The Yankee of the Yards: The Biography of Gustavus Franklin Swift by Louis F Swift

Summary

  1. “Rare indeed is the man who attains preeminence with the steady, irresistible thrust – who leaves in those who started with him a sense that his success was inevitable, that one could no more have stopped him than an Alpine glacier or a Sierra cascade. This is the story of Gustavus Swift. His abilities and the world’s changing needs came together to produce a career as exceptional as it is interesting.”

Key Takeaways

  1. A Better Mousetrap
    1. His long suit was keeping expenses down. Next in his interest came developing byproducts – which is another form of the same thing. Low expenses and maximum return from every pound of live animal are what made Swift a leader in the new industry of which he was a founder – meatpacking and distribution. He recognized early on that waste and accomplishment are incompatible. 
    2. He turned small and uneconomic units into a large, centralized, very efficient unit which bought, transported, slaughtered, refrigerated, and brought to market high quality beef to dense urban centers. He eliminated middlemen, only shipped parts of the animal that were needed, which eliminated markups, wasted shipping/feeding costs and more. He made money out of what age old customs said to throw away. The butchers were glad to have this rubbish carted off, for disposing of it was difficult. The savings were so great that the beef was sold below locally slaughtered beef although it was higher quality and it still left a handsome margin. His competitors were slow to catch on so used this time to sprint ahead while he had the field to himself. Every cent his business yielded went back into it again 
      1. Reminds me of Sam Zemmuray, the banana king, who took bananas that people thought were useless as they were too ripe and sold them locally. Alchemy – turning other people’s rubbish into gold. 
    3. No enterprise can grow soundly and survive the lean days which always come unless it blocks off every possible source of waste. Byproducts revenue is what developed his business. Before he had finished sign the process, he was using everything from the animal to produce a profit. 
    4. He was never satisfied with his business. He knew he could get more if he could crowd his prices below the rest of the field without sacrificing profit. Out of this continual pushing for sales by cutting his costs, he built his own business to a place of preeminence. There were no little cracks in the walls which permitted anything to get away undetected. It is the leaks which ruin more basically sound businesses than any other cause 
    5. Ability by itself could not have done what he did. His thoroughness was the source of his magic – working dissatisfaction with half measures. Father could not be happy if anything which he was connected functioned short of 100%. Basically of course he comprehended a fundamental commercial truth: if everything is done right if errors are held below the errors of competitors and if a business service and economic end then it must prosper. He schooled himself to do everything absolutely right and to expect the same of everyone else. Perhaps the one point where he laid the most emphasis on having everything done absolutely right was in cleanliness. He insisted on it because he liked it and because it cut down spoilage materially. He looked in the corners, under benches, and in the least well lit parts of for dirt. Sarcasm was his working tool for getting things corrected. He was much more concerned about maintaining a right method than about adopting a new one. Therein he showed that common sense which distinguished his ways of working from those of so many men of greater brilliance. Once he had a good method established he never allowed anyone, himself included, to overlook it. He was ready to supplant it at any time if a better method came his way. But he avoided that common failing of being so busy with new hatched plans that he overlooked the old, tested, profitable methods. 
    6. He had to overcome the sin of newness but his system was a marker improvement over the old order. 
      1. It is said people are afraid of change, and this is partially true, but what people are truly afraid of is uncertainty, losing and being in a worse spot than before. If you have a change which leaves everyone better off, people will flock to you. Nobody was ever afraid of a promotion because it included change. 
    7. He never believed in holding on to a thing because selling it might bring a loss. Meat is perishable and he believed that the best way to make money is to keep turning over goods and capital. He developed s technique  which kept his goods moving at a rate far faster than was needed to avoid spoilage. But he also warned his people not to overload a customer. Never try to sell a customer more of anything than he can get rid of quickly. Try to sell him what he needs and then he’ll come back. He’ll be a better customer in the end. Similarly he held that smaller customers should not be discriminated against. Maybe some day they’ll be a big customer
    8. He used a beautiful, clean, service oriented store to sell more meat. If a customer had their mind set, they sold only that. But if a customer was undecided they would push the meat they wanted to sell. He would sell more with nice displays and by having everything cut up, people would buy more 
