The Art of Business Wars

David Brown

• Publisher: Harper Business
• Year: 2021
• ISBN:
  9780063019539
• Topic: Negocios y empresa
• Subtopic: Historia empresarial

Based on the chart-topping Business Wars podcast, stories and lessons from history's greatest business rivalries. Using Chinese military genius Sun Tzu's strategies as a guide, Brown examines why some companies triumph while others crumble. Business is a fight for survival. In business as in war, leaders match their wills in pursuit of opposing outcomes, they devise strategies, and marshal resources for victory. Success can turn on the smallest of details; a single tactical blunder can topple an empire. Ultimately, one side triumphs—and victory is all that matters.

David Brown, host of the hit podcast Business Wars, masterfully frames some of the biggest business rivalries in history using revered Chinese military strategist Sun Tzu's insights and pragmatic advice. Each rivalry he examines tells a story of combined wits, strategies, and resources. Brown chronicles the rise of companies as they vanquish rivals, formulate innovative plans, and adapt to keep up with shifting societal needs. The goal? Stay ahead of the competition and emerge victorious as an industry titan.

By compiling powerful insights uncovered over hundreds of episodes and more than a year of in-depth research, Brown has developed a formula for business intrigue that uses popular history as a hook to lure readers in. The stories in The Art of Business Wars are fascinating, but the lessons we draw from them—about determination, ingenuity, patience, grit, subtlety, and other traits that contribute to a victorious enterprise—are invaluable, whether you're a software-slinging freelancer or the CEO of a multinational manufacturer.

1

Entering the Battlefield

The general who wins a battle makes many calculations in his mind before that battle is fought.

—Sun Tzu, The Art of War

Every great business begins in the same place: nowhere. There is never anything more than the sketch of an idea, a vision for what might be. It doesn’t matter whether it’s laid out in a blueprint, scribbled on a cocktail napkin, or, in some cases, inspired by a competitor. Sparked by sudden insight or developed through years of research, a new business idea is just an objective, an X on the map. You still have to fight to capture that piece of ground—and win. The war begins when an entrepreneur takes the seed of an idea and makes it a reality. In the marketplace, no ground is ever surrendered willingly. No matter how remarkable the innovation, a business can never triumph without toppling the status quo—and those competitors perched comfortably on top of it.

Be skeptical when you read the myth-making autobiographies of famous entrepreneurs. It’s too easy to downplay the role that luck and timing play when recounting your own origin story. To identify universal truths, it’s better to compare and contrast different examples from throughout history. What are the common elements of a successful launch, the ones that appear time and time again? Just as important are the lessons of great ideas that failed to take root—at least, until the timing was better, or a more skilled entrepreneur carried them into the field of battle.

The struggle to break through with the new is, in fact, nothing new. Even coffee, that life-giving elixir, had a rough introduction. When the Venetian botanist Prospero Alpini introduced the use of coffee to Europe from Egypt, the Vatican advocated against its infernal influence. That is, until Pope Clement VIII tried the foreign brew, loved it, and gave coffee his blessing. (In the end, the Italians turned out to be pretty big fans.)

If you have a wild idea and a burning desire to make it a reality, never expect a warm welcome. Change of any kind threatens the establishment, and the greater the change, the greater the resistance. So think ahead: Who are the key players? Who stands to lose if you gain? The impact of a new product can be hard to predict. It can lead to unexpected, far-reaching consequences. Before you take a single step, map the battlefield thoroughly. Make sure you really understand the size of the fight you’re about to start.

Henry Ford Thinks Bigger: The Model T

It’s 1:30 a.m. on June 4, 1896. Yawning, Henry Ford sits back from the contraption in front of him and stretches to get a kink out of his neck. Looking around the small brick shed he’s been using as a workroom, he realizes with satisfaction that he’s done. After two years of tinkering and experimentation, he’s finally finished the job he set out to do as best he could, just as his mother always insisted. Ford can’t say he’s tired exactly, but he certainly should be. Once again, he’s spent all evening putting the last touches on his new invention after a long day on the job as an engineer at the Edison Illuminating Company. Ford’s wife, Clara, and their son, Edsel, must be fast asleep by now. Did they come in to say good night? He can’t remember. The man who’s been assisting him on this project, James Bishop, is clearly just as tired. Bishop is sitting on a nearby stool, nodding off. It’s been a long night.

