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FAQ v2.23d - Frequently asked questions

2009-03-01T21:48:00.001+07:00

What's this EventID 4226?
The EventID 4226 means, that there are to many concurrent TCP connection attempts. A connection attemp is a query to a computer, if it accept the TCP connection or not. If the computer is for example no more existent, it will be waited for a few seconds, until a timeout occurs and the connection attemp get canceled.
Since XP SP2 there are only 10 concurrent TCP connection attempts possible, while in SP1 it has not been limited.

Which effects does this limit have?
Applications with many connection attemps may work bad or not at all. Even web browsers, eMail clients or antivir programs can be affected and might bring a long time of waiting.
Also administrative diagnosticprograms in companies make problem. In short, there seems to be more problems than there is an advantage.

How can I find out, if I'm affected?

Just have a look at Start/Maintenance/Control Panel/Administration Management/Eventview/System if there are entries with the event id 4226. If yes, minimum one time the limit has been reached

I read something, that it's possible to change limit via registry (TcpNumConnections). Is that true?
Unfortunately not. Because the concurrent connection attemp limit has nothing to with concurrent connections, this registry-key is useless. Unfortunately there is no registry-key, which would allow the user to change the concurrent connection attemps.

50 concurrent, half-open connections is to less for me. Is it possible to get more?
Yes! Just use as a Parameter /L=limit, where limit describes the new limit.
For example a 100 limit can be set with the command:
EvID4226Patch /L=100

Which other parameters does exist?
Not entered yet ...

Which languages are supported?
Theoretical every lange is supported. If not, please contact me!

I have Windows 95/98/ME/2000/XP SP1. Will these get supported soon, too?
Because the limit got introducted in XP SP2, the other operating systems are currently unlimited.
Exception: Windows 2003 Server seems to be limited as well since SP1 beta. An update will follow ...

Customer Service Failure Gold!

2009-01-02T00:07:00.000+07:00

Did you mess up again?

Have you ever thought about the marketing value of knowing the mistakes you have made in the past? I am here to tell you that learning about your mistakes is a gold mine of marketing wealth. Most of us would like to think that we are providing good services to everyone who takes a chance on using our businesses. Unfortunately, this is rarely true for absolutely everyone who patronizes our businesses.

If you are competent and have a pleasant disposition, odds are that you are able to meet the needs of the vast majority of your clients. However, none of us are one hundred percent successful and the gold is found in understanding what caused us to lose clients. Somewhere, your marketing and customer service systems failed you and more than likely it will happen again unless you address it.

The real problem here is studies have shown that up to 96 percent of people who experience a bad interaction with your business will never spontaneously complain to you. Why is it a bad thing you don’t have to deal with their complaints? Because they just leave and never come back! Despite the fact that they don’t complain to you, they will be more than happy to tell everyone they know to stay away from your business.

Typically for every complaint you hear about, about 25 others are unhappy with you and don’t bother to tell you. Again, they just leave! If that isn’t enough to motivate you, realize that up to 95 percent of them would have continued to patronize your business if you had resolved the problem quickly.

In today’s economy setting up a system to track client feedback about your business may be the most cost effective marketing task you will ever accomplish. It really isn’t that hard to do. First you need to have a system to track who patronizes your business and how often. Second you must have their contact information. Finally, you must develop a system to actively solicit their feedback about the experience with your business. Of course there are a lot more details to put all this together, but the overall system is that easy. The vast majority of business never bother to set it up!

Yahoo Rejects Microsoft- A Great Day For Small Business

2009-01-02T00:00:00.001+07:00

Well it appears that Yahoo has rejected the unsolicited bid from the evil empire! In my opinion this is a great day for small businesses. I can imagine nothing worse for the future of the internet than a domination by Microsoft. While Google may have a strangle hold on the search and advertising business on the internet, they have gotten it the honest way- by commitment to an ever improved service to their user base. They early on developted a corporate strategy of "do no evil" which is about the polar opposite of Microsoft. Google has gone to the top based upon a free market choice of their services due to the quality they provide their users. Microsoft has historically made it to the top by rolling over competition and forcing their users into having no choice except what they choose to provide. Their products typically are either a rip off of someone else (i.e. Windows) or promoted by forcing competition out of business by bundling tactics (i.e. Internet Explorer).

