Founders - #118 Forty Years With Henry Ford

Episode Date: March 31, 2020

What I learned by reading My Forty Years With Ford by Charles Sorensen.----Come see a live show with me and Patrick O'Shaughnessy from Invest Like The Best on October 19th in New York City. Get your tickets here! ----Subscribe to listen to Founders Premium — Subscribers can listen to Ask Me Anything (AMA) episodes and every bonus episode. ---Henry Ford’s greatest achievement and his greatest failure [0:01]Henry Ford had one, single idea [4:15]Henry Ford’s management style [5:46]The paradox of Henry Ford [8:27]Henry Ford’s greatest advisor [11:30]A great story about The Dodge Brothers [16:20]Why and how Henry Ford bought out all of the shareholders of Ford [19:15]Henry Ford would tell you to not divert your attention [27:15]Henry Ford would tell you to not be afraid [28:20]Henry Ford would tell you to be firm in what you want to accomplish but flexible in how you do it [31:45]Why Henry Ford and The Ford Motor Company are worthy of study [36:20]The difference between a pioneer and an expert [39:45]Henry Ford would tell you not to worry about titles [47:40]Henry Ford would tell you to focus on individual contact over collective speeches [49:52]Henry Ford would tell you don't let your team grow stale [50:10]Henry Ford would tell you that you can’t foresee everything. Even things that should be obvious. [50:50]Henry Ford would tell you to never stop learning [51:32]A description of Detroit and the early days of one of the most important industries ever created [55:14]The story of the Model T: Henry ford was groping and fumbling toward a low-cost car. [59:14]---“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested, so my poor wallet suffers.”— GarethBe like Gareth. Buy a book. It's good for you. It's good for Founders. A list of all the books featured on Founders Podcast. ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

Henry Ford's greatest achievement was changing the face of America and putting the world on wheels. His greatest failure was his treatment of his only son, Edsel. And this treatment may have hastened his son's death. Henry Ford wanted Edsel to be like him. But what he forgot, or ignored, was the fact that his father wanted Henry to be like him. William Ford, Henry's father, was a strong-minded domineering farmer who did all he could to make his son Henry become a farmer. But Henry hated farm work, which accounts for his later interest in farm machinery. Henry wanted to, and did, live his own life, and that is what he would not accept and understand in

Edsel. Although Edsel was a more dutiful son than his father had been, he might have had an easier life, and probably a longer one, had he deferred more to the elder Ford and his ideas. In two important respects, Edsel was like his father. He was an individualist who wanted to live his own life. And like his father, nothing could move him once he decided upon a certain course that he felt was right.

His decisions, though, were unlike his father's. The elder Ford was guided by hunches and intuition. Edsel reasoned out his problems after listening to the opinions of others. He wouldn't compromise between what he thought was right and wrong, but he would seek adjusted agreement between extremes. What Henry Ford was unable to realize

was that his son could not be a second edition of himself without being a mere copy of the original. Okay, so that's an excerpt from the last chapter of the book that I'm going to talk to you about today, which is My 40 Years with Ford, and it was written by Charles Sorensen. That chapter, interestingly enough, is called Henry Ford's Greatest Failure, and it goes into great detail the tragedy that Charlie, as we're going to call him today, witnessed with the breaking down of the father son relationship between Henry Ford and Edsel Ford. Before I jump into the book, as a reminder, this is the fourth book that I've read about Henry Ford and the fourth podcast that I've made about Henry Ford. So you can if you haven't done so already, you can learn more from Henry Ford by listening to Founders number 9, number 26, and number 80. Okay, so I want to start with an

introduction to Charlie. This is David L. Lewis writing in the introduction of this book. David worked at Ford for over a decade and is now a professor of business history. And so he says, Charlie claimed to have known Henry Ford better than any man dead or alive. Henry Ford used to say Charlie could smell what he wanted. Summing up Charlie in 1970, the famous aviator Charles Lindenberg, who came to know Charlie through the work they did together at the William Run bomber plant when the Ford factory was shut down. They stopped automobile production in World War II so they could make machinery for the war. So this is what Charles Lindbergh had to say about Charlie Sorensen. He said that Charlie was born for another era. He lived in the two-gun days

of American industry and shot it out with the best of them. He was a hard-boiled, hard-fisted fighter and probably would prefer to be known as such. And then this also gives you an indication of why this book is so important and it's so worthy of our time and attention to study. Charlie's book offers a very revealing and most interesting portrait of the auto industry's best known individual, Henry Ford. Serious Ford historians have delved into this book for a So he's right about that. We are delving into this book 60 years after it was originally published. All right, so let's go right into what Charlie has to say about Henry Ford. He was essentially Henry Ford's right-hand man for 40 years.

And I want to start out with something that's repeated over and over again in this book. And it's the idea that Henry Ford had one single idea. So Charlie writes, he says, My story is about the Henry Ford I knew better than any man alive or dead knew him. It is about the fabulous growth and preservation of the Ford Motor Company, So Charlie writes, he says, of the 20th century, the modern American industrial system of mass production with its moving assembly line. I started with him when he had no more security in his job than I had in mine. He had nothing but one single purposed idea, a low-cost car in large quantities. I saw that dream materialize and change the face of America. It was the greatest industrial adventure in history. From a backyard machine shop to a billion dollar worldwide

enterprise and creation of a magic name. So when I read that, that's part of the book, I realized the fact that Henry Ford had one idea and one idea only is one of the most important things to know about Henry Ford, the man, and then Ford the company. It is repeated over and over and over again in this book, but it's also, if you think about it, extremely inspiring when you realize it only takes one idea to change the world and to build a life upon. So Charlie's going to tell us a little bit about Henry Ford's management style. I found this very interesting. He said, during the nearly 40 years I worked for Henry Ford, we never had a quarrel. If we just disagreed on policy or anything else, a quiet discussion settled things. This gives you an insight into who Henry Ford the

person was as well. I don't recall ever receiving a direct order, such as I want this done or do it this way. To that degree, Ford was extremely stubborn and determined and definitely in control of the Ford Motor Company, but he also believed in, I would almost say, extreme decentralization. So he says he got what he wanted by hint or suggestion. He seldom made decisions in fact when I brought a matter up for his approval his usual reply was what are we waiting for go ahead so a lot throughout this book Charlie's so much he reflects a lot because he had a diary the

whole time and so he would journal his thoughts over many decades that he worked with Ford. And this shows up in the book in what I would say is almost like an internal struggle about the relationship. It wasn't quite a father-son relationship. Charlie was 15 years or so younger than Henry Ford. But he very much was, you know, a mentor that shaped Charlie's life. And as if you knew anybody for over 40 years, you're going to realize their imperfections. You can't hide who you are over four decades. And so in this section, we're going to see that he's kind of, he's talking about the futility in trying to understand Henry Ford he says no two men could have been more unlike than Mr. Ford and I we had little in common yet I never saw two other men in any business anywhere who were so close to each other as we were in fact we had a business relationship closer than even his family had

with him and in many ways I knew him better than did members of his own family it was useless to try to understand Henry Ford one had to sense him it's a very interesting sentence he talks about you have to sense him uh then on the in the other direction of the relationship that he could smell what Ford wanted. These are very interesting ways to describe a very close, tight-knit working relationship that spanned essentially half of a lifetime. And so Charlie's going to continue. And in this section, we're going to realize a lot about the personality of Henry Ford, which will make the decisions he made in building the company and building his one single idea kind of makes more