In front of Ford in that quiet shed sits a five-hundred-pound mechanical vehicle he’s decided to call the Quadricycle. It sits on four bicycle tires, so the name makes sense. No frills, all function—the way everything should be. Easier to repair and easier to replicate that way.

For all the mechanical complexity of its two-cylinder internal combustion engine, Ford sees the two-seat vehicle in front of him as a straightforward thing: more of a prototype than a product. When you’re trying to get a new idea out, it makes sense to keep every element as simple as you possibly can. And he’s been trying to get this particular idea out since he was a boy, when he first saw a steam engine pulling a farmer’s cart down the road. A “horseless carriage.” Now he’s built one of his own. Sort of.

Ford’s friend Charles King recently tooled around Detroit in his own wooden, four-cylinder-engine vehicle. He made it up to five miles an hour—could the Quadricycle beat that? Other, similar projects are under way around town. Ford has been hearing interesting noises coming from Europe, too. No one can guess what these machines are going to look like in their final form, or exactly how they’ll fit into everyday life. Right now, they remain strictly the province of hobbyists. But Ford knows, deep in his gut, that they won’t stay that way for long. Right now, there’s camaraderie among the tinkerers. King even helped Ford out with his Quadricycle. But this open and collaborative spirit won’t last. There’s business to be done. The Quadricycle isn’t going to replace horse-drawn carriages. But some future iteration will, and the entrepreneur who builds that model will change the world—and leave a generation of competitors floundering in his wake.

Ford looks around the shed. It’s awfully late. And the machine will be awfully noisy. But he really ought to take it out for a test drive . . .

* * *

Henry Ford was born in Michigan on July 30, 1863. His father, William, immigrated from Ireland in search of cheap farmland. He and his wife, Mary, had found more than a hundred acres of it just outside Detroit. Growing up, Henry and his seven younger siblings helped work the farm, but Henry had no appetite for agriculture. He struggled academically, too, though math came easily enough. Even as a child, mechanical devices consumed Henry’s attention. He tinkered constantly, disassembling his siblings’ windup toys and scrutinizing the workings of any mechanical object he could get his hands on.

On Saturdays, the Fords would go into Detroit to do their weekly shopping. Henry was mesmerized by the paddle steamers on the river and the other steam-powered marvels appearing with increasing frequency around the city. Change was in the air in Detroit, which had already become an epicenter of American innovation. But eventually his parents would finish their shopping and they would all return to the farm, which must have felt like a form of time travel for Henry—backward into the distant past.

Knowing Henry’s consuming interest with mechanical devices, a family friend gave the boy an old, broken watch as a plaything. Henry ground a metal nail into a makeshift screwdriver, disassembled the mechanism to understand how each piece functioned, and then reassembled it in working order. This feat drew the attention of the neighbors, who began bringing their own broken timepieces to the Ford house for repair. Henry improvised an entire toolkit for himself out of knitting needles and other household items and started earning extra money that way. Maybe he could avoid the drudgery of farm work after all.

Ford’s obsession with mechanical devices only deepened at the age of thirteen when his mother, always proud of her “born mechanic,” died after another childbirth. Mary Ford had always encouraged Henry to find something he was good at doing and then devote himself to doing it as best he could. After her death, Ford made this his mission moving forward. It was around this time that Henry first witnessed a farmer using a steam engine to pull a cart of produce into Detroit. That noisy, coal-burning contraption was the first vehicle other than a horse-drawn carriage that he’d ever seen. Steam was already being used to power farm tools, but this engine-driven cart suggested the possibility of being tirelessly conveyed from one place to another with no fundamental limit on speed or distance. It captured his imagination. “It was that engine,” he later said, “which took me into automotive transportation.” The farmer was friendly enough to let Henry ask questions and inspect the engine itself. Disassembling it out on the road, of course, was a nonstarter.

