Business is Business

Shortly after the United States entered World War Two, I tried to obtain a commission in the U.S. Navy. On February 20, 1942, I had an interview in Washington, D. C., with Colonel Frank Knox, who was then the Secretary of the Navy.

Colonel Knox, aware that I indirectly held a controlling interest in the Spartan Aircraft Corporation and the Spartan Aeronautical School, urged me to abandon my plans. Instead, he asked me to take over active personal management of these companies.

"That would be the most useful thing you could do for the Navy and for your country," he told me. "We need aircraft and airplane parts—and trained flyers—desperately. To obtain them, we must have experienced businessmen running our plants and flying schools—men who can rapidly expand manufacturing and training facilities and raise production to unprecedented levels."

Two days later, I was in Tulsa, Oklahoma, where Spartan Aircraft and the Spartan Aeronautical School were located. The former was a small company that had been established in 1928. The latter, a thriving training plant turning out air and ground crews for the U. S. and Allied air forces, was already well on its way to becoming the largest privately owned flying school in the country. It was being well managed by Captain Max Balfour, a veteran pilot and top-notch administrator. The factory, still geared for post-Depression civilian production, needed much attention.

Now, my knowledge of airplane manufacture was nil. I knew little more about airplanes than that they had wings and engines—and that if they were properly built and piloted, they flew. My business career up to that time had been largely devoted to finding, producing, refining and marketing oil. Admittedly, I'd made some tangential assays into other fields, including real estate and even the hotel business—but I certainly had no experience even remotely related to the manufacture of airplanes. On February 21, 1942, while en route from Washington to Tulsa, I made the following notation in my diary: "I have an important job—getting the Spartan factory into mass production for the Army and Navy."

I faced this job with no small degree of trepidation. It was no normal peacetime venture. The factory would not be producing everyday items for civilian use. Its products would be highly important—possibly even vital—to the nation's war effort. Airplanes were not porch swings or doorknobs; they were fantastically complex machines whose components had to be manufactured with infinite precision. There could be no margin of error; any mistake or miscalculation would cost human lives.

Could I handle the job? I'd asked myself this question a thousand times in the two days that followed my interview with Secretary Knox. Upon my arrival in Tulsa, I made an intensive inspection of the Spartan plant, studied the company's books and records and conferred at length with the firm's executives and employees. Within 48 hours, I had the answer to my question. My job was to "expand manufacturing and training facilities" at Spartan, to boost the production of airplanes and the number of trained men to fly and service them. I felt certain I could do it.

It seemed logical to me that the basic principles involved in accomplishing these tasks would be the same as those involved in, say, the expansion of an oil company. Granted, there would be vast differences in the technical aspects. One does not drill an engine-mount bracket to a one-thousandth-of-an-inch tolerance in precisely the same way one drills a mile-deep oil well. When one builds a storage shed he can, in a pinch, substitute asbestos roofing for galvanized iron; but there can be no substitutions when, for example, specifications for a wing surface call for a certain gauge and type of aluminum alloy. I also knew that time was very short and materials scarce—and that labor would have to be recruited and trained. But I'd had experience with fairly analogous situations previously in my career, particularly in the great oil-boom periods in Oklahoma and California.

In short, I reasoned that business is business—whatever type of business it may be. And, according to my definitions, "doing business" is nothing more nor less than performing a service that has a commercial value.

Of course, in the case of Spartan, the service that the company—and I—had to perform was not commercial in the most widely accepted sense of the word. The primary aim was not to build the company or to make profits, but to do everything humanly possible to help win the War. Nonetheless, the service could be considered commercial in the sense that Spartan had to turn out top-quality products at maximum speed and at the lowest possible prices, in order to meet a huge and exigent demand.

Once I viewed my new job in this light, the problems of getting Spartan's operations into high gear diminished to entirely manageable proportions. I realized that I need only apply the same principles that I had always used in business. I soon found that these were just as valid when applied to airplane manufacture as they had been when I'd applied them to my oil business.

Before long, Army and Navy representatives were accepting my forecasts of time needed to get various items into production and my estimates of ultimate output, considering them more reliable than predictions contained in surveys made by various "efficiency experts."

In one instance—in April 1942— Spartan received a subcontract to manufacture wings for the Navy's Grumman fighter planes. The experts predicted that it would take the factory at least 15 months to tool up, train labor and get into full production on the wings. They backed their prediction with the customary Everests of charts, tables and graphs. At this time, the War situation was anything but bright. The Philippines had fallen; the Nazis continued their advance into Russia. The U. S. and its Allies were on the defensive everywhere, while the Axis powers were celebrating triumphs large and small on all fronts. Under these circumstances, 15 months seemed an unconscionably long time to get into production on wings for urgently needed fighter aircraft.

I wasn't overly impressed by the forecasts of the factory experts. I've often found that the trouble with many experts is that they're technicians, not businessmen; they frequently seem to lack the built-in enterprise and competitive spirit that motivates businessmen to beat deadlines and achieve results quickly. I talked the matter over with Spartan executives, supervisory personnel and line workers. All of them recognized the challenge and the need for speed. We slashed the time-lag estimate down to six months. Needless to say, the experts howled their protests and disbelief.