sense in our minds right but at the same time he's going to describe the paradox that is henry ford and before i read this section to you the note i left myself is this not true for all of us like we're full of hypocrisies and contradictions and paradox paradoxes so he says what was henry ford really like he was unorthodox in thought, but puritanical in personal conduct. He talks about he would look down upon people that smoked or drank. He's very adamant that it would affect somebody's work. He had a restless mind, but he was capable of prolonged, concentrated work. He hated laziness, but he had to be confronted by a challenging problem before his interest was aroused. He was contemptuous of money-making, of money-makers,

and profit-seekers, yet he made more money and greater profits than those he despised. He defied accepted economic principles, yet he is the foremost exemplar of American free enterprise. He abhorred ostentatiousness and display, yet he reveled in the spotlight of publicity. He was ruthless in getting his own way, yet he had a deep sense of public responsibility. He demanded efficient production, yet made place in his plant for the physically handicapped, reformed criminals, and human misfits in the American industrial system. He couldn't read a blueprint, yet he had greater mechanical ability than those who could. He would have gone nowhere without his associates. we did the work while he took the bows yet none of us would have gone far without him i think that's a really important sentence to

understand the what makes any company succeed he has been described as a as complex contradictory a dreamer a grown-up boy an intuitive genius a dictator yet essentially he was a very simple man he's gonna talk about more about for its personality that made him specifically this one aspect of his personality that probably was more responsible than anything else in terms of creating a product because you know they sold over 15 million um model t's that's this is in the early 1900s that's that's insane it's an insane number of any product it says it was more it was the great common sense that mr ford could apply to new ideas and his this is the important part, and his ability to simplify

seemingly complicated problems that made him the pioneer he was. So I'm going to get more, I'm going to go into more detail because I like this idea. He uses the word pioneer a bunch to describe not only Ford, but a lot of the people that helped build and were essentially priceless in building in the early days of Ford Motor Company. So remember that word pioneer. We'll get to that in a minute. This is something that people might find surprising, though, and more insight to his personality. And this is the fact. I'm going to go off on a series of tangents here, but I'm going to work my way back to Ford. You'll see why. This is the fact that Henry Ford's wife was his single greatest advisor. So he says social life and a lot of people and having a lot of people around him had no appeal.

He liked to be alone with Mrs. Ford. That's another paradox because he had hundreds of thousands of employees. Henry and Clara Ford were as close-knit and devoted a married couple as I've ever seen. When he would listen to no one else, he listened to her. So, you know, we just got started. You're hearing over and over again these hints about how determined and stubborn Henry Ford was. Again, a lot of the things that make us, that can be our greatest strengths can also be our greatest weaknesses. And there's times in Henry Ford's life that stubbornness, that determination was undoubtedly his greatest strength. And then later in life, it was his greatest weakness.

He relied on her judgment. She had strong opinions about some of his associates. I want to bring one thing to your attention. She had strong opinions on the noisy and boisterous Dodge brothers. They were particular objects of her displeasure. So I'm going to tell you more about the Dodge brothers in a minute. Just remember that. So when you think about this, the fact that she was his greatest, before I tell you the degree and an example of how much he listened to her, even when he thought he disagreed with her, the more I thought about this was the fact, when you study Henry Ford's early life, the fact that she was his greatest advisor later in life is less surprising when you learn more about their early married life, because their early married life was not easy.

They got by with a tiny, small income. Every penny they had, any extra penny they had went to Henry Ford's experimental work, his tinkering with this idea that he had for an internal combustion engine powered by gasoline. She believed in, to that degree, she believed in him when no one else did and really when no one had any reason to. So let me give you an example of the extreme levels of influence that she had on him. Later in life, we're going to fast forward in the timeline,

he's almost 80 years old this time. This is during the New Deal. There is a huge societal change. And essentially, Ford was having pressure by government, by media, and by his own workers, which broke his heart, to cede to union demands. And Ford did not want to. He was willing to give up his life's work. So let me just read this part to you. Once the workers voted for a union, Ford was never the same. He was willing to give up the company and be done with the motor car business. So during this time, they're having a conversation and Charlie's, he's saying, you know, just give him the keys. I don't want to deal with this anymore.

I give up. Charlie tells him, listen, we can't close the factory. This is early 1940s. We can't close the factory. We have contracts with the government

that we have to produce this machinery for the ward. And Ford tells him something. He says, listen, the government can have the keys to the factory. They'll be in the automobile industry when all this is over and he will not.

So he leaves Charlie and saying we're not going to. He goes home later that night, right before he goes home for a night rather, and says, you know, we're not I'm not doing this. I'm not giving into the demands. I'd rather lose my entire business. I'd rather have somebody else run it than do this. The very next day, he confirms every single thing in the proposed union contract. And essentially what happens there is Ford gave up all the power that he had wielded up in that point for 38 years over the Ford Motor Company. Why? Like, it was shocking when you got to that part of the book. And so he doesn't say anything the next day. Charlie actually finds about it in the news that ford signs the contract right few days maybe a few weeks later he finally has a conversation with charlie he said he did it because when he went home his wife didn't want to see any more bloodshed so there's people being

shot we've seen we've covered this a lot in founders podcast um you know right this time in history it was very common for fights uh there's an all-out war if you go back to the podcast i did on meet you in hell the book meet you in hell between uh the falling out between andrew carnady and henry cully frick you know many people died same thing uh was happening at ford plants people were shooting there'd be people getting their head bashed in and And so he goes home. His wife says, listen, I don't want to see bloodshed. And if you don't sign this contract, I will leave you. So he signs the contract. And Henry Ford was never the same after that. He was 78 years old at the time that he signs the contract.

Now, so that's the influence that that his wife had on him as his greatest advisor. Now, this whole idea of her not liking the Dodge brothers, Dodge brothers were very early shareholders in the early Ford company. And they made a lot of money, a lot of money when Henry Ford bought out all of the shareholders and he consolidated control, which I'll tell you more about later. But what I want to bring up, I want to just bring up this funny, this interesting story, because the reason I bring this up now is because next week, I'm going to tell you about a biography of the Dodge brothers who are crazy characters. So this is the beginning of this multiple part series I told you that I've been talking about that I want to do about the early days of the automobile industry. And I'm going to tell you more about that today, where it's just a fascinating time period to study

because it's literally the birth of one of the most important industries that ever existed. My personal opinion is we're living through a similar time now, but with information technology, with software and things like that. But I think there's a lot of lessons that we can learn from the early 1900s that can be applied to the work we're doing now. Okay, so Dodge Brothers. At this time, they're still working with the Ford company. They're still shareholders.

So Charlie has to deal with them. So Charlie goes to meet one of the Dodge Brothers, this guy named John Dodge. And so he gets to Dodge's office before John shows up. And he says, I noticed a man sitting in the lobby when I went in a few minutes. He's sitting in the office waiting for John. And this guy that he knows is sitting on the lobby. A few minutes later, I heard a wrangle outside. Remember, they described them as noisy and boisterous. These guys are insane. They're crazy people. I noticed a man sitting in the lobby when I went in. A few minutes later, I heard a wrangle outside. The man stepped up to John Dodge as he was coming in and said,

you were the one who struck my horse and wagon yesterday with your automobile. You smashed up my wagon and I want you to pay for the damage you have done. I heard John Dodge reply, oh, so you're the fellow who got in my way. He hauled back and slapped the man hard across the face, then threw him out the door. Now, this is an amusing story when you realize the back story. What took place before John Dodge ran over this poor guy's horse and wagon. John was out piloting his boat, was drunk as can be, gets to shore, gets into his car, and then he's driving drunk through

the streets of Detroit and runs over this poor guy in a horse and wagon. He's completely at fault. He's completely in the wrong. And yet when this guy comes and says, hey, you need to pay for the damage, his response is to yell at the guy and smack him across the face. So that's just one of many, many stories of the, I would say, the uncontrollable Dodge brothers that we're going to learn more about next week. Okay. Now, I also want to go ahead, before I go back in the timeline, I need to go forward in the timeline because I want to talk about the fact that even though the Dodges became fabulously wealthy from being shareholders of Ford. They didn't really like Henry Ford.