At sixteen, Ford went into the city to find work as a mechanic. He got a job in a machine shop, supplementing his small income by repairing watches in the evening. Less than a year later, Ford left the machine shop for an apprenticeship at a shipbuilding company, where he had the opportunity to work on different kinds of power plants. Ford lived and breathed engines and other machines nearly every minute of the day for three years. Eventually, he returned to the family farm, where a neighbor hired him to run a steam engine that cut corn, sawed wood, and performed other labor-intensive farming tasks. When the Westinghouse Engine Company learned about Ford’s aptitude with engines, it hired the nineteen-year-old mechanic to service its products around southern Michigan.

In 1891, now married and ready to settle down, Ford and his wife, Clara, moved into an apartment in Detroit, where he went to work as an engineer for George Westinghouse’s rival, Thomas Edison, at the Edison Illuminating Company. Just after their son, Edsel, was born in 1893, the company promoted Henry to chief engineer. Even as his duties at work and in the home pressed in on him, however, Ford found the necessary drive to continue tinkering on his own projects long into the night. Like many of his contemporaries, including Ransom Olds, David Dunbar Buick, and the Dodge brothers, John and Horace, Henry Ford wanted to build a self-powered carriage using an internal combustion engine, one that he could manufacture at scale.

The Quadricycle was Ford’s first vehicle to run on an internal combustion engine. Soon after he completed a successful test drive, at four in the morning—his assistant Bishop bicycling ahead to warn any early-morning pedestrians as Ford got the flimsy machine up to a whopping twenty miles an hour—he decided to build a second model. Bigger and tougher, this iteration successfully drove the thirty miles to Pontiac, Michigan, and back. That demonstration got Ford the financial backing to form a manufacturing company, but it went bust in 1900. He got a second operation off the ground, but left after a dispute with his investors. (Those investors salvaged what was left of the company, its engine design and factory, and formed Cadillac, naming it after the French founder of Detroit.) Finally, on June 16, 1903, Ford formed the Ford Motor Company.

In 1903, there were fewer than eight thousand cars on the road. The automobile was still just a rich man’s hobby. Expensive and finicky, the first cars were each built by hand. In fact, Ford’s factory didn’t even make any of the component parts. His twelve employees simply assembled components, including engines, purchased from other machinists around town. When it came to repairs, the lack of consistency meant that replacing a part often required making a new one for the purpose. Ford believed that cars would become essential for nearly everyone, but that would only happen if they could be built quickly and consistently. The first entrepreneur to achieve that would amass an extraordinary, perhaps unassailable, lead. Ford had a vision, but he was up against both the horse-drawn carriage industry and other early car manufacturers. At stake: the future of America’s roads.

Ford’s chief backer in his new company, the coal dealer Alexander Malcomson, was stuck in a horseless-carriage mindset. Malcomson believed that cars would simply replace horse-drawn carriages as a luxurious and expensive conveyance for the rich. Ford disagreed. He wanted to scale production beyond anything his competitors could imagine. He envisioned a light and reliable car that nearly anyone could afford. At the time, this was a shocking notion—everyone owning a car?—but by 1906, Ford had made strides. That year, he produced the Model N. The cost? Six hundred dollars. The Model N was both lighter and sturdier than cars that cost more thanks to Ford’s use of durable and easy-to-machine vanadium steel and his insistence on stripping the design to its essentials. As much car as a person needed and no more.

“I believe that I have solved the problem of cheap as well as simple automobile construction,” Ford told the press.

But even as Ford was getting closer to realizing his vision, Malcomson kept trying to steer the company along a different road. Nor was Ford going to succeed as long as he had to rely on others for his parts. In 1905, Ford used a new strategy to solve both problems at once: vertical integration. To dominate automobile manufacturing, Ford needed to be able to act decisively and unilaterally, with total control over every aspect of production. Toward this goal, he formed the Ford Manufacturing Company, a separate entity, to make his own engines. This move also had the benefit of diverting to Ford Model N profits that would otherwise have gone to Malcomson, allowing Ford to buy the coal dealer out. With full control of his company, Ford absorbed his engine-manufacturing company, and then acquired a steel mill to boot, allowing him to make other key components like axles and crankcases. The move was a masterstroke. Now Ford could manufacture every component of his automobiles to his exacting specifications and in the manner he saw fit.

