John Burroughs did not like the Model T. In 1908, the famous nature writer denounced the car as a “demon on wheels” that would “seek out even the most secluded nook or corner of the forest and befoul it with noise and smoke.” Not exactly a raving review for America’s new favorite automobile. It was a critique that really hurt Henry Ford.
As an avid bird watcher, Ford was a big fan of John Burroughs. And to him, the car was not a way to destroy nature, but to enjoy it. A way for people to explore and connect with the land he loved. So, Ford sent a letter to Burroughs to explain why he thought making an affordable automobile would change the future of America.
The letter arrived with a new Model T.
Even though Burroughs would accidentally drive that car through the side of a barn, he was persuaded by Henry Ford’s vision. The two went on to exchange many more letters, and a deep friendship emerged. Ford introduced Burroughs to Thomas Edison and Harvey Firestone, and in 1914 the group decided to embark on an adventure to the Florida Everglades. It was the birth of the great American road trip.
They called themselves the “Vagabonds.” And whether it was the Adirondacks, Catskills, Smoky Mountains, California’s sparkling coast, or the maple forests of Vermont, they did a big camping trip each year from 1914 through 1924. They averaged 18 miles per hour, and there was no shortage of adventure, whether it was picking apples for an orchard owner, helping a farmer cradle his crop of oats, or hitching a short ride on a passing train.
Ford was the mechanic, Edison was the navigator (always opting for backroads), Firestone cooked the meals (usually while reciting poetry), and Burroughs led botanical hikes at each stop. They debated philosophy, economics, world war, and which sap-filled plants might be a natural alternative to rubber. But no matter how intense those debates might get, they always agreed on one big thing.
Business should be a force for good.
John Burroughs wrote about this in a travel essay where he said that Ford was, “Always thinking in terms of the greatest good to the greatest number.” And that Edison started every venture by asking, “What can I do to make life easier and more enjoyable to my fellow man?” And while they were not perfect humans by any stretch, they did start two iconic American companies from the idea that the world would be a better place because of the work they do.
It’s an idea that’s worth revisiting today. Because we stand in the wake of one of the largest and most destructive experiments in history. What was it? The rise of the belief that companies should serve shareholders above all else.
It all started in the 1970s, when academic economists began celebrating something they called agency theory. At the theory’s core is the assertion that since shareholders own the corporation, they should have ultimate authority over all major business decisions. And that by maximizing profit for shareholders, companies would also benefit customers, employees, and society at large.
It sounds reasonable at its face, but that’s not exactly how it played out.
With outsourced labor, reduced investment in research and development, recurring scandals, mass layoffs, wage stagnation, environmental destruction, reduced funding for employee development, and increasing pressure to deliver short-term returns, we’ve seen a wave of unintended consequences from this shift to shareholder primacy (for more, you can read this).
And worse, the shift actually hasn’t generated more value for shareholders. The University of Toronto calculates that from 1932 through 1976, the total real compound annual return on the stocks of the S&P 500 was 7.6 percent, while the comparable return in the years after 1976 was just 6.4 percent. Add in the fact that the average lifespan of an S&P 500 company has declined from over 60 years in the 1950s to less than 20 today, and one thing is clear.
This experiment did not work.
But what does this have to do with us? Don’t worry, this is not a socialist manifesto. And even if it was, most of us are not in a position to shift this prevailing corporate governance model. But there is one thing that each of us can do.
When you think about the work you do, don’t see it in terms of the value that it brings you, but the value that it brings others. Whether it’s new product you’re launching, meeting you’re planning, report you’re writing, presentation you’re giving, car you’re selling, or anything else, you can use just one principle to guide the way.
Always create more value than you capture.
Whether it's your customers, coworkers, or community, if you consistently deliver more more value than you get in return, you will win. It's why media CEO Tim O’Reilly and billionaire investor Ray Dalio see it as the philosophy that guides the work they do. And Henry Ford did too, as he often said that, "The only true test of values, either of [people] or of things, is that of their ability to make the world a better place in which to live."
Which brings us back to the Vagabonds. Thomas Edison died at his home in Orange, New Jersey on October 18, 1931. His son Charles was by his side, and when he saw his father start to fade away, he placed a test tube by his mouth catch his last breath. Charles sealed the tube and delivered it to his dad’s best friend, Henry Ford. It remains on display at the Ford Museum today.
So even though all of the Vagabonds are gone, we still have that last breath. A permanent reminder of the legacy they left. A reminder that good work is always good for the world.
Let's never forget it again.