And so there was an example. In fact, the lawsuit that the Dodge brothers are going to bring about to Henry Ford is like the straw that breaks the camel's back in why Henry Ford eventually buys out all shareholders and controls the entire Ford Motor Company. So at the time, they're, at this time I'm about to tell you, the Ford, the Model T is already in production,

but they're realizing, hey, he's got a goal, right? And so maybe he can start out making, his goal is I want to mass produce a car that's so simple and cheap that every single, even normal workers can afford to do that. And so at the time, let's say the Model T is maybe costing seven or $800. They realized they have to build a bigger plant, the Rouge plant.

And it might be rogue. I don't know what the proper pronunciation of that is. But in any case, it's like, okay, Henry Ford's like, we got to go bigger. Because eventually he perfects this mass production of the Model T. It gets down to like, I think $200 a month, something. Or excuse me, not a month, $200, maybe 250 bucks. And you can buy an entire car at the time. The average worker at Ford could make like 100 bucks a month.

So that gives you an idea. He brings it way, way down. All right. The reason that the Dodge brothers sue him, though, is because Henry Ford is instead of borrowing money to finance this large plant that they have to make. He takes the money out of profits. But the Dodge brothers wanted him to give them the money as dividends, as shareholders. Right. So he says within a month, the Dodgers got an injunction restraining Ford from diverting profits. And 10 days later, the court slapped another order at Ford restraining him from proceeding with his plan. Something to know about Ford, he could not stand when other people tried to have influence on how he ran his business. Later, there's a bottleneck because after the war, the United States railroads are in kind of disrepair.

Ford has to buy a railroad and run it because the bottleneck is that he can't get supplies by rail into his factories and can't get cars out by rail. So essentially, he says, listen, you idiots, you don't know what you're doing. I'm going to buy the rail. He winds up succeeding. He buys this old, decrepit rail, runs it for like 10 years, makes it hugely more efficiently operational, starts turning a profit. And then when there's a lot of legislation

which would not let him lower prices, which is what he wanted to do for other companies that were using his railroad, he winds up selling it. And I think they sell it for like two and a half or three times what they paid. So he's extremely successful doing things his own way. So it kind of makes sense that, hey, I don't like people telling me how to run my business i knew what i'm doing so in this case the dodge brothers

have a judge saying you can't do this um eventually ford fights back the order gets struck down had the order struck uh stuck the company would have been hamstrung but the court relented permitting ford to go ahead with the development at the rouge or rogue i don't know what's called uh there would never this is what charlie's point though there would have never been a ford motor with development at the Rouge or the Rogue. I don't know what it's called. There would never have, this is what Charlie's point though, there would have never been a Ford Motor Company as it is today if the expansion of that plant

had been permanently blocked or if Henry Ford had been less determined. There's that word again. You're going to see it over and over again. Okay, so the Dodge brothers already told you that they were trying to get, they wanted the profits instead of expansion. Okay. Henry Ford, once again, shows his determination to go ahead as he saw fit, something that that is a trait that he had his entire life to give him the freedom of action and to protect himself from further interference from stockholders.

He would buy them out and secure complete control of the company. He let it. Now, how did he do this? He started at this time, he had the company that was making cars, but he also had, he got started, you know, because he wanted to build machines so farmers could, he could be freed from the farm, right? So he also had a company called Henry Ford and Son, which was successful in its own right. And he built factors and tractor equipment and stuff like that. So he told the shareholders, like, listen, you know, I think Henry Ford and Son, we're going to branch out from the tractor field and we're going to build a new car that's in the same price range as Model T. He wasn't serious about that.

He did that because that would scare the remaining shareholders to sell out to him. So this is the financial impact of this, which is remarkable. Remember, this is, I think we're in like the 19-teens. This is 19-teen money. The, I think we're in like the 19 teens. This is 19 teen money. The figures are the most dramatic in American industry. These stockholders who had originally put up $33,000, 16 years later sold out for more than $105 million. But that's not really the full picture. In those 16 years, they'd already received dividends of more than $30 million. So they put up $33,000. You're talking about 10 or less people or institutions. I think there were people, actually. They put up $33,000 and yielded in 16 years $135 million. So it cost him

a lot of money, but now he has control. All right, so I'm going to go back in time. Let's go back more to his early life and more about his personality. Interesting to note, as we've seen over and over again, we saw this last week with with Chung Ju-young. You know, you could say that Henry Ford was an interest in formal schooling. Really, it was, you know, I mean, he wasn't, but you really have an opportunity. He had to go to work at a young age. And we see, just like we saw with Chung, he's on the farm. Henry's on the farm. As a young farm boy, he had no chance to go beyond the basic rural school, where reading and writing and arithmetic in its simplest form were all a pupil could get. But even at that, he passed out much of the education that the school could have offered. He was not serious about his schooling. Tinkering with watches and with machinery around the farm

appealed to him more. He was gifted in that degree. Although he neglected his education as a boy, the business he developed had taught him much. It doesn't mean just because you're not interested in formal schooling doesn't mean he's not interested in learning. Henry Ford was very much a lifelong learner. You have to be to accomplish what he did.

So he says, What I don't know, he used to say to me, I can always hire someone to show me how to do it. And that way I learn more than if I try to do it myself. Of course, he had met and had contact with the foremost writers, education, educators, scientists, and statesmen. This is after he becomes world famous. They visited with him and talked with him and he loved it. Experience was his school. And I wonder whether anyone ever got more. Another thing to know about him which isn't surprising at least he had remarkable energy he had to I often wonder how he could live on the little food he ate and all the years I knew him he never weighed more than

148 pounds but for a man who appeared almost frail he had a remarkable endurance I walked the woods in upper Michigan and followed tractors on foot with him in the heat of summer days. On foot, he was tireless. He could run like a deer. You know, something I, you know, just why would somebody read so many books on Henry Ford? Why, why would I keep making podcasts on it? Because I think it's important because he was a fountain of great ideas. And Charlie picks up on that. He says he never ran out of ideas. In his prime, he was loaded with them. And it was impossible to keep up with him unless one had vision and initiative enough to anticipate them and stay ahead of him.

So one of the great things about reading biographies, reading autobiographies, is you're having a one-sided conversation with some of the greatest minds in history. Right? conversation with some of the greatest minds in history right to that degree you start to get almost like you have like you know the the um this idea of like you have a little devil and a little angel on each shoulder guiding and and telling you what you should do throughout life uh my version of that is you know i can after reading so much about people like charlie munger for example he's somebody i refer to back all the time like i have like a little charlie munger sitting on my shoulder a lot of times that i'll you know have these one-sided conversations with like what would you do in this situation charlie and you can kind of guess what their ideas would be and then you could also say you know what would he tell other people and one thing henry ford

would tell you and tell tell me is to not divert your attention. This is an example of that. Henry Ford was no mystic or genius. He was a responsible person with determination to do his work as he believed it should be done. I think anybody having that trait, you're likely to respect him. A responsible person with determination to do their work as they believed it should be done. This sense of responsibility was one of his strongest traits. I often tried to persuade Mr. Ford to diversify his business. Remember, he would tell us not to divert your attention. Here, Charlie's trying to get him to divert his attention. Let's get into food producing because he liked farming or take up something like Sears, like a Sears company or Marshall Field. He would have nothing to do with the idea.

