projects.

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Getting Stuck in the Bubble

In this case, technological bubble is one of the reasons why some businesses fail. When the railroad business of Vanderbilt took off, everyone who has money wants to have a piece of the market. Eventually, railroads were overbuilt and there are more railroads that there are cargos to export and the cost of maintenance and labor are so high that the earnings can no longer cover them. This drives market price to go down and before you know it the bubble has popped and companies went out of business, people were unemployed and the economy came crashing down. One of the most efficient ways in coming up with innovations in order to prevent getting stuck in the bubble is conducting market-driven strategies. Some people underestimate the power of consumers that they resist and focus solely on their products. In recent years, the companies that are repeatedly the most successful in the marketplace with their new product developments are those that proactively adhere to the needs of the consumers, the ability of the technology to be adopted fast and the differentiation strategy and branding.

In a literature by Shikhar Sarin, “From Market Driven to Market Driving: An Alternative Paradigm for Marketing in High Technology Industries, he demonstrated various ways and level by which market leaders can use as successful routes to defy tech bubbles (Sarin, 2014). Strategies can include strengthening your core competencies while getting rid of the rigidities, formatting strategic alliances with your supplier, manufacturer and distributors and investing time and money promoting the products and educating the mainstream on its benefits. The company should also ensure that not only are they able to deliver the product but also has post-purchase services such as customer services, technicians, and agents that will be able to assist them when they needed.

1. Redraw Industry Boundaries.• Rescale the industry• Compress the supply chain• Drive Convergence

2. Redefine the Market Space• Push the bounds of universality• Strive for individuality• Increase accessibility

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3. Reconceive a Product or Service• Radically improve the value equation• Separate function and form• Achieve joy of use

Patenting can also become an issue in pursuing an invention. This was a significant hurdle for Henry Ford when he was about to sell his automobile for the masses. The process is rigorous and if the royalties are high, there is a chance that the business will fail faster that they could pay. It impedes advancement in technology in a way because it discourages start-up companies due to huge fees. On one hand, to advance technology and put forward commercially viable products, business leaders need to be speaking to one another and working together. Even though a company may own the right to a research tool, the company may still need to rely on studies conducted in the field. In this regard, the paten system allows people to keep one another informed of scientific progress. On the other hand while the patent system may not hinder research, the lack of patent protection especially for technologies in the life science and biotechnology industries may be harmful to many companies. The ability of companies to obtain paten protection for their assets directly impacts the ability of those companies to secure investments. It was true then and is still true still.

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