Key Reasons for Andrew Carnegie's Success

Andrew Carnegie was not only a steel tycoon but also one of the most influential leaders of his time. Carnegie built the largest steel company in the United States, Carnegie Brothers & Company. He was an American industrialist who had a considerable fortune and was a significant philanthropist of his time. Though there were many successes and failures of Carnegie’s career, he is seen as a revolutionary figure in the eyes of many. Carnegie utilized a wide range of leadership tools embodied by both hard and soft power.

Carnegie Wasn't Born Into a Position of Power or Leadership

Andrew Carnegie was born into a blue-collar family in Dunfermline, Scotland. Carnegie did not have much formal education though he read a lot of books growing up. His parents supported academic endeavors. Carnegie moved to The United States with his family when he was 13 years old. He started his career working in a factory in Allegheny, Pennsylvania. Carnegie’s’ first investment was a stock purchase in the Woodruff Sleeping Car Company. Woodruff’s sleeping car contained beds and mattresses, which allowed travelers to get a good night’s sleep on their long train rides, as they would previously try to rest on chairs or benches. This was a new idea at the time, and one Carnegie had faith in it. Carnegie took risks and pushed himself outside of his comfort zone with his investments. After two years, Carnegie was earning 5,000 dollars a year from his stock in Woodruff Sleeping Car Company. This investment was the foundation for Carnegie’s great success and wealth. At the age of 24, Andrew Carnegie was offered the position of superintendent of the railroads Western Division by the newly elected vice president of the Pennsylvania Railroad, Thomas Scott. Carnegie suddenly found himself the leader of the most extensive and most-used section of railroads in the United States. This was the beginning of Carnegie’s journey as a leader.

When managing the railroad, Carnegie’s’ primary goal was to keep the railroads running smoothly, no matter the cost. He prioritized the success of the railroad. Not only did Carnegie work nonstop, but he also pushed the men that he led as hard as he pushed himself. Carnegie wrote in his autobiography ‘I was probably the most inconsiderate superintendent that ever was entrusted with the management of a great property, for, never knowing fatigue myself, being kept up by a sense of responsibility, I overworked the men and was not careful enough in considering the limits of human endurance’. Carnegie recognized his mistakes and shortcomings. This is crucial in a good leader. One who believes there are right all of the time or flawless is not one you want to be lead by or one you want in power at all. Carnegie was criticized for his treatment of the workers throughout his time running the railroad. In his early years working for the train company, occasionally, Carnegie was misjudged by his short stature as height and prominence were more universally expected signs of leadership during his time. During one incident at the train tracks, ‘A burly Irishman, not realizing the small young man was the boss, picked him up and placed him out of the way’. At this time, the desired traits in a leader were transitioning from emphasizing physical characteristics to one on personality traits. It was common to have men in positions of power who were tall and towered over those who they led. Tall white men dominated leadership roles during this time. Once he gained a following, he used a variety of different hard leadership skills to advance himself and his agenda. It is understood that power is fundamental in any fortune making. Once he had the power, he set out to further his ideas and achieve greater success.

Andrew Carnegie as a New Type of Modern Entrepreneur for His Time

Carnegie rarely worked after he built up his colossal fortune. It has been said that he even disliked work. Some would argue that Carnegie was not a leader but rather just a master in making money. Carnegie wrote during this time in his life, one of which is his most famous essay, ‘The Gospel of Wealth’ . Some viewed Carnegie’s writings as ‘silly and insincere books which were admired by a generation that adored money, bigness, and success’. Though Carnegie spent much of his time outside of his company, he did carry the ultimate decision and force over his company. Carnegie used hard leadership skills such as coercion and the ‘strong man’ ability to get his employees to cater to his needs. As Nye talks about in his book, The Powers To Lead, the goal of all leadership styles is to achieve a purpose, usually dictated by the leader, by affecting people’s behavior. This idea that he could treat his employees how he wanted and got them to comply with his demands was key to Carnegie’s success as a leader. As Redlich says

These were run by young men, whom he had promoted and who were more or less accustomed to the idea that they did the work while he goaded them, whip in hand, and that he had the final decision and made most of the money, although they were indispensable for the functioning of the concern.

Though Carnegie stood at just five feet three inches tall, he had built up the power and respect to use hard leadership skills, even at a time when being a good leader had a great deal more to do with looks. Some people did think that the success of Carnegie’s company was at the expense of those he employed. Some of the leadership tactics Carnegie used were controversial. Though many of them were forms of classic hierarchical leadership, as Carnegie reached and succeeded in his goals, I would say that his use of hard leadership skills was effective.

