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Business Success: P.T. Barnum v. Trump

The other day, I wrote about W. Edwards Deming on business success. Today, I thought of another great American businessman. I’ll bet many of my readers think of P.T. Barnum as the great huckster, the progenitor of Donald Trump, which Barnum probably was. The two characters use similar tactics, but Barnum’s enterprises were roaring business successes that changed the nation. Trump is such a business bungler, he bankrupted New Jersey casinos. 

Daniel Boorstin, the renowned American social historian and Librarian of Congress, dubbed Barnum as “a genius at making pseudo-events,” in his book The Image. Trump, who announced digital trading cards with comic depictions of himself last August, also makes pseudo-events.

There’s no evidence that Barnum ever said “never give a sucker an even break,” or “there’s a sucker born every second,” but he was a master at using gimmicks and distortions to get attention. Boorstin reports that Barnum sent a man out to ostentatiously move single bricks stationed around his American Museum in Manhattan (now the American Museum of Natural History) to draw a crowd which would follow him inside every hour attempting to discover what the man was doing and also paying the entrance fee. The stunt paid for itself and greatly increased the notoriety of the museum.

The brick stunt was harmless, but Barnum also generated empty publicity– pseudo-events if you like Boorstin’s term—around racism and people with physical oddities such as dwarfism. In this, Barnum was cruel, but perhaps not perceived as cruel during the 1830-1880 period when Barnum was active. To his credit, Barnum successfully ran for public office on anti-slavery and fair treatment for former slaves.

Barnum readily admitted that some of his stunts were outright fakes, or humbugs as he called them, and the public seemed to accept his chicanery as good-natured entertainment.  His museums captured the public favor. He raised the stature of the theater, which became acceptable middle and upper class entertainment through his guidance and publicity. He brought the famed Swedish opera singer, Jenny Lind, to the U. S. on a popular tour that was immensely profitable for both Barnum and Lind. And, of course, the Barnum Bailey Circus was a crowd-pleasing success.

Both Trump and Barnum published books on how to succeed in rough and tumble business. Barnum had no ghost writer; he wrote The Art of Money Getting himself. Unlike Trump, who has reviled factual news platforms, Barnum wrote:

Always take a trustworthy newspaper, and thus keep thoroughly posted in regard to the transactions of the world. He who is without a newspaper is cut off from his species. In these days of telegraphs and steam, many important inventions and improvements in every branch of trade are being made, and he who don’t consult the newspapers will soon find himself and his business left out in the cold.

This brings up an important point that may help folks who do not look forward to the 47th presidency. Follow Barnum’s advice and seek verifiable facts. They influence business (and life) far more than false “alternate facts.” People who act on false information are cut off from their species and make poor decisions, both in life and business. Barnum knew that.

Notice, like Boorstin, that pseudo-events, only generate publicity. Pay attention to events, not pseudo-events; your life will be easier.

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Rereading W. Edwards Deming

I’m not feeling optimistic about the U.S. If there was ever a time for a U.S. turnaround, it’s 2025.

The bed rock of Deming’s method is respect for all the participants; the hot-shot CEO and the assistant janitor both contribute equally to the success of the enterprise. If everyone today took Deming to heart, the decade would turnaround in an instant.

Boeing, a company I respected, even idolized, forty years ago is in shambles. 3M, another company I once admired, is accused of foisting forever-chemicals on us, and now we’re supposed to get rid of our black plastic kitchen utensils because they are poisoning us.

We’re about to inaugurate a president who claims to be a business genius but went bankrupt running New Jersey casinos. He’s such a blunderer at moral corruption, the usual play ground of political types, he’s a convicted felon. Not my idea of success.

This week, I decided it was time to go to the all-time turnaround king, W. Edwards Deming, for advice.

About fifteen years ago, I wrote a book on computing standards called Cloud Standards. I covered ISO/IEC 270001, which is a basis for most IT security plans. Cloud computing services, such as Amazon Web Services, request public audits of their compliance to ISO 270001 aiming to increase their customers’ confidence in their IT security practices. 270001, as do many IT governance schemes, relies heavily on W. Edwards Deming’s Plan-Do-Check-Act (PDCA) cycle.

Consequently, I became interested in W. Edwards Deming; I read a number of his books and studied his work. In the 1950s, Deming went to Japan to advise industrialists on running their companies while they struggled to recover from WWII. Within fifteen years, Japan went from a bombed out and defeated ruin to the thriving second largest economy on the planet. They attributed their success largely to Deming’s tutelage.

In the 1980s, Ford Motor Corporation had trailed behind General Motors in automobile sales and profitability since the halcyon days of Henry Ford and the Model T. Seeing the success of Honda, Toyota, and Nissan, they brought in Deming. Following his advice, FMC soon took the lead among U.S. automakers in competing against the onslaught of well-designed and precision-built Japanese automobiles.

Maybe it’s time to listen to Deming’s advice. He died in 1996, so we can’t talk to him, but he left behind several books and many papers.

Deming applied statistical analysis to manufacturing and management. You might expect his method would be to measure productivity precisely and design processes around time and motion studies of worker efficiency.

Deming rejected all of that. Instead, he recommended abolishing performance reviews. The originator of Total Quality Management looked on product inspections with disfavor.  

