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  • George Westinghouse–A Leadership Vignette

    Posted by David Foster on September 6th, 2012 (All posts by )

    Originally posted 5/30/2004

    The date, sometime during the late 1800s. The scene, a Westinghouse Electric factory complex in Pittsburgh, with an unpaved yard between buildings. A young laborer–a recent immigrant–is trundling a wheelbarrow, filled with heavy copper ingots, over an iron slab which serves as a track across the yard. The wheelbarrow goes off the track and into the mud. As the laborer struggles to get it back on the track, other workers begin mocking him.

    At that moment, a man in formal clothing is crossing the yard. It is George Westinghouse, founder and chief executive of the company. He wades into the mud and helps the man get the wheelbarrow back on the slab.

    Not a word was said, but powerful messages were transmitted: when someone is having problems, you don’t laugh at him–you help him. When things go wrong, no one is too important to dive in and get his hands dirty.

    This is a splendid example of how good organizational cultures are created: through the power of example. Think how much more effective Westinghouse’s action was than the mere posting of a “corporate values statement” containing phrases such as “we must respect our fellow employees at all times.” Not that such things lack value, but they are meaningless unless backed up by action.

    It would have been very easy for Westinghouse to simply ignore the incident and continue on his way. After all, he was heading to a meeting about something–a multi-million-dollar bond issue, say–compared with which a wheelbarrow stuck in the mud would seem to pale in importance. But his instincts were the right ones.

    (The story is from Empires of Light, by Jill Jonnes)

    9/6/2012: The above post is part of my Leadership Vignettes series, which starts here

    A related post by Bill Waddell: The cultural side of lean manufacturing

     

    22 Responses to “George Westinghouse–A Leadership Vignette”

    1. Jonathan Says:

      Excellent. Who among our current business, political or cultural leaders would act as Westinghouse did?

    2. Whitehall Says:

      I work in one of the remnants of the George Westinghouse empire and can say that I see some of George in the current corporate culture. It is one of the best companies I’ve worked for over my long career. He lost control of the company in the 1921 recession to some money guys from Boston. The company got into radio broadcasting as a first mover with the first commercial broadcast license in 1924. That grew into what became CBS which divested the industrial parts in the 1980s. My chunk was picked up by a UK Crown Corporation and then sold to the Japanese about 2006.

      Needless to say, the Japanese corporate culture and the Westinghouse American version sometimes takes patience and effort to meld.

      Picked up a book from 1903 on railroad technology and under a full page photograph of George is the caption “Inventor of the Greatest Life-Saving Apparatus Ever Given to the World” – the Westinghouse air brake system for trains.

    3. David Foster Says:

      I’ve been meaning to do a post on Westinghouse (the man) one of these days. The air brake (which he invented at age 23#) was indeed an extremely important contribution; he also developed and promoted improved railway signaling systems and helped pioneer the gas-lighting era (which in turn paved the way for the gas cooking and heating era and eventually our present-day natural-gas renaissance.) Perhaps most significantly, he backed AC power technology when Edison was still stuck in DC-forever thinking.

    4. Bill Brandt Says:

      Bill Hewlett, the co-founder of HP, was like that. There are many stories of him over the years but my favorite is an employee at a plant, seeking directions to get somewhere, asks a humbly dressed man cleaning up a storeroom how to get to XXXX – which the man simply responded – it was Hewlett

    5. David Foster Says:

      I think Steve Jobs would probably have helped the guy get the wheelbarrow back on the track…but would probably also have told him he was an idiot for running it off in the first place.

      (It would be interesting to know whether Westinghouse followed up by suggesting that the materials-handling system in the yard needed some improvement, maybe handcars on rails in place of wheelbarrows.)

      On the political-leadership side, I can definitely see George W Bush responding as Westinghouse did.

    6. grey eagle Says:

      If it was Obama instead of Westinghouse, Obama’s secret service detail would clear the area for ten miles in all directions. The man with the wheelbarrow would have been arrested and taken to Guantanamo for questionning. He, and many others, are sill there.

    7. David Foster Says:

      Modify Grey Eagle’s scenario a bit….assume that Obama has not yet become President, that he’s around 30, and that someone has made him CEO of a manufacturing company. In that scenario, how would he have responding to the wheelbarrow in the mud?

      I think his reaction would have been similar to the young doctor in this story:

      http://photoncourier.blogspot.com/2007_04_01_photoncourier_archive.html#3853590478676286992

      …ie, he wouldn’t have noticed the guy at all.

    8. Bill Brandt Says:

      @David – I think – what this all comes down to – is that real leaders have a humility

    9. Shannon Love Says:

      There are numerous stories from Iraq about American officers or enlisted men causing a complete turn around in the moral and dedication of Iraq military and police units by the simple expedient of leading from the front. In one case, I read of recently, the performance of one unit was completely abysmal and the Iraqis very cynical about the entire enterprise until the point of a unit got ambushed. Everyone retreated but they left one man down under fire. An American Captain darted out without thinking and dragged the man back to safety.

