Notes from the First Industrial Revolution

I saw this statue of Adam Smith in Edinburgh last week and was carrying with me six chapters of Smith’s the The Wealth of Nations (published by Penguin Books in their Great Ideas series, “The Invisible Hand by Adam Smith”, London, 2008).

I started to read.  

Smith’s insight on the division of labor outlined in the first two chapters of The Wealth of Nations is profound.  When labor is divided into specific tasks, productivity tends to increase with specialization of effort and attention. Of course, there is a need for coordination to assure efficient and effective production but Smith observed that in 18th century manufacturing, the cost of hand-offs between specialized workers was far outweighed by the benefit of reduced complexity and task changeovers by an individual worker attempting to do all the tasks himself.

Smith plausibly claimed an additional benefit from workers focused on one or at most a small number of tasks, reflecting the modern psychological view that human attention is finite and easily exhausted:

 “Men are much more likely to discover easier and readier methods of attaining any object when the whole attention of their minds is directed towards that single object than when it is dissipated among a great variety of things.  But in consequence of the division of labor, the whole of every man’s attention comes naturally to be directed towards some very simple object.   It is naturally to be expected, therefore, that some one or the other of those who are employed in each particular branch of labor should soon find out easier and readier methods of performing their own particular work, wherever the nature of it admits to such improvement.  A great part of the machines made use of in those manufactures in which labor is most subdivided, were originally the inventions of common workmen, who, being each of them employed in some very simple operation, naturally turned their thoughts toward finding out easier and readier methods of performing it.”  (Penguin edition, pp. 8-9).

The innovations act as a catalyst to productivity, potentially driving a virtuous cycle of improvement.

Opportunity for Leaders and Managers

Smith also noted that some improvements come from synthesizers: “…some [improvements arise] by …those who are called philosophers or men of speculation, whose trade it is not to do anything, but to observe everything; and who, upon that account, are often capable of combining together the powers of the most distant and dissimilar objects.” (Penguin edition, p 10).

These synthesizers work in the realm of ideas, not specifically manufacturing specific goods.  They function as design engineers for processes and products.

Leaders and managers have the opportunity to act as synthesizers, observing how people in their organization do the work, the problems they face and the innovations they propose, to find ideas worth combining and spreading.