His most popular work, Out Of the Crisis, was published in 1982. He wrote to address the crisis of American industry in the 1980s when Japan produced better cars at lower prices than Detroit and companies like Sony and Hitachi were innovating circles around the nascent Silicon Valley.

Out Of Crisis contains the kernels of his ideas. He demands that both workers and management have a through understanding of all aspects of their business and customers and focus on long term success while ignoring quarterly profits. He uses statistical analysis to distinguish errant processes from accidents. The job of both management and workers is to improve the process by iterating on the Plan-Do-Check-Act cycle for continuous improvement.

The bed rock of Deming’s method is respect for all the participants; the hot-shot CEO and the assistant janitor both contribute equally to the success of the enterprise. If everyone today took Deming to heart, the decade would turnaround in an instant.

I wish I could recommend Out Of the Crisis as a book, and I do, but with cautions. Deming’s style is his own. He’s preachy. He works from examples more often than explicit statement of principles and reasoned exposition. Keep in mind that Deming was not a crackpot. He sounds like one, but when businesses followed his advice, they consistently thrived. He was the most effective business consultant of the twentieth century.

He could turn around the twenty-first century. Read him and follow his advice.

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China’s Woes

The decline in China’s economy has occupied the economic press lately. Fifty years ago, I studied more in classical Chinese than English. I was working on a PhD. thesis on China of the Confucian era. Many of the basic tenets of traditional Chinese government and economics go back to Confucius and his followers in the Yellow River Valley, like much of western tradition goes back to Athens and Jerusalem of classical antiquity, which was roughly contemporaneous with Confucius. Maybe sunspots or a burst of cosmic radiation spurred civilization onward, although that ignores the great civilizations of Africa and the Americas.

It grieves me that I can’t say “I told you so,” to those who thought China would never get beyond the chaos of Mao because I didn’t tell anyone.

That bit of personal history has shaped my views of China. In the 1970s, China was in the bitter throes of the cultural revolution, but I concluded that China, if it could ever shake off its legacy of western colonial oppression and poverty, was a better platform for 20th century western market-driven capitalism than Max Weber’s characterization of the protestant ethic.

I wish I had published those views to refer to now, but I didn’t, so you will have to take my word for them. Herrlee Creel, my mentor at the University of Chicago, hinted at this view in his bestseller of 1949, Confucius: The Man and the Myth, in which he argued that Confucius held democratic ideals. I do not entirely agree with my mentor on that, but Joseph Needham’s encyclopedic Science and Civilization in China convinces most readers that traditional Chinese society fostered scientific and technical innovation. I assert that Confucian world view fostered individual initiative bolstered by a vigorous familial system. A budding entrepreneur in traditional China was more likely to receive encouragement and financial support than a western protestant in recent centuries.

The last decade of the 20th century and the first two decades of the 21st century have proved me right. Family support of entrepreneurship has helped the contemporary rise of the Chinese economy. It grieves me that I can’t say “I told you so,” to those who thought China would never get beyond the chaos of Mao because I didn’t tell anyone.

A common trope is a Chinese gangster who starts firing a weapon and can’t stop until the magazine is empty. The trope is pure xenophobia and racism, but it reminds me of the Chinese official policies on Covid-19.

I read a lot of popular American detective and mystery fiction written in the 1930s and 40s. A common trope is a Chinese gangster who starts firing a weapon and can’t stop until the magazine is empty. The trope is pure xenophobia and racism, but it reminds me of the Chinese official policies on Covid-19.

China’s initial reaction to Covid-19 was a crackdown: mandatory masks, draconian quarantines, workers locked in factories, and whole cities shutdown over scattered cases of the virus. The policy was successful. China kept their death toll down and their economy led the world in the early years of the pandemic.

But like the gangster with the machine gun, the CCP could not take its finger off the trigger until the gun was empty; the rest of the world was in recovery and Covid-19 restrictions were holding China back when Emperor Xi Jinping let up and abruptly tossed the zero-Covid weapon aside; Covid-19 roared back. Death tolls rose and China’s internal economy suffered.

Information on current events in China passes through many filters. Closest to the ground, reports are tailored for a favorable response from the next level up in the government. The Chinese government filters and massages published information to shore up their position. Then western agendas kick into gear and add their own layers of distortion. And finally, your lowly servant here is picking and choosing to tell a story that will keep your interest.

I won’t go into the details of China’s current economic woes. I suggest reading The Economist on the subject or any business publication for more information. Most are gloating over the inherent weakness of authoritarian governments.

I agree that authoritarians are weak, I won’t go into why I think that, but I haven’t seen that the commentators have taken into consideration the peculiar nature of traditional China’s authoritarian empire, which has failed, recovered, and triumphed over and over for the last two thousand years. A more resilient empire than the Romans or the British.

There’s an old Chinese saying: The mountains are high and the emperor is distant. (Shān gāo, huángdì yuǎn.) It’s used in many situations, but slow, unreliable communication in the empire frequently served as a buffer between alternate centers of power and culture and the sometimes inept central government located wherever the emperor happened to sit.

I am forced to wonder if the flattened mountains and shortened roads of twenty-first century communications and transportation have worsened China’s current economic woes. The west has a century of experience with rapid communications and a well-informed populace. China does not.

I am watching carefully.

Hold fast. Be patient. Keep trying.