Let’s assume for a moment that Elon Musk fits into the rarified category of madman/genius.
In that context, the clearly brilliant visionary behind Tesla, Tesla Energy, SpaceX, The Boring Company, Neuralink, Open AI, and supposed bidder for Twitter, may be teetering into the madman part of the equation.
His increasingly impulsive and erratic actions make him appear to be unfocused and distracted from doing any one thing.
For Bloomberg Opinion contributor Stephen Mihm, it brings to mind the trajectory of Henry Ford about a century ago.
Mihm argues Musk may be in danger of following the meandering path of Ford, whose non-automotive pursuits ultimately resulted in his company getting leap-frogged by the competition.
By Stephen Mihm
As Elon Musk tries to add the social media giant Twitter to his
expanding empire, he’s seeming a bit busy. When he’s not starting
and buying complex companies, he’s sounding off about free speech,
cryptocurrency, artificial intelligence and, well, just about everything.
The electric-car magnate is developing an eerie resemblance
to another automotive visionary: Henry Ford. That’s not meant as
a compliment. If Musk keeps courting celebrity and pursuing side
ventures, the risk is that Tesla, the company that made him a
household name, will fall from its premier position just as Ford
Motor Company did in the 1920s.
Henry Ford famously parlayed visionary ideas about
assembly-line manufacturing into unimaginable wealth and global
fame.
This adulation drove a transformation in Ford’s
personality. Like Musk, Ford was originally a shy, awkward man.
But as his business ventures made him a celebrity in the years
after 1910, he underwent a metamorphosis that foreshadowed
Musk’s own transformation from tongue-tied savant to global guru.
Samuel Marquis, a friend of Ford’s, once recounted how the
automaker “suddenly faced about, hired a publicity agent [and]
jumped into the front page of every newspaper in the country.”
Ford’s new philosophy, Marquis noted, boiled down to a belief
that “it is a good thing to keep people talking about him, no
matter what they say.”
There was plenty to say. In the 1920s, Ford’s ambitions
attracted jaw-dropping awe. In a typical side project launched
in 1921, Ford proposed to lease the government-owned Wilson Dam
on the Tennessee River. A longstanding proponent of
hydroelectric power, Ford hoped to turn a large swath of dirt-
poor Alabama known as Muscle Shoals into a hydro-powered
industrial metropolis the size of Detroit.
He proposed to underwrite the business with a new kind of
techno-currency: the “energy dollar,” which would be backed by
electricity generated by the river. By the time the plan fell
apart, Ford was contemplating another modest project: a run for
the US presidency.
His wife nixed that idea. But the “Sage of Dearborn,” as
Ford became known, started plenty of other ventures. He moved
into the manufacture of airplanes and launched the nation’s
first commercial airline in 1925. He started educational
initiatives, including the Henry Ford Trade School.
Other ventures weren’t so wholesome. He purchased a failing
newspaper known as the Dearborn Independent, pumping money into
it and turning it into a large-circulation national paper
distributed through his dealerships. It featured columns that
ghostwriters churned out under Ford’s name.
It also published a horrific series of anti-Semitic screeds
later published as “The International Jew.” The addled
conspiracy theories that appeared there attracted the admiration
of Adolf Hitler.
Lost in all the celebrity and controversy was Ford’s iconic company.
As he became increasingly distracted – and ever more
convinced of his own infallibility – Ford drove away many of his
most capable lieutenants and engineers, replacing them with
sycophants. He even sidelined his own son, Edsel, who correctly
anticipated many of the challenges facing the company.
Ford had become someone who “would rather be a maker of
public opinion than the manufacturer of a million vehicles a
year,” Marquis observed.
Ford’s dethroning began with the arrival of Alfred P.
Sloan, an engineer trained at the Massachusetts Institute of
Technology who by 1923 had gradually assumed control of a motley
assortment of car companies known as General Motors.
Sloan was ruthless and calculating, using financial
statistics to cut costs and foster efficiency. The language he
used to describe everything, one management theorist later
observed, was as “cold as the steel he caused to be bent to form
cars: economizing, utility, facts, objectivity, systems,
rationality, maximizing — that is the stuff of his vocabulary.”
He looked the part, too.
Sloan had no interest in being a public figure. He simply
wished to usurp Ford. He began by bringing order to his own
corporate empire, segmenting the market into different brands.
Instead of Ford’s singular Model T, General Motors had a “car
for every purse and purpose,” as one advertisement put it. Sloan
gave the executives in charge of different divisions –
Chevrolet, Buick, Cadillac and so forth – enough latitude to run
their own ships, but otherwise centralized management.
The differences multiplied from there. In the 1920s, Ford
pursued a strategy of vertical integration, buying mines and
forests to give him a steady supply of raw materials. (Musk has
embarked on similar ventures.) Sloan, by contrast, opted for a
more flexible reliance on suppliers that freed up capital to
pursue the investments behind the strategy of market
segmentation and planned obsolescence.
While Ford spent a fortune building Fordlandia, a bizarre
utopian city in the Brazilian rainforest designed to oversee
rubber production in an area bigger than Connecticut, Sloan
focused on building affordable and stylish cars. And while Ford
kept expecting buyers to pay cash, Sloan pioneered consumer
financing.
In 1929, General Motors became the world’s biggest car
manufacturer. Though Henry Ford tried to stage a comeback with
the Model A, it was too late: General Motors widened its lead
during the Great Depression. Only when Ford’s grandson took over
at the end of World War II and hired top managers did the
company’s fortunes turn around.
In the case of Tesla, history is breathing down Musk’s neck.
The automaker best positioned to overtake Tesla premier manufacturer of electric vehicles could be the Ford
Motor Company, which is gearing up to beat Musk at his own game.
Today’s Ford executives don’t have tens of millions of
Twitter followers. They’re not household names. They don’t have
grand plans to transform the world or launch new ventures.
In other words, they’re not at all like Henry Ford. And
that spells trouble for Ford’s modern-day incarnation, Elon
Musk.