Chapter 2

In theory and law an industry belongs to the stockholders, at least it is for the stockholders to elect the board of directors who through practical officers manage the business; but, as a matter of actual fact, to the man who has the best job in the world for himself right in that organization, the life of the organization is of greater importance than it is to any one of the stockholders. In the same sense the existence of the industry is of greater value to many others in the organization and in the community than it is to the stockholders.

Hence, anything that interferes with the success of the organization injures many people.

WHAT IS NOT AN INDUSTRY.

Perhaps it will be well to state first what does not constitute an industry. Power, transportation facilities, fine buildings, fine machinery and a group of skilled workmen, a complete office staff and an elaborate system of fad management do not constitute an industry. Such an aggregation might be likened to a cargo ship all ready for service excepting that it lacks a captain and navigating officer and some one to determine what kind of a cargo to take, where to go and how to get there.

The greatest value of an industrial plant that has everything but a work to do and a leader to determine its major policies, lies in the skilled workers and able executives in work and office. The buildings and machinery come next in value, but the whole thing is worthless without the idea and the vision.

"DEAD" ORGANIZATIONS.

In all cities we can see "dead" organizations. Many of these companies that are actually "dead" seem to have life in them because they continue to move, but in many instances the motion is only due to the momentum of a push that was given years ago.

A "dead" organization may show signs of life in its gradual growth in size, but its real character is to be seen in the extent to which it is departing from specialization or by the continued use of antiquated methods and buildings.

The departure from specialization is generally due to either lack of courage to discard obsolete designs or to an inclination to consider the business from the selling end only.

It takes courage to discard an old model and it also takes courage to refuse to build some new invention.

The indifferent management carries the old and takes on the new. This policy covering many years creates a condition that is far removed from the specialization plan.

The management that views everything from the selling side of the business is also inclined to go on indefinitely increasing the line of goods manufactured.

The drift away from specialization may not be disasters today or tomorrow, especially, if there are no competitors who are specialists, but the inevitable result will be the burial of the "dead" organization when a real competitor comes into the field.

The calamity of the existence of "dead" industrial organizations is something more than the ultimate loss to the stockholders, it is the deplorable stagnation in which the workers find themselves with their progress blocked by lifeless management.

SOME INDUSTRIAL HOWS, WHYS AND WHATS.

How groups of men achieve the highest results in expenditure of given energy.

What is necessary to establish such conditions.

What are the most desirable opportunities.

What are desirable industries.

Why the need of building up habit-action.

How a group of men, through team work, acquires a group habit- action by which their product greatly exceeds the product of the same number of men working without cooperation.

How the individual ability and skill, as well as the group ability and skill is only to be acquired by repetition that establishes habit-action.

Why repetition of operation is essential to acquisition of skill and special ability.

What are the boundaries that divide the Jack of all Trades, the specialist and the victim of an overdose of repetition work.

Why industrial managers should know the cardinal principles of invention, of industrial engineering, industrial management, industrial relations and the human factor in engineering and in the industries.

Why a plant may be growing in size and paying dividends and may still be dead so far as the spirit of enterprise is concerned.

Why some men try to manage industrial plants regardless of the cardinal principles of progress of workers and the state.

Why the ideal conditions for the workers and executives can only be found in an industrial establishment that can successfully compete with others.

These "whys", "whos" and "whats" are of importance to all and suggest a line of thought and interest in this industrial discussion.

NEW INDUSTRIES.

The first men to function in the creation of new industries are those who are already well grounded by long experience in some special form of industry. The new organizations must have men well qualified to direct each of its branches.

In general it may be stated that a new organization must start with a superior article to manufacture and the elements of a superior organization. Sometimes it is possible by invention alone to win without the aid of the modern plan of specialized organization. On the other hand, the success may be attained by superior organization without a superior article to manufacture, but in general it is better to combine all of the possible beneficial factors in a new organization.

Organizers should know the market possibilities. If possible, the product should be sold directly to the user. The contact with the ultimate user is of supreme importance in the development of the invention and the organization. In dealing through a selling agency the manufacturer is not in control of the whole business. The selling agent dictates the policy of the whole business. He dictates the policy of the manufacturing plant from the selling agent's needs and that seldom fits the manufacturing conditions. The selling department generally demands many changes in product and wide range of articles of manufacture, while the manufacturing conditions require that special skill and ability that can only be developed by continuity of action of a given kind, and this restricts the range of produce.