      No one in the unit had ever seen an officer do anything like that. In the Iraqi tradition, officers lead from the rear, often herding their men into fire with security troops. The idea that an officer would risk his own life to save a mere private was previously unthinkable. Overnight, the entire tenor of the unit changed and within weeks they were top performers.

      I am reminded of the adage from boy scouts that you have to be a good follower before you can be a good leader. In both cases, you must have humility and a willingness to put the good of the team above your own.

    10. Shannon Love Says:

      David Foster,

      “I think Steve Jobs would probably have helped the guy get the wheelbarrow back on the track…but would probably also have told him he was an idiot for running it off in the first place.”

      I know from stories told by old Apple hands who worked with Steve when the company was small that he would pitch in on any task usually with maniacal energy. That was one of the reasons he got away with being such an abusive jerk, he’d built moral authority by always pitching in and usually being right.

      On the hand, he had an intense hypocritical streak in that regard. He built a radically egalitarian culture at Apple but as is often the case, some animals were more equal than others. Here’s one first hand story I was told: Steve did away with all the executive seperation in things like washrooms and the gym. So, it was common to see Steve and all other executives in the gym with everyone else waiting their turn at the machines. However, if Steve needed a machine, such as an exercise bike, he would casually lean against a wall as if waiting patiently but then just stare at the person on the machine until they got the hint and moved on.

      Kinda of funny in its pettiness. I was never quite sure how much Steve was really into the whole egalitarian company thing and how much he just used it as an organizational tool. Steve was obsessed with two things: insane quality and hyper-intense marketing of everything, even himself. I think he took to heart Benjamin Franklynn’s observation that it does your reputation no good to be virtuous unless enough people see you being virtuous.

    11. David Foster Says:

      Shannon….re Steve Jobs and the bicycles. I think that as a general matter, organizations that are formally egalitarian preserve privileges for their leaders which act to negate the egalitarianism. A member of the Soviet nomenklatura, for example, might have a formal salary only modestly higher than that of an ordinary worker….but he would also have access to special stores (which had otherwise-unavailable products), use of dachas for vacation, special medical clinics, etc.

    12. Michael Kennedy Says:

      David, the principle of modest salary and a log list of perquisites is the European stander I have read. THat is why you read in leftist literature about how greedy American CEOs are. The European “managing director” drives a company car and lives in a company home and takes vacations in company facilities or on company expense. That, at least, is my understanding and it may be a better way to do things but may have something to do with our tax rules.

      “he backed AC power technology when Edison was still stuck in DC-forever thinking..”

      The unsung, and indeed reviled, hero of the Westinghouse electrical revolution, for it was nothing less, was Sam Insull.

      Examples:

      Insull began purchasing portions of the utility infrastructure of the city. When it became clear that Westinghouse’s support of alternating current was to win out over Edison’s direct current, Insull switched his support to AC in the War of Currents.

      and:

      As a result of owning these diverse companies, Insull is credited with being one of the early proponents for regulation of industry. He saw that federal and state regulation would recognize electric utilities as natural monopolies, allowing them to grow with little competition and to sell electricity to broader segments of the market. He used economies of scale to overcome market barriers by cheaply producing electricity with large steam turbines. This made it easier to put electricity into homes.

      Samuel Insull also had interests in broadcasting. Through his long association with Chicago’s Civic Opera, he thought the new medium of radio broadcasting would be a way to bring opera performances into people’s homes. On hearing of the work of Westinghouse to establish a radio station in Chicago, he contacted the company. Together the two companies arranged for a radio station to be built in Chicago which would be operated jointly by Commonwealth Edison and Westinghouse. KYW’s first home was the roof of the Edison Company building at 72 West Adams Street in Chicago, and it went on the air November 11, 1921. It was Chicago’s first radio station.[5]

      Insull became overextended, as many early businessmen did in the days before professional managers, but he was a useful target for the Roosevelt Administration’s war on businessmen.

      In Illinois, Insull had long battled with Harold L. Ickes over concerns that Insull was exploiting his customers.

      (After lowering electricity rates 32%)

      Upon the promotion of Ickes to Interior Secretary in 1933, Insull had a powerful foe in the Roosevelt administration.
      Insull controlled an empire of $500 million with only $27 million in equity.[19] (Due to the highly-leveraged structure of Insull’s holdings, he is sometimes wrongly credited with the invention of the holding company.) His holding company collapsed during the Great Depression, wiping out the life savings of 600,000 shareholders. This led to the enactment of the Public Utility Holding Company Act of 1935.
      Insull fled the country initially to France. When the United States asked French authorities that he be extradited, Insull moved on to Greece, where there was not yet an extradition treaty with the US. He was later arrested and extradited back to the United States by Turkey in 1934 to face federal prosecution on mail fraud and antitrust charges.[1][16] He was defended by famous Chicago lawyer Floyd Thompson and found not guilty on all counts.
      [14]”

      I’ve long been interested in his story. His life seems to be used by successive generations of leftists as a bad example but he was another Steve Jobs, without Jobs’ later revivals.

