Discovering Rules of Success

Following the original survey of business conditions in Richmond, Kentucky, instructions came from the home office of the Merchants Trade Journal to do another investigation. They wanted this one from a larger town. Lansing, Michigan, was suggested.

So, leaving Richmond, Kentucky, I proceeded north through Cincinnati and other towns and cities in Ohio.

I am reminded at this point of a visit to the National Cash Register Corp. plant in Dayton. Again, I am not sure whether it was on this particular tour. But I learned there of an incident which has always been remembered.

A Sales Lesson

At that time ncr, as this company was familiarly called, had something of a reputation of being the most aggressive sales organization in American business. And its president, John R. Patterson, was more or less generally reputed to be the country’s most successful sales genius.

This is what I learned: Mr. Patterson’s mind had caught a sudden sales inspiration. Immediately he did a sensational and unprecedented thing. He sent telegrams to every ncr salesman in the United States, ordering them to come to the factory in Dayton immediately—at company expense. I was shown, while touring the plant, a large auditorium in the company’s office building. Here, I was told, the hundreds of salesmen assembled, filled with curiosity. Mr. Patterson addressed them.

“Men,” he began, “you are wondering why I called all of you here. Now I will tell you. Every one of you loses sales because your prospects put up objections you are unable to overcome. An idea flashed into my mind the other day that will enable you to turn every objection into your strongest selling point. It’s so simple you’ll all wonder why you never thought of it. Whatever the objection, you are to answer immediately, with a smile of complete assurance: ‘Why, certainly—and that’s the very reason you need this National Cash Register!’”

Then Mr. Patterson asked a few salesmen to come to the platform and pretend they were prospective customers, putting up to him the objections that each salesman had failed to overcome.

One said, “I simply can’t afford to buy a cash register.”

“Exactly!” responded Mr. Patterson. “And that’s the very reason you need this National Cash Register. When you have all the records this register will give you—when it protects you from losses—pays for itself and saves you money, then you can afford things!”

One by one John R. Patterson answered every sales objection that his salesmen had been unable successfully to answer.

I have found this principle of salesmanship effective, perhaps hundreds of times.

A Disappearing American Institution

At this point I must indulge another digression. I had written this chapter of the autobiography in our bedroom of a Pullman car on a train. Mrs. Armstrong and I were en route to Texas, on the Dallas car of the streamlined Sunset Limited. At El Paso our car was switched onto a T&P train for Dallas.

We had just returned from the dining car. Between our streamliner car and the diner we passed through one of the old-time Pullman cars. I had not seen one in some time. The modern Pullmans are all-room cars. But these older models contained mostly open Pullman seats that make up into berths in sections at night. This is the kind of sleeping cars I rode constantly on these “Idea Man” trips.

The newer streamliner cars provide private toilets in every room, but these old-timers provided one large men’s washroom at one end and a ladies’ restroom at the other end. These men’s washrooms contained a long leather lounging seat at one end, and a chair or shorter seat on the side. They were also the men’s smoking rooms. With the disappearance of men’s washrooms on Pullman cars has departed a real American institution! I suppose few women know anything about it.

In these washrooms, especially on long trips, men would sit or stand and talk by the hour. In these washrooms no introduction was needed. Conversations were opened as a matter of course. Men conversed familiarly, as if they had been acquainted for years, rarely introducing themselves by name. And what would you women suppose they talked about? Their wives? Laughing at dirty stories? Not at all! I don’t believe I ever heard one off-color story being told in a Pullman washroom. Men always had something more important to discuss than idle gossip about their wives. The discussions were always impersonal.

It was here, in this great but vanishing American institution, that the political, economic and social problems of the nation and the entire world were “solved!” Questions of religion were usually avoided. Heated arguments or angry controversy were rarely, if ever, indulged.

If only the heads of state of the world’s great nations could have had the Pullman washrooms wired, and the conversations tape-recorded, they could have had the solutions to all their knotty and perplexing problems! Too bad! Tape recording came in after this honored American institution went out!

