The year 1839 marked the birth of one of the world’s greatest business titans. John Davison Rockefeller was born in Richford, New York to a less-than-scrupulous father and a pious mother – fortunately, it was the latter that had the biggest influence on his life.
During the following 97 years he walked the earth, Rockefeller amassed a fortune unequalled in the history of humanity, becoming the world’s first billionaire at a time when millionaires were a rarity.
As one of the early industrialists who made a fortune during the period after the US Civil War – he was the founder and largest shareholder of Standard Oil Company – Rockefeller was portrayed as mean-spirited and money hungry, obsessed with trampling competitors and dominating markets.
The real Rockefeller, however, was a fair-minded man who single-handedly reduced the cost of kerosene for millions of Americans from 58 cents per hour to just 1 cent per hour, allowing homes across the country to be lit at night.
He was also the consummate family man, putting his loved ones ahead of even his passion for business.
Still, his success in business delivered fantastic results, and the strategies and principles he employed in building his empire are still useful for business owners today, whether of a major international corporation or a small family enterprise.
Here are 10 key lessons from the career of the world’s most iconic businessmen:
1. Cost cutting can yield great profits – Rockefeller was focused on reducing overheads and increasing efficiency, which improved his margins. This strategy also allowed him to pass on savings to customers, making it difficult for competitors to match his prices.
2. Focus where your competitors aren’t looking – Many sought to make money from the oil-refining industry, but Rockefeller saw opportunities beyond extracting and refining raw material. His masterstroke was creating products from petroleum-processing ‘waste’ that others failed to perceive.
3. Extract every revenue stream you can – While Rockefeller’s competitors would dump waste product, he was obsessed with extracting value from every stage of the refining process. He eventually created more than 300 different product lines from the raw oil extracted from the ground.
4. Be fair and honest – Despite his skinflint reputation, Rockefeller always offered fair value for any competitor he bought out. One of his early business associates once stated that if you owed him a cent he would expect to collect, and if he owed you a cent he would not rest until he paid you.
5. Control each step of the process – Rockefeller took control of every step of the process in his business, employing his own engineers and plumbers to build and repair his pipelines. He also employed his own coopers to make barrels, undercutting the cost of those who supplied them to others.
6. Sell the ‘picks and shovels’ – Much like those who made a fortune from selling equipment to people prospecting for gold, rather than digging for it themselves, Rockefeller avoided the riskier search for oil and instead focused on refining the end product.
7. Provide your customers with value – In the same way that Henry Ford made cars available to the everyday person, Rockefeller brought light and comfort to the masses at a price no-one could match.
In the process, he created customers that had never before been able to afford his products yet could not live without them once they had them.
8. Be prepared to go against common opinion – Rockefeller invested heavily in Ohio oil fields that were deemed unusable because of their stench of sulphur, offering to underwrite the investment with his own money when members of his board disagreed.
He believed his chemists could extract kerosene from the vast quantity of cheap oil available, and he was proven right.
9. Inspire and reward staff – Rockefeller was willing to work on the factory floor himself and was not afraid to pay his employees well. He would reward his top managers with long holidays, recognising their need for rest and replenishment.
10. Follow your passion and surround yourself with good people – Rockefeller loved business, and he was also extremely committed to his church, philanthropic efforts, and family. Indeed, he often turned to his wife Laura Spelman for guidance, saying, “Her judgment was always better than mine. Without her keen advice, I would be a poor man.”
Although Rockefeller established himself during the 19th Century – a very different time to our modern age – the principles of success that established his fortune are as relevant now as they were then.
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