Denying the Paradigm

I recently heard a Vistage (Vistage.com) speaker admonish members for believing that there is anything special or unusual about this historic moment. His benign take on the world is that we are in a simple economic correction that is no different from every other recession. His position was a little surprising, given that he otherwise seemed to be quite intelligent.

What I found to be most naive in the presentation was his thesis that nothing in the technology of today in any way differentiates this age from others. His point was that technology has always existed. One of his examples was that the tomahawk was a technological advance, as was the Trojan horse. People, he said, have always used technology to their advantage, and today is no different. He openly ridiculed any concept of a paradigm shift.

What he, and a considerable number of economists and supposed historians seem to be ignoring is the enormity of the social impact that these technological advances are introducing. We have, of course, experienced similar massive upheavals in the past. I think a look at just one example, utilization of the assembly line in manufacturing, can help us get an idea of technology as social, as well as, economic game-changer.

Henry Ford had a problem. He had designed a reliable car that used mass-produced, inter-changeable parts. The car was better-made and simpler to operate than its predecessors. Ford realized that with all those advantages, he could make his car available and usable to a mass market.

The problem he had yet to solve was purely financial. He needed to produce a car cheaply enough so the people who built the car would be able to afford it. The car was, of course, the Model T.

When the Model T was introduced in 1908, assembly time was 728 minutes, and the price was $950. After implementation of the assembly line production in 1913, the assembly time dropped to 93 minutes, and the sales price decreased to a low of $280.

However, the problem of mass market remained. How could the factory worker afford the car? Ford solved the problem by doubling the going rate from $2.50/day to $5.00/day. This, combined with credit financing by the company, allowed the common worker to be able to afford the fruits of his labor, and the consumer economy was born.

The economic impact of this development was enormous, and relatively speaking, immediate. The mass production and availability of the automobile set in motion a global demand for steel, oil, and rubber. Since many of the raw materials came from outside the United States, the shipping industry experienced an immediate increase in volume.

Prior to 1919, the main use of refined petroleum was kerosene for lamps. After that year, the major use of petroleum was conversion to gasoline for automobiles. This increase resulted in a natural demand to build pipelines. This demand exacerbated the need for mining more iron ore for pipe.

Aside from the increased demand for natural resources, the number of cars on the roads created a predictable demand for more of the same…roads! An interesting historic aside is that also in 1919, Dwight D. Eisenhower crossed the United States from Washington, DC to San Francisco in a military convoy. It took more than two months for the trip. This is supposedly the catalyst to Eisenhower’s advocacy of a National Highway System during his presidency.

So far, we have only focused on the automobile. It is important to remember that once Ford proved the efficacy of the production line, it spread to all other industries. Once Ford introduced the extension of credit to employees so that they could afford the product of their labor, that practice, too, became the norm. Wringer washing machines, refrigerators, water heaters, and radios are among the myriad of products suddenly put within the reach of the average wage earner, creating a unique, American phenomenon: a substantial middle-class.

The economic consequences of a change in a method of production are measurable. We could include more and more data points to further elucidate the thesis, but I think you get the point. One major change in the organization of the assembly line had enormous impact on production, price, buying power, expectation, and the global economy.

The secondary aspect of this change is equally important, and probably had even more influence on the lifestyle of most American workers. Prior to Henry Ford, automobiles were mostly toys for the wealthy. They were a hobby, built by craftsmen who enjoyed the artistry of designing and building a few cars a year, usually against a direct order from the new owner. The teams that built the cars were inventors, mechanics, hobbyists, and other skilled workmen.

What was required for the assembly line was a very different type of worker. The beauty of the assembly line was that it mimicked the product it produced. The products were interchangeable and could fit any machine. The workers, too, were interchangeable.

There is a very telling quote from Henry Ford that has been largely misinterpreted. Ford said, “Why is it every time I ask for a pair of hands, they come with a brain attached?” I have seen this variously quoted as praise of the intelligence of the American worker. In fact, it was a complaint that the workers hired to be interchangeable machines on the assembly line actually had ideas about how that work should be done.

The assembly line was a place for pure efficiency. The less energy people spent on any activity not directly devoted to production, the better. It was, therefore, Ford’s policy to fine anyone on the assembly line for the crime of laughing, talking, or whistling…all of which, Ford believed, diverted energy from production.

The conversion of skilled craftsmen to interchangeable cogs has had an immeasurable impact on the history of work in America for the past hundred years. That, coupled with the huge social displacement of a rural, agrarian population to an urban, industrial workforce had the added effect of further denying the majority of people the opportunity to contribute at their highest level of ability in any job.

Until very recently, Ford’s practices had a stranglehold on the workplace. It is only in the past few years that employers have begun to open their offices, factories, and retail outlets to leverage the creative energy of the people generating the income. The good news is that we have a new tool as powerful as the assembly line that is transforming the workplace back into a creative, productive, and fulfilling place to be for those with the courage to embrace it.

Today, by focusing on the blinding flash of the obvious popularized by Jim Collins in Good to Great, getting the right people in the right seats on the right bus, we have taken the first step. The next step is to recognize what Dan Pink calls Conceptual Workers, and Seth Godin refers to as Linchpins in our organizations. The final step is to create an organizational structure that celebrates the competence and beauty of the minds and hearts of everyone. Rather than follow Ford’s practice of punishing people for showing any lack of focus to the singular task at hand, we create workplaces that encourage us all to be productive because it is enjoyable and rewarding.

I have focused on the impact of the automobile to illustrate a paradigm shift, full of both intended and unintended consequences. I could have used electrification, the steam engine, or the printing press to make the same point. Occasionally, a new tool introduces an energy so powerful that it completely transforms the way we live.

The ubiquity of the internet, collaboration tools, cloud computing, crowd-sourcing, mobility (of people and information), shows us that we can return to the best aspects of work: contribution at our highest level. With these tools, and an intelligent attitude toward a dynamic organizational structure, any CEO can create a workplace that leverages the best of all possible worlds without the burden of imposing his or her own personal prejudices on the rest of the organization.

All that is holding us back is the inertia of rest; the resistance of business owners to create a workplace where we encourage creativity. It should be obvious to everyone that the assembly line is not coming back. The workers who are hired to be human machines have been replaced by actual machines. How will your company find and attract people who are willing to be more than a machine? How will you create an organization that supports that kind of worker? How will you find and develop executives who have the courage to not always have to be in control? These are the challenges we face in this new, exciting, and challenging paradigm.