I spent many an hour in thought-provoking conversation in this “institution” of a bygone day, from the days of these “Idea Man” tours until the modern streamliners relegated this meeting place of business men to a vintage of the past.

But in all seriousness, this digression about washroom conversations truly belongs in this story of formative life experiences. For I verily believe that these hours of contacts over the years with many important, thoughtful and successful men contributed their share in the preparation for the responsibilities of today, and for the years still ahead of us. We are influenced by every person with whom we come in contact. The most successful men—the leaders—the men of accomplishment—rode the Pullman cars. These washrooms afforded a meeting place where I was privileged to enter invigorating, stimulating, and often enlightening conversation with men I could never have contacted otherwise. Here was a place where men were free and relaxed, always willing to converse with other men on a social parity, regardless of social distinctions outside the Pullman washrooms. Contacts and conversations with scores and scores of prominent and important men—many of them in Pullman washrooms—are among my most treasured experiences.

WHY Men Fail

On all these “Idea Man” trips, one assignment had been to observe, and to question businessmen, in all parts of the country, to try to learn why one man succeeds and another fails. An alarmingly large percentage of retail merchants over the nation were operating “in the red”—on their way to failure and bankruptcy. Why?

Two men might start out in business under almost identical conditions. One would succeed in building a thriving and profitable business, while the other would “go to the wall.” The Merchants Trade Journal wanted to know why!

I had questioned literally hundreds of businessmen, as to their ideas or opinions on this question. The majority gave the same answer—lack of ability.

While in Detroit on this trip I had a nice interview with the manager of Detroit’s large department store, the J. L. Hudson Co. He, with a minority of other businessmen I interviewed, insisted that the main reason for failure in business was lack of sufficient capital.

Of course both of these were factors. But, based on observation, getting at the facts that led either to success or failure in hundreds of businesses, I found a third important cause of failures was the fitting of the proverbial square peg in the round hole—in other words, so many men are misplaced—in the wrong line of business, for them; this, coupled with the fact that the seven laws of success are not known or followed by most people.

One Sad Experience

I remember a perplexed and frustrated merchant in southern Indiana. He was coming out on the short end, without any profit, and he couldn’t figure why.

“I have figured to the very penny every item of cost in doing business,” he explained. “It costs me exactly 20 percent to do business—including every expense—salaries, rent, utilities, advertising, even cost for wrapping paper and string—and it runs exactly 20 cents on each dollar of sales. Now I have figured that a 5 percent profit is fair. So I add the 5 percent profit to my 20 percent cost of doing business, and I mark up all my goods 25 percent above wholesale price. But at the end of the year my 5 percent profit just simply isn’t there—it has vanished, clean as a whistle! I can’t figure where it went!”

“I think I can,” I replied. “Suppose you buy a certain item at a cost of $12 per dozen. What are you going to retail that item for?”

“Why, $1.25, of course. $12 per dozen is $1 each. I add an overall of 25 percent—to cover 20 percent cost of doing business and 5 percent profit, and mark the selling price at $1.25.”

“I thought so!” I exclaimed. “That’s where you’ve made your mistake. Now look! You say your expenses run 20 percent of your sales—right?”

“Sure!” he said.

“All right. Now I want you to figure 20 percent of that $1.25 selling price, and subtract it from the $1.25.”

He did, and couldn’t believe his eyes!

“Let’s see—20 percent of $1.25 is 25 cents. Why, when I subtract my expenses from the selling price, I am right back to my cost price! Where did my 5 percent profit go?”

I felt like laughing, but it was no joke—it was too tragic!

“You see,” I explained, “you figure your cost of doing business as a percentage of your sales—not of your buying price. But when you figured your markup, you figured it on the buying price, instead of the selling price. Actually, you should have marked your price up 33¹/³ percent above the buying price, in order to sell the item at a price to allow you 20 percent on the selling price for expenses, and 5 percent for profit.”

I left this merchant in a rather dazed condition. Why was he failing? Lack of capital? Lack of ability? Square peg in a round hole? Or, perhaps, lack of proper education, the second law of success!

I found many retail merchants in small towns who were former farmers. It seemed that many farmers in those days had a habit of grumbling and complaining. They knew they worked hard. It seemed to them that the merchant in town had it mighty easy, compared to their lot. The mail order houses kept telling them how the retail merchants gouged them and took big profits. It looked like running a store was a luxurious easy life, with big profits.

So, many farmers sold their farms and bought retail stores. Then they began to learn that a merchant had worries a farmer never thought of. They were untrained and unskilled in merchandising, advertising, selling, cost accounting, shrewd buying. Salesmen from manufacturers and wholesalers overloaded them with the wrong goods. They didn’t know how to figure markups. They didn’t know how to meet the public or sell goods. They didn’t know how to manage clerks, if they hired any. They were misfits—square pegs in round holes!

Then, there are those seven laws of success!

Most people—men and women alike—probably do not think of or apply a single one of these seven laws. These are of such importance that we have issued an attractive free booklet on the subject which the reader may receive upon request.

The Lansing Survey

I continued on to Lansing, state capital of Michigan, to put on the second survey of retail business conditions.

Here conditions were found to be very much like those in the smaller town of Richmond, Kentucky. Although Lansing was much larger than Richmond, and had better and larger stores, yet I found, on actual investigation by house-to-house and farm-to-farm interview and reports from banks, post office, etc., that the Lansing merchants were losing untold thousands of dollars’ worth of business to the mail order houses and the larger stores and exclusive shops of Detroit and Chicago.

I had one very good interview with the superintendent of the Reo automobile plant in Lansing. He explained in detail why his plant, and all others, were unable to compete with Ford’s new wage plan. They were not yet on the assembly-line production basis.

Somehow, I do not remember so much about this particular survey. It was mostly a repetition of the Richmond investigation, only on a larger scale. It was the Richmond survey that shocked its way into memory, because it was a new revelation to us.

Hiring Myself Another Job

My next definite memory, after concluding the Lansing investigation, was an interview with the secretary of the Chamber of Commerce in South Bend, Indiana.

I have mentioned that, in addition to interviewing retail merchants, I usually interviewed also the secretaries of chambers of commerce, for the Journal was interested in general community activity and betterment, as well as successful business methods.

Of all the chamber of commerce secretaries I had interviewed, this man, whose name was Spaulding—I do not remember his given name or initials—impressed me by far the most. He is the only one still retained vividly in memory. He impressed me as being the most able and resourceful of any chamber secretary I had met.

After leaving South Bend, I had jogged back east as far as Fort Wayne, Indiana. From there I was scheduled to cut southwest toward Indianapolis, and then on back to Des Moines. My biggest “Idea Man” tour was now nearing its end.

The imminence of the return to Des Moines brought back to mind the fear of being “fired.” The thought of the disgrace of this now mounted to a mighty crescendo. I felt I had to “beat them to it,” by resigning, avoiding the stigma of being discharged.

So on the impulse of the moment, I entered a telephone booth and got Mr. Spaulding at South Bend on long distance. Once again, I “hired myself a job.”

“Hello, Mr. Spaulding!” I said. “Since I was in South Bend, I’ve been thinking a lot about you and your chamber there. I’ve decided I want to get into chamber of commerce work for a while. I’ve decided to resign from the Merchants Trade Journal and come back to South Bend as assistant secretary of your Chamber of Commerce.”

“You have!” exclaimed Mr. Spaulding incredulously. “Well, I don’t know what we’d have you do, or how I could manage to pay any salary.”

“Oh, that’s all right,” I responded with the usual cocky confidence. “I’ll have to go on out to Des Moines, and check out finally with the Journal, and you’ll have a couple weeks or so to figure it out before I return.”

This self-assurance and positive approach must have been difficult to resist, for Mr. Spaulding said he’d try to think of something.

Thereupon I sent in to Mr. Boreman a letter of resignation, saying I would finish this trip and then would leave immediately to return to South Bend.

My First Big-League Game

It was about this time, or on one of my “Idea Man” trips through Chicago, that I saw my first Major League Baseball game. Ralph Johnson, manager of the Journal’s Chicago office, and I went together.

The Detroit Tigers were playing the Chicago White Sox in an American League game at Comiskey Park. I had seen a number of minor-league games. I had played a great deal of baseball as a boy, between ages 11 and 18. But it seemed to me that this major-league brand of baseball was the most monotonous and least exciting of all.

Then I began to understand the reason. They were better players. There was no wasted motion. When a shortstop picked up a hot grounder, he didn’t get all excited and wildly wind up before throwing to first. He scooped up the ball as his throwing arm was smoothly moving into throwing position, and effortlessly it was thrown with speed straight to the first baseman. The players were not making as many motions, but actually the ball was traveling faster.

It’s the same in all branches of athletics. The novice makes work of it—goes to unnecessary effort. The champion does it smoothly, with precision.

The same is true with workmen. A greenhorn beginner as a carpenter wastes a lot of motions with his hammer, plane or saw, and quite frequently his hammer misses the nail altogether. The experienced carpenter does it smoothly, effortlessly to all appearances, but he is getting the job done faster.

This particular baseball game really was a monotonous, dull, unexciting game. Even the experienced regular customers were talking about it. We endured the game down to the last half of the ninth inning. The White Sox led, 3 to 1. Detroit was at bat. There were two outs, none on, and one strike on the batter, who happened to be the famous Ty Cobb. We arose trying to get out of the stands before the rush.

A regular “dyed-in-the-wool” fan, sitting in front of us, turned around and said earnestly, “Please take my advice and don’t go yet. No baseball game is over until the last out. Ty Cobb hasn’t failed to get a hit in any game this year. Don’t worry—he’ll get a hit.”

Why Ty Cobb Was Famous

We sat down again, a little dubiously. “Ball one!” droned the umpire.

“Ball tuh!”

“Foul ball! Strike tuh!” the umpire’s drone continued.

“Ball three!”

“This is it!” exclaimed the fan in front of us, excitedly. “Now watch what happens! Old Ty Cobb won’t miss getting that hit!”

He didn’t! The next pitched ball cracked squarely off Cobb’s bat, driven like a bullet straight between left field and center. It was a two-bagger at least—maybe a triple, if Cobb rounded the bases fast enough!

But Cobb didn’t! To our utter amazement, he jogged leisurely to first, sat down on the bag, stretched and yawned drowsily!

But as soon as the ball was thrown back to the pitcher, he was up and alert, dancing friskily at a dangerous distance off first, beginning a taunting, razzing line of chatter at the pitcher.

“Hey you pitcher! Thanks for that two-bagger you handed me! Yea! Thanks for nuthin! I didn’t want it as a gift! I’d rather steal it from ya! Come on, now! I’m goin’ ta steal second. Try and catch me! Ya can’t throw straight enough to catch me!”

The pitcher whirled and whipped the ball to first. But Ty slid back under the ball safely. Now he razzed the pitcher more than ever, taunting him, telling him he was no good—he was going to pieces—daring him to catch Cobb off base.

The pitcher threw a ball and a couple of strikes at the batter, meanwhile whipping the ball a couple more times to first trying vainly to catch Cobb off base.

Then Cobb dashed off and stole second.

The batter finally connected. This, too, might have been good for two bases. But the batter was forced to stop on first. Ty Cobb lay down on second, feigning sleep, snoring loudly. But as soon as the ball was again in the pitcher’s mitt, he was up and dancing wildly far off second, his torrent of contempt for the pitcher pouring violently from his mouth.

Two or three times the pitcher made a vain attempt to snap the ball to second in time to nail Cobb off base and end the game with the third out. But each time only brought a fresh outburst of contemptuous discouragement from Cobb. This strategy was beginning to have its effect on the pitcher. Before the next batter could get a hit, strike out, or a base on balls, Ty had stolen third. There, again, he sat down and continued taunting the pitcher.

Why didn’t Cobb race, on his own hit, for second, third, or even to stretch his hit into a home run? Why, when he was on second, and the next batter cracked out a line drive, didn’t he race on to round third and score a run? Usually a single drives in a run if a man is on second.

The answer is that the score was 3 to 1 against Detroit. One run was not enough. Had Cobb scored a run on either his own hit, or that of the batter following him, the White Sox probably would have put out the next man, and the game would have ended 3 to 2 for Chicago. Cobb’s strategy was to exasperate the pitcher psychologically until he “went to pieces” so that following batters might succeed in driving in a total of three runs needed for a Detroit win. As long as Cobb remained on base, he was allowed to taunt and razz the pitcher.

So he remained on third, shouting ridicule at the pitcher, who now walked a batter, filling the bases. The pitcher now was thoroughly rattled, nervous, his confidence gone.

The next batter drove out a double, scoring all three men on bases. Thus the game ended. Score, Tigers 4, White Sox 3!

This game turned out to be one of those rare, once-in-a-lifetime thrills most people never see, though they may attend ball games regularly. It was the topic of conversation of all Chicago next day.

On arriving in Des Moines I learned, to my dismay, that Mr. Boreman had had no thought of “firing” me, but merely wrote the letter I had received at Lake Charles, Louisiana, in an effort to snap me out of a slump and prod me on to better effort. I gathered the impression that he was genuinely sorry to see me leave the Journal.

Actually, now, having been myself an employer for several years, I think I can better understand. The almost three years I had spent with the Journal had been largely preparatory years, and Mr. Boreman probably figured they had invested quite a little time, instruction, supervision and money toward developing a man who had some slight promise of becoming a really valuable man in the organization someday. And to see me quit and drop out, just as I was beginning to be worth something—beginning to be able to write articles and advertising copy professionally—meant the investment was now wasted and a total loss, except for whatever value I had been while there.

While with the Journal my salary had been raised a number of times. The raises had never been large, but they were fairly constant, as frequently as I deserved, and I probably was in line for another raise about the time I resigned. I was then getting $20 a week, which was not a high salary, but with the expense account, traveling most of the time, the salary was mostly clear. There was no room or board to pay out of it.

I must have had another conference with my Uncle Frank Armstrong while in Des Moines this trip, but do not remember his reaction to my latest detour from the main track. But even though it was another sidetrack, nevertheless it was to provide valuable experience and training for the later big job.

Building a Highway

Leaving Des Moines this time was destined to be leaving it as “home” forever. I had been born and reared there. But now I was almost 23. Perhaps it was time to fly the home nest.

I arrived, I believe, one evening in South Bend and obtained a room at the ymca which was to be my home for some three or four months. Next morning I reported to Mr. Spaulding at the Chamber of Commerce.

Actually there had been no need of an assistant secretary, so there was no salaried job awaiting me. But, as I had detected on my one interview with him, Mr. Spaulding was a resourceful man, and he did come up with something for me.

The automobile was just beginning to come into its own in America in 1915. Of course most families did not, as yet, own automobiles, but the number was increasing annually. And the cross-country highway idea was just beginning to make its first bit of headway. Of course all roads outside of towns and cities were unpaved. But a great deal of work had been done on the coast-to-coast “Lincoln Highway” (now U.S. 30), and this already had been built—in the manner they were then built—routed through South Bend.

This manner of building consisted of doing considerable additional grading and surfacing of already existing roads. Few if any of the old “horse and buggy” square corners were straightened out. Surfacing consisted, at best, of a certain amount of graveling—but few even dreamed, as yet, of paving or hard-surfacing highways between cities.

At this particular time the highway activity centered on getting through the new “Dixie Highway,” from Canada to the Gulf. As planned by its promoters, this north-south highway was to pass through South Bend. But the right-of-way and cost of road improvements had to be approved by, and paid by, each township and county. The federal government had not, apparently, gotten into the highway business as yet. Nor were there any state highways.

Mr. Spaulding explained to me that they were running into a snag. Although there was a Dixie Highway Association—more or less privately promoted but endorsed, as nearly as I remember the setup, by civic groups such as chambers of commerce—the right-of-way over existing roads or for any new roads, if necessary, had to be voted and approved by a majority of property owners of each township and county along its route. The big obstacle was the northern township of Marshall County, which was next south of St. Joseph County, of which South Bend was county seat.

In order to hurdle this barrier, and to promote the construction of the new highway generally, Mr. Spaulding had conceived the idea of forming a local motor club. It was in no sense like the aaa, or associated automobile clubs of today. Its primary aim and purpose was good roads, and the promotion of this Dixie Highway.

One idea we had was to name or number every country road in St. Joseph County. I am not sure now whether this was Mr. Spaulding’s idea or mine. It was very difficult for a farmer to direct anyone unfamiliar with the neighborhood to his farm. He would have to direct one to go about a mile and a quarter in a certain direction to a certain windmill; then turn left to a road where he would see a red barn; then right until he came to a certain cow in a pasture, then to the fourth house on the left—or some such crazy and incomprehensible direction. Our idea was to name and number country roads like city streets, with road signs plainly designating the name or number of each road.

Mr. Spaulding’s idea was for the Chamber of Commerce to sponsor the motor club, which I believe we named the St. Joseph County Motor Club, and memberships were to be sold to automobile owners for $2 each, with the more prominent citizens expected to purchase the multiple block of memberships.

How to Swing a Group

When I arrived, Mr. Spaulding had the germ of the idea, but it remained for me to “put it over.” First, we had to propose the idea to the chamber’s board of directors, and win their approval.

One of the first lessons learned in this new school of chamber-of-commerce activity was how to swing a group of hard-headed businessmen to vote the way you want them to. Mr. Spaulding had the know-how. It was an interesting experience.

First, he selected three of the more prominent and influential board members whom he felt sure of winning to the idea. He and I went to these men and “sold” them on the motor club idea privately. He arranged for one of them to spring to his feet in the board meeting as soon as Mr. Spaulding had presented the general idea, and enthusiastically endorse it, saying he was most definitely in favor of this idea. The other two men were to follow suit, rising promptly before any other board members could rise to object, and heartily endorse the idea.

Then, at the board meeting, after Mr. Spaulding had outlined his proposal for the motor club and these three members in rapid-fire succession had generated enthusiasm by their vigorous endorsements, Mr. Spaulding exclaimed that it seemed useless to ask for more discussion—and brought it to an immediate vote before any member could object.

In this meeting were several multimillionaires. South Bend was home of a number of very prominent industries, including the Studebaker automobile factory, Oliver Chilled Plow Works, L. P. Hardy sales book manufacturers, and many others. It was a new experience to me to see the psychological effect of this strategy on these supposedly hardheaded businessmen. Like all humans, they had the “sheep” instinct. The impression had been created in the mind of every board member that every other member, except possibly himself, was enthusiastically in favor of this proposition, and not wishing to be on the losing side, or a lone dissenter, each one voted yes—it was unanimous!

So the motor club became a reality. My commission was to be 25 percent. I learned later—too late—that the proper rate of commission on a thing of that kind should have been 50 percent. But the whole idea was a new one to all of us. Actually, my work was very successful, but I was only half paid, and was unable to “hold body and soul together” as they say, on what I was making—so after a few months I was forced, of necessity, to move on.

But there were some exciting experiences in putting through this Dixie Highway during those few months.