"Paul Getty has never run an aircraft plant before in his life!" they chorused. "He doesn't know what he's doing!"

Although Grumman and Navy representatives were somewhat skeptical about Spartan's ability to begin deliveries within six months, they agreed to go along with my estimates and to cooperate in every way possible. My production chief and I promptly selected 50 of our best workers and shipped them off to the prime contractor's plant in California. There they were given intensive on-the-job training in the most efficient methods of producing wings for the firm's fighter planes. In the meantime, we began tooling up feverishly at Spartan. We had ten jigs ready by the time the men returned to Tulsa. Spartan was in production on the Grumman subcontract in slightly less than the six months I'd estimated. What's more, Spartan workers reduced production time from a normal 400 hours per unit to an astounding 40 hours per unit.

By the time I had been at Spartan two years, I had ample reason to feel proud of the company's achievements and of its contribution to the war effort. Factory floor space had been increased from some 65,000 square feet to more than 300,000. The plant, which had formerly employed only a handful of people, now had over 5500 employees—loyal, hardworking men and women who certainly earned the efficiency awards the company received from the United States Government. By February 14, 1944, I could note in my diary that Spartan had produced: 90 training planes on prime contract; 155 sets of wings for Grumman fighters; 650 Curtiss dive-bomber cowlings; all the control surfaces for 1100 Douglas dive bombers; 5800 sets of elevators, ailerons and rudders for B-24 bombers; and a great quantity of other aircraft components and subassemblies.

The point of all this? Business is business. Business principles do not change; the fundamentals remain constant, no matter what the field or industry.

When I began my career over 40 years ago, it was assumed that if an individual was a businessman, he could handle almost any type of business. It was hardly considered unusual for a man to own a mill, a department store, a brace of office buildings and perhaps even a bank—and make a success of running them all. It was taken for granted that a man who possessed the necessary traits of leadership, imagination, ambition and enterprise—who "had a good business head on his shoulders"—could operate almost any form of commercial endeavor. I am well aware that business is far more complex now than it was then. Nevertheless, I still think it can be done, and that there are still men who can do it.

Don't misunderstand me. In no way am I trying to imply that I think that businessmen are born and not made. I'd be the last person in the world to advance any such theory, for I have my own example and experience to indicate that the opposite is probably true. I most certainly was not a born businessman. Quite to the contrary. I showed no early urge or drive—or, for that matter, talent—to be a businessman. My own thirst for lemonade quickly doomed my juvenile forays into lemonade-stand operation. I had only indifferent success as a magazine-subscription salesman. I suppose the closest I came to having any childhood feel for business was the strong feeling of competitiveness I derived from being an avid collector and trader of marbles and automobile catalogs, two items dearly prized by most boys in those days.

As a young man, I wanted to join the United States diplomatic service and to be a writer. I most probably would have tried to realize these ambitions even after I'd achieved my first successes as a wildcatter in Oklahoma, had I not been an only child.

My father, George F. Getty, devoted his entire life to building his business. If I'd had a brother or brothers who could have taken over from him, I doubtless would have become a diplomat or a writer. As it was, I had no brothers—but I did have a sense of responsibility toward my father, his employees and the shareholders in his companies. It was a sense of duty to them that impelled me to abandon my ambitions and enter the family business. However, once I did decide to go into business, I determined to be a businessman of the kind that William H. Whyte calls an entrepreneur—rather than the organization-man type he labels a collaborator, who is merely a cog that spins in the business machine only because the big gears are turning.

My formal education had been mainly in the humanities. My practical training had been in the oil fields, where I'd worked as a roustabout and tool-dresser. Thus, I had much to learn about business; and, more often than not, the lessons were anything but easy. But learn I did—most particularly, the basic truth I've already stated, that the principles of business apply with equal force and validity to all forms of commercial enterprise. And, in my opinion, one of the most important of these principles is implied in the definition of business as "performing a service that has a commercial value."

Plainly, a business must supply a need. In so doing, it must give value for value received. The value received—or the price of the service rendered or product sold—must be fair, low enough to be within the buyer's ability to pay, yet high enough to give the business a reasonable profit.

In order to keep old customers, obtain new ones, meet competition and justify his profits, the businessman must constantly seek to raise quality, reduce costs (and prices), increase production and improve all facets of his business. He must (concluded on page 122)Business(continued from page 98) accept the facts that he will always be faced with problems and that these exist only to be solved in the most efficient manner possible. Once he accepts these concepts, he must train himself to be an imaginative innovator, able to meet any situation by applying his cumulative knowledge and experience to whatever new obstacles confront him.

Actually, there are very few unique business problems or situations. Anyone in business for any length of time soon realizes that there are, within the realm of his own experience, precedents to almost any problem that may arise. A drilling rig and an airframe may not seem to have much in common; but the construction of one is analogous to the construction of the other, if only because both must be built from raw materials to perform certain tasks. Lessons learned in eliminating delays and bottlenecks in the construction of one can, if applied imaginatively, go a long way toward showing how similar problems may be solved in the construction of the other. Even my experience in hotel operation and construction proved invaluable when it became necessary to build housing accommodations—and eventually a miniature city—for Getty Oil Company employees in our Middle Eastern oil fields.

