The Technology Shift of 1915: Lessons We Can Learn 100 Years Later

In 1915 there were more than 4,600 of these companies in the United States alone, a competitive and vibrant industry that had supported tens of thousands of workers, unchallenged for hundreds of years. Entire careers revolved around them – with professionals and specialists, skilled in the complexity and artistry behind their products. An entire supply chain existed – from suppliers, to manufacturers, to makers of essential artefacts like the “buggy whip” to support them.

Flint and Cincinnati led production, while a city such as Amesbury in Massachusetts was one of many thriving towns, a home for more than 26 companies in the 1850s alone, with long forgotten businesses like George Adams & Sons, Loud Brothers, H. G. & H. W. Steven and William Chase & Sons humming away struggling to meet spiraling customer demand.

The industry peaked in the 1890s with 13,000+ companies. Yet by 1925, there were just 150 of these companies in the US, and by 1929, just 88. In just 15 years, 98% of an industry had been wiped out.

The industry is of course that of the “chaisemaker.” Even the name itself has fallen out of use (Microsoft Word is telling me I have a typo!) More commonly, you’ll know the industry as that of the carriage makers.

Some within the carriage making industry saw the automobile as simply a passing fad and couldn’t imagine a future without the horse drawn carriage. Few understood the fundamental technology shift that was underway and how it would disrupt their businesses to the core.

While many of the carriage makers were much better capitalized, had great commercial reach and distribution, better brand recognition than their auto-making peers, they almost all failed to adapt to a technology shift. Just a few made the leap. In fact, Studebaker was one of only two top ranked carriage makers that embraced the destruction of their old business, eventually retooling their entire production to manufacture automobiles instead. Companies that tried to hang on to the past, or simply apply old world skills and technology to the new world simply failed to exist.

Not just the carriage makers were wiped out. But the entire ecosystem that supported them. The “buggy whip” was an essential accessory for any erstwhile coach driver, an entire cottage industry in itself, the industry and the phrase itself crumbling in the face of disruption.

And here we stand today, another disruption underway, from on-premise software, with an entire ecosystem that surrounding it, to cloud computing. What lessons can we learn from the shift from carriage to car?

  • Only those that embrace creative destruction will make the shift. The carriage makers that didn’t invest in retooling their production failed. Most were too busy protecting their existing, dying, revenue streams. The same holds true today, with some of the largest software vendors desperately trying to carry 20 year old software into the future. The carriage makers that simply attached engines to their old wagons didn’t make the shift — just like those that are gluing old world software to the cloud won’t either. The one’s that designed autos from the ground up did – and very few did so. What made you successful in the past isn’t the same formula for the future. Leaders like Apple understand this — by essentially destroying the iPod with the introduction of the iPhone, they discarded the old to build the new, but became even more successful as a result. Many of today’s legacy software leaders have not learned the same lesson.
  • The transition is much faster than anyone expects. Over the course of 15 years, from 1914 to 1929 an entire industry basically ceased to exist. That’s akin to a staple of the year 2000 sliding into the dust today – or perhaps today’s cars essentially being replaced by self-driving cars by the mid-2020s. The pace of changing can be disconcerting. Those that have spent their entire career in an industry invariably underestimate the breadth, depth and speed of change. The speed of disruption and the unwillingness to put aside the old, no longer applicable technology is a potent combination, bringing organizations to their knees much faster than thought possible. Innovators like Google with a self-driving vehicle, and Tesla Motors with an electric vehicle designed from the ground up understand this, while the old automakers do not.
  • New innovators emerge out of nowhere, faster than the old world leaders expect. At the beginning of the carriage makers decline, in 1913, Henry Ford introduced the first moving assembly line. By 1923, US auto production had reached 3.7 million units, with the Ford Model T accounting for 52% of production. By 1926 there were more than 23 million cars on the road. By 1929, just as the carriage makers were taking their final breath, Ford and General Motors were undisputed leaders, both of them slugging it out, and GM netting $250M in profit in just that year alone. The closest analog today, leaders like Salesforce, NetSuite, Workday and Adaptive Insights, building leadership positions in their respective cloud categories, CRM, ERP, HCM and CPM. Leadership can change hands disconcertingly quickly.

The lesson? Embracing change is no half measure, but holding on to the past is more risky than embracing the future. Oh, and definitely at all costs don’t be the “buggy whip” maker.