John Rockefeller was an American businessman and philanthropist born in Richford, New York. He is known as one of the richest men to ever live with his estimated worth amounting to about $340 billion in today’s economy. He started working at the age of Fourteen which was about the time he migrated to Ohio with his family. Mr. Rockefeller started working by embarking in a number of small businesses until landing his first real job at the age of 16 where he started his career as an assistant bookkeeper with Hewit & Tuttle. At 20 years old, Rockefeller started a company with a partner working as a commission merchant in hay, meats, grains and other goods.
Rockefeller took very few unnecessary risks, but in the early 1860s he saw an opportunity in the oil business. in 1863 he decided to open an oil refinery near Cleveland and within two years it became the largest in the area. Due to the success of the oil business, he decided to devote his undivided attention on to the oil business. In 1870, Rockefeller incorporated the Standard Oil company. In 1892 the Ohio supreme court deemed standard oil a monopoly thus forcing Rockefeller to dissolve the company.
He retired from the face of the company in 1895 at the age of 56. In 1937 he passed away at the age of 97.Chapter 1: Management Fundamentals The business world is always changing and the time in which Rockefeller was alive and a leader was completely different then what it is today. Social capital is something that made Standard Oil the company it was. Rockefeller who at the time owned standard oil gained control of the oil market by promising railroads a regular flow of business in return for lower shipping rates. This is where a domino effect was created. The competition could not promise the same thing to the railroads and could not compete so they were faced with a choice go bankrupt or sell to Standard Oil. The process of absorbing companies resulted in railroad prices getting cheaper due to the fact Standard oil was giving them more product.
Rockefeller said to the remaining competition ” If you don’t sell your property, it will be valueless because we have advantages of the railroads.” Frankly, this is a skill the ability to turn knowledge into action and that’s exactly what Rockefeller did he knew if he gave the competition no other options they would have to sell. Rockefeller responded well when he was faced with the changing nature of organizations. As stated in the documentary “How Big Oil Conquered the World” it shows that Rockefeller was faced with a decision either allow ethyl alcohol become the new fuel source or do something about it. In 1925 Henry Ford said that ethyl alcohol was “the fuel of the future”. Due to the prohibition alcohol around the same time, this fuel source was being researched what the documentary shows is that Rockefeller “donated” millions of dollars to making alcohol illegal. There are a few scenarios why Rockefeller would do this, one being he was a religious man and thought morally the right thing to do for people’s lives was to get rid of alcohol, or through agenda setting he made getting rid of alcohol a number one priority to reach his goals and plans in the long term.
Rockefeller was said to have treated and paid his employees fairly and often handed out bonuses to hard working employees. Rockefeller would often lead and get involved in the front line as well as write letters to partners encouraging and complimenting the companies work, “Let the good work go on. We must ever remember we are refining oil for the poor man and he must have it cheap and good.” Or as he said to another partner: “Hope we can continue to hold out with the best illuminator in the world at the lowest price”. these letters show that he used leading to inspire and arouse enthusiasm to achieve goals. Standard oil was ahead of its time in many different aspects but one that stands out is the fact they were using the upside down pyramid. This strategy puts the customers and clients at the top of the list and managers at the bottom. Rockefeller has been described as someone who was kind, forgiving, generous and loyal and was not the slightest bit arrogant or ostentatious.
He viewed all his employees as valuable and would rarely fire anyone, this resulted in every employee from top to bottom to be genuinely fond of him. He kindness and generosity extended to the public as well where he has stated in private letter that he wants to produce the best product and sell it at the cheapest price. In the future, I see myself as adopting a similar style as Rockefeller and treating the customers and employees as the number one priority. I would follow in the footsteps of Rockefeller in the fact that I would never be condescending or rude when dealing with employees and try to pay employees generously, my main goal would be to have employees see me as someone they can approach.
Just like Rockefeller, I would take pride in the product that I am producing and make sure it is quality. One thing that I would make sure I don’t lobby and “donate” money to political parties for self-gain. Chapter 4: Planning Processes and Techniques I would say that John D. Rockefeller was the best of all time when it came to forecasting for a plethora of reasons but the most obvious being he mad billions in an industry he didn’t start in.
