Paradigms are shifting all around us – in business and the global economy, to the ways we look at energy and the environment. Institutions and industries are being forced to rethink traditional business models considered sacred. World leaders are asking countries and cultures to reevaluate their very ways of life.
Never before in our lifetime has there been such a tectonic shift in, well… everything. Such a shift has indeed occurred before in the life of our nation though – and among the lessons it taught was that for the creative and the bold, these sweeping changes can open the doors to amazing opportunity.
A New Birth
Perhaps until now America’s most profound economic and cultural transformation occurred in the Reconstruction era of the 1860s and 1870s. Then, a tattered nation emerged from the crucible of civil war into “a new birth of freedom” and an industrial revolution of unprecedented wealth creation that Twain dubbed “The Gilded Age”.
As Malcolm Gladwell says in his book, Outliers, “This is when the railroads were being built, and when Wall Street emerged. It was when all the rules by which the traditional economy had functioned were broken and remade”. Then, as now, everything was changing. And, it was the age when nearly 20% of the 75 wealthiest individuals in human history took advantage of those changes and built their fortunes… all in America. They are (by rank of wealth):
01) John D. Rockefeller: Oil Industry
02) Andrew Carnegie: Steel Industry
28) Frederick Weyerhaueuser: Paper Industry
33) Jay Gould: Railroad Industry
34) Marshall Field: Department Store
35) George F. Baker: Railroad Industry
36) Hetty Green: Banking
44) James G. Fair: Mining
54) Henry H. Rogers: Oil Industry
57) J.P. Morgan: Electricity and Steel Industries
58) Oliver H. Payne: Oil Industry
62) George Pullman: Railroad Industry
64) Peter Arrell Brown Widener: Tobacco Industry
65) Philip Danforth Armour: Meatpacking
These fortunes were made during turbulent times of boom and bust not unlike our own. The “Golden Spike” connecting the Union Pacific and Central Pacific railroads was driven at Promontory Summit, Utah in 1869, creating the nation’s first transcontinental railroad – and billions of dollars for the economy. America rode the rails of success until 1873.
That’s when European financial instability caused the collapse of the Vienna stock market, then swept across the continent and on to London, finally hopping “the Pond” to crash upon American shores on September 18th. Banking firm Jay Cooke, which was heavily leveraged in rail construction loans, went belly-up, and ignited a financial panic in the railroad industry that staggered the country.
The railroad bubble burst. The New York Stock Exchange closed its doors for the first time, going dark for 10 days. One quarter of the nation’s 360 railroad companies declared bankruptcy, and a full one-sixth of the American workforce was unemployed with dizzying speed (and without unemployment insurance). Yet, in those dark days of uncertainty, great opportunity existed for entrepreneurs and business leaders with the vision to see it, and the boldness to reach for it.
A Steel… Err, Silver Lining
For steel magnate Andrew Carnegie the depression offered unexpected opportunity. The financial downturn resulted in decreased demand for labor and materials, which translated into a 25% savings on Carnegie’s projected costs. Carnegie took advantage of the opportunity to diversify beyond the railroad industry that had been his bread and butter. Rather than bury his head in the sand, he boldly invested in additional labor and materials, expanding his operations into new sectors.
Carnegie sought, and won, contracts to supply steel for buildings and bridges – including, eventually, all of the steel for the Brooklyn Bridge. When everybody else zigged, he zagged. Instead of playing it safe to avoid failure, he made daring moves to achieve success. Carnegie said it was one of the most valuable business lessons he learned: The best time to expand was when no one else dared to take risks. In volatile economic times he risked it all, and he won.
Carnegie is a perfect example of creativity and imagination merging with strategy to achieve profound success. He and his contemporaries were in the right place at the right time to make the most of their personal gifts, emerging technologies, and shifting paradigms.
So are we.
Déjà vu All Over Again
Today, we face similar economic uncertainties. We also find ourselves in the midst of a changing world rife with possibilities. Carnegie’s revolution was industrial. Ours is energy. President Obama campaigned on a promise to make energy a focus of his administration. We are moving to improve the ways we power our world, and the government will marshal resources and money to advance research in this field. As part of the proposed economic recovery America’s energy infrastructure will be beefed up. From wind to solar to smart grids and beyond, business opportunities will blossom within, and because of, the expanding energy sector.
There will surely be opportunity created from the unexpected new technologies developed as a result of this energy revolution. Just as Cold War competition with the Soviet Union inadvertently spawned the creation of the Internet (an “accidental discovery” resulting from government-funded radar systems research), unintended and amazing technologies often unfold wherever government focuses so much money and attention. All of this, combined with the changing paradigms of business practices, regulation and finance, may be setting the stage for some of the greatest opportunities for innovation, business, investing and wealth creation in American history.
What will your role be?
Embrace the Change, and Seize the Future
Change can be scary, especially when it is so profound and occurring as rapidly as it is today. Rather than be fearful, be grateful. We are fortunate to be here now and to be in a position to potentially take advantage of the changes unfolding around us. Don’t give in to the gloom and doom of the nightly news.
History shows that even in the most volatile economic times opportunity abounds for business. Emerson declared, “The world is all gates, all opportunities, strings of tension waiting to be struck.” Be prudent, while staying proactive. Don’t bury your head in the sand. America will lead, and entrepreneurs with the vision to see the opportunities – and the boldness to reach for them – will fuel the engine that drives the economy forward.