Howard Yu - Leap: How to Thrive in a World Where Everything Can Be Copied

The opening up of new markets, foreign or domestic illustrates the same process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.

J OSEPH S CHUMPETER , A MERICAN -A USTRIAN ECONOMIST (18831950)

O UTLASTING COMPETITION IS DIFFICULT. D OING SO OVER decades or a century often seems impossible. Since the great Industrial Revolution, every country that has become rich started by copying others: the French copied the British, the Americans copied the Germans, and the Japanese pretty much copied everybody else.

In the midst of this competition, countless players fell. Yet some pioneering companies have managed to endure and even prosper over the course of centuries. How is that possible?

Greenville, South Carolina, 1872

Henry P. Hammettwho was the mayor of Greenville, South Carolina, a century and a half agowas a happy man. He was also a To the mayor, the newly launched railroad was the Piedmonts best chance at reforming its economic outlook. It offered an opportunity to shed the Piedmonts former reputation as a poor white enclave burdened by indebted farmers and mountain dwellersremote, aloof, and primitive.

During the golden age of American railroading between the late 1870s and 1890, some 73,000 new miles of track were built. That translated into about 7,000 miles a year. Much of that went into the Deep South and western areas. It was also a vision so compelling that Mayor Hammett took up his own advice given at the business gathering and set up the Piedmont Manufacturing Company (PMC), taking advantage of the newfound connectivity. On March 15, 1876, PMC began exporting cotton sheeting rolled onto cylinders with diameters of up to 36 inches, using the most modern textile machinery available for manufacturing, to a fast-growing market overseas: China.

The project was a huge success. By 1883, after acquiring some $80,000 worth of machinery, PMC had become the largest textile producer in South Carolina, with 25,796 spindles and 554 looms. Five years later, Hammett opened a second factory, Piedmont Number Two. Then he opened a third, Piedmont Number Three, the following year.

Despite this breakneck expansion, others quickly came to dwarf PMC. Bigger namesHolt, Cannon, Gray, Springs, Love, Duke, Hanesswept through the region as the international market took off. Collectively, they ended the tight grip British manufacturers had over the Asian market since the Industrial Revolution. And by the 1930s, southern spindles accounted for 75 percent of the US total. Local news routinely attributed the stunning success to the salesmanship and ingenuity of the hardworking southerners, who had pretty much put everyone else out of business.