Disruption and loss can foster growth; Adversity often provides the stimulus that drives a determination to success in business

November 19, 2013 4:10 pm

Disruption and loss can foster new growth

By Luke Johnson

Adversity often provides the stimulus that drives a determination to success in business

E xperiencing adversity is almost a necessary precondition for those destined for the top. As Henry David Thoreau said: “You cannot dream yourself into a character; you must hammer and forge yourself one.” If it all comes too easy, if your life is too comfortable, then you are unlikely to stretch yourself, or know how to handle hard knocks. Nothing creates adversity like war. It is almost always a tragic waste of lives and resources. But from all the terrible dislocation of armed conflict a number of businesses have emerged.For example, the entire cable TV industry was spawned from army surplus coaxial cable used to link military radios to antennas. It was started in 1948 by accident in the mountains of Pennsylvania by John and Margaret Walston. Mahanoy City residents couldn’t receive a television signal because of the surrounding mountains. John Walston erected a local antenna to receive broadcasts, and using cheap coaxial cable connected various customers who had bought TV sets from him. The American cable TV industry is probably now the most profitable entertainment segment in the world.

Similarly, Britain’s largest retailer was founded on army uniforms and surplus foodstuffs. Jacob Kohen, who would become known as Jack Cohen, worked with his tailor father in London’s East End during the second world war making uniforms, before joining the Royal Flying Corp in 1917. Later he spent his £30 demobilisation gratuity on surplus armed forces foodstuffs, and sold it on a Hackney street market at rock bottom prices – acquiring his nickname Jack the Slasher. In due course his business became Tesco, which today has revenues of £70bn.

And Joseph Cyril Bamford created his empire in earth-moving vehicles thanks to war experience and equipment. He learnt how to weld during the second world war while helping to make aircraft. In 1945 he rented a lock-up garage in Uttoxeter, and made tipping trailers using surplus military equipment for farmers. A family and no money “tended to concentrate the mind”, he said later. The business became the world-beating JCB, Europe’s largest construction equipment manufacturer, with revenues of £2.7bn last year.

In the ashes of conflict, innovative ideas lurk. Soichiro Honda in 1946 found a small generator engine built for an army wireless radio. He thought it could be used to power a motorbike. And so Honda Motor Co was created. Similarly, Ferruccio Lamborghini was a second world war mechanic in the Italian air force. After the war he made tractors from unwanted military equipment and laid the foundations for the famous sports car maker.

Sometimes the challenges that produce impressive results are not across society as a whole, but personal. For example, there is a remarkable correlation between high achievers and those who lost a parent at an early age or were adopted.

A clinical psychologist called Martin Eisenstadt studied the parental histories of eminent people in the 1970s and noticed how many had suffered parental loss, or were orphans.

Well known entrepreneurs who were adoptees or orphans include Larry Ellison of Oracle, Jeff Bezos of Amazon, the late Arnold Weinstock of GEC, Coco Chanel and Roman Abramovich, owner of Chelsea football club.

There are plenty of others who are not quite so spectacularly successful, but nevertheless high performers. Meanwhile an extraordinary proportion of famous politicians, scientists and artists lost their father or mother when young.

Eisenstadt suggested that early loss and uncertainty for a child could act as a stimulus – working as “a springboard of immense compensatory energy”. By contrast, if you have never suffered big shocks or setbacks, then when they do strike, the impact can be devastating.

Of course catastrophe is not generally good for one’s career. But learning early on to overcome serious difficulties, and developing ingenious coping methods, are valuable attributes for any entrepreneur. After all, building a business is a journey of discovery and adaptation. A resilient personality that can deal with uncertainty would seem well equipped to make that leap into the semi-unknown.


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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