If You are Only Going to Read One Book on Business History


Anyone who knows me or has heard me speak knows how strongly I feel about business history. 
For starters, I believe that very little that really matters in business is new. Sure, technologies come and go – whether to advertise on hot air balloons or online, whether to deliver via the mailman or via downloads – but the real crux of business – how you treat people, how you foster innovation, how you deal with customers, how you finance the business – is, relatively speaking, timeless. I guess you could call me a “business fundamentalist.” 
In addition, there is SO much to be learned from the great enterprises and their leaders. No manager in modern times understands the essence of building a great company more than Alfred P. Sloan, the man most responsible for the greatness of General Motors at its peak. Nobody understands risk and innovation better than Henry Ford or Andrew Carnegie. I find these stores not only inspiring, but highly provocative – they always contain an idea that I can apply today or tomorrow in my own enterprises. 
The result is that you will find me continually talking about business history and its lessons on this website. There are thousands of books and millions of worthwhile ideas to be found in the treasure trove that is business history. But you have to start somewhere, and there is one book and only one book to start with: Alfred Chandler’s Pulitzer-Prize-winning The Visible Hand: The Managerial Revolution in American Business (1977, The Harvard University Press).
Mr. Chandler, now deceased, was the dean of American business historians, descended from the ancient DuPont family and a long-time professor at Johns Hopkins and Harvard. His theory about how big business came to be, and the role it played in the social and economic development of our nation, is by far the most prominent and most discussed theory of management development in academic circles. But whether you subscribe to his theories or not, there has never been another business history writer so powerful at finding the important details and telling the great stories. So many academics work on bits and pieces; Mr. Chandler wove it all together. 
Some of the business history articles and books I have read give short shrift to specific companies, entrepreneurs, and leaders. It is as if historical and cultural forces came together to create great industries and great companies, but it didn’t really matter if the founder was a Ford or a Rockefeller or a Smith. Other times, when academics do get specific, they focus on secondary enterprises rather than those most important in size and innovation. Chandler does not share these delusions. He understands that a handful of great enterprises, led by real men and women, defined how we make and consume cars, how we deliver goods through boxcars and retail chains, how we make and sell soap.
In this book you will find out that the great National Biscuit Company was formed in 1898, during the era of the great trusts, when business leaders thought the best way to success was to buy up all your competitors. (“Horizontal combination” in the terminology of economists.) This era led to the government’s “anti-trust” measures. Within four years, however, the management of Nabisco was writing to their shareholders to tell them that this had not worked, and that they were henceforth going to focus on internal, organic growth. Chandler quotes from the letter which made this radical announcement. Turned inward, Nabisco focused on building great brands, an art they helped create (their first mass marketed brand was “Uneeda” biscuits). Even today Oreo, Ritz, and their brethren are among the strongest brands in America. In the last 10-15 years, might our formerly great banking giants have been better off perfecting their existing services before going on acquisition sprees?  
You will learn that most of what those of us in business do today – from accounting to organization charts – was first done by the railroads, the initial giant industry. You’ll find that one of the most important and innovative industries was meat-packing, led by Gustavus Swift and Philip Armour. You’ll learn how Singer (sewing machines) opened one of the first networks of branch offices and how they met the new challenge of managing employees spread across the globe. How Julius Rosenwald built the greatest merchandising colossus in the history of the world – Sears, Roebuck. And how business leaders learned and grew from studying one another, a process that continues unto this day. Your own participation in this perpetual process will be greatly enhanced if you read this book.
Like most great nonfiction books, The Visible Hand contains extensive footnotes and bibliographical references, coupled with an index, making it easy to use this book as a reference book or as a gateway to further learning. This was not Chandler’s only book – I hope to review others in the future – but this was his definitive book, the one you should start with. I hope that, once you read it, you will be so thrilled by what you learn that you go on to study business history and its lessons in much more depth, as I have.