Right now we have three major players in the internet services arena- Google, Yahoo, and Microsoft. It would be a travesty if Microsoft was able to buy their way into a two way fight with Google. I am relieved that Yahoo has rebuffed them for now, but I remain concerned as Yahoo obviously has some real business problems. I hope that they invest in innovation to compete with Google and force the bar higher for first class service to internet users. That can only be good for individuals and small businesses. However, if Microsoft had been able to buy their way into a two way fight with Google the tactics they would use to compete would likely to have little to do with innovation or service to the community.

Well done Yahoo!

Better Yourself, Better Your Life Insurance Rates

2008-12-30T21:27:00.000+07:00

May 4, 2007

If you're overweight, have high blood pressure, high cholesterol or a heart condition, you know what the best steps are to take in order to improve your condition. You should be eating healthier, getting plenty of exercise, taking medications as directed and seeing a doctor regularly to monitor your condition. But did you know that by bettering your overall health, you could also be improving your life insurance rates as well?

"When it comes to illnesses, the higher risk you are, the higher your life insurance payments will be," says David Roush, CEO of Insurance.com. "If you pay a higher life insurance rate due to a medical condition, you can possibly lower your premium by trying to improve your overall health. Many insurance companies are very receptive to customers trying to make changes in their life to improve their health, and often this type of behavior is rewarded with a price reduction."

Insurance companies focus on your health when it comes to life insurance. The less risk you represent, the better your rates are going to be. If you initially purchased a life insurance policy when your health wasn't so good, but you took the steps to get yourself up to and above par, you can then request a premium reduction. Just ask your insurance agent what specific requirements there are, and see if you've met them. There's no limit to how many times you can ask your insurance company to review your medical records to see if you meet the requirements for a premium reduction

Many times, insurance companies require proof from a doctor that the improvements that you've made have been maintained for a certain amount of time. More severe health problems, such as cancer or heart disease, warrant a longer improved health period requirement. If you have a condition that will never improve, such as heart-wall damage, you will more than likely never see a rate reduction.

Another step some life insurance companies take is to require you to undergo medical tests ordered by the insurance company. The bright side of the test is that if you are being tested for one thing and the insurance company finds something else wrong with you, your life insurance rate will not be affected by it.

If you are interested in saving money and getting a life insurance quote, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers - helping you find the best life insurance coverage at the most affordable price.

2008-12-30T20:40:00.000+07:00

2008-12-30T20:32:00.003+07:00

2008-12-30T20:20:00.002+07:00

A New Dawn

2008-12-30T20:13:00.002+07:00

Time has No Meaning

2008-12-30T19:54:00.002+07:00

world

2008-12-30T19:39:00.002+07:00

Computer Hardware

2008-12-29T17:20:00.007+07:00

Your PC (Personal Computer) is a system, consisting of many components. Some of those components, like Windows XP, and all your other programs, are software. The stuff you can actually see and touch, and would likely break if you threw it out a fifth-story window, is hardware.

Not everybody has exactly the same hardware. But those of you who have a desktop system, like the example shown in Figure 1, probably have most of the components shown in that same figure. Those of you with notebook computers probably have most of the same components. Only in your case the components are all integrated into a single book-sized portable unit.

The system unit is the actual computer; everything else is called a peripheral device. Your computer's system unit probably has at least one floppy disk drive, and one CD or DVD drive, into which you can insert floppy disks and CDs. There's another disk drive, called the hard disk inside the system unit, as shown in Figure 2. You can't remove that disk, or even see it. But it's there. And everything that's currently "in your computer" is actually stored on that hard disk. (We know this because there is no place else inside the computer where you can store information!).

The floppy drive and CD drive are often referred to as drives with removable media or removable drives for short, because you can remove whatever disk is currently in the drive, and replace it with another. Your computer's hard disk can store as much information as tens of thousands of floppy disks, so don't worry about running out of space on your hard disk any time soon. As a rule, you want to store everything you create or download on your hard disk. Use the floppy disks and CDs to send copies of files through the mail, or to make backup copies of important items.

Random Access Memory (RAM)

There's too much "stuff" on your computer's hard disk to use it all at the same time. During the average session sitting at the computer, you'll probably use only a small amount of all that's available. The stuff you're working with at any given moment is stored in random access memory (often abbreviated RAM, and often called simply "memory"). The advantage using RAM to store whatever you're working on at the moment is that RAM is very fast. Much faster than any disk. For you, "fast" translates to less time waiting and more time being productive.

So if RAM is so fast, why not put everything in it? Why have a hard disk at all? The answer to that lies in the fact that RAM is volatile. As soon as the computer is shut off, whether intentionally or by an accidental power outage, every thing in RAM disappears, just as quickly as a light bulb goes out when the plug is pulled. So you don't want to rely on RAM to hold everything. A disk, on the other hand, holds its information whether the power is on or off.

