7/31/10

The Creed of the Ford Motor Company Under Henry Ford Is Timeless

One of the best books I have ever read about business was originally published in 1922 and yet it is as viable and important today as it ever was--and I expect that it will be thus far into the future. Today, I would like to share what Henry Ford called The Creed of the Ford Motor Company. You could think of it like a mission statement (although I laugh at most of those. . .), but it is so much more real and stronger than that. It was the guiding basis of how Henry Ford thought about business and in particular how he felt about being in business as the Ford Motor Company. Here is the quote from his book, My Life and Work by Henry Ford:

The principal part of a chisel is the cutting edge. If there is a single principle on which our business rests it is that. It makes no difference how finely made a chisel is or what splendid steel it has in it or how well it is forged--if it has no cutting edge it is not a chisel. It is just a piece of metal. All of which being translated means that it is what a thing does--not what it is supposed to do--that matters. What is the use of putting a tremendous force behind a blunt chisel if a light blow on a sharp chisel will do the work? The chisel is there to cut, not be be hammered. The hammering is only incidental to the job. So if we want to work why not concentrate on the work and do it in the quickest possible fashion? The cutting edge of merchandising is the point where the product touches the consumer. An unsatisfactory product is on that has a dull cutting edge. A lot of waste effort is needed to put it through. The cutting edge of a factory is the man and the machine on the job. If the man is not right the machine cannot be; if the machine is not right the man cannot be. For any one to be required to use more force than is absolutely necessary for the job in hand is waste.

The essence of my idea then is that waste and greed block the delivery of true service. Both waste and greed are unnecessary. Waste is due largely to not understanding what one does, or being careless in doing of it. Greed is merely a species of nearsightedness. I have striven toward manufacturing with a minimum of waste, bot of materials and of human effort, and then toward distribution at a minimum of profit, depending for the total profit upon the volume of distribution. In the process of manufacturing I want to distribute the maximum of wage--that is, the maximum of buying power. Since also this makes for a minimum cost and we sell at a minimum profit, we can distribute a product in consonance with buying power. Thus everyone who is connected with us--either as a manager, worker, or purchaser--is the better for our existence. The institution that we have erected is performing a service. That is the only reason I have for talking about it. The principles of that service are these:

1. An absence of fear of the future and a veneration for the past. One who fears the future, who fears failure, limits his activities. Failure is only the opportunity more intelligently to begin again. There is no disgrace in honest failure; there is disgrace in fearing to fail. What is past is useful only as it suggests ways and means for progress.

2. A disregard for competition. Whoever does a thing best ought to be the one to do it. It is criminal to try to get business away from another man--criminal because on is then trying to lower for personal gain the condition of one's fellow man--to rule by force instead of by intelligence.

3. The putting of service before profit. Without a profit, business cannot extend. There is nothing inherently wrong about making a profit. Well-conducted business enterprise cannot fail to return a profit, but profit must and inevitably will come as a reward for good service. It cannot be the basis--it must be the result of service.

4. Manufacturing is not buying low and selling high. It is the process of buying materials fairly and, with the smallest possible addition of cost, transforming those materials into a consumable product and giving it to the consumer. Gambling, speculating, and sharp dealing, then only to clog this progression.

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