Friday, March 9, 2012

The Philosophy of Andrew Carnegie (1835 - 1919), the Steel Tycoon / Magnate of 19th century USA ---> What can we MBA students learn from the life of Andrew Carnegie?

From the link:

Here are some interesting thoughts of Andrew Carnegie, the amazing Scottish American. He built the Carnegie Steel Company / U.S. Steel, the Carnegie Hall, among many other public institutions like museums. The Carnegie Mellon University is named after him. He is regarded as the second richest man in history after J.D. Rockefeller. His was a true "rags-to-riches" story! He immigrated with his parents in May 1848 from Scotland, UK to Pittsburgh, Pennsylvania in USA. He made his wealth in the Steel industry, among a host of other industries and investments. Later on in life, he gave away his wealth in Philanthropy and educational institutions, in the same enthusiasm which as he had accumulated his wealth, to start with.

Andrew Carnegie Dictum:
  • First 1/3rd life  ---> Education.
  • Second 1/3rd life ---> Earning money.
  • Third 1/3rd life ---> Philanthropy.
Before his death on August 11, 1919, Carnegie had donated $350,695,654 (at THAT time). The "Andrew Carnegie Dictum" illustrates Carnegie's generous nature:
  • To spend the first third of one's life getting all the education one can.
  • To spend the next third making all the money one can.
  • To spend the last third giving it all away for worthwhile causes.
Carnegie was involved in philanthropic causes, but he kept himself away from religious circles. He wanted to be identified by the world as a "positivist". He was highly influenced in public life by John Bright.

On Wealth:

As early as 1868, at age 33, he drafted a memo to himself. He wrote: "...The amassing of wealth is one of the worse species of idolatry. No idol more debasing than the worship of money. ...the man who dies thus rich dies disgraced." He wanted to retire at 35, initially. However, he did not begin his philanthropic work in all earnest until 1881 (age 46).

Carnegie wrote "The Gospel of Wealth", an article in which he stated his belief that the rich should use their wealth to help enrich society. The following is taken from one of Carnegie's memos to himself:
Man does not live by bread alone. I have known millionaires starving for lack of the nutriment which alone can sustain all that is human in man, and I know workmen, and many so-called poor men, who revel in luxuries beyond the power of those millionaires to reach. It is the mind that makes the body rich. There is no class so pitiably wretched as that which possesses money and nothing else. Money can only be the useful drudge of things immeasurably higher than itself. Exalted beyond this, as it sometimes is, it remains Caliban still and still plays the beast. My aspirations take a higher flight. Mine be it to have contributed to the enlightenment and the joys of the mind, to the things of the spirit, to all that tends to bring into the lives of the toilers of Pittsburgh sweetness and light. I hold this the noblest possible use of wealth.

In 1908, Andrew Carnegie commissioned (the now famous) Napoleon Hill, then a journalist, to interview more than 500 wealthy achievers to find out the common threads of their success.

Napolean Hill eventually became a Carnegie collaborator. Their work was published in 1928 after Carnegie's death in Hill's book The Law of Success and in 1937, Think and Grow Rich. The latter has sold more than 30 million copies worldwide. In 1960, Hill published an abridged version of the book containing the Andrew Carnegie formula for wealth creation.

Video of Napolean Hill, speaking about Andrew Carnegie:

On Religion and world view:

Witnessing sectarianism and strife in 19th century Scotland regarding religion and philosophy, Carnegie kept his distance from organized religion and theism. Carnegie instead preferred to see things through naturalistic and scientific terms stating, "Not only had I got rid of the theology and the supernatural, but I had found the truth of evolution."

Later in life, Carnegie's firm opposition to religion softened. For many years he was a member of Madison Avenue Presbyterian Church. He also prepared (but did not deliver) an address to St. Andrews in which he professed a belief in "an Infinite and Eternal Energy from which all things proceed". Napoleon Hill wrote that Carnegie asserted the importance of belief in "Infinite Intelligence", for "God" or the "Supreme Being".

On World peace:

He was influenced by his "favorite living hero in public life", the British liberal, John Bright. His motto was: "All is well since all grows better" and it served his successful business career & his view of international relations. Despite his love and efforts towards international peace, Carnegie faced many dilemmas on his quest for world peace. These dilemmas are often regarded as conflicts between his view on international relations and his other loyalties. Throughout the 1880s and 1890s, for example, Carnegie allowed his steel works to fill large orders of armor plate for the building of an enlarged and modernized United States Navy; while he opposed American oversea expansion.

After he sold his steel company in 1901 (to J.P. Morgan?), Carnegie was able to get fully involved into the acts for the peace cause, both financially and personally. He gave away most of his fortunes to various peace-keeping agencies in order to keep them growing. Carnegie believed that it is the effort and will of the people, that maintains the peace in international relations. Money is just a push for the act. If world peace depended solely on financial support, it would not seem a goal, but more like an act of pity. The outbreak of the First World War was clearly a shock to Carnegie and his optimistic view on world peace. Although his promotion of anti-imperialism and world peace had all failed, and the Carnegie Endowment had not fulfilled his expectations, his beliefs and ideas on international relations had helped build the foundation of the League of Nations after his death, which took world peace to another level.

Some of his famous Quotations (among many):

  •  A man who dies rich dies disgraced. (I guess he advocated charity towards the end of one's life).
  • If you want to be happy, set a goal that commands your thoughts, liberates your energy, and inspires your hopes.
  • No man will make a great leader who wants to do it all himself, or to get all the credit for doing it.
  • My heart is in the work.
  • As I grow older, I pay less attention to what men say. I just watch what they do. 
  • And while the law of competition may be sometimes hard for the individual, it is best for the race, because it ensures the survival of the fittest in every department.
Here are some good YouTube videos about Andrew Carnegie:

This is an interesting school video project (re-creation by school boys):

Notes from the video:
  • Andrew Carnegie's genius was in
  • Industrial Organization:
  • 1) Designing efficient Production Systems
  • 2) Managing Costs
  • 3) Controlling Quality
  • 4) Organizing people
  • is what Andrew Carnegie used to give birth to the Industrial Age.
  • Mass production enabled goods to be produced quickly in large quantities at a lower cost per unit produced.
  • But this produced the classes - rich, middle class and poor. 
  • The counter argument was that the Quality of living goes up for ALL, because of industrialization.
  • But Carnegie belived in the Law of Competition
  • Law of Competition (an extract from what Andrew Carnegie said in his long piece): "The price that society pays for the law of competition, like the price it pays for cheap comforts and luxuries is also great; But the advantages of this law are greater still, for it is to this law that we owe our great material development, which brings improved conditions in its train".
Hope you liked this blog post :) I shall try to make a summary soon. This is a lot of work, especially because I do have a few pending asssignments, LOL. But I do the best I can to post useful info on my blog :) Enjoy!

- Gerry Som.
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