I don't want any more business, he said. I also tried to get him to expand the auto field. I felt we could build a near monopoly. Let us shoot for 75% of the market, I urged. I don't want any more than 30%, he replied. He actually welcomed the competition. Another thing I think if Henry Ford, if we were able to have a conversation with Henry Ford today, he would tell us not to be afraid. Charlie says, I would go to him with problems that looked insurmountable. Nothing appeared to frighten him. His lasting accomplishments were achieved when facing down opposition, such as fierce opposition, I would say, such as when his directors opposed the Model T idea.

When that opposition had been overcome and he ruled an industrial empire other interests and projects shared his attention i'm going to stop here for a second because i think it's an extremely important point picking up on not only um the nature of henry ford but the nature of humans so when i read that section and you see examples of that throughout the book that he needs a great challenge to marshal up all his resources, to finally realize all his potential. You know what it made me think of? It was actually an interesting observation. The first part about, there's two things that I think are important with that section there, right? The first part about needing a hard goal in opposition to realize your potential reminds me of a line from a speech that JFfk gave about going to the moon i just happened to reread it a little while ago anytime

you want you need to hype yourself up go read this speech okay and specifically this part this is what jfk says we choose to go to the moon we choose to go to the moon in this decade and do the other things not because they are easy but but because they are hard. Because that goal will serve to organize and measure the best of our energies and skills. Because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win. Henry Ford had a very similar attitude with regards to his single idea. He was a man of singular purpose. I want to manufacture a simple, cheap car that everybody can have. Anybody can drive at the time, you know, people had chauffeurs or especially like it was very complicated to drive some of these horses carriages. He's like, I want it to be simple. Anybody could do it. And

I want anybody could be afforded. Okay. The second part, though. That second part tells us a lot about human nature. That is very common. After we achieve this goal, it's hard to keep up that same level of performance. So to me, it's like you always need another mission. You have to be striving for something else. So case in point, in Henry Ford's case, the Model T and the required development

of the means to mass produce that car, right? Those are the two things that he had the idea, but then he also had the secondary greatest achievement was the system in which to make that car possible. Once that was done, first of all, that's why we're talking about him today. That simple idea, simple but very hard idea, is the one that made him immortalized

in history. But after this was done, he splits his attention. He's not really focused on the Ford Motor Company. To some degree, you could say it's an issue of age, health, certainly, he had strokes, he had declining mental facilities, faculties, rather. But it's also because the 15 million Model Ts that he made and sold is what made him who he was. And so once that was fulfilled, it was very hard to marshal those energies. And he never achieved anything greater after that. So I think that's a really good idea. Now, another thing Henry Ford would tell us, based on what I learned by reading this book, I'm fairly certain he would tell you to be firm on what you want to accomplish, but be flexible on how. And this might be the single most powerful idea in the entire book.

And I think it's expressed in a handful of sentences. With the obvious exception of his single purpose goal of a cheap car for the masses, there's that idea again, a set policy was next to impossible with him. It was impossible because by nature he was an experimenter. And so the difference between this book and the three other books that I read about Henry Ford

is you have much greater detail into how this was done. And I'm going to share some of that today. I obviously can't do all of it. Highly recommend reading the book, obviously. But it's this, the fact that they learned through trial and error, through experimenting. Remember I told you the idea of being a pioneer. I'm still going to go, I'm going to circle back around to that idea. Don't worry, I have not forgotten. That was central to how Henry Ford lived his life and created his company now i want to go more into before i get into that we need to understand more of his personality and this is more another paradox he was an individualist but he was also hard to be to know

so here's charlie says he was so much of an individualist that no one ever really knew him the most frequent question i've been asked about henry ford is was he modest So here's Charlie says he was so much of an individualist that no one ever really knew him. The most frequent question I've been asked about Henry Ford is, was he modest? So Charlie pulls out the dictionary here on us. He says, according to Webster, modesty means decent reserve and propriety, a humble estimate of oneself in comparison with others. Yeah, right. Shyness and a sensitive shrinking from anything indelicate. No, Henry Ford was not modest. He pretended.

Now, this is something we've talked about over and over and over again. That you don't mistakenly become great. That I think every single, this is the 118th book I've read for this podcast. There's not a modest person among the bunch. Not one. podcast there's not a modest person among among the bunch not one um now henry ford realized that you may need ego to push you and to drive you to do great things but it's way smarter to hide that from other people it just is so to that degree he pretended to be humble with uh with uh with people who did not know him but i knew this was an act he sought publicity he wanted to be humble with people who did not know him. But I knew this was an act. He sought publicity.

He wanted to be observed. After the name of Henry Ford became a household word, men, and this is a darker side of his personality, unfortunately, men in the Ford Motor Company who might temporarily get more publicity than he did aroused his jealousy. One by one, they were purgedged a process familiar in personal dictatorships so here we go more of a paradox maybe some things that we want to learn and emulate and other things that we don't right um and in the same section we we see charlie's wrestling with being loyal to an imperfect leader um but to me it's also a reminder that we succeed in spite of our defects. I try to find the positive. And I think that's the positive. And that's inspiring that there's not a person in

addition to there being nobody of, you know, diminished ego on this podcast. There's also no, no perfect people, not one. And so, you know, sometimes we can judge ourselves harshly and think, oh, you know, I'll never succeed in what I want to do because I don't have this attribute or I suck at doing this or I fail doing this. And it's like, no, no, no, no, no. We all are going to have to succeed in spite of our defects. So it says Henry Ford was opinionated in matters about which he knew little or nothing. He could be small minded small-minded suspicious jealous and occasionally malicious and lacking in sincerity he came close to wrecking the great organization he had built up these were his

defects taken by themselves they were grave faults and it might well be wondered how how one could retain one's self-respect and still serve such a man but when weighed against his good qualities his sense of responsibility, his exemplary personal life, and his far-reaching accomplishments, these defects become microscopic. It is not for his failings, but for his impact upon his time and his momentous part in liberating men from back-breaking toil that he will stand out in the future. It was because I understood what he was trying to do that I pinned my flag on Henry Ford and that I still stand out in the future. It was because I understood what he was trying to do that I pinned my flag on Henry Ford

and that I still hold him in great respect and esteem. Okay, moving ahead, we have Charlie explicitly, I don't even know if he's doing it, implicitly, how about that, telling us why Henry Ford and the Ford Motor Company are worthy of study. And he says, there have been more than 1,200 automobile companies. Today, there are only six. So that's the time of writing since then. I've read in other places that there was this American car companies, obviously.

There have been 2,000 car manufacturers and only three survivors. So it's crazy. So again, he's telling us like, well, these companies survived. They're obviously worthy of study. And Charlie's going to outline why the Ford Motor Company survived. Why did the Ford Company survive

when 1,200 others went out of business? It was born at the right moment. The time was right for a cheap car, and Ford had one. An inexpensive car required revolutionary cost-cutting production. Ford evolved it. Both car and production methods were unorthodox in that day, and the organization that developed them was likewise unorthodox. Its head was a single purpose. There's that word again.

It was a its head was a single purposed man who dominated, yet at the same time, delegated sweeping authority and responsibility. So we've we've seen these these dual traits that seem like they'd be contradictory when we studied. How many podcasts have I done on Warrenren buff and charlie munger by now like five something like that where we have extreme centralization with charlie and and warren making all of the investment decisions and the compensation decisions and extreme decentralization everywhere else where you have these highly gifted people are just left alone to run their businesses they see fit largely Okay, so there's this this interesting idea that we see time and time again where? combining to What many people would consider contradictory traits in a unique way?

Unique and novel way may yield better results that in this case Charlie's taught call he's using the word unorthodox, right? So it says its operations were intricate yet experts were distrusted and virtually all executives came up from the ranks now it goes into then he he does he uses Charlie's really good at using metaphors to and building pictures in our minds so we understand what that means he says when the music was not written we improvised when it was written we had no time to learn to read. So we played by ear. Judged by present day standards, Ford's management was loose and eccentric.

