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 / Second Quarter 2002 / Issue 27(originally published by Booz & Company)


Professor Chandler’s Revolution

But the core of Professor Chandler’s work (and the reason he is most relevant to business managers) is his theories about industrial change and the interplay of large corporations that he has spent 60 years articulating. “Al’s data,” says his Harvard Business School colleague Associate Professor Nancy Koehn, “isn’t the kind you call up on an Internet site. In an age of just-in-time analysis, Al Chandler is about getting the story right. Everything he does as a historian legitimates the value of in-depth research, and the study of history, as a calling.”

Professor Chandler is not just a mentor to business historians and the developer of one of the most far-reaching theories of business success; he is also our most prominent fan of big business. He follows the Fortune 500 the way some of his Bostonian neighbors follow the Patriots, Celtics, and Red Sox. His writing can be dense and dry, like that of Fernand Braudel, the great French historian of economic daily life, with whom he is often compared. Professor Chandler generally eschews stories of heroic personalities and instead writes meticulously about comparative economic performance — the impact of organizational decisions on production costs, throughput, and the larger economy. He is fascinated with the fate of corporate titans, from the Erie Railroad to Cisco Systems Inc., as they clash and compete, allying with and betraying each other, continually seeking to control their fields, and shifting the economic landscape around them through their battles and alliances.

Alfred D. Chandler Jr.’s 1977 book, The Visible Hand: The Managerial Revolution in American Business, was the first business title to win the Pulitzer Prize; it is only one component of a body of work (more than 25 volumes published over 45 years) that established the nature and influence of large corporations in the modern economy. “He’s the Boswell of American capitalism,” says management writer Andrea Gabor, who devoted half a chapter to him in The Capitalist Philosophers: The Geniuses of Modern Business — Their Lives, Times, and Ideas, her survey of management thought.

Integrated Learning Bases
Professor Chandler’s central idea about industrial change is unveiled gradually in each of his books, taking its fullest form to date in Inventing the Electronic Century, which is the first of a two-volume set, to be titled Paths of Learning. (The second volume, due out next year, will chronicle the chemical and pharmaceutical industries.) Success, Professor Chandler argues, comes to companies that cultivate an “integrated learning base,” as he calls it: the capabilities needed to lead in a particular business niche. “The key theme for any business,” he says, “is learning its boundaries: relating the firm, the markets, and the technology to your particular strengths.”

The theory helps to explain why Philips experienced its tribulations with CD-i, while the Sony Corporation recovered not just from the Betamax debacle, but also from a devastating investment in Columbia Pictures. As Professor Chandler writes in Inventing the Electronic Century, Sony set the pattern for its success back in the 1950s, when it “commercialized Japan’s first audiotape recorder and became the world’s first-mover in miniaturization technologies.” Sony kept its early lead by continually expanding those miniaturization and marketing capabilities — to integrated circuits and the Trinitron color TV tube in the 1960s, the Walkman in the 1970s, and a variety of disc formats in the 1970s and 1980s. As its reach and resources increased, Sony kept investing in corollary technologies, like plastics, adhesives, components, and picture tubes, which allowed it to build on past success. One by one, its competitors were downed, until, by the mid-1990s, Sony (along with the Sharp Electronics Corporation and the Sanyo Corporation on a smaller scale) became “the chief — indeed, the only — architects of the evolving consumer electronics path in the new Electronic Century.”

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  1. Richard R. John, “Elaborations, Revisions, Dissents: Alfred D. Chandler Jr.’s The Visible Hand after Twenty Years,” Business History Review, Summer 1997
  2. Alfred D. Chandler Jr., Inventing the Electronic Century: The Epic Story of the Consumer Electronics and Computer Industries (Simon & Schuster Inc., Free Press, 2001)
  3. Alfred D. Chandler Jr. and Stephen Salsbury, Pierre S. du Pont and the Making of the Modern Corporation (Harper & Row, 1971)
  4. Alfred D. Chandler Jr., Scale and Scope: The Dynamics of Industrial Capitalism (Harvard University Press, Belknap Press, 1990)
  5. Alfred D. Chandler Jr., The Visible Hand: The Managerial Revolution in American Business (Harvard University Press, Belknap Press, 1977)
  6. Andrea Gabor, The Capitalist Philosophers: The Geniuses of Modern Business — Their Lives, Times, and Ideas (Times Books, 2000)
  7. Thomas K. McCraw, ed., The Essential Alfred Chandler: Essays Toward a Historical Theory of Big Business (Harvard Business School Press, 1988)
  8. Richard Tedlow, Giants of Enterprise: Seven Business Innovators and the Empires They Built (HarperCollins, HarperBusiness, 2001)
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