Chapter 67 - My Life and Work
Today’s Chapter is based on the book “My Life and Work”, an autobiography by Henry Ford, the founder of Ford Motor Company.
Here’s what I have learned:
Work
"To me, ideas are worth nothing unless executed.”
— Steve Jobs
In his autobiography, Henry Ford explains the importance of labour in society. He believes that labour is the foundation of human economics. He mentions that “Labour is the human element which makes the fruitful seasons of the earth useful to men. It is men's labour that makes the harvest what it is. That is the economic fundamental: every one of us is working with material which we did not and could not create, but which was presented to us by Nature.”
Furthermore, he says that the foundation of society are based on agriculture, manufacture and transportation. And based on his work at the Ford Motor Company, Henry Ford has truly revolutionised both the manufacturing and the transportation industry. For him, running the Ford Motor Company is merely work. In fact, he explains that while the start of a business may come from an idea, “it is work and work alone that can continue to deliver the goods—and that, down in his heart, is what every man knows.”
“Ideas are of themselves extraordinarily valuable, but an idea is just an idea. Almost any one can think up an idea. The thing that counts is developing it into a practical product.”
— Henry Ford
However, while it is important to execute on ideas, Ford mentions that it is necessary to go through a thorough analysis of new ideas before executing them as most of the “acute troubles of the world arise out of taking on new ideas without first carefully investigating to discover if they are good ideas.” As Ford once said, “Thinking is the hardest work there is, which is probably the reason why so few engage in it.”
This reminds me of the importance of the concept of “labour of thinking” we have learned from Henry Ford’s own friend, Harvey Firestone. Firestone explains that it is quite difficult in business to have some time to yourself to think as numerous things come up every day that will need your attention.
Furthermore, he mentions that thinking is primordial in making good decisions and to run a successful business in the long run. In his book, Firestone provides Henry Ford as an example of this. While Ford is known for making business decisions quickly, but in reality, “He reaches his decisions slowly and alone; he does not jump at anything, and so, when the time comes for execution, everything moves with marvelous rapidity because everything has been previously thought through and planned.“
As a matter of fact, Ford was a master of delegating executive duties to others and made sure to have enough time on his own to think, and to plan and to watch. He would make sure to never assign any executive duties to himself and to have no social obligations.
“He has had the time to do this thinking and planning because he has used his time himself instead of permitting others to use it for him. And he is certain that plans will be executed for him, because he knows how to let men go when they grow too rich and lazy to execute.”
— Harvey Firestone
Service Over Profit
“Take care of your customers and employees, and the profits will follow.”
— Jack Taylor
As we have previously learned from Jack Taylor at Enterprise, profits are not be the criteria to evaluate the success of a company. As a matter of fact, Taylor is consistently always asking himself if the company is treating their employees well and if customers are happy, because he knew that these questions must be answered properly in order to build a sustainable business over the next fifty years and beyond.
Similarly, Henry Ford believes that it is wrong to assume that businesses only exist for profit. In his opinion, business exists to provide services. In fact, after working in business for so many years, he came to these three conclusions:
(1) That finance is given a place ahead of work and therefore tends to kill the work and destroy the fundamental of service.
(2) That thinking first of money instead of work brings on fear of failure and this fear blocks every avenue of business—it makes a man afraid of competition, of changing his methods, or of doing anything which might change his condition.
(3) That the way is clear for any one who thinks first of service—of doing the work in the best possible way.
As such, Ford reminds us to not be too greedy for money when running a business, as that is the surest way to not get any. He believes that when one focuses on providing great services, then money will abundantly takes care of itself. As he once said, “For the only foundation of real business is service.”
He explains that “The most surprising feature of business as it was conducted was the large attention given to finance and the small attention to service. That seemed to me to be reversing the natural process which is that the money should come as the result of work and not before the work. The second feature was the general indifference to better methods of manufacture as long as whatever was done got by and took the money.”
“It is the function of business to produce for consumption and not for money or speculation.”
— Henry Ford
In Ford’s opinion, a business’s responsibilities to his customers do not stop once a sale is completed. As a matter of fact, that is only the start of it. For example, “In the case of an automobile the sale of the machine is only something in the nature of an introduction. If the machine does not give service, then it is better for the manufacturer if he never had the introduction, for he will have the worst of all advertisements—a dissatisfied customer.”
As such, when being a businessman, we must make sure to identify great products by the great services it provides to customers rather than by how much money we can earn by selling it.