What this entails is that while he was working as a commission merchant he used forecasting and saw the potential the oil industry had and predicted that oil was the next big thing. In 1890 the U.S Congress passed the Sherman Antitrust Act a federal legislation prohibiting trusts and combinations that restrained trade. In 1892 standard oil was dissolved by the Ohio supreme court, due to the fact Rockefeller was always a step ahead he had a contingency plan that resulted in Standard Oil operating as a holding company named Standard Oil of New Jersey. Rockefeller knew that he owned 90 percent of the market and eventually something would happen and when it did his contingency plan worked. The plan was very successful and ended up working until 1911 where the company was eventually forced to break into more than 30 different companies.Standard Oil owned almost all competition so all the competitions employees were basically owned by Standard Oil.
A procedure or rule that was in place at the time was nobody could share information on the price the company bought something for and employees could not disclose any information on conversations or negotiations. Rockefeller was very smart when it came to saving money in his business life as well as his personal life.From a young age he would keep track of every single purchase on a piece of paper and when it was full he would add all of his expenses up and try to either stay within a reasonable range of spending or spend less than the previous week. The earliest example of this was when he was 16 and bought a book for 5 cents and within minutes was said to have recorded the purchase on a piece of paper.
This was Rockefeller’s budget and it helped him save money for potential business opportunities. Although when he became the wealthiest man alive it’s not hard to believe that he stopped keeping track of all purchases. Standard Oil and Rockefeller had a vision of the company to be “the most successful oil refinery company in the country and create various companies across the United States.
Standard Oil will meet customer expectations of highest quality, and give its customers the best deals”. This vision statement clearly states what the company was trying to accomplish which was supply a good product to their customers at the best price possible. When it comes to planning processes and techniques I personally believe Rockefeller is one of the best at it.
Something that I believe is imperative when running a company is to always have a contingency plan for everything. As shown by Rockefeller everything can change in the blink of an eye and you will regret not having a contingency plan. Something that I think will benefit me that Rockefeller has done is record every purchase and when you add up the total for that week you stay within your budget. Finally, the most important thing I would take from Rockefeller’s business, a vision statement it is extremely important for customers to see what the company’s intentions and goals are so they know what they are spending their money on. Chapter 5: Strategy and Strategic Management Rockefeller was a leader of Standard Oil which at the time was a growing industry and quickly became the biggest and most profitable industry. Standard Oil owned 90% of one of the biggest markets and made billions, according to Porter’s Five Forces Model I would say Standard Oil was in a very attractive industry.
The reason behind this is because there was a minimal amount of industry competition due to the fact Standard oil owned most of the competition. The risk of new entrants was low as well because companies were scared to enter and have to compete against the giant corporation known as Standard Oil. When it comes to substitute products or services there was a threat of ethyl becoming the new fuel source but Rockefeller was always a step ahead. Bargaining power of suppliers is very little and in this scenario standard oil usually influenced the suppliers due to their massive size. The customers had really no power when it came to influencing the price because it was a monopoly, but Rockefeller wanted to truly give his customers a product that was high in quality and cheap in price and was always looking at ways of decreasing the price of this product.
Standard Oil used growth and diversification strategies to become billion dollar company. They focused on growth through concentration, standard oil tried to rule the domestic market and tried to operate as best as they could in the United States, resulting in the sculpting of the largest oil refinery company in the U.S. Due to the cutthroat nature of the oil industry I would say Co-operative strategies were not something oil companies got involved in.
Although I would say that Standard Oil had some cooperation between rivals when they basically forced them in to selling and working with them, I would say that it benefited both parties for the simple reason the companies being bought wouldn’t have to declare bankruptcy and standard oil would increase their market share. Standard Oils master strategy was obvious,Growth. They were never satisfied with where they were and they always wanted to increase their Sales, Market share, and operating locations. Standard Oil acquired at least 34 different companies and was not going to stop buying until they were forced too.
What this shows is what their main strategy was, keep growing. Standard Oil had two obvious competitive advantages and both go hand and hand. One being they were able to cut costs and still produce quality product, and two they had bottomless pockets. They were able to cut cost because of the secret agreements they had with the railroad companies that no other companies could promise. This increased their profit margins resulting in them having the financial resources to decrease the price of their product to a point where competitors could not match it. Standard Oil was a star they were a high market share business in a high growth market.