The Hard Disk

All of the information that's "in your computer", so to speak, is stored on your computer's hard disk. You never see that actual hard disk because it's sealed inside a special housing and needs to stay that way. Unlike RAM, which is volatile, the hard disk can hold information forever -- with or without electricity. Most modern hard disks have tens of billions of bytes of storage space on them. Which, in English, means that you can create, save, and download files for months or years without using up all the storage space it provides.

In the unlikely event that you do manage to fill up your hard disk, Windows will start showing a little message on the screen that reads "You are running low on disk space" well in advance of any problems. In fact, if that message appears, it won't until you're down to about 800 MB of free space. And 800 MB of empty space is equal to about 600 blank floppy disks. That's still plenty of room!

The Mouse

Obviously you know how to use your mouse, since you must have used it to get here. But let's take a look at the facts and buzzwords anyway. Your mouse probably has at least two buttons on it. The button on the left is called the primary mouse button, the button on the right is called the secondary mouse button or just the right mouse button. I'll just refer to them as the left and right mouse buttons. Many mice have a small wheel between the two mouse buttons, as illustrated in Figure 3.

The idea is to rest your hand comfortably on the mouse, with your index finger touching (but not pressing on) the left mouse button. Then, as you move the mouse, the mouse pointer (the little arrow on the screen) moves in the same direction. When moving the mouse, try to keep the buttons aimed toward the monitor -- don't "twist" the mouse as that just makes it all the harder to control the position of the mouse pointer.

If you find yourself reaching too far to get the mouse pointer where you want it to be on the screen, just pick up the mouse, move it to where it's comfortable to hold it, and place it back down on the mousepad or desk. The buzzwords that describe how you use the mouse are as follows:

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Point: To point to an item means to move the mouse pointer so that it's touching the item.
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Click: Point to the item, then tap (press and release) the left mouse button.
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Double-click: Point to the item, and tap the left mouse button twice in rapid succession - click-click as fast as you can.
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Right-click: Point to the item, then tap the mouse button on the right.
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Drag: Point to an item, then hold down the left mouse button as you move the mouse. To drop the item, release the left mouse button.
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Right-drag: Point to an item, then hold down the right mouse button as you move the mouse. To drop the item, release the right mouse button.

The Keyboard

Like the mouse, the keyboard is a means of interacting with your computer. You really only need to use the keyboard when you're typing text. Most of the keys on the keyboard are laid out like the keys on a typewriter. But there are some special keys like Esc (Escape), Ctrl (Control), and Alt (Alternate). There are also some keys across the top of the keyboard labeled F1, F2, F3, and so forth. Those are called the function keys, and the exact role they play depends on which program you happen to be using at the moment.

Most keyboards also have a numeric keypad with the keys laid out like the keys on a typical adding machine.

If you're accustomed to using an adding machine, you might want to use the numeric keypad, rather than the numbers across the top of the keyboard, to type numbers. It doesn't really matter which keys you use. The numeric keypad is just there as a convenience to people who are accustomed to adding machines. Most keyboards also contain a set of navigation keys. You can use the navigation keys to move around around through text on the screen. The navigation keys won't move the mouse pointer. Only the mouse moves the mouse pointer.

On smaller keyboards where space is limited, such as on a notebook computer, the navigation keys and numeric keypad might be one in the same. There will be a Num Lock key on the keypad. When the Num Lock key is "on", the numeric keypad keys type numbers. When the Num Lock key is "off", the navigation keys come into play. The Num Lock key acts as a toggle. Which is to say, when you tap it, it switches to the opposite state. For example, if Num Lock is on, tapping that key turns it off. If Num Lock is off, tapping that key turns Num Lock on.

Combination Keystrokes (Shortcut keys)

Those mysterious Ctrl and Alt keys are often used in combination with other keys to perform some task. We often refer to these combination keystrokes as shortcut keys, because they provide an alternative to using the mouse to select menu options in programs. Shortcut keys are always expressed as:

key1+key2

where the idea is to hold down key1, tap key2, then release key1. For example, to press Ctrl+Esc hold down the Ctrl key (usually with your pinkie), tap the Esc key, then release the Ctrl key. To press Alt+F you hold down the Alt key, tap the letter F, then release the Alt key.