If the head or one of the heads of a proposed organization knows the market condition and knows what can be done in the sale of a new article, then the question of invention and manufacture can be safely left to those who have been well grounded in such principles. That leaves only the question of the financial arrangements.

The method of forming a stock company under the laws of Vermont is very simple and people are generally well disposed to invest in the stock of the new company providing the men at the head are known to be competent--the inventor as an inventor, the business man as a business man and so on all the way through. The standards of measure of each one of the men and the standards of measure of conducting the business are set forth in other chapters. At this time it is sufficient to say that getting the capital is the easiest part of the job. The real work is the preliminary work of acquiring experience and devising plans.

A plan to create a new industry does not call for disloyalty to the employer, for as a rule it is very foolish to attempt to compete with an established organization excepting on some business that gives the new organization an advantage by one or more of the following points: invention, simpler product, simpler methods, a higher degree of specialization, a more effective and direct scheme of sales or a better spirit of personnel.

One of the essential things for the business man--if the business man is not the inventor--is to grasp the fact that his success is tied up to the inventor. The inventor is needed in the development all the way through, not only in guiding the form of the manufactured article, but in a large degree by dictating the process by which the article is to be manufactured. The inventor usually needs curbing to keep him from disturbing his own market by the creation of newer forms, but these matters are treated under the chapter of invention.

The principle element to set forth now is that it is a waste of time and money for a few business men to buy a patent or an invention and then dispense with the service of the inventor. They are merely going to sea without a navigator. On the other hand it is equally true that the inventor must consider the business side of the problem and do all in his power to devise effective means to facilitate the process of manufacturing.

The point to be made here is that there is no chance to win in this game by sharp practice. It is only through work and the combined work and energy of all the men in the organization that anyone can win.

INVENTOR'S PROPORTION.

In the machine tool industries, one-third of the interest in the plant is given to the inventor. This, to the average investor appears to be an unfair proportion, but it is one of those cases in which the broadest vision is necessary, and a glance at the earning power of such organizations as well as the prestige of the inventions, will bear out the wisdom of the general plan in similar industries.

The plan, however, should not be considered as something that boosts only one man or one group of men. If there is any attempt to exploit labor, the plan is wrong. The scheme must be fundamentally right so that each man coming into the workshop or the office of business finds there his best opportunity to develop and receive his best return for the use of his energies.

It is hoped that succeeding chapters will build up confidence in the scheme that will make it possible for men to see the way to progress in this line, to have faith in each other and to know that their ultimate success will come through a spirit of cooperation, concentration of attention and energies of each man to his own special work so as to attain highest ability and last but not least, the complete coordination of all in one safe, sane industrious organization.

MANUFACTURERS AND NEW INDUSTRIES.

One of the forces that operates against increase in the number of industrial establishments is the fact that we do not realize the need of human progress in our plants. Men should progress from job to job until they reach their best achievement. Some gain their greatest success in some manual work in which they acquire great skill and others go on to executive positions and even graduate to join other organizations or to start new industries.

We fail to see this fundamental law regarding the growth of the manufacturing organization, and seldom realize the prime necessity of the fundamental law relating to specialization. We overlook the fact that stagnation in place of progress of the men in the plant is deadly to the organization, and feel that if we get an extra-efficient man in a certain position that he must be kept there regardless of his own opportunity for advancement. We fail to realize that progress all the way through the organization, should be encouraged--that while man is distinctly a creature of habit, his mind as well as his body must be considered, and that only by changes of a progressive nature does he develop most favorably.

Too often a manufacturer is opposed to the creation of other organizations by men from his own organization, when, as a matter of fact, it would be a great deal better for his own institution if he would encourage the growth of other plants that can be created by his own men.

HABIT ACTION, BASIS OF SKILL AND PROFICIENCY.

We have many text books on the subject of industrial finance, of engineering, of invention, of industrial management, and all these books are written on the assumption that the human being knows his own kind. A study of our failures seems to reveal, however, that we have misunderstood the human being.