Education
“Don’t let schooling interfere with your education”
— Mark Twain
As we have previously learned from Stef Wertheimer, the founder of ISCAR, learning through reading can be a great alternative to the formal education route. In fact, Wertheimer took his lack of formal education as a motivation to learn more on his own through reading. This passion for learning definitely came from his father who was known as a man of integrity. Wertheimer says that his father “was intelligent, an autodidact, a lover of books, someone who was interested in all subjects, and a person of uncompromising principles.” As such, Wertheimer mentioned that he had the habit of reading a book a day, at the least.
“I also continued to read voraciously. I was eager to learn, but in my own way. I always resisted conventional, banal classroom studies, with the teacher instructing the class and the pupil receiving instruction.”
— Stef Wertheimer
This ability to learn on his own through learning was definitely a useful ability that helped Wertheimer throughout his career. As a matter of fact, when he was enrolled in the army, Wertheimer was once assigned to repair air-conditioning systems. However, at the time, he had zero knowledge on the subject. By consequence, he had to learn on the subject through books and within a few days, he was able to fix anything that was in need of reparation!
“Oh no!” Captain Thompson groaned. “They made a mistake again. I asked for an expert on aircraft air-conditioning, so what did they send me? An optician.” I told him, “Captain, don’t worry. I’ll get my hands on a few instructional manuals and I’ll repair the air-conditioning systems for you too.” A pilot there named Breyer who flew to Palestine as part of his assignment brought me some books, and within a few days I could fix anything that was in need of repair.”
— Stef Wertheimer
The story of Stef Wertheimer is a kind reminder of the importance of continuous learning in life through reading. As Charlie Munger once advised: “Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.” As a matter of fact, Munger genuinely believes that part of the reason why Berkshire Hathaway is so successful is because Warren and Charlie are avid readers. He once said, “You’d be amazed at how much Warren reads – at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
Similarly, based on his autobiography, it is clear that Henry Ford do not believe that one’s knowledge be judged by their formal education. As he once said, “An educated man is not one whose memory is trained to carry a few dates in history—he is one who can accomplish things. A man who cannot think is not an educated man however many college degrees he may have acquired.”
“But the best that education can do for a man is to put him in possession of his powers, give him control of the tools with which destiny has endowed him, and teach him how to think.”
— Henry Ford
Furthermore, he believes that one’s education starts after graduation, as the main goal of education “is to teach him how to use his mind in thinking.” As such, when Henry Ford was running the Ford Motor Company, Ford never hired any experts or men with past experiences. His reasoning was that “A man who knows a job sees so much more to be done than he has done, that he is always pressing forward and never gives up an instant of thought to how good and how efficient he is. Thinking always ahead, thinking always of trying to do more, brings a state of mind in which nothing is impossible. The moment one gets into the "expert" state of mind a great number of things become impossible.”
This reminds me of the way Edwin Land used to hire his employees. Following his motto of “an education without a degree”, Land often did not require new employees to have any technical experience. Since his company’s office was located nearby, he frequently hired fresh graduates or students from Harvard or MIT. Furthermore, Land preferred to hire bright young liberal students over applicants with technical experience. As a matter of fact, he believed that they could learn the routines of the laboratory and the structure of scientific discipline as rapidly and, more importantly, they had little to unlearn.
While Land did not expect his new hires to have technical knowledge, he expected his employees to continue their education as an integral part of their working career. He fully believed that individuals in the industry would be better qualified to increase their technical competence and at the same time make their job fully satisfying through continuous learning.
Simplicity
“That's been one of my mantras—focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it's worth it in the end because once you get there, you can move mountains.”
— Steve Jobs
Henry Ford believes that if you ask people on how they want their products to be made, you will discover that over 95 percent of people want articles at the very highest quality but sold at the very lowest price. As such, during his entire career, Ford focused on the concept of manufacturing cars at the lowest cost possible.
To accomplish this feat, Ford put his best effort in the direction of simplicity. He explains that the best way to cut costs is to study the item in question and to find ways to eliminate the entirety of useless parts. As he once explained, “As we cut out useless parts and simplify necessary ones we also cut down the cost of making. This is simple logic, but oddly enough the ordinary process starts with a cheapening of the manufacturing instead of with a simplifying of the article.”
Another way of simplifying things in terms of manufacturing is through standardization. Ford put all his effort into the production of one car—one model, the Model T. What made the Model T so special was the fact it was truly simple to mass produce it; there were only four constructional units in the car (the power plant, the frame, the front axle and the rear axle). As such, it was simple enough to assemble it at a massive scale.
“That works both ways and applies to everything. The less complex an article, the easier it is to make, the cheaper it may be sold, and therefore the greater number may be sold.”