I shall abstain from the claim that such an organization would work today. My point is that no other organization would have done the job then. My purpose is to indicate how it worked. Henry Ford's philosophy was, we must go ahead without the facts. We will learn them as we go along. It was his working principle when designing his cars. He would have an idea,

but he couldn't tell whether or not it was worth trying until he tried. Jeff Bezos' own spin on this is like, you're not innovating if you know in advance that if it's going to succeed or not, you have to experiment. Thus, he learned the facts by going ahead without them. If experts and the voices of experience had been heeded, there would have been no Ford car and no Ford motor company. Now, this is talked about in every single book on Henry Ford. The one thing that the idea that he was not a big fan of experts, he says that if he wanted to damage his competitors, he would have he would first he says he would never hire an expert in full bloom.

And so he would say if he wanted to damage his competitors, he'd make sure they staff their experts, they would know everything was that was impossible, and therefore they get no work done. That's a paraphrasing of his quote that I don't have in front of me. But the difference was Charlie adds on to, yes, we didn't respect experts. Because he's saying we're on the frontier here. But what Charlie adds is the fact that the idea that he compares and contrasts pioneers and experts, which I thought was a very fascinating idea. I'm going to share that with you now. The difference between a pioneer and an expert.

The experts come along and pick up where the pioneers leave off. Clearly from his writing, you see that he relished the fact that he was there at the very writing in the book towards the end of his 40-year career, and that organization is unrecognizable compared to the early ones. So, and that's why I'm also doing this idea of pioneering is why I want to spend time talking about the founders of Dodge Brothers, General Motors, any other founders. There's a lot of car manufacturing founders of this time that are very interesting. Okay. The experts come along and pick up where the pioneers leave off.

Confronted with the unusual, something beyond their rules and special knowledge, their reaction is, it's never been done, or even it can't be done. The pioneer, in contrast, says, let's try it. Ford was not an expert, and he didn't rely upon experts, whether they were scientists, railroad men economists educators business executives or bankers he actually had different ideas in every single one of those fields actually he was an individualist who arrived at conclusions both right and wrong by independent thought in other words he

thought from first principles an example of pioneer verse expert is this is actually a good little story one of our first belts with experts came in 1907 the person running the cut for company this kind of guy named cousins who plays in a really important role but he hires this guy named Hawkins so let's just just remember hawkins for now um hawkins puts in this very onerous system right and at this point 1907 ford has to they have to move fast and hawkins system is slow and cumbersome the record keeping of the hawkins cost accounting systems that he installed was a bureaucrat's heaven and a production man's hell. Under Hawkins' system, a part, such as a piston, now think about how many different parts they have to deal with

and how ridiculous this idea is when you think about it in that terms, a part such as a piston entered production bearing a ticket, which covered every operation. If 10 operations were involved, meaning with that part, an entry was made on the ticket after each stage before proceeding to the next one. This is supposed to be to keep things organized and more efficient. And I put efficient in quotes.

If one piston was lost in the move, all progress stopped until the missing piece could be found and accounted for. I don't think there's a founder alive that would agree with a system like that. Not only did the process mean delay from one operation to another, but when a motor assembler couldn't get pistons, all car production was held up. As you can imagine, this did not appeal to Mr. Ford. Costs were rising and production falling in the names of efficiency. And they put efficiency in quotation marks. This was Henry Ford's response to this. He's had enough. So this is why Charlie is telling us the story. I have gone into this incident with some detail because it strikes me as a vivid illustration of the difference between two diametrically opposed shop management practices.

And he's also at the same time comparing and contrasting what an expert might recommend versus what a pioneer would do. One is a rigid system in which rules tend to be paramount. The other is flexible method in which the objective comes first. That may, again, that's probably the most important idea. Focus on the objective and be flexible how you're going to accomplish it because there's going to be things along the way that you don't know. You get paid because you figure it out. I love that idea. The other is a flexible method in which the objective comes first. More on why forward distrusted experts. You could probably summarize this section with his belief that there's always more to learn. When one man begins

to fancy himself an expert, we had to get rid of him. The minute a man thinks of himself an expert, he gets an expert state of mind and too many things become impossible. The forward operations and creative work were directed by people who had no previous knowledge of the subject. It's interesting. People might not think of car manufacturing

as creative work today. It probably still is. But it definitely was creative work when they were doing it. They were inventing an entirely new industry. They did not have a chance to get on really familiar terms with the impossible. I am certain now that no other formula would have been successful. There was no one around who had experience because what there's no one had experience because what they were doing is fundamentally new, right? And if one came along who had done

well in any other business, we had more of a problem to get him to drop his ideas and fall in line with our progressive manufacturing and assembling it's a very interesting use of words there um something also to know about this time this goes this really goes more with uh the idea that you know for for somebody that lacked experiencing experience and relied on hunches and intuition he he certainly intuited the benefits of having a decentralized command. Now, if Ford wants decentralization, which he clearly does, to get that he has to find gifted people that would work for him that had essential skills he didn't possess. And I'm going to read this part to you because he does that. But he also has this interesting idea about information that I wonder if we could apply to our personal information.

That maybe like living in the information age that we do, maybe we're consuming way too much information. So he says he did not want to be informed just for the sake of being informed. For soon, he would be doing nothing but getting information. He was decentralizing the major operation. He did not want to be the bottleneck of decisions. Now, somebody that played an important role and allowed him to do that was this guy named Cousins, who was extremely, probably the most important person after Henry Ford with the success of the Ford Motor Company. The paradox is that, but for Cousins and his organization and domination of sales and finance, that's where he was focusing on, why Ford was focusing on building products, Ford Motor Company would not have lasted long. He was a hard shrewd operator with a temper, with a whiplash

temper and energy. But unlike Ford, he insisted that all details and facts in his field be brought to his attention and frequently for his decision. One morning in the fall of 1915, Mr. Ford came into my office. Mr. Cousins has quit, he told me. Charlie, and this is maybe another paradox here. Charlie, he was one of the hardest men I've ever had to work with, but I wish I had one just like him to take his place. Cousins goes on, becomes the mayor of Detroit, a senator,

extremely, extremely successful person. Something that was unique about the Ford organization, given how large it eventually got was Henry Ford didn't like titles. It says in 50 years there was four presidents with three members of the Ford family holding that office for 47 years. But whether he or his son was president Henry Ford ruled the company. He never regarded a corporation title as giving a man full exercise of what the title implied. He would have preferred no titles at all. So people would ask like, well, without titles, how do you build an organization? This is what Ford, this is a summary of my interpretation of

what Ford would tell you, that you should anchor yourself around the job that must be done and not the title you hold. And so here's an example of that. He's having a talk with Charlie and another person that has to work closely with Charlie. And Henry Ford says, just go out there and run the plant. I know you can do it. But there's one thing I want to add. You need to work together as one. I don't ever want to hear that you can't work together. And don't worry about titles. That's the end of the quote. Now Charlie's elaborating on this. And so with no further grant of authority and no specified division of it, Ed Martin and I worked together for 32 years with no real break in our relations. Too often the concern of course, this is so funny about this is funny. He says this now because it was true at this time in the Ford Motor Company is definitely not true later.

So let me read you first. Too often the concern of corporation executives about their titles, even size and furnishings of their office of their offices, deflect thought and energy from the jobs they're supposed to do. That concern may wet ambition, but with a wrong emphasis in the absence of a flock of titles, such things didn't worry us at Ford. OK, as the Ford Motor Company grew, though, there was more infighting and much more company politics. You have many examples in this book and in others. And again, it's not just, it's certainly not relegated just to Ford Motor Companies everywhere. But you have many examples of adults acting essentially like high schoolers. So I'm not going to cover any of that on the podcast because I think on today's podcast, it's definitely in the book. It's in almost every company history.

