John D Rockeffeller

What makes John D. Rockefeller an effective leader?

In his decades of business, one of the key characteristics that propelled Rockefeller to success was his strong leadership abilities. It wasn't his status, nor his age that made Rockefeller a great leader. Instead, it was his influence. People around him wanted to follow him; they were inspired by him to do more than they ever thought they were capable of. It was his ability to create a strong sense of teamwork and his own energy and passion that drove his workers and thus his company.

We can say he was a leader according to the leadership framework: Be, Know, Do:

- he was a real professional who possessed good character traits (like competence and dignity of labour) and above all a good sense of business.

- he well knew his job, and above all, he perfectly knew the human nature and the importance of well carrying for his workers.

- he perfectly did motivate his employees by setting the example and by being a good role model for the workers. ("Good leadership consists of showing average people how to do the work of superior people").

Then, we can guess that he was a strong and influent negotiator, because he managed to obtain rebates from railroads companies to transport his products at low fares. Rockefeller's competitors did not manage to do the same, that's why the Standard Oil Company began to make money.

What helps Rockefeller to become an effective was his sense of visioning. When Rockefeller first set foot on the oil fields of western Pennsylvania, in the early 1860s, he found an anarchy of independent drillers and refiners who were constantly indebted, desperately underselling each other, and vulnerable to wasteful cycles of boom and bust. That's why he projected to build something new. The results of it are that Rockefeller has been the first businessman who created such a great trust and who created the principle of monopoly of the market. That led the Standard Oil Company to the wealthy situation that we know.

How did Rockefeller lead his company?

Even if Rockefeller seemed to be very close to his employees and tended to show respect to them, his way to lead his company was totally different. Standard Oil employed a number of cutthroat business practices such as:

Monopolization -- Rockefeller is remembered for buying up all of the components needed for the manufacture of oil barrels in order to prohibit his competitors from getting their product on the market.

He realized that by controlling the refining process, he was the master of the whole industry, and worked from that point on to a vertical concentration to the whole industry, taking over every stage of production, from extraction to retail, including transport, research, marketing and even the manufacture of barrels. At its peak, the Standard Oil owned not only all the infrastructures necessary to the making of refined oil, but also pipelines, cars, tankers, groceries. By this way, he managed to get the monopole of the oil market in almost the country.

Rate Wars -- the giant Standard Oil was able to withstand short term losses by cutting the price of oil thanks to a huge economy of scales allowed by the size of the Rockefeller's company. Smaller competitors could not keep pace and either went out of business or sold out to Rockefeller

Rebates -- The railroads bringing oil into and out of Cleveland were competing fiercely for traffic and, in an attempt to create a cartel to 'stabilize' freight rates, formed the South Improvement Company. Rockefeller agreed to support this cartel if they gave him preferential treatment as a high volume shipper which included not just steep rebates for his product, but also rebates for the shipment of competing products.

Intimidation -- on more than one occasion, Standard Oil dispatched thugs to break up competitors' operations that could not otherwise be controlled. Sabotage was sometimes used, as for example in 1887, when the Standard Oil paid a mechanic working for the Vacuum Oil Company in Buffalo to tamper the still so as to make it explode. In the fight against independents pipelines, armed men defended land bought by Rockefeller on the planned way of the pipelines.

What type of leadership did he use?

It appears that, to lead his company, Rockefeller used one type of leadership to lead the workers inside the company and for the commercial practices. In both case, it was an autocratic and directive style of leadership. Even if Rockefeller seemed very close to his employees and knew how to motivate and reward them, he did not trust them at all. He saw his relationship with them as transactional, one of competing needs. However, he rarely made important decisions without seeking debate and achieving a common mind among his key associates, foreshadowing the "consensus-management"

For his commercial practices, he used too an autocratic leadership. His most flagrant sin was the ruthlessness with which he crushed competitors. For every competitor who became to be dangerous for his business, Rockefeller used all the above practices to reduce them to nothing, or he extended the olive branch to vanquished rivals, buying out their companies and drawing them into his organization, making at least some of them richer than they could have been on their own. This was not generosity but the mechanism whereby he expanded Standard Oil into a monopoly.

The Rockefeller's underlying characteristics that helped him to raise the top:

Several studies on Rockefeller show us the caricatured portrait of this guy. He was described as being "steely-faced, secretive, greedy, crafty, ruthless but generous". All that characteristics made him the famous and very wealthy businessman that everybody knows.

Rockefeller was very secretive and steely-faced, and that was one of his commercial practices, that he called "Silence is golden". To avoid stimulating the greed of their competitors, the men of the Standard Oil Company, had to commit themselves not the reveal what they earned and to keep a low profile in their standing expenses. If we add to this wonderful