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The 21st Century Industrialist Is Not a Capitalist

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Day 4 of 21 days with Chuck’s new book, Why Employees Are ALWAYS a Bad Idea

The 21st century Industrialist is one of the core business diseases to come out of the Industrial Age. “Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful; that’s what matters to me.” – Steve Jobs

People who hate business think that Wall Street and all it’s excesses, actually represents capitalism, and therefore hate Capitalists. Capitalists want to do “something wonderful”. But Wall Street and most of the Bigs of today are not Capitalists at all. They are just old-fashioned Industrialists running smokeless, digital factories. I’m a fire breathing, rabid Capitalist who wants to do something wonderful. I can’t find anything in common with either the Industrialists of the 1800s or those of today that masquerade as Capitalists.

Attributes of the 21st century Industrialist
Following are six distinct attributes of a 21st century Industrialist that separate them from traditional Capitalists who are focused on doing something wonderful.

Attribute #1 – Being Big vs. Being Great
Being big, not being great, was the primary driving force behind the famous Industrialists of the 1800s. 21st century Industrialists like Microsoft, GM, the publishing industry, and most banks assume it is the holy grail of business. For them, being big trumps being great.

Attribute #2 – Closed Markets
The Industrialist’s goal was not to be the best, but to destroy everyone else in a zero sum game of dog eat dog. The modern day 21st century Industrialist works hard alongside politicians to keep the markets closed to small newcomers.

Attribute #3 – Resistance to Progress – Status Quo
Industrialists are brilliant at squeezing the last dollar of profit out of the present market, and are unparalleled at doing so. But this massive investment in legacy systems make it very difficult to adapt and move forward in a fast-paced world. The constantly changing world threatens the Industrialist’s dominance, and puts them at an extreme disadvantage to newcomers. Progress is the enemy of the Industrialist. The status quo is their friend.

Attribute #4 – Users, Not Creators – The Cash Cow Rule
Industrialists rarely create, invent or innovate. They are users of existing products, services, sectors and industries in order to gain power for themselves. They look around for proven winners that can be controlled and spun up to great efficiencies, with bigger opportunities to dominate and be powerful. It’s about building a cash cow, not creating or innovating.

Attribute #5 – Focus on the Competitor (Destroy, Mimic, or Buy)
Industrialists worry a lot about what the other guy is doing, because the other guy could end up creating something that will take market share away from their fiefdom. Instead of focusing on being more creative, they work to destroy, mimic of buy those who might threaten their control.

Attribute #6 – Short-Term Decision Making
Businesses controlled by investors make almost all of their decisions based on what is good for the company’s quarterly report, even if it hurts them in the long run, which it usually does.

Industrialists Are Not Capitalists
Let’s stop lumping Capitalism in with industrialism. Instead, let’s identify which companies are embracing 21st century Industrialism for their own short term gain, and which ones are focused on building sustainable companies that Make Meaning in the world around them, for the benefit of everyone in the process.

This is a summary of a chapter of Chuck’s new book, “Why Employees Are ALWAYS a Bad Idea (And Other Business Diseases of the Industrial Age)”. Click here to pre-order this new ground breaking book at a discount on IndieGoGo.com until July 28.

The Problem with Big

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Day 2 of 21 days with Chuck’s new book.

Jerry Garcia said, “Too much of anything, is just enough.” But “Big” is one of the core business diseases of the Industrial Age; a very new business solution devised by Industrialists to serve themselves. Big has big problems that Small will never experience.

It took a long time for us to fall in love with Big, in the 1970s, almost at the very end of the Industrial Age. But since then, we’ve become addicted to big. We can’t help ourselves. Big “anything” is just too cool for school.

Why is Big so Big Now?
Big Government has been around a long time, but Big Business as a dominant force is brand spanking new. There are just 167 companies in the world older than five hundred years, and only one of them has more than 100 employees. The rest are Smalls. After thousands of years of running economies on the backs of the Smalls, we now just assume Big is the best and only way to go.

The Problem With Big
Big has special problems that it doesn’t share with Small. Whether it is business, government, dinosaurs, hurricanes, or snowstorms; the really big ones have two intrinsic problems that Small doesn’t have:

1) The bigger they are, the more problems their complexity creates, for themselves and the world around them.

2) The bigger they are, the greater impact their mistakes and problems have on themselves and the world around them.

In 2008, one giant financial institution, Lehman Brothers, collapsed, which created a domino effect, threatening the entire banking system. As a result, in 2009, and for almost two years after, the U.S. economy was stunningly rated by the National Security Agency as the highest threat to U.S. national security, higher than terrorism or any other outside threat. The United States addiction to Big had become our own worst enemy.

Big is Bigger Than Ever
How did the two Bigs (business and government) respond to this internal threat to our nation’s security? Big Government gifted hundreds of billions of dollars to a few giant banks without so much as an I.O.U. Free money with no strings attached. Big government had to do it. Big business was holding the government and the entire country hostage by sheer virtue of its size. The big banks are now all bigger than they were when they were “too big to fail.”

What did the giant banks do with the bailout gift? They put it in their pocket and stopped lending to small business. Small business in America was crippled by this one act which went largely unreported by big media, and is still the largest underlying cause of the slow recovery.

Big Impact
As this shows, the reach of bad decisions by the Bigs can be devastating. When Big does something stupid like Lehman Brothers, the impact is global. When Small does something stupid or intentionally detrimental, it’s no less acceptable, but the scope of the damage is localized and controlled. It’s the difference between the mistaken detonation of a hand grenade or a nuclear bomb. Both are bad, but only one is global in scale.