* * *

The concept of the assembly line might seem obvious in retrospect. So do most great innovations—with the benefit of hindsight. When entering the battlefield, however, a leader is presented with an enormously complicated and nuanced picture where even so-called obvious solutions can be hard to identify. It takes an extraordinarily deft mind to look at what every competitor is doing, identify the flaws, and forge ahead in a better direction.

The problem Ford faced was complexity itself: car companies expended enormous effort in training workers to make the whole vehicle, which involved locating and fitting together hundreds of parts by hand to assemble a single automobile. The task required a great deal of mechanical aptitude. Some employees took to the challenge, but they were hard to find. Most struggled, and therefore assembly was slow and inconsistent. Even the smallest mistake—say, misjudging the tightness of a nut—could lead to malfunctions and even accidents. The only thing manufacturers could do about any of this was throw more people at the problem, or urge everyone to work harder than they already did.

Ford knew that something fundamental would need to change about how cars were assembled. But what? As inventors often do when seeking a new paradigm, Ford turned to analogy. For all its extraordinary complexity, a mechanical timepiece operates with startling efficiency, hundreds of tiny pieces smoothly interacting in specific ways to produce a single outcome—the tick of a second—over and over with near-perfect regularity. Ford found himself wondering: What if an automobile factory operated like a clock, with each step in the production process feeding into the next like a series of interconnected cogs? With the factory floor organized like a watch, a worker would only be responsible for performing a single step of the manufacturing process. With minimal training, anyone could learn a single action and then perform it the same way over and over. If a step in the manufacturing process needed to be modified—and just about every step needed tweaking over time—it would only require retraining a single worker instead of an entire workforce. A factory designed like a watch would be precise, consistent, and fast. Potentially very fast; once the process was “automated,” it would be easier to accelerate it. Just like a car.

Ford’s efforts to create what he eventually dubbed the “integrated moving assembly line” were not linear. He didn’t begin with a blueprint. If he’d waited until he’d dreamed up something perfect, he would never have started. Instead, he made a practice of studying his production line, looking for ways to shave even a second off the process of turning raw materials into a fully functioning Ford motorcar. These “time-and-motion studies” helped optimize the flow of production, though Ford was still hamstrung by the limitations of the factory space.

Ford’s obsession with minute details must have frustrated his employees, but that was nothing new for him. Even before he started test-driving his Quadricycle around town in the middle of the night, Ford had been dismissed as a crazy tinkerer by the neighbors. He’d come to accept that no one would understand, let alone praise, what he was trying to accomplish with his factory. He knew he was creating something that had never before existed. A century later, Jeff Bezos would famously say that Amazon is “willing to be misunderstood for long periods of time.” Henry Ford was equally willing.

On October 1, 1908, Ford released his follow-up to the successful Model N: the Model T, the car that made automobiles affordable for millions of Americans and changed transportation forever. The Model T represented a leap forward in efficient and reliable car design. But Ford’s extraordinary feat had as much to do with his engineering of the production process as it did with his engineering of the car itself. His continual honing of the assembly line caused the Model T’s price, which started at the equivalent of under $24,000 today, to steadily drop during its years of production, reaching the equivalent of less than $4,000 by the end of its run in 1927. Each time the price dropped, more people could afford one, until an extraordinary 15 million Model T cars had been sold, making them a ubiquitous sight on America’s roads.

In 1910, Ford opened a sixty-two-acre manufacturing plant in Highland Park. Now he would have the freedom to design the operation from the ground up for maximum efficiency. Modern mass production as we know it took shape in the Highland Park factory, although for many years the approach was known simply as Fordism. As Fordism evolved, production time of a single car dropped from over twelve ho...