He Failed But Remained Strong

Carnegie did have times in his career where he failed as a leader. One of these times was a violent strike at his steel mill in Pennsylvania. His workers were unionized and wanted an improvement upon their working conditions. The workers at his mill protested cuts in wages, and though Carnegie was not there, he got criticized for how his general manager, Henry Frick, handled the situation. Frick called in armed men to try to protect the plant, but instead, a battle ensued. The people that he called in began to fight with the protesters and it turned bloody. At least ten people died, and many were arrested. The strike went on for five months. Though Carnegie did not make decisions in this situation, he was criticized because his followers did not agree with the decisions that the person he put into a position of power made. It caused violence, death, and mayhem for everyone, even though these workers just wanted to be paid better. Carnegie should not have let this happen at a steel mill with his name on it. This tainted Carnegie’s reputation as someone who understood his followers, though he was not the one calling the shots. Carnegie was implicitly affected by those who he put into power. This was one of the failures in Carnegie’s leadership journey.

Carnegie had great charisma in his actions. People loved socializing with him as he was intelligent, humorous, and quick-witted. Charisma is an essential quality in a leader because it can inspire the devotion of people to you. Charisma is rooted in culture. Carnegie went to dinner parties and events with his neighbors as they enjoyed discussing the crucial issues of the time with him. People loved Carnegie and were inspired to follow him, not just because of the deals or decisions he made, but because of the conversations, ideals, and charisma he had. Charisma is the ability of someone to inspire fascination and loyalty in those around him. Since Carnegie was not born into a powerful and wealthy family, he had to gain legitimacy with his followers. Charismatic legitimacy is what Carnegie worked to achieve. It is the follow me because you like my mentality. Carnegie had to build up the trust and admiration of his followers through his actions because his followers had the choice of following him or not. At his time, charismatic legitimacy was usually outweighed by legacy as most businesses and positions of power were passed down through generations. Carnegie had to work harder and smarter to gain legitimacy as he was not born with an advantage. He used his leadership skills to promote his causes and emphasis philanthropy through the end of his life.

Philanthropy was a very integral part of Carnegie’s life. From the beginning of his career, he stressed the importance of putting money to good use. As Carnegie explained, wealthy people need to use the same talents with which they had amassed fortunes to distribute those fortunes for the common good. Carnegie believed that those who were wealthy should pay their debt to society. ‘The man who dies thus rich dies disgraced’. Good leaders give back to those who they lead. Carnegie spent the later years of his life doing just that. Carnegie sold his coal business for 200 million dollars at the age of 65. At age 76, Carnegie established the Carnegie Corporation of New York. The foundation that Carnegie created has been described as ‘the greatest endowment ever given to a group of men for the promotion and diffusion of knowledge and understanding amongst the people of a nation’. Carnegie set the precedent of successful leaders giving back in significant ways to their followers and those who supported them along the way. An integral part of the formation of an entrepreneur philanthropist is to have amassed one’s fortune through one’s own endeavors. The enormous fortunes are usually made by people who dominate their field, such as Carnegie did with steel. Carnegie then used his amassed fortune to improve the lives of those around him and advance society.

We can learn a lot from analyzing Andrew Carnegie’s approach to leadership. Carnegie was both a transactional and transformational leader. He utilized skills used in transformational leadership, such as willingness to take risks, charisma, and resilience. Carnegie took risks in his investments and used too little money he made at the start of his career to reinvest. Carnegie was good at forming relationships and used charisma to his advantage throughout his business dealings. This was a critical factor in Carnegie’s rise to success. Carnegie also utilizes transactional leadership skills. He knew how to make a deal to get what he wanted in the steel industry. We can learn a great deal about smart power by looking at Carnegie’s leadership style. Carnegie learned how to be a good leader through trial and error.

Conclusion

Carnegie used both hard leadership skills and soft leadership skills together in smart power. He knew how to get done what he needed to get done to push forward his agenda. He also knew how to work with people using charisma and soft leadership skills. Carnegie received criticism throughout his lifetime for the treatment of the group of followers that were his employees. All leaders, including Andrew Carnegie, have strengths and weaknesses throughout their leadership journey. Carnegie built his empire from the ground up through perseverance and the utilization of leadership skills. He used many tactics that were ahead of his time and improved on the capabilities of those before him.