Wednesday, October 23, 2013

A Case of Entreprenurial Innovation

Of interest, perhaps, to historians of economic thought in modern debates about entrepreneurial innovation, Wayne Lewchuk authored this entry in the 0xford Dictionary of National Bibliography ( showing early 20th-century attempts at mass production in the nascent motorcar industry, then slowly developing in England at the Cowley, Oxford. 
Of particular interest is the key role of the innovator-engineer aligned with an entrepreneurial a business owner in conditions of a developing mass market for a new transport technology.   
He writes:
“Frank George Woollard, (1883-1957), developer of mass production, was born in London, the son of George Woollard, general steward to a firm of private bankers, and his wife, Emily Constance, nee Powell. He was educated at the City of London School and Goldsmiths and Birkbeck colleges. Between 1900 and 1905 he was apprenticed to Dugald Drummond with the London and South Western Railway (LSWR) at Eastleigh, Hampshire. There he was exposed to two factors that would shape his future career: he was involved in the design of an early motorized vehicle, the Clarkson Steam Omnibus, and he also witnessed the introduction of a crude assembly line in 1904 to manufacture all steel coaches. The cycle time on this line was seven and one-third hours, a factor which encouraged Woollard later in his career to consider flow production techniques in the British automobile industry despite relatively short production runs.
… During the First World War, he was responsible for the production of tank gearboxes, his first exposure to producing large numbers of standardized products. After the war, he supervised a contract to manufacture front and rear axles, and gearboxes for the Morris Cowley. Production was reorganized along flow lines to meet Morris's demands.
In 1923 Woollard left Wrigley to become director and general manager of the engine branch of Morris Motors Ltd. His first task was to reorganize the old Hotchkiss plant in Coventry. With the use of flow production assembly techniques, within a year output increased from 300 to 1200 engines per week. In early 1924 the machinery used to manufacture engine blocks, the heaviest and most complex component of an engine, was reorganized and placed in order according to the sequence of individual operations. Initially, the machines were linked with hand conveyors and workers manually pushed blocks between production stations. In late 1924 a bold step was taken towards automated production with the introduction of a hydraulic system which automatically moved blocks between stations, clamped them into fixtures, and sequenced the machines.
Woollard had appreciated that such a system offered advantages in the areas of planning and co-ordination, and in the control of labour, giving management more authority to set the pace of work. He believed that such control would be accepted by the workforce if it was accompanied by rising living standards. At the time, this was itself almost as radical a concept as the shift to automated production. Woollard's innovative use of automatic transfer machinery had to be abandoned because of failures in the electric, hydraulic, and pneumatic control mechanisms. However, he paved the way for Ford to implement a similar system in Detroit some twenty years later.”
Completely new production technologies for new consumer products can create whole new products (if successful in attracting consumer demand sufficient to attract capital and an appropriate workforce at least minimally profitable prices).
Entrepreneurs who identify and can exploit the means to supply such opportunities can thrive on their vision, but ‘many are called but few are chosen’, as old-style preachers used to warn their flock. The survivors come and go – think of the original computer giants in early computing power like DEC, Digital and IBM, or the smaller firms like Apple, Prime, Wang and also the many rivals to Microsoft.
Frank Woollard was in the engineering-led, early motorcar manufacturing industry.  He was also part of the beneficiaries from increasing-returns of innovation in both manufacturing processes and in product designs.
Nobody can plan dispersed innovation, especially not those in government-led committees – while the are sitting taking minutes of their meetings, the real world keeps turning and among the countless dispersed entrepreneurs in markets some are thinking ‘outside the box’, as they say.  Some few of them restlessly seize what they believe are opportunities, not just contemplating the ‘ifs’ of what they could have done, ‘if only’.
They just do it! 
That is the power of markets in free societies, though not necessarily those with utopian notions of so-called perfectly free-markets in Economics 101.


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