After spending time as a machinist’s apprentice, a watch repairer and a mechanic, Henry Ford built his first car in 1896. Initially, Ford was fascinated by the mechanical possibilities and drove racing cars.
Quickly he became convinced of the commercial potential and started his own company in 1899.
Through innovative use of new mass production techniques, between 1908 and 1927 Ford produced 15 million Model Ts. In 1919 Ford resigned as the company’s President with his son, Edsel, taking over. By then the Ford company was making a car a minute.
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y Life and Work was published in Henry Ford’s sixtieth year when he bestrode the modem industrial world like a colossus. It is a robust account of his life and business philosophy. Indeed, it is notable for the dominance of the former and the lack of the latter.
Ford’s business thinking is simply expressed: ‘Our policy is to reduce the price, extend the operations, and improve the article,’ he writes. ‘You will notice that the reduction of price comes first. We have never considered any costs as fixed.
Therefore we first reduce the price to the point where we believe more sales will result. Then we go ahead and try to make the prices. We do not bother about the costs. The new price forces the costs down. ‘The more usual way is to take the costs and then determine the price, and although that method may be scientific in the narrow sense; it is not scientific in the broad sense, because what earthly use is it to know the cost if it tells you that you cannot manufacture at a price at which the article can be sold?’ Ford’s commitment to lowering prices cannot be doubted. Between 1908 and 1916 he reduced prices by 58 percent – at a time when demand was such that he could easily have raised prices.
The above extract from My Life and Work was quoted by Ted Levitt in his article ‘Marketing myopia’ (1960). In it, he provides an unconventional interpretation of Ford’s gifts. ‘In a sense Ford was both the most brilliant and the most senseless marketer in American history. He was senseless because he refused to give the customer anything but a black car. He was brilliant because he fashioned a production system designed to fit market needs. We habitually celebrate him for the wrong reason, his production genius. His real genius was marketing . . . mass production was the result not the cause of his low prices.’
Ford’s masterly piece of marketing lay in his intuitive realization that the mass car market existed – it just remained for him to provide the products the marketwanted. In man-
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agement jargon, Ford stuck to the knitting. Model Ts were black, straightforward and affordable. At the center of Ford’s thinking was the aim of standardization – something continually emphasized by the car makers of today though they talk in terms of quality, and Ford in quantity.’ I have no use for a motor car which has more spark plugs than a cow has teats,’ said Ford. The trouble was that when other manufacturers added extras, Ford kept it simple and dramatically lost ground.
The company’s reliance on the Model T nearly drove it to self-destruction even though at one time Ford had cash reserves of $1 billion. Henry Ford is reputed to have kicked a slightly modified Model T to pieces such was his commitment to the unadulterated version. The man with a genius for marketing lost touch with the aspirations of customers.
More conventionally, Ford is celebrated – if that is the right word – for his transformation of the production line into a means of previously unimagined mass production.
Production.’ in the Ford company’s huge plant, was based round strict functional divides – demarcations. Ford believed in people getting on with their jobs and not raising their heads above functional parapets. He did not want engineers talking to salespeople, or people making decisions without his approval.
In My Life and Work Ford gives a chilling insight into his own unforgiving logic. He calculates that the production of a Model T requires over 8,0000 different operations. Of these 949 require ‘strong, able-bodied, and practically physically perfect men’ and 3,338 require ‘ordinary physical strength’.
The remainder, says Ford, could be undertaken by ‘women or older children’ and ‘we found that 670 could be filled by legless men, 2,637 by one-legged men, two by armless men, 715 by one-armed men and 10 by blind men’.
With characteristic forthrightness, management and managers were dismissed by Ford as largely unnecessary.
‘Fundamental to Henry Ford’s misrule was a systematic,
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deliberate and conscious attempt to run the billion-dollar business without managers. The secret police that spied on all Ford executives served to inform Henry Ford of any attempt on the part of one of his executives to make a decision,’ noted Peter Drucker in The Practice of Management (1954). Ford’s lack of faith in management proved the undoing of the huge corporate empire he assembled. Without his autocratic belligerence to drive the company forward, it quickly ground to a halt.
Even so, Ford’s achievements are not in doubt. ‘In some respects Ford remains a good role model,’ says Ray Wild, principal of Henley Management College. ‘He was an improviser and innovator, he borrowed ideas and then adapted and synthesized them. He developed flow lines that involved people; now, we have flow lines without people, but no-one questions their relevance or importance. Though he is seen as having de-humanized work, it shouldn’t be forgotten that he provided a level of wealth for workers and products for consumers which weren’t previously available.’ Among his many innovations was a single human one: Ford introduced the $5 wage for his workers which, at that time, was around twice the average for the industry.
Ford will never be celebrated for his humanity or people management skills. But, in the realms of business, he had an international perspective which was ahead of his time. His plant at Highland Park, Detroit, produced – the world, not just the US, bought. Also, Ford was acutely aware that time was an important competitive weapon – ‘Time waste differs from material waste in that there can be no salvage,’ he observed. Ford’s business achievements and contribution to the development of industrialization are likely to be remembered long after his theories on politics, history, motivation or humanity.