  2. Role as a teacher
    1. Whenever he found a good man, he would raise his wages. These men will save us far more than they cost. 
    2. He no interest or time in discussing profitable branches. “I want to talk about the ones that are losing. I have no time for the others.”
    3. He cared about every detail and was always teaching. His aim was not to make a man feel bad but to avoid the possibility of repeating any similar loss
    4. I don’t have to go out and hire very many managers. I can raise better than I can hire. It is noteworthy that 20 odd years after his death, most of the men in positions of high responsibility are men who were trained directly under the founder. These men understand loyalty and that they have an obligation to the company, just like the company has to him 
    5. He believed in helping those who helped themselves 
    6. Loyal support from the head of a business makes loyal men beneath the head. Swift fully backed men he trusted and if he didn’t believe in a man enough to back him, he’d want nothing to do with them. 
    7. If he is the right kind of man, he is better off for being corrected. This man is worth the effort. Otherwise, leave it alone
    8. We have a policy to never put outsiders over old employees if the job can possibly be filled from within 
    9. One secret of his success in training men was the way he dealt with them. He knew all about practically every detail in the business, the standards to which every operation must be held. His microscopic eye for detail never overlooked any really significant points, even though he might not concern himself too immediately with them. At the same time, he would seldom overrule an individual he had confidence in if they made a deliberate junction. He preferred to let the man incur a loss to prove to his own satisfaction what would always have remained a doubt if he had simply been told to follow the boss’s instruction
    10. Even more than in developing executives – Swift’s knack of dealing with human being appeared in his work with the rank and file. It is more difficult to get a reasonable degree of work out of the 97% of employees who never develop the capacity for authority and who never can 
      1. A focus on the bottom of the roster is paramount to high performing teams 
    11. One of the cardinal principles which enabled him to raise better men than he could hire was his sparing use of compliments. You promote the able and willing and unless they do something spectacular, you don’t spoil them
  3. Touching the medium – an eye for detail
    1. Whenever he visited a branch house or plant, he went without warning. Generally he came in the back way and got his eyes full of what was going on, before ever he looked up the men in charge. 
    2. Father’s knowledge of every part of the business and his attention to the most minute details was one of the secrets of his operating success. While the microscopic eye was for scrutinizing little things, he had the telescopic eye for surveying big things. And he never put on the wrong lens!
    3. Swift became a devotee of weekly reports when the company became too big for him to have his finger on every aspect of it. You’ve got to know how you stand every week. If you wait a month, you might be broke. Above all else his favorite statistical diet was the reports of weak departments. His whole being enjoyed the sheer difficulty of going into a seat of trouble, diffing out the facts, aligning them, and putting things right. Swift believed in frequent reminders and in prompt corrective measures. 
    4. Knowledge of every detail of the business was the taproot of his way of managing. His technical knowledge was exhaustive, perhaps as great as that of any man the packing industry has known even to this day. His grasp of the facts of distribution, of transporting the products, of the current standing of company finances – in everything from buying cattle and icing cars all the ah through where he would get another ten millions of capital and how he would use it – made him completely the master. One reason for his mastery of the facts was the time he devoted to business, st the office, at the plants, at home. He worked hard, harder than he asked anyone else to work. The men who worked with him liked his pushing. 
    5. He grew at a rate considerably faster than a conservative man would have thought either possible or safe but his decisions were based on a meticulous knowledge of his own affairs and if the whole industry. 
    6. He did not want his information or opinions second hand. 
    7. Always he held his affairs ahead of his finances and his plans ahead of his affairs. One reason, the principal reason he managed to carry the thing off, was that he knew his business and held to it exclusively. He had no interests outside live stock, packing, and closely related enterprises. A secondary reason why he succeeded where most men must have failed was that he knew the measure of everyone from whom he borrowed money in any considerable amount. While a dreamer and a visionary, he based his dreams and his visions of expansion very much on the practical facts of life. 
      1. Circle of competency
  4. One thing he insisted on absolutely was honesty 
    1. Absolute honesty like his is exceptional. Not only did he know that he was honest in all of his dealings, everyone who dealt with him experienced his honesty and felt perfect assurance in its unvarying characteristic. The extent to which some people with whom he did business relied on his honesty and fairness is almost unbelievable. 
    2. He always regarded his credit as his greatest asset. He always had the money when a loan came due and usually asked for a renewal on the spot. In the downturn of 1893, Swift’s employees knew the business needed cash to survive as they couldn’t get it from banks. Hundreds of employees voluntarily lent the company their savings to keep it alive. That is the confidence and loyalty Swift inspired in his men. 
    3. He always tried to find out the right way to do a thing, and then he followed out his right procedure unfailingly. If a thing’s worth doing at all, it’s worth doing right. This was his maxim – not just in business, but in life.
    4. He never changed his price unless conditions changed. He stood by his word 
    5. There’s no use handling poor stuff or dealing with the wrong sort of people. There are enough people who want good stuff and who will deal honestly, to give us all the business we can handle. This was his guiding principle in picking men or livestock 
    6. Swift always gave his competitor a chance to join him. If you handle my beef, we’ll be partners. If you won’t, I’ll put it in against you. This was the squares kind of competition. And if it came to competition, my father always won. He had the mighty advantage of economics on his side. 
    7. Swift’s reputation was such that many a man gave yo his own established business to come to us, with full confidence that he was bettering himself 
    8. One thing he insisted on was absolute honesty. We want character to go with our goods. And sixteen ounces is a Swift pound. I don’t know how many times he said this to me; it must’ve been in the hundreds 
  5. Other
    1. If it had failed to come through the times of trouble, the verdict must be that it had grown too fast 
    2. He had trained himself never to forget anything until he had seen it to a successful conclusion 
    3. You don’t make a profit on shortages was another maxim of his
    4. He would quickly take a chance to lose a lot of money if that was the key to getting a big trade quickly. 
    5. He saved every minute he could and in this way saved more time than most men have altogether. He let not a minute nor an idea go to waste. He had no patience for anyone or anything which wasted his time. He heartily disliked any duplication of work for appearances’ sake. Using time to good advantage involves principally setting standards of what is worth taking time for and what is not – then holding up these self-imposed regulations. 
    6. To get the company up and running he had to work nonstop. Even after all was taken care of, he lived with it. And that is what wore him out. His son was able to change his working habits so that he was able to decouple and gain perspective
    7. He hated the excuse “it’s not my department” – he wanted everyone of his men to think of himself as a Swift man rather than as a lard department man or whatever his job 
    8. This business will be far bigger after I’m gone – that’s what I’m building for 
    9. The best a man ever did shouldn’t be his yardstick for the rest of his life. The department head or superintendent who used that forbidden yardstick was not worth keeping. Your standards must always be changing, evolving, adapting. 
    10. He was very interested in his employees personal affairs as he realized that a man’s personal habits had a great deal to do with his ability and also that they shed light on what might be expected of the individual
    11. He wished his people to own stock. He was a pioneer in bringing this about in a big way. His was the first large concern to encourage its employees to become substantial stockholders. Partners are usually the cleanest to make money for the firm and the concern which has many stockholders is more stable than the company which is closely held
    12. Use tact when you can but fight when you have to. He always preferred going around a difficulty to going through it. She never threw a challenge into the other fellows territory until he had made up his mind that arbitration or compromise would not settle for trouble
    13. He had absolute faith in his ultimate success. He was afraid of nothing. Even when he was still working out the kinks in refrigerated cars and would lose tons of beef, he’d be optimistic and tell everyone “it will be alright.” “We don’t quite know how to do it right. We’ll get it though. We’ll learn.”

What I got out of it

  1. He had a better business model. His method of slaughtering in one place and selling the meat thousands of miles away saved him costs in many ways. He’d be able to sell it at half of what the local butchers were and still make a healthy profit. He would save on shipping and feeding costs since he’d be shipping lighter and wouldn’t have to worry about keeping the animals fat and happy for the long trips. His innovation in refrigeration especially and constant improvement allowed him to come to dominate the industry in a relatively short period of time. He was a teacher, tough on his people, knew every detail, and worked extremely hard