Business is one of the most competitive fields in the world today. In recent years there has been an abundance of books written on the topic of “How to be a Business Superstar.” There is even “The 10 Super Stars of Business” that have been made into movies. Business success is not easy and it takes time to build a solid reputation and customer base. The world of business is filled with stories of great leaders who have achieved success in their field; however the story of Andrew Carnegie’s incredible success is almost always overlooked.
Andrew Carnegie was a Scottish immigrant and came to the United States at the age of twenty-one. From here he established his own business in what was then called New York City. By early 1855 he had already developed what was called a general partnership, a sort of business agreement between two or more partners in which each would take a piece of the business. Over the years the business expanded and by the late teens of the nineteenth century had taken on a life of its own. Today, there are over three hundred independent stores operating in New York City alone. The company still continues to this day to operate through its own stores.
What makes this example of business innovation so interesting is the fact that Carnegie did not simply open up any business that popped up. Rather, the story of how he was able to do this is a case study in why a successful entrepreneur should not be afraid to think outside the box when it comes to business practices. Many business owners may view the story of Andrew Carnegie as a case study in how they should do business rather than what they are doing.
The key element to understanding how the practice of monopoly management led to tremendous success for Carnegie was his attention to details.
After establishing a monopoly, Carnegie realized that all of his competitors were focusing their efforts on a few key elements that could affect his business. For example, he realized that the cost of manufacturing products was much higher than the cost of simply providing access to the product. By studying the actions of his competitors and observing their methods, Carnegie was able to create a monopoly that benefited him, but it also benefited those who wanted to purchase his products.
Another case study of how innovation and business practice can be built upon one firm’s innovation and the ability of that firm to control resources is the case of Microsoft. The principle of value creation is often discussed in business, but it is also an important principle of how to create long term success in business. The theory of value creation states that a firm should focus on creating a unique product or service and then allow the customers to come up with their own version of that product or service. Microsoft recognizes that the process of building a monopoly allowed them to not only focus on a unique product, but to also focus on a highly innovative business process so that the company was able to stay ahead of its competitors.
The question still remains as to what business practice contributed most to Andrew Carnegie’s ability to form a monopoly. The reality is that most innovations do not happen overnight and taking advantage of a monopoly before other firms can steal the idea can take years, if not decades. As such, the most important element of business is finding a way for the innovator to stay ahead of its competitors and avoid being copied.