Summer Safety Tips

2008-12-21T19:57:00.005+07:00

June 21, 2006

Summer is nearly here, and we`re all thinking about how much fun we`re going to have. We've got some useful tips and ideas about how to make the most of the summer months while keeping you safe.
Traveling

Keep the Window Up
As tempting as it might be to wind down a window, lean your arm outside, and enjoy the sunshine while driving, you might get burned. The cooling sensation of the wind blowing across your arm disguises the fact that you might actually be getting badly burned. Use sunscreen liberally, or cover up – or both.

Your Car`s an Oven
Cars get hot, fast, even if it doesn`t feel that warm outside. Direct sunlight can raise the temperature inside a car by over 30 degrees in less than five minutes, which can and has killed children and elderly people over the years. Even keeping a window cracked isn`t enough, so never leave children, pets or anyone inside a car during the summer.

Sunscreen for your Car
Inexpensive sunshields are available that can be placed inside your car, and can help keep temperatures down when you`re away from your vehicle.
On Your Bike

Protect Your Noggin
Make sure you wear protective gear, including a helmet that fits correctly. Only wear a helmet that is approved by either the CPSC (Consumer Product Safety Commission) or Snell. A helmet will have a sticker indicating that it has been approved. Also, remember that helmets are designed to protect you from a single serious accident. If the helmet has taken a hit, it should be replaced.

Maintain a Safe Ride
Keep your bike well maintained, and check tire pressure, brakes and chain. Oil relevant parts when necessary, and check your bike before each ride. Make sure your bell works and that the reflectors are clean.

Stand Out
Wear bright colors to stand out from the scenery. You want other drivers and bikers to be able to see you easily. Always carry some form of ID when you`re out cycling.

More Fun with Two... or more!
There`s safety in numbers so when your kids go for a bike ride, encourage them to take a friend as well as make sure you know where they`re going. That`s something for adults to consider too!

Sun Safety
Sunscreen. Lots of it. Regularly applied. This is important for any outdoor activities in the summer. It doesn`t have to be hot or sunny for sunburn to occur, and although staying in the shade is an essential part of skin care during these months, some sun exposure is unavoidable. Covering up with lightweight, light-colored clothing can also help minimize exposure.

Stay hydrated
Drink lots of water. Avoid alcohol or caffeine, as these will only add to dehydration. Dehydration can lead to heat exhaustion. The warning signs are feelings of nausea, cramping, light-headedness, fatigue, or headaches. Should you suffer any of these, it`s important to get out of the sun, and start drinking water. Untreated, heat stroke may develop, and that is a potentially fatal condition.
At the Beach

Dangerous Toys
Carefully supervise the use of inflatable toys as floatation devices. Not only are they not an alternative to knowing how to swim, they are easily blown out to sea, and children often attempt to recover these toys, which could put them into danger. If your child does need a floatation device, then provide them with a properly-sized lifejacket or other personal floatation device.

Keep Applying
Reapply sunscreen often, especially after being in water. Tell kids to check in regularly for sunscreen. You can still get sunburned in the water, so it's not an alternative to wearing sunscreen. Water-resistant sunscreens lose their SPF after 40 minutes in the water; waterproof sunscreens after 90 minutes so it's critical to reapply. The water may feel cool on your skin, but it's not protecting you from the sun's harmful rays.

A Sailor`s Life
If you`re on the water in a boat or other craft, make sure to pay attention to the weather reports for small craft advisories and other alerts. Also, remember that boats and beer don`t mix. Many accidents and fatalities are caused by alcohol. You wouldn`t drink and drive on land, so don`t drink and drive on water either.

For more Summer Safety tips, visit

http://www.redcross.org/services/hss/sumsafety

Viatical and Life Insurance Settlement Contracts: Will They Work For You?

2008-12-16T17:39:00.001+07:00

May 1, 2007

Viatical and life insurance settlement contracts allow a person to sell their life insurance to a third party in exchange for a reduced amount of its face value. The amount you get back is dependent on your health, age, death benefits and the number of years your life insurance policy is in force.

In 1989, viatical businesses began as a way to give terminally ill AIDS patients early access to their life insurance. As time has gone by, life insurance policyholders with cancer, heart disease, and other life threatening illnesses have been opened up to the same privileges.

There are many legitimate viatical and life insurance settlement companies, but there are also many scams out there as well. It should be noted that some viatical companies target people with conditions such as high blood pressure, in an attempt to cash in on their hefty death benefits. It's important to be cautious when selling your life insurance policy, and be sure to do your research before you commit to selling it.

Make sure you know what you're doing

Ask questions and do not commit to anything unless you fully understand the terms and conditions.

Weigh the pros and cons.

Speak with a financial advisor who takes into consideration your financial circumstances, age, objectives and other circumstances