It's just something I find distasteful. Another idea from Ford. Ford would tell you to ditch collective speeches and to focus on individual contact. This is early days. Ford, of course, he knew every man on the payroll, most of them by their first name. He did not gather them together

and make speeches and show elaborate plans. Individual contact meant more. Henry Ford would tell you not to let your team grow stale. I would say that this applies on an individual level as well, that it's our obligation not to let to make sure that we don't go stale. It isn't the incompetent who destroy an organization. The incompetent never get into a position to destroy it. It is those who have achieved something and want to rest upon their achievements

who are forever clogging things up. To keep an industry thoroughly alive, it should be kept in perpetual ferment. The art of government, said Napoleon, is to not let men grow stale. Henry Ford didn't let us grow stale. Ford would also tell you that no matter what, that you can't foresee everything, even things that should be obvious. And this made me chuckle when I first heard it.

This is later in the history of Ford Motor Company. They were so successful. Think about this before I read this to you. They were so successful in making an affordable car that a lot of their workers would buy it, right? So what's going to happen now when they go to work? Here's the problem. Traffic had become a major problem. For we had not foreseen that our workers would come to work in their own automobiles.

Considering that the Ford dream was every man a car owner, we had not foreseen that our workers would come to work in their own automobiles. Considering that the Ford dream was every man a car owner, this was either a glaring oversight or equally glaring lack of faith. That's great. Ford would tell you never to never stop learning. No man can help it if he has to leave school in his early years, but he can very much help it if he lacks an education thereafter. The man who carries on night study courses while doing a full day's work has the necessary determination and sense of values for self-advancements. Here's a disheartening sentence that's probably true. There are never enough such men. Let's

change that to people. Obviously, he's writing in the 50s, so his focus is going to be on men. There are never enough such people. That is still true today, unfortunately. We at Ford Motor Company rarely selected a man entirely for what he knew. It was for his capacity to learn, particularly the capacity to learn that about which he knew nothing. Proved competence in some field, plus intellectual curiosity and audacity are to me essential qualities it also tells you that your education if you stop at high school college

graduate school whatever it is it doesn't matter you could be at school for 15 years it's incomplete it's got to be something you do your whole life is what they would tell us. And so they have a great story that shows this. It's a tragic story, but it's also, dare I say, it is kind of humorous when you think about it at the end. It's a tragic comedy. What do they call these things? Anyways, this is Charlie's college story. They're in a meeting one day, and Ford instructs Charlie. And he says, tell your college story, Charlie. And my story went this way. One day, Mr. Ford brought a rather seedy looking man to the office and said,

Charlie, this is an old schoolmate of mine. He has a son who wants to go to college and learn to become a forester. See if you can find the proper school and I'll help pay the boy's way. This also shows you how generous he was. After an inquiry of our western branches, a forestry school was found at a West Coast university. I bought the boy a railroad ticket. A Ford West Coast manager met him on arrival, took him to the school, and helped him get settled. Mr. Ford paid the bills until after three years of study, the boy passed his forester's examination and returned to Dearborn. Again, Mr. Ford came to my office with the boy's father. Now we must have the boy, this is Henry Ford talking, now we had to start the boy in his forestry profession.

See if you can find a job for him, Ford told me. The boy wants to go west, California, Oregon, or Washington. Again, I queried our western branch managers, and a position was found with a big lumber company in Oregon. So again, I bought the young man a ticket at Henry Ford's expense and put him on a westbound train. When he arrived at Seattle, a Ford branch manager met him. Having had direct instructions from me to see that the boy got off to a good start, the manager put him on a train to a small town someone from the lumber company met him and put put him uh put him in his baggage on a large heavy wagon with big high wheels you might know where we're going here it was quite a distance

to camp over a rough and bumpy road somewhere along along the way, the boy fell off, the wagon ran over him, and he was killed. When I told this to Mr. Ford, he was concerned as to how he should break the news to his old friend, the boy's father. He thought for a while and then said, Charlie, do you realize that you forgot to teach that boy in college how to ride on a wagon? That is Charlie's college story. All right, so now we got to the point which I might find most interesting. And this is a description of the early days of Detroit and the beginning of one of the most important industries ever created. And there we're going to see how the lives of Charlie and Henry Ford first intersect. Six years earlier, Charles King had driven the first car through the Detroit streets.

Oldsmobiles were a familiar sight. They were scurrying along like cockroaches. The horseless carriage, this is in the, I think 1890s, I want to say 1896. The horseless carriage had become so much of a craze that by 1900, nearly 100 makes of cars had appeared. This is something that many people find surprising. Most were electric or steam. Only a quarter were gasoline engine driven. Few of them survived more than a year, but for every horseless carriage that eventually reached to the road, there were probably three backyard mechanics experimenting with motors and dreaming great dreams.

So again, no one was asking permission. People had a goal. They thought these machines were so cool, so interesting. They had to experiment. They wanted to tinker. They wanted to contribute to the foundation of what would become the automobile industry. Now, listen to how he describes he's in charlie's obviously in detroit at the time so it's henry ford they haven't met yet they're about to but listen to how he describes the people working in the auto early automobile industry and you and it becomes apparent why they're so worthy of study he uses words like imaginative enthusiasts experimental and course, why is it worthy of study?

Because these traits are so important if you want to improve on something that you're doing today. All over the country, there are imaginative mechanics. Detroit had perhaps more than its share of enthusiasts. And within a couple of years, would become the chief automobile manufacturing center. Most of the city's automobile designers brought their sketches and experimental work to Bryant and Barry. That's the company where Charlie was working. He was making wood models, essentially wooden prototypes at the time. These included Charles King, who had been working with gasoline engines for nearly 10 years. Each new experiment had to be preceded by patterns, which themselves had to be experimental

because many of the designs were but rough drawings. This guesswork and trial and error pattern making was a fortunate preparation for what I would be doing for the rest of my active life. But I didn't know it then. When I was reading this section, this desire, because this is how he's going to meet Ford, because Ford wants him to make a model of this rough idea he has right so this desire of ford that henry ford has to see his

ideas in physical form it's not very different if you think about um than what we learned about steve jobs method steve's uh method of product design uh in that book creative selection they're using it's different times certainly they're different materials, but it's the same principles. Ford used models. Steve used demos. Same thing. He didn't want to just draw it on paper. He didn't want to hypothesize. He wanted to see it, to touch it, to feel it. So this is the environment that Charlie meets a young Henry Ford. The year is 1902 and Henry Ford is 39 years old. With him that morning was a lean, sandy haired stranger. Charlie, he said, meet Mr. Henry Ford. I'm interested in a gasoline engine, which he, meaning Henry Ford, was building

and we're going to put in a racing car. But he wants to see some of his ideas in pattern form. So that is how they start working together, knowing each other. Eventually, Charlie asked for a job multiple times. Henry keeps rebuffing him. He's like, no, no, we're not on solid ground yet. Eventually, he gets a semi-solid ground. You know, still a handful of employees, not a lot of money. But he says, okay, Charlie, come.

Come work with us. And Charlie stays there. At the time, he is, I want to say 24 years old. And he stays, I think he retires. He leaves when he's 64 and so the early days of the company the company remember this is before ford consolidates all his power and a lot of the the reason he realized that's a good idea is because he had to go through these these struggles where he's at odds with other people in the company his board of directors

at the time remember for Ford only had one idea. Okay, so it says, there were difficulties with which Mr. Ford had to contend. He had a board of directors which was split over whether to build a high-priced or low-priced car. They can't pick an idea, so they figure, why not try both? That's usually not a good idea. With a few exceptions, the motor car of those days was like a box at the opera. It was a showpiece for the wealthy. Ford believed the company should stake its future on a low-cost, quantity-to-produce machine.