I could cite countless other examples to show how previous business knowledge and experience may be applied imaginatively to new and different business situations. However, I believe it is more important to emphasize that experience alone is hardly enough to make an individual a successful all-around businessman. Mere experience—without the imagination to use it constructively and creatively and without business ability— is likely to be more handicap than advantage. There are many men for whom experience serves as a mental strait jacket. They are unable to apply imaginatively what they already know; they only repeat what they first learned. The experience of five, ten or twenty years actually stultifies such men. Instead of adapting what they know to new situations, they try to make all new situations conform to patterns with which they are familiar.

As for "business ability," this is something of an imponderable, comprised of many ingredients. Among these are large measures of common sense, ambition, versatility, a highly developed spirit of competitiveness, a genuine interest in business, a healthy appetite for the give and take of the market place, resource-fulness—and an ingrained understanding of the concept that business is performing a service that has a commercial value.

I have said that I was not a born businessman. But, as I have also said, when I did go into business, it was with the determination to be an entrepreneur. To my way of thinking, being in business was worth while and challenging only if one viewed it as a form of creative work. My career has seasoned me as a businessman—and has taught me not only that business is business but that there are commercial possibilities in almost everything. To me, an empty lot is not just an empty lot; it is a potential site for a house, a store or a filling station. If I went to a remote Greek island inhabited by poor fishermen and farmers, I would automatically start looking for natural resources that could be developed or for industries that could be established on the island. True, the profit motive would be present—but profits could only come after the life of the islanders had been bettered by putting their human energy to more productive use.

The farsighted businessman realizes that he can render the greatest commercial service by taking advantage of every opportunity. And there are opportunities everywhere for creating new businesses, even entire new industries—and for building and expanding old ones. They exist in profusion on remote Greek islands, in developed countries and underdeveloped ones—and in our own back yards.

It is often charged that the modern-day business executive is too much of a specialist and not enough of a businessman. I'm forced to agree that there is more than a grain of truth to this. Over-specialization has narrowed the outlooks of some of our most promising men.

On the other hand, it must also be admitted that the present-day business executive is a better businessman than the old-timer—in the same way that the modern physician is a better doctor than was the g. p. of a few decades ago.

Both the doctor and the executive of today are specialists. Both have had intensive training in their specialties—and both have more and better tools with which to work. The modern heart specialist has the electrocardiograph and other scientific instruments to aid his diagnosis. The g. p. had to rely on his stethoscope, the patient's symptoms, diagnostic questioning—and his own experience and intuition. The oil prospector of 1967 is aided by seismographic tests, vast quantities of geologists' data and other technical devices and information. The oil prospector of 1917, by contrast, had to feel and guess his way to oil.

To such extents as these, doctors and business executives are today more efficient and less liable to make errors— in their own specialized fields. But I wonder if the average heart specialist can deliver a baby, set a broken arm or remove an appendix as well as the old-time g. p. I certainly know innumerable executives who are specialized in highly restricted fields, but who are completely lost when asked to take over a department other than their own.

While the modern technician-executive may know far more about one particular aspect of business than does the all-around businessman, the latter's grasp of the whole and all its parts is much greater. And, consequently, it is the all-around businessman—the entrepreneur—who has the best chance of reaching the top. As one extremely successful businessman remarked to me recently: "I own several businesses and I run them all profitably. If I get stuck and need a specialist, I can always put one on the payroll, but I can't hire anyone to do my job. The men who could handle it are in business for themselves, making their own fortunes."

In my opinion, modern business has a great need for more entrepreneurs. I believe there is more opportunity for a young man to become a successful entrepreneur today than ever before—if only because specimens of the breed are fewer and farther between.

How to do it? First of all, an individual must possess business ability, imagination and enterprise. He must be of the type who would rather run the show than be a supporting player. He should conceive of business as a form of creative effort—and understand that business principles are the same whether one is manufacturing safety pins or skyscrapers.

His education should be as broad as possible. Whether obtained at a university or in the college of hard knocks—and preferably in a combination of the two— it should give him a multidimensional background and outlook. A highly specialized education is fine—for the specialist. But the wider the scope of the entrepreneur's education, the more capable he is of grasping the problems he will have to face.

Then, no matter what field he enters initially, he must learn as much as he can about all aspects of it. In short, he must be a sort of g. p. of business— versed in everything from accounting to warehousing—to the extent that he can direct every facet of the business.

Lastly, and perhaps most importantly, the would-be entrepreneur must have it clearly in mind that business is business. The entrepreneur who knows one business thoroughly can operate another—or a dozen others—as handily as the first.

There's a great challenge and a great satisfaction in being an entrepreneur in the business world. It's fun—and it's highly profitable. It's also the shortest, fastest—and surest—road to success.