You know, I was rereading My Life and Work by Henry Ford lately. It’s one of my favorite philosophical books, in what it says about business and the art of service. Since I’ve run a small software development business for a while now, business is something I’ve thought about a lot.
Henry Ford says that first and foremost you must serve your customer. Your product must be excellent and suit the customer’s need, it must be robust and repairable, for whatever measure of repairable it is, and it must last forever. It should not be something designed only to extract as much money from the customer as he can pay, for that is how you run a business into the ground, for in the end there will be no more money to extract. He says that once you have achieved this product, then you must standardize the process, and make it as efficient as possible, not by mistreating your employees or cutting slack for temporary gain, but by achieving real efficiencies.
In the end, a business must serve its workers and its customers, and the profits will follow, is the philosophy of Ford. When reading his books, it’s interesting to see how the Lean philosophies were followed and almost presented by Ford: tireless commitment to cutting slack in production, letting workers halt production and be able to raise concerns directly in a flat management structure, a commitment to quality for the customer and continual growth in output. Reading his books makes one utterly question the modern basis of American business and business courses. Value for the shareholder is all very good and well, but in the end, a business is paid by its product, not by how much it can shake down from rich people, and it will survive by its product alone. Workers are not paid by management, but by the product they produce - if the product is of high quality and sells well, the workers should get high wages because there is money enough to pay wages. Similarly, in the end, managers, shareholders, and vendors are all paid by the product. The product and thus the customer is king.
Ford further goes on to say that he distrusts most finance for this reason, since it doesn’t seem to be driven by a product, and more often than not seems to be fleecing people. I’m not sure I entirely agree with this, as capital allocation is a fundamental part of an industrial economy, but I agree that a business should not just be focused on making as much money as possible in the shortest time. Craftmanship is as important.
I feel, however, that this form of responsible business has had a bit of a renaissance lately, with ever more visionaries in charge of companies. The previous century of financial excess seems to be on the point of being curtailed by the aftereffects of covid and in the brave new world that we seem to be going into, more and more business seems to be rediscovering the virtues of community.
I think that in 2084, a lot more business will therefore be local. We will return to a form of Mercantilism, with a lot more internal trade among blocks and a lot higher tariffs on trading outside. There will be less fake profit, and hopefully more real gains. Ford will become more important, than Jack Welch’s shareholder value at all costs. A lot of business will be more decentralized, with a lot more happening in each country, rather than across many countries, as we’re already seeing happen with the CHIPS act. I think, however, that the lessons learned from the venture capital world of capital allocation, to allocate more capital to longshots, big dreamers, and odd visions, will however still be more around, and that therefore this increasing decentralization could be an opportunity for more and more people to get involved in business on an equal and fair way. Especially if AI makes it easier to do business by doing more thinking for you.