It was fundamentally Ford's idea and his only idea. So Charlie's going to describe the situation at the time. Ford was a man with a strong, stubborn hunch for a cheap car for the average man, yet unable to describe its execution. Listen to the words he uses. I love this. And unable to describe its execution at a board of directors out of sympathy with his aim. And they were driven almost to hysterics by the groping. These are the words groping and fumbling toward a low cost car. He did not know what he did not know. He just had this idea.

He's going to grope and fumble towards it. That's very interesting. For Ford, merely had the idea. He had no picture in his mind as to what the car would be like or look like. I could see at the time he was discouraged over the way things were going. The first automotive products of the Ford Motor Company

were models A, B, and C. A and C were Henry Ford's first gropings towards his dream of an inexpensive car. They were priced from $800 to $950, and they sold about 2,500 of them in the first few years of the company. But his directors would not allow Ford to concentrate upon these two models. They insisted he must design a vehicle for the high-end price field. Now, remember when Ford told us earlier that you shouldn't divert your attention. I'm pretty sure this is where he learned it was a mistake to split

the attention in the early days of a company. This is the early schedule of Ford before the Model T. Remember, he's still groping at these ideas. He's still trying to figure out how to accomplish the one idea, his one idea. We did not have Saturdays off in those days. Every day was a work day and even Sunday mornings I would go to the plant. Mr. Ford often came to and we talk over last week's work and next week's plans. All of this helped me to understand better what he was trying to do. He was determined to build the car for the masses and he sensed, these words, sense, smell, grope, he sensed that there had to be a great, there had to be a great development in the technique of manufacturing the parts that went into the car.

So what he's sensing there is I can't get the price of the car low enough unless I can build them rapidly. So I have to invent an entire new way to make cars. This was constantly on his mind, and there was never a day that we got together that the subject wasn't before us. Now, it's very important to understand in Ford Company, in every company, he had a lot of help laying the foundation of Ford. He needed greatness. So it says, it was Henry Ford's good fortune to have at his side three greats in the early days of his company. I've already mentioned one to you. One was James Cousins.

Another was C. Harold Wills. We're going to call him Harold Wills. And Walter Flanders. All three of who left the Ford company for one reason or another. But without them, the Ford company would have fallen apart almost before. Would have fallen apart before it had been put together. So this book goes into great detail about these three greats and many more people that played important roles in the building of the Ford Motor Company. What I'm

going to do is I'm going to bring your attention to a story that's about one of them, and that's Harold Wills, because I think there's a lot of lessons in here from the story of Harold Wills for you and I. Wills was a hard worker in the early years. Hours, holidays meant nothing to him. But as the fortunes of the Ford Motor Company improved, so did his scale of living, the enjoyment of which drew him away from his work. He starts collecting fine jewels. He starts buying yachts. He starts giving out cash gifts to everybody. As the years went on, it was apparent that he and Henry Ford were drifting apart. He was proud and independent and often would not come to work before 11 o'clock. This indifference did not sit well with Henry Ford. Ford was determined to put Wills to work

the way he wanted, all of which was a shock to Wills, who before always had a free hand. Instead of complying with the ford ultimatum wills remained away more than ever in 1919 he left the company and soon formed the willis or excuse me the will st claire company the new they're gonna build auto they're gonna build cars right the new auto uh that was uh that they launched was a superior car for customers who wanted the best it was so completely different from the simple engine and Model T design that I was astonished that he would build such a complicated engine. I criticized it from a service and parts requirement angle,

but he laughed at me. And this is the main point here. Well, one of the main points. His car was the reverse of our thinking at Ford. So it's not simple. It's not cheap. It's complex and expensive. I realized more than ever that Henry Ford was better off without him. The Will St. Clair was a beautiful piece of engineering, but utterly unsuitable for the times. And a prime reason for its failure was that few garage mechanics of those days knew how to service it. After Wills

failed in his business, he was hired by the Chrysler Corporation for a while. An old friend of Wills asked Henry Ford to take Wills back. See Charlie about it, he was told. I was so astonished that I could scarcely believe it. Wills was broke. His friend told me that he would do anything. I doubt that very much, I replied. Remember, he lost his work ethic. He got sloppy. When Wills called, he said he needed a job, but I suspect he thought he would be welcomed with open arms and given a top position.

I suggested the purchasing department, starting at a nominal salary. That meant reporting for work at 8.30 in the morning and punching a time clock. He said he would do anything. I wanted to see if he meant it. He left, and I never saw or heard from him again. There was never any doubt in my mind about Will's inherent ability. He was an individualist who sooner or later was bound to clash with Henry Ford, an even stronger individualist.

So the moral of the story, Will went to sleep on a win, and he woke up with a loss. He stopped doing the work that made him successful in the first place. So that moral is don't stop, don't quit. This is a great story that even Henry Ford had doubts. Again, right before the Model T,

and I would just say, while you're listening to this, imagine if he quit here. We wouldn't even know who he was. He had just come from a hot session with cousins and he was beat down. Cousins had impressed upon him that they would be running out of money before they knew it. This was the first time I'd ever seen Mr. Ford discouraged. The thought of borrowing for operating costs frightened Ford.

I never knew anyone who had a greater horror of debt than he had. He expressed himself very strongly to me, hinting that he wouldn't be in the business very long. That's shocking. We sat there a while and again he stressed to me his determination to build a car at a low price. I had heard that for many times but he went on. His ambition was to build a car that his workers could afford to buy. This was an entirely new slant. He began to scribe the great benefits to the country of this type of transportation in a vehicle that could be owned and operated by everybody, including the working man. I said to him, Mr. Ford, that is a magnificent idea. If you're

determined to do it, I'm sure you will accomplish it. He slapped me on the back. See, everybody needs encouragement from time to time from other people. Henry Ford is no different. He slapped me on the back. Charlie, I'm going to do that job, and you're going to help me. Then he left me with a little casual remark. You go on, Charlie, with what you're going to do. I'm going to see that this job is finally accomplished. I'm determined to do it, and nobody is going to stop me. This conversation has remained clear in my memory ever since. It seems to me to mark the real turning point in the Ford Motor Company's future. The anxiety, this is so important, the anxiety about money was merely temporary. What it inspired was a no-turning-back determination of Henry Ford

to realize his vision of a car for the masses. So now he takes off. He's got renewed determination, renewed dedication to his idea. So this is, they start, the Model T is going to be the product that helped Henry Ford realize his goal, right? But again, Charlie, he's great at using metaphors to help us understand what's happening. So I want to talk about that now. I love the metaphor that's about to follow here.

And it's this idea, it's thinking about a new idea as a baby. Fragile, precious, full of potential, and must be protected at all costs. So here's the story. Early one morning in the winter of 1907, Henry Ford dropped in at the pattern department to see me. Come with me, Charlie, he said. I want to show you something. I followed him to the third floor, which was not fully occupied.

He looked about and said, Charlie, I'd like to have a room finished off right here in this space. Put a wall up with a door big enough to run a car in and out. Get a good lock on that door. We're going to start a completely new job. The room he had in mind became the maternity ward for the Model T. Let's go. Okay, so for the Model T to work, it goes on in great detail.

I'm going to give you two highlights, two key insights from that, okay? And for the Model T to work, right, they had to spend countless hours simplifying all of the parts that go into a car because it had to be simple in order to mass produce a car. Why did they have to mass produce a car? Because the more cars they make, the cheaper they can make, right? If they couldn't find innovative ways to mass produce the Model T, it wouldn't be cheap enough for the ordinary worker to buy. So one, this sentence summarizes it, to get everything simple took a lot of fussy work. And again, the book goes into great detail. One of this is how difficult it was to simplify the transmission, okay? What I'm about to tell you, so they're talking about transmissions.