For instance, while we know that skill and experience is invaluable, we make our mistake by underrating its value, or too often we limit its application to the hand worker. We say that skill of the pianist, the surgeon, the workman must be acquired by practice. We know that in many trades a workman must spend three, four or more years as an apprentice, and at least the same number of years is necessary of actual specialized practice in almost any department of work, but we overlook the fact that that special skill or that special ability on which modern success is based must be acquired under certain conditions.

The oriole builds a nest unlike the robin's nest. Each is qualified in its own work. We know that these birds would be sorely handicapped, and would probably be downright failures in providing nests in season for eggs, if each were required to work to plans and specifications of the other bird's nest.

Our fundamental error in understanding our own kind seems to lie in the fact that we fail to recognize that man is a creature of habit to an extent not quite equal to that of the lower animals, but nevertheless to a degree that positively stands in the way of any man who tries to create or manage an industry without giving due value to this one element.

Another way to say all this is that we must recognize experience is necessary--experience not only for the worker but for each one in the organization.

The effect of this characteristic of habit action is so profound that any disturbance in a plant due to changing the position of benches or machinery or changing the character of the work sorely interferes with man's efficiency. On account of this characteristic the degree to which man's energies are most effectively employed goes in direct proportion to the degree in which there is a minimum of changes in the character of the work. The importance of this will be realized when we consider the question of competition, for that, in the last analysis, constitutes the measure of success.

Now, if we extend the plan of acquisition of special ability to embrace men in office as well as in the workshop we have covered the whole subject and have said nothing more than that it is necessary for all men in the office as well as in the workshop to have a special ability that has been acquired by experience.

If it is as simple as this, why the need of saying it? The need is brought about by the painful fact that one of the characteristics of habit action is to continue on without change even after the mind has apparently recognized that a change should be made. Success comes not from the mere _word_ knowledge of these things, but through action.

SPECIALIZATION.

Of the many elements on which industrial development depends, the question of specialization looms large.

Under the general term "specialization" we include all plans and methods of work by which the scope of activity of man is concentrated.

The highest degree of skill of artist or worker is attained by concentration of energies to a restricted range of work. It is through practice that the skill is acquired. The highest skill and highest ability is attained by the degree of interested attention and number of repetitions of a given kind of work.

Other things being equal, the practice, combined with keenness of interest, makes the most successful man in a given profession or work.

Repetition of operation becomes an automatic (habit) action in which man accomplishes the most work for a given expenditure of energy.

These two results--proficiency and easy performance--are of greatest value, but repetition of action, like nearly all good things, is not without its drawbacks. An overdose of one kind of work with a limited range of action frequently leads to dulling the senses. This stultifying effect produces a most undesirable result. The harm begins when there is a loss of interest in the work, for it is through the interest that the progress is made. The dividing line between the good and bad results varies with different types of men.

The simplest tasks may become of intense interest to the scientist and he may achieve great success in a work that to others seems monotonous drudgery. But with all its drawbacks it still is the best way for man to work and while we must labor to eliminate the condition of drudgery, we must face the plain fact that competition between men, industries, states and nations makes it absolutely necessary to specialize.

Specialization by the men and groups of men will determine the question of superiority of advance in science, industry, commerce, general wealth and welfare, as well as military strength in the time of war.

While we have clearly before us the degrading effects of repetition of distasteful tasks; we must not ignore the other extreme.

The opposite condition is the employment of energies of mind and body in ways that cannot produce high degree of ability. With such desultory use of energies, a day's work is of relatively small value, and there is no progress.

Of the two extremes we find the most prevalent to be the scatter-brain and scatter ability type.

The industries of the higher type lead in providing the best implements and in organization of best team work by which each worker produces the greatest value for a given expenditure of energy.

The essential bearing Of these facts is that the worker as well as the business man should compare his work with the work of others with whom he is in competition.

In these days of long distance transportation our competitors in the market may be a long distance away.

If it is in agriculture, the question of climate, soil and degree to which highly efficient implements can be used, are important factors.

If it is in the professions we must see how we can acquire the greatest proficiency and opportunity. This again involves the question of the extent to which we must specialize.

The measure then of success is the value of our services as compared with the services of others.

One of the important problems in industrial management is the extent to which specialization should be practiced.

