Harvey Firestone constructed one in every of America’s nice industrial empires from scratch, reworking from a farm boy to Henry Ford’s key accomplice. This episode reveals timeless ideas about constructing companies by means of booms, busts, and technological disruptions.
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The episode is predicated on his biography: Males and Rubber: The Story of Enterprise.
The Firestone Rules: 12 Timeless Classes from an Industrial Pioneer
- A Style for Saltwater: Most individuals spit out saltwater; Harvey had discovered to savor it. The cruel, uncomfortable circumstances that made others stop made him come alive. When the 1920 financial crash left his firm drowning in $43 million of debt, his executives needed to close down. Harvey’s response? ‘The state of affairs didn’t frighten me. It put new life into me.’ He noticed alternative the place others noticed catastrophe. Excellence isn’t about avoiding issue; it’s about growing an appreciation for discomfort.
- Positioning is Leverage: Harvey’s father taught him that ‘a effective crop one 12 months was roughly a lucky accident.’ As a substitute of chasing outcomes, Harvey targeted on controlling what he may: sustaining surplus reserves (which gave him leverage when others have been determined), questioning each course of, and constructing systematic benefits. When the 1907 panic hit, his reserves let him develop whereas rivals scrambled for survival. Outcomes are lagging indicators; the one factor you’ll be able to management is the method.
- Excessive Company: When trade cartels controlling tire patents and rim manufacturing repeatedly excluded Harvey from their associations, he didn’t settle for defeat, he created a greater different. His new tires outperformed their patented designs, and his rim manufacturing unit produced higher merchandise than theirs. ‘There may be at all times a greater means of doing all the pieces than the best way which is normal for the time being. It’s a good factor for a person to be pushed into discovering that higher means.’ Excessive company means treating each ‘no’ as analysis, not rejection. There may be at all times one thing you are able to do to enhance the state of affairs.
- The Braveness to Shut Doorways: Harvey may have stayed within the worthwhile stable tire enterprise, however acknowledged that “stable tires would quickly be a minor product” lengthy earlier than that was standard knowledge. Regardless of inside resistance so sturdy that he had to purchase out a serious shareholder, he pivoted to the tires we all know at this time. Typically it’s important to kill good choices to pursue nice ones.
- Bias Towards Motion: When the 1920 disaster hit whereas Harvey was vacationing in Europe, he didn’t kind committees or rent consultants. He took the following steamer dwelling, personally took over gross sales, and applied a surprising 25% value reduce inside days. ‘A small discount wouldn’t give the smash we needed to have—the massive dramatic play.’ The gamble paid off. Firestone moved $18 million in stock whereas rivals scrambled to match his costs. Pace beats perfection when circumstances demand decisive motion.
- Outthink, Don’t Simply Outwork: Harvey’s two questions—‘Is it vital? Can it’s simplified?’—remodeled operations all through Firestone. When he questioned why rubber wanted months of pricy warehouse getting old earlier than use, no person may clarify it. Eliminating this sacred step saved hundreds of thousands in storage prices. The identical questions slashed administration layers from six to 2. The best benefit typically comes not from working more durable inside complexity, however from the readability to acknowledge and remove it.
- Bounce, Don’t Break: Each rejection grew to become a redirection. Excluded from the clincher tire affiliation? He pivoted to develop straight-side tires. Refused by the rim firm? He bounced into manufacturing his personal. When his first financial institution mortgage was denied, he didn’t surrender, he discovered what he was lacking and located a greater financial institution. The important thing isn’t avoiding partitions; it’s sustaining sufficient flexibility to ricochet in new instructions while you hit them. The place others noticed useless ends, Harvey noticed pivot factors.
- Win by Not Shedding: When rivals undercut Firestone’s costs, Harvey prevented the 2 paths to destroy: slicing high quality (which destroys popularity) or slicing costs with out altering operations (which destroys earnings). As a substitute, he invented a brand new sort of tires that sellers may reduce to measurement, eliminating their stock prices and escaping value competitors completely. Whereas rivals fought damaging value wars, Harvey sidestepped the battle. Success typically comes not from brilliance, however from disciplined avoidance of stupidity—refusing to play video games the place everybody loses.
- At all times Be Unforced: Harvey refused to make selections from weak point. When executives met him on the dock with catastrophic information: an excessive amount of debt, banks refusing credit score, gross sales utterly stopped—they anticipated fast motion. As a substitute, Harvey advised them ‘I can’t deal with this job till Monday’ and retreated to his household farm. That weekend of clear pondering led to the daring 25% value reduce that saved the corporate. Even below excessive strain, he acted from selection, not panic. Solely transfer while you select to.
- By no means Delegate Core Tasks: Whereas Firestone grew his firm to hundreds of workers and delegated day-to-day operations, he maintained private management over essential capabilities. Throughout the 1920 disaster, when survival was at stake, he despatched the gross sales supervisor on trip and personally took over: visiting sellers, setting costs, and shutting offers himself. His philosophy was clear: ‘If something within the enterprise is mistaken, the fault is squarely with administration… the fault is mine.’ True management means accepting final duty, particularly when it issues most.
- Easy Scales, Fancy Fails: Throughout the growth, Firestone developed elaborate hierarchies, promoting ballooned from 7 to 105 individuals, a number of administration layers generated countless memos, and so they even printed a million-circulation journal that misplaced 15 cents per copy. The disaster revealed this was all theater. Harvey’s two questions, ‘Is it vital?’ and ‘Can it’s simplified?’ reduce by means of the bloat. He eradicated divisions, merged departments, and killed the journal. The lesson? Success sows the seeds of its personal destruction: prosperity breeds complexity, complexity breeds inefficiency, and inefficiency breeds failure.
- Catch the Proper Wave: Harvey positioned himself on the intersection of main traits: when vehicles emerged, he pivoted from stable carriage tires to car tires; when WWI clogged railroads, he launched the ‘Ship-by-Truck’ motion that helped create America’s trucking trade; when Ford mass-produced vehicles, he partnered early. Curiously, he wager mistaken on electrical beating gasoline, however positioned his tires to work with both. Fairly than predicting the long run, he positioned for a number of doable futures and rode the waves that materialized. The important thing? Be on the proper intersections when change occurs.