They produced large profits through penetration of an expanding market. I think what Rockefeller did was genius and I would follow him by finding a market that is attractive using Porter’s five forces and find a way to have not only one but multiple competitive advantages. I would use these competitive advantages to increase my market share while maintaining decent profit margins.
Another aspect of Rockefellers strategic management I would use in the future in focusing on the domestic market. It is imperative to be the best in your domestic market because if you try to extend yourself to markets you don’t know before being the best in yours it may ruin everything you have. I don’t imagine myself being involved in a cut-throat industry such as the oil industry, Rockefeller basically gave people no other choice than to sell the company they worked hard for. Whether they were in it for the money I couldn’t see myself taking someone’s business away just so I can get richer.
Chapter 9: Leading Rockefeller had the power to make everyone in his company do what he said when he said but this was not the case. He once hired an accountant who was great at what he did so he came to a room to start work, the accountant had never seen Rockefeller in person before, he then saw an exercise machine in the room and ordered a man to take it away the man kindly took it. A few day later the accountant found out the man he ordered to take away the machine was Rockefeller. The accountant was expecting to be fired but Rockefeller never brought the encounter up. This event shows Rockefeller was not condescending and did not use his power to command or punish people he preferred a different approach using reward power and relational power. Employees would describe Rockefeller as generous, the reason they said this was because when an employee or manager had a good idea or was working hard he would reward them with bonuses in monetary form or in the form of extra vacation days. Rockefeller would often describe his business as the “Standard Oil family” and tried to get each member to work for the good of the whole.
Rockefeller would often help teams that needed it and would be seen at 6:30 A.M “rolling barrels, piling hoops, and wheeling out shavings.” he would work with employees and management toward a collective goal. Rockefeller would make consultative decisions, he would often just sit and listen to arguments during board meetings and would rarely speak until the end. After hearing all the information he would make a decision whether it was the popular one or not, But even when making the unpopular decision everyone agreed because they knew Rockefeller always made the right decision.
When an employee apart of the “Standard Oil family” was sick or not able to work at 100 percent Rockefeller was the first one to notice and he gave them as much time off as they needed. The employees would have full pay while they were away because Rockefeller felt that a person’s health comes before business. “Please feel at perfect liberty to break away three, six, nine, twelve, fifteen months, more or less .
. . . Your salary will not cease, however long you decide to remain away from business.” words out of Rockefeller’s mouth showing he uses moral leadership and although he may be losing money he puts what’s right or ethical first. Although employees were giving as much time as they needed to get healthy they never took advantage of it which is counter-intuitive. Rockefeller’s trait of caring for people and doing what’s right was also shown in the later years of his life donating $540 million to charities and universities.
“Very well kept—very indeed,” said Rockefeller to an accountant about his books before pointing out a small error and leaving. This is just one example of him seeing the good in people and trying to help them improve. Rockefeller was very smart when it came to giving constructive feedback he first complimented what they did right and if something was done wrong he would communicate that in a positive and constructive manner. Rockefeller is a charismatic leader who inspired his employees and still inspires people today. The biggest reason for this is he was self-made and got no handouts, his father was a snake oil salesman and mother a religious woman, not your common billionaire upbringing.
He reached inspiring goals of owning the world largest refinery at the age of 31, became the richest man in the country at 58, and by the time of his death he was the richest man in the world. If this is not inspiring enough he would also often write inspiring and motivating letters to management and employees. Rockefeller used Transactional leadership and would often say “Good leadership consists of showing average people how to do the work of superior people.”? He would learn the framework and apply it systematically to keep others moving forward to achieve performance goals. When his employees completed a task or did something well he would often reward them generously.
He would inspire and motivate and although he gave out rewards employees would work with or without the reward because they believed in his vision. I envy Rockefeller in the fact that he became the richest man in the world and would still treat people below him with respect, I aim to be like this in the future because I believe that everyone respects you more and will be more transparent because they don’t see you as the big boss. I see myself following Rockefeller by giving employees paid leave for as long as they need because when you are in a job that has a lot of stress you won’t perform as best you can. Mental health is becoming a lot more prevalent nowadays and I could see giving people this option being very beneficial. Although nowadays I can see people taking advantage of this I would not take this benefit away because of a few bad apples. Giving feedback is very important and that is something I will do as a future leader for sure. I will make sure that when I give constructive feedback just like Rockefeller did I will first compliment and tell people what they are doing well before telling them what they need to change.