    13. David Foster Says:

      MK…don’t know much about Insull, but he sounds very interesting.

    14. Bill Brandt Says:

      MK, A book I keep starting and MUST finish is The Forgotten Man. The author talks about Insull and I am inferring from the unfinished portion that he wanted to get into the power plant business big time – and the govt then built the TVA.

      Or he envisioned each home or business having its own power plant.

      I should finish that book.

      Well (reading your link) i is pretty thorough. I did get the feeling without the governments intervention he would have been huge – but founding GE certainly seems like it was big enough.

    15. Kirk Parker Says:

      Shannon,

      The story of the officer rescuing his soldier–and the effect on the Iraqis–reminded me of an account (which I have been utterly unable to locate) of an academic from the third world, recently hired by an American university, and on a trip to a conference with the head of his department. This department head actually carried his own luggage out of the car and into the hotel they were staying at–completely unthinkable from the third-world/big-man world view the new hire had come from. It caused him to totally rethink his views of the Ugly Americans.

    16. Shannon Love Says:

      Kirk Parker,

      Your story sounds a lot like one of Dinesh de Souza’s accounts of how blind Americans are to class differences compared to people in the India.

    17. Whitehall Says:

      There’s a great biography of Samuel Insull out there – I have a copy at home. The man was a true visionary and at one time controlled a third of all US electric generation capacity. One reason he pressed for state rate regulation was to get his company’s business out of the hands of Chicago politicans by getting the state of Illinois to do the regulation. It was a reasonable system for what is largely a natural monopoly and a vital piece of infrastructure. Electric DEregulation has been a failure by my analysis and a step backwards.

      He sold stock in his company through his company’s billing office so that everyone could buy it directly. That bypassed Wall Street and made him enemies of the Morgans, et all, who used the FDR administration to go after him.

      In the 1932 campaign FDR named Insull an enemy of the people and promised to put him in jail if elected.

    18. Michael Kennedy Says:

      ” I am inferring from the unfinished portion that he wanted to get into the power plant business big time – and the govt then built the TVA.”

      The guy who was heavily involved in the TVA story was Wendell Willkie. TVA was as heavily subsidized by government as the “green energy” business will be if Obama gets another term.

    19. Whitehall Says:

      Investor-Owned-Utilities had a problem serving rural customers – they didn’t pay. There was not enough electric sales in kW-hrs to pay for the new power lines required and the line losses – the customer-per-mile metric didn’t work.

      Farmers wanted the power since it vastly increased their productivity.

      TVA was a notion to have government provide electric service out in the sticks. But Wendell Wilkie’s Southern Company wanted to eventually grow into the same region and fought FDR hard to block TVA.

      The US government eventually set up the Rural Electrification Agency (REA) to provide low cost capital from the Feds to cooperatives for the necessary distribution and generation investments. We eventually killed REA after the country was completely served but not before some of those coops grew into rather large organizations. In some states (Nebraska and Washington) almost the whole state is served bu “public power districts.” The infamous Washington Public Power Supply System started to build 5 or 6 nuclear reactors of which only one, Columbia, made it to startup and service. Both the government and the private bond holders took a big bath on that.

    20. Mike_K Says:

      “Investor-Owned-Utilities had a problem serving rural customers – they didn’t pay. There was not enough electric sales in kW-hrs to pay for the new power lines required and the line losses – the customer-per-mile metric didn’t work.

      They didn’t work for TVA either so TVA decided to destroy Southern Company and take over the paying parts of their business. TVA is quite a story that began as Muscle Shoals, a nitrate plant for WWI It is pretty well discussed in The Forgotten Man.

    21. David Foster Says:

      I don’t know what the overall return on investment for TVA has been, but I’ll warrant that it’s much, much higher than the ROI for the Obama administration’s “Green” initiatives. Hydroelectric is a technology that actually works and (given the right sites) is very economically viable; especially important to note that it has integral energy-storage capabilities. The flood-control benefits have also been significant.

      Indeed, the attitude toward dams is a revealing indicator of difference between the old Left and the modern “progressives.” The old lefties, anywhere on the spectrum from the New Deal to the Soviet Union, were proud of their dams; today’s “progressives” want to blow them up.

      Deanna Archuleta, Obama’s Deputy Assistant Secretary of the Interior, in a speech to Democratic environmentalists in Nevada: “You will never see another federal dam.”

      This is not your grandfather’s Democratic Party.

      Also see my post Frankly, My Dear, I Do Need a Dam:

      http://photoncourier.blogspot.com/2006_10_01_archive.html#116170691210214436

    22. Mike_K Says:

      The San Francisco lefties want to blow up Hetch Hetchy Dam which supplies all the SF water. I’d actually watch them with relish.