Big Has a “Get Out of Jail Free” Card
And too often, when Bigs get stupid, they get a pass. In 2012 the U.S. Justice Department found that HSBC, one of the world’s three largest banks, had “spent years committing serious crimes”, regularly laundering money for terrorists and drug cartels. But the Justice Department decided HSBC was “too important to subject them to disruptions”, and shielded them from any criminal prosecution.

Micro-solutions for Micro-problems
Another problem with Big is that it creates macro solutions for micro problems. Even with the best of intentions it is simply too big a task to ask macro-entities to solve local problems. The problem is not the systems, but the size of the systems; the size of business, size of government and the resulting accumulation of power and decision-making into those few hands.

The reason size is a problem is simple. The old adage is that “all politics is local.” The same is true for problems – “All problems are local.” Big never solves local problems.

Size Matters
Does small always work better than big? No. It is easy to find both local businesses and local governments that make self-preserving decisions that aren’t in the best interest of their constituency, just like the Bigs. But because they are small and local, the negative affects are never as damaging.

Returning to local government and local business for answers to our local problems would push as many decisions down the food chain as possible. This is difficult if not impossible for both national politicians and big business leaders to accept, because they would lose control over their own macro-power.

There is a place for both Big Business and Big Government, but experience says we would be better off, and certainly safer as a nation with less of both.

Tomorrow we’ll discuss why greed doesn’t drive Wall Street; it’s something much bigger.

This is a summary of a chapter from Chuck’s new book, “Why Employees Are ALWAYS a Bad Idea (And Other Business Diseases of the Industrial Age)”. Click here to pre-order this new ground breaking book at a discount on IndieGoGo.com until July 28.

You Can Be Small, and Also Be An Industrialist

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Take the Test – Are You An Industrialist?

People think they despise Capitalists, but they’re actually angry at 21st century Industrialists. There are six major values and beliefs of the new Industrialist. You can be a new startup with no employees and get sideways out of the gate with these beliefs. Are you practicing any of the six?

Many of today’s companies, big and small, are simply Industrialists who forgot which century it is. Industrialism is not something that happened in the 1800s. It still dominates a majority of business practices today. Industrialist values can infect a business of any size. Take the test – see if you are an Industrialist.

Value #1 – Motivated to Be Big The number one value of an Industrialist is that they are more motivated by being big than by making a contribution to the world around them. They might talk about adding value, or creating and innovating, but the motivation for doing so would be – to be big. Do you want to create something that adds value to the world around you, or are you more motivated by using existing innovations simply to get big? Capitalists don’t try to be big, they try to be good. And big follows if big is what will help them be even better. If you’re driven by being big instead of being creative and innovative – even if you have no employees, you’re an Industrialist.

Value #2 – Closed Markets The famous Industrialists of the 1800s, did not believe in a Free Market. They believed in a market that would allow them, the elite, to control everything, at the cost of every other business owner’s freedom. The Industrialist’s goal was to destroy everyone else; to be the last man standing in a zero sum game of dog eat dog. Do you invite others into your industry or do you wish they’d stay out? If you’re not welcoming others in with open arms, you’re not about free markets, and you’re in Industrialist.

Value #3 – Resistance to Progress – Status Quo Industrialists are brilliant at creating efficiencies around their present product and their present position in the market. They are fanatically obsessed with squeezing the last dollar of profit out of the present market, and are very aware that the next great invention could likely destroy their power by simply refocusing the consumer on a newer, better product or service. Are you afraid somebody might come up with some new idea that could make your “legacy” system obsolete? If so, you are an Industrialist. Stop running scared and become the guy who creates what destroys your own legacy system.

Value #4 – Destroying Jobs – Industrialists get bigger by acquiring other companies, then stripping them of “redundant” people who the buyer already owns. Capitalists do it more by organic growth based on having been creative, innovative, introducing new products and adding value to their offering, which sells more product and requires that the grow and hire. Are you thinking you’ll grow your way to success by buying up other people’s creativity? If so, you’re an Industrialist. Instead, get creative and innovate your way to “Big”.

Value #5 – Be Users, Not Creators – The Cash Cow Rule
The thing Industrialists are best at is creating cash cows from other people’s inventions. They don’t look for opportunities to create, innovate and push the world forward. They look for a potential cash cow that can be controlled and spun up to great efficiencies, with bigger opportunities to dominate and be powerful. Besides using existing inventions rather than creating new ones, Industrialists also use people, local economies and resources. Are you using the innovation of others and other people to create a cash cow for yourself at the expense of the world around you? If so, you’re an Industrialist (and a really uncreative one at that).

Value #6 – Focus on the Competitor (Destroy, Mimic, or Buy)
Chris Peters, when he was head of Excel Development in the very early years wrote, “We didn’t write Excel to make money, we wrote it for the sheer joy of putting the largest computer software company out of business.” Industrialists worry a lot about what the other guy is doing, because the other guy could end up creating something that will take market share away from their fiefdom. Capitalists are so busy creating and innovating that they have very little time to worry about what the next guy is doing. Are you focused on creating something amazing for the world around you, or are you focused on mimicking, buying, or destroying the “competition”? If so, you’re an Industrialist.

Don’t fool yourself. Industrialists aren’t giant corporations, they are people who have the wrong view of the world around them. How a company starts their journey has a lot to do with their permanent DNA.

How are you starting your journey?