The American railroad produced the nation's original corporate capitalists—the ones we call tycoons, moguls, or robber barons. The first and greatest was "Commodore" Cornelius Vanderbilt, who amassed the New York Central system between New York and Chicago in the 1860s and '70s. This week's purchase of Burlington Northern by Warren Buffett seems to make Mr. Buffett a worthy successor.
via online.wsj.com
Some time ago, I had the good fortune to work on a branding strategy for a major affiliate of the railroad industry. Trains are such interesting things--partly because of their iconic status, and partly because of their vital role in the creation of our modern world. Plus, it's an industry that gave us model trains--which I still think are totally cool.
Reading this piece by T. J. Stiles reminds me how important it is for us to understand our origins. Railroads created so much of the foundation of our economic value. And here they stand today--perhaps the ultimate symbol of the industrial economy--and the most respected investor of our generation has decided to make the largest investment of his storied career.
When I worked on the railroad brand strategy project, I had the opportunity to interview some fascinating people who worked in the industry. It was amazing to me how visionary they are, coming from a culture I had assumed was stodgy and lacking in innovation. Nothing could be further from the truth.
What I learned about this industry is that its value does not come from its hard assets--its rolling stock, its locomotives, its endless miles of track. Those are all the symbols we see everyday. Its value comes from its network, which is large hidden from view. And exactly what is a network and what makes it more valuable or less valuable? The answer: a network is just a series of efficient connecting points.
If you read the Stiles piece and his account of Commodore Vanderbilt, you realize that Vanderbilt's contribution came very much from his understanding that for the industrial age to flourish it needed fast moving networks.
Buffett seems to understand that we need the same thing, and his bet is that Burlington Northern is at the forefront of making that happen. I think he is right.
There is really not that much difference between the physical and the virtual economy, not if you really think about it and look at it carefully. The variables on the surface may change, but the underlying dynamics remain the same. That's why we should always be cautious of anyone who tell us that the world has fundamentally changed because of the latest piece of information technology. It probably hasn't--we just haven't adequately understood it.
Planners who devise strategies for brands need to understand how deeper forces work. When I spent time working on the railroad, so to speak, I learned that these deeper forces had a lot to tell me. Understanding the historical arc from Mr. Vanderbilt to Mr. Buffett is a most worthwhile exercise.
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