This next sentence I'm going to read to you, but it applies to ideas in any industry in any time. And it's one of the most powerful sentences in the entire book. And here it goes. Automobile history is full of strange parallels of once discarded ideas picked up years afterward and used again. So they found an insight that was previously discarded that wind up being a key insight to simplify the transmission and that helped them manufacture more of them and lower the price. So let me read that again. And it's not just automobile history. So I'm going to read it again.

History is full of strange parallels of once discarded ideas picked up years afterward and used again. So we're going to talk more about that in a minute. He uses the actually, you know, let me I'm going to skip right there. Well, can I skip over this? Hold on. Yes. OK, I'm going to go back to that part of it. So one of these ideas, interchangeable parts that Ford used in mass production, they were not a new idea. Okay. So it goes back to this idea, this very powerful idea. The history is full of strange parallels. Once discarded ideas, you can pick up, you can apply to different situations, different. Mass production evolved from a necessity. That's actually a great way to understand Ford. The car evolved from an idea. Mass production evolved from necessity. But interchangeable parts were not new in 1913. Johann Gutenberg, my friend and yours, the first printer in the Western world to use movable type, employed that principle 500 years ago. Eli Whitney used interchangeable parts when making rifles in the early days of the

Republic. So now we're talking late 1700s. And in early days of this century, 1900s, Henry Leland applied the same principle in the first Cadillac cars. Regardless of earlier uses of some of these principles, the direct line of succession of mass production and its intensification into automation stems directly from what we worked out at Ford Motor Company between 1908 and 1913. So they're talking about all the years of development they had to make the moving assembly line. Henry Ford is generally regarded as the father of mass production. He was not. He was the sponsor of it. I like that idea. Now, going back, this is how to think about Henry Ford's talents during the development of Model T. So he's focused on product design, engineering, let other people run sales, service, purchasing, that kind of stuff.

Every day it became more evident that soon Mr. Ford would come up with something revolutionary. With his mind working the way it was at the time, there was no reason why he should be involved in administration or production. I could see a big difference in Mr. Ford after beginning development work on the Model T. He kept saying to me, Charlie, we're on the right track now. We're going to get a car that we can make in great volume and get the prices down. Many of the world's greatest mechanical discoveries were accidents in the course of other experimentation, not so for the Model T, which ushered in the motor transport age and set off a chain reaction of machine production now known as automation. All of our experimentation at Ford in the early days was toward a fixed and then wildly fantastic goal. There's that idea again. Orient yourself around an objective, be flexible. How are you going to get there? Be flexible through

experimentation, right? It could not be blueprinted. Today's engineers believe that they can design by coming with just what is right on a piece of paper, but the Model T could not be designed that way. A blueprint didn't mean much to Henry Ford. It was because of our constant tinkering that we were so right in that we were so right in many of the things we made. I cite only this particular job talking about the transmission I was talking about earlier to show the hard work we put in to lick countless seemingly minor problems. So essentially what he's talking about there is the Edisonian principle of design. Obviously, Ford was inspired. His idol was Thomas Edison. But what he's talking about there, the Edisonian principle of design, it's also what James Dyson wrote about in his autobiography,

that 5,127 prototypes that he had to do before he made his first vacuum cleaner. That vacuum cleaner made him a billionaire. Dyson writes a lot about that in his autobiography if you want to learn more about that if you haven't done so already definitely listen to founders number 25 on james dyson probably still my first and we have no idea why certain books and certain things speak to us they just do but i would say james dyson's autobiography is probably the it is it's, it's my favorite book so far that I've read for the podcast. I don't know why it just is. Okay. I want to tell, talk to you more about an example of determination. And this is all about, you know, the main focus

here is the Model T because that's the main goal that's what that's what henry ford's telling us right okay so i want to tell you something that almost interrupted that his fulfillment of that goal and it would have if it wasn't for how determined uh henry ford was so a patent lawsuit almost killed the model t um at this time they're manufacturing model t's but they have to make more. Their prices are still low, so they've reached the capacity of the plant they're at. So they're like, all right, we got to build a bigger plant. We need to build a bigger machine that makes the machines, right? A decision to build a new plant at that time was one of the most courageous steps ever taken by the Ford Motor Company. Why is it courageous? It was not

uncertainty of the success of the Model T that made this decision hazardous. What he means there is they had more demand than they could fulfill. It was the risk that went with each sale, with the sale of each Ford car, and the risk increases the number of sold cars rose. What is he talking about? For five years, a shadow of patent litigation with possibility of ruinous damages had hung over the company. In 1987, George Seldon, a New York patent lawyer, had applied for a patent for a horse's carriage driven by an internal combustion engine. Although he never built the vehicle, Seldon claimed that the patent was a basic one

under which no manufacturer could make automobiles without a license. So we're seeing he's an 1800s version of a patent troll, right? Now, this is really smart, clever one way ford routed around this in addition to fighting it uh i think they went all the way up to supreme court so there's one way ford right around this they tracked down a description in a french technical magazine of a vehicle driven in 1862 of a gas engine model made by Jean Lenore. So, Selden gets his patent in 1877. 15 years earlier, though, there's a description of a gas engine, of a horseless carriage with a gas engine made by Jean Lenore.

It was decided to build an engine according to Lenore's specifications. If that worked, it might upset Selden's claim. I also was relentless in fighting this in court. In 19 November, Henry Ford did not like other people telling him how he should run his business. He hated that. He refused to allow that. In 1909, federal court announced a decision. Seldon's patent was upheld.

Uh-oh. If this decision was held, Ford Motor Company faced ruin. By that point, nearly 10,000 Model T cars had been turned out, each car being a potential addition to a damage suit for infringement of Seldon's patent. Mr. Ford's answer to this threat was to increase production and extend plant facilities. Ford stood ready to take the case, if if necessary to the Supreme Court of the United States. Eventually, Selden's patent was upheld, but part of it, the court's ruling said, did not apply to the cars of Ford and other auto manufacturers. Kind of rendering obsolete in those terms, right? The Ford fight against Selden's patent is a milestone in the history of the automobile industry.

I believe it is one of the greatest things Mr. Ford not only did for the Ford Motor Company, but for everybody in the auto making business. Remember, he welcomed competition. He carried full responsibility for success or failure on his own shoulders with little or no encouragement from members of his board. He rarely had a pleasant moment inside or outside his organization for as long as this uncertainty lasted. Yet the affair did as much to inspire him as anything that had occurred up to that time. Why would it inspire him? Here's the reason. He knew that he could battle with the best there was in the country and not be stopped. I may seem to have gone on a tangent from the main topic of this chapter. I did so purposely for evolution of the Ford mass production system came from just a series of tangents. Remember back to the experimental. This is a very important point.

I'm going to repeat it over and over again because it's really the main lesson I get from the career of Henry Ford. He's got a million different good ideas. But start with a goal and maintain flexibility with how you get there. There will here is you got to focus on what you can control and just keep working towards your goal that's what henry ford did henry ford had no ideas on mass production he wanted to build a lot of autos he was determined but like everyone else at the time he didn't know how in later years he was glorified as the originator of the mass production idea far from it he just grew into it like the rest of us today historians describe the part the ford car played in the development of that era and in transforming American life. We see that now, but we didn't see it then. We weren't as smart as we've been credited with being. All that we were trying to do was to develop the Ford car.

I think that's a great idea to end on. I will leave the story there. That is 118 books done, 1,000 to go. If you want the full story, buy the book. And if you buy the book using the link in the show notes, you'll be supporting the podcast at the same time. And I'll talk to you again soon.