On one hand we see the ill effects of a routine repetition where there has been an overdose of repetition--one that has gone beyond the beneficial point--and on the other hand, we find that the greatest achievements in the sciences and professions have been wrought by those who have concentrated in a way that has given them a higher development. Unfortunately in many of the industries, the development of machinery has gone forward with the sole end in view of dollars and cents, disregarding the effect on the worker.

This is to be found in some of the industries in which originally there was an opportunity for the worker to have a keen interest in his work. Mention is made of this situation as it comes about with certain stages of development of the manufacturing processes. It is unfortunate and something that the engineers and managers should endeavor to eliminate.

We have very few of such industries in Vermont; they can broadly be classed as undesirable industries. The fact that there are such industries should not in itself drive us from the scheme of working by which men specialize. We should, however, see to it that the degree of repetition of operation goes only to the beneficial extent. Our greatest trouble in Vermont has been the wasteful scattering of each man's energies over a variety of tasks.

Competition with the outer world makes it absolutely necessary that we use our energies in the most effective manner; that most effective manner is the one by which through repetition and experience we acquire skill and ability. The important matter to decide is the degree to which we can specialize. This degree varies with the work and the individual. To an alert and active mentality routine work becomes drudgery, while to the opposite type, mental work is annoying. In an industry, men gradually fit in with the most suitable work. Each man's job should be one that is best for him.

Nothing has been said thus far regarding the invention of new forms of articles to manufacture, or of new methods of machinery for manufacturing articles. These elements and many others are necessary in order to complete a successful plant, but the fundamentals embraced in a statement regarding the habit-action of man represented by special ability and skill acquired by experience, and the habit-action of the group acquired in the same way, constitutes a measure in determining the way at ninety per cent of the cross roads in industrial progress. Anyone undertaking the creation of a new organization or the management of a going concern must grasp these facts.

The value of experience, if acquired in an industry where such fundamental principles have been recognized, should be given the highest rating. Experience, however, in an industry where the energies of men were not most effectively employed and where there was not a recognition that the effective employment of man's energies require a general development of mind and body up to the man's capacity, cannot be counted as wholly good unless, through force of purpose, there is the strength to adopt a new path.

[Footnote]INDUSTRIAL MANAGEMENT.

[Footnote text: A revision of material originally under title of Human Factor in Works Management by James Hartness, published by McGraw-Hill Publishing Co., New York.]

The navigator in preparing for a voyage carefully examines each of his instruments. He must know the present error of his chronometer and its rate of change, and its general reliability as indicated by its past record. He must also know errors in his compasses for each point, and he should have the fullest information regarding the degree of reliability of every other means on which his success depends; and, last but not least, he must accurately determine his starting-point or point of departure.

In taking up the subject before us we will do well to follow his example.

In doing so, our task will be to examine two principal elements: one, the means on which we depend for interpreting the information that is available; and the other, the source and character of the information.

The means may be considered analogous to the navigator's instruments, and is no less a thing than the brain or mental machinery; and the information is simply the world about us as seen in the existing things, such as machinery, methods, popular notions, textbooks, etc., all of which may be classed as environments, and may be considered as analogous to the charts and other publications of our worthy example.

Like the mariner, we must determine the degree of reliability of all these sources of information and our means for interpreting observed facts.

When we have ascertained this we will know what allowance to make from the "observed" to get the actual facts. With this knowledge we will be able to accurately determine both our starting-point and best course.

The importance of considering our own minds will be seen when we realize that every new fact taken in must in a measure conform to the previous ideas. If some of these old ideas are erroneous, the mind must be more or less ready to discard them. It is very difficult to dislodge deep-seated convictions. Contradictory ideas are not assimilated. Only one of them is actually accepted. Even when to the objective reasoning they seem false, they frequently continue to control our actions.

Since we are loaded with the popular ideas which we have absorbed from our environment, it will be well for us to begin by critically examining our environment and the process by which ideas have been taken in. This may enable us to put out some of the erroneous views, and perhaps more firmly fix the true ideas; thereby preparing the mind for a more ready acceptance of what otherwise would be barred out as contradictory.

We shall not go deeply into the psychology of the subject, as it will not be necessary to go contrary to or beyond the well-known facts.