— Henry Ford
Ford mentions that this concept of building one standard universal car didn’t come easily to him as he had to go through a thorough studies. The results of his studies led him to define the fundamental attributes of a universal car he had to respect:
(1) Quality in material to give service in use. Vanadium steel is the strongest, toughest, and most lasting of steels. It forms the foundation and super-structure of the cars. It is the highest quality steel in this respect in the world, regardless of price.
(2) Simplicity in operation—because the masses are not mechanics.
(3) Power in sufficient quantity.
(4) Absolute reliability—because of the varied uses to which the cars would be put and the variety of roads over which they would travel.
(5) Lightness. With the Ford there are only 7.95 pounds to be carried by each cubic inch of piston displacement. This is one of the reasons why Ford cars are "always going," wherever and whenever you see them—through sand and mud, through slush, snow, and water, up hills, across fields and roadless plains.
(6) Control—to hold its speed always in hand, calmly and safely meeting every emergency and contingency either in the crowded streets of the city or on dangerous roads. The planetary transmission of the Ford gave this control and anybody could work it. That is the "why" of the saying: "Anybody can drive a Ford." It can turn around almost anywhere.
(7) The more a motor car weighs, naturally the more fuel and lubricants are used in the driving; the lighter the weight, the lighter the expense of operation. The light weight of the Ford car in its early years was used as an argument against it. Now that is all changed.
Furthermore, after standardising the products, he had to make sure that the assembly process was as simple as possible. As we have learned previously, saving time or money, even on a small detail, can become significant at a large scale. As Henry Ford once said, “If a device would save in time just 10 percent. or increase results 10 percent., then its absence is always a 10 percent. tax. If the time of a person is worth fifty cents an hour, a 10 percent. saving is worth five cents an hour. If the owner of a skyscraper could increase his income 10 percent., he would willingly pay half the increase just to know how.”
“Save ten steps a day for each of twelve thousand employees and you will have saved fifty miles of wasted motion and misspent energy.”
— Henry Ford
Here’s what Henry Ford wrote about the principles of assembly:
(1) Place the tools and the men in the sequence of the operation so that each component part shall travel the least possible distance while in the process of finishing.
(2) Use work slides or some other form of carrier so that when a workman completes his operation, he drops the part always in the same place—which place must always be the most convenient place to his hand—and if possible have gravity carry the part to the next workman for his operation.
(3) Use sliding assembling lines by which the parts to be assembled are delivered at convenient distances.
This concept of simplifying the manufacturing process in order to save up on costs remind me of how Elon Musk runs his Tesla factories. As we have learned previously, Musk loved to use first-principles thinking in order to question every single requirements, especially when it came from regulators.
In fact, a big reason why Musk started SpaceX was due to the fact that rocket components were considered too expensive due to the fact that they are subject to hundreds of specifications and requirements mandated by the military and NASA. Elon Musk would often asks his engineers, both at Tesla and at SpaceX, to always question these “requirements” through first-principle thinking. By doing so, one realises that more often than not, these requirements are not necessary.
As Musk would say, “Step one should be to question the requirements, make them less wrong and dumb, because all requirements are somewhat wrong and dumb. And then delete, delete, delete.”
By questioning requirements and seeing them as mere recommendations, Musk was not only able to save money, but he was also able to make his manufacturing of rockets and cars much more efficient.
“The only rules are the ones dictated by the laws of physics. Everything else is a recommendation.”
— Elon Musk
Elon Musk was so serious about this concept of questioning all requirements that he implemented a five-point checklist that was dubbed “the algorithm”. Here’s a summary of it:
1. Question every requirement. Each should come with the name of the person who made it. You should never accept that a requirement came from a department, such as from “the legal department” or “the safety department.” You need to know the name of the real person who made that requirement. Then you should question it, no matter how smart that person is. Requirements from smart people are the most dangerous, because people are less likely to question them. Always do so, even if the requirement came from me. Then make the requirements less dumb.
2. Delete any part or process you can. You may have to add them back later. In fact, if you do not end up adding back at least 10% of them, then you didn’t delete enough.
3. Simplify and optimize. This should come after step two. A common mistake is to simplify and optimize a part or a process that should not exist.
4. Accelerate cycle time. Every process can be speeded up. But only do this after you have followed the first three steps. In the Tesla factory, I mistakenly spent a lot of time accelerating processes that I later realized should have been deleted.
5. Automate. That comes last. The big mistake in Nevada and at Fremont was that I began by trying to automate every step. We should have waited until all the requirements had been questioned, parts and processes deleted, and the bugs were shaken out.
Beyond the Book
Read "Henry Ford and the Actual Value of Education" by Farnam Street
Read "First Principles: The Building Blocks of True Knowledge" by Farnam Street
Listen "#266 Henry Ford's Autobiography" by Founders Podcast