What today's entrepreneurs can learn from the Victorians

Forget the 'fourth industrial revolution' - the original is a great source of inspiration.

by David Waller
Last Updated: 20 Sep 2016

In the two decades from 1830 to 1850, the Victorians built 8000 miles of railway, a project that rivalled the construction of the pyramids and transformed transport and society for all time; over a similar period of time, we haven’t quite decided where, when and if we would like a new runway for Heathrow airport or a high speed rail link from London to the North.

While we agonise over the contribution of the manufacturing sector to the economy as a whole, locked in a losing battle with more productive and energetic parts of the world, the Victorians turned this small country into the workshop of the world, yielding industrial supremacy to the US and Germany only much later in the nineteenth century.

How did the Victorians pull this off? One factor was the sheer genius of engineering titans like the father and son teams of George and Robert Stephenson and Marc and Isambard Kingdom Brunel. Another was the availability of cheap labour for the mills and factories, leading to appalling working conditions. But there are other lessons for modern entrepreneurs.

We often think of Victorian industry in Dickensian terms: Danny Boyle’s opening ceremony for the London Olympic Games, for example, portrayed the proverbial dark satanic mills belching smoke while swains and shepherdesses abandoned the pastures and woods for the factories. Yet nineteenth century entrepreneurs had more in common with the Silicon Valley of today than this image suggests.

Hi-tech companies of the era created an open and innovative culture that is very much at odds with this Dickensian image. For example, Henry Maudslay (1781-1831) opened a factory in Lambeth, just south of the Thames in London, that became a magnet for engineering talent, very like Google or Goldman Sachs attract the best software and financial engineers today.

Maudslay invented precision engineering, building machines in metal to a level of strength and accuracy that had hitherto been unattainable. His strong, powerful machines were able to harness the power of steam, leading ultimately to a boom in mechanical engineering. The shipping industry was transformed by his marine engines, and the railways could only develop because of Maudslay-inspired advances in mass production and interchangeable components.

People who worked at Maudslay’s factory went off to other parts of the world, transmitting the master’s manufacturing principles to their own businesses. One such was Joseph Whitworth, who won more medals for engineering at the Great Exhibition of 1851 than anyone else. Whitworth left the London factory for Manchester in the 1830s, setting up a workshop that over decades grew into one of Britain’s largest industrial companies. Known as the pioneer of machine tools, he also figured out how to standardise the production of nuts, bolts and screws: a vital contribution to Britain’s industrial success as hitherto components made in different factories simply wouldn’t fit together.

Whitworth was also a pioneer in relations with his workforce. He encouraged his employees to own shares in his company and provided them with many benefits. When he died in 1887, he left a gargantuan, Bill Gates-style legacy which to this day helps finance engineering students at Manchester University, as well as the recently-renovated Whitworth Gallery.

A second point is that there was an astonishingly fertile relationship between technical innovation and practical business people. Going back to the pre-Victorian period, James Watt was a brilliant chemist and physicist, but his steam engine could only have its revolutionary impact because he teamed up with the Birmingham entrepreneur Matthew Boulton. Boulton raised the finance and helped Watt work out the practical details of how to manufacture and sell their engines at a profit. Their company Boulton and Watt was the dominant manufacturer of steam engines for decades.

In the nineteenth century, the gifted mechanical engineer James Nasmyth was another who learnt his trade in Maudslay’s London factory. After he left to set up on his own, he prospered precisely because he had a succession of business partners who looked after the administration of his company, handling sales, accounting, costing and other management disciplines. Nasmyth was freed to develop innovative products including the famous steam hammer and the dentist’s drill.

Richard Roberts was another hyper-talented engineer who trained at Maudslays. He then went to Manchester where he invented a mechanized spinning machine that revolutionised the cotton industry, and then built one of the UK’s largest engineering and railway engine companies. But when his business partner died, his empire collapsed. Roberts ended his life a pauper, still busy inventing machines that had no commercial market. Even the most gifted inventors needed management skills if their businesses were to flourish.

Thirdly, finance for business came from an array of often local sources. Quaker bankers backed the Stephensons’ early railway ventures, while Manchester mill-owners provided the money for James Nasmyth to expand. When Nasmyth first started his own business in the early 1830s, he was obliged quite literally to make his own tools. When he retired nearly 30 years later, he sold out of what was by then one of the UK’s largest industrial companies. The money for expansion along the way came from local businessmen acting very much as venture capitalists do today.

A fourth consideration is that central government was not as hands-off as we might imagine. True, successive regimes dragged their feet over reforming labour market abuses, but government did step in when national interests were at stake. In the Regency period, for example, government supported the mass production of ships’ blocks, financing the development of the world’s first mechanized assembly line at the Portsmouth Block Factory, where Maudslay constructed the machines. Government also put public money behind the project to build the first tunnel under the Thames and Charles Babbage’s difference engine, a prototype computer.

In recent years, it has become fashionable for politicians to say that we can learn something from the Victorians. Prime Minister Theresa May acknowledges the Birmingham businessman and politician Joseph Chamberlain as an influence, while her predecessor David Cameron said: "every transforming generation in our history has left a legacy like the Victorians…"

If we are to create our own legacy like the Victorians, we could do well to heed the lessons of Henry Maudslay and his followers. An open culture, close links between industry and inventors, combined with management discipline, prolific sources of finance and a supportive government, are the winning ingredients of Victorian enterprise.

David Waller’s book Iron Men: How One London Factory Powered the Industrial Revolution and Shaped the Modern World, is published by Anthem Press


Find this article useful?

Get more great articles like this in your inbox every lunchtime

Is Amazon becoming a 21st century conglomerate?

Why history suggests being too diversified can spell doom for the biggest business.

5 reasons CEO successions fail

Picking the next leader is arguably a board's most important job.

Leadership clinic: Is this the right time for M&A?

Octopus Group co-founder and chief executive Simon Rogerson answers questions on starting up, scaling up...

The problem with first impressions

The leader that made me: Bev White, Harvey Nash Group CEO, thought her new boss...

What China wants

Long read: Beijing’s fractious relationship with Western businesses is well documented. But some foreign ventures...

What you can learn from the work experience girl

Priyanka’s unpressured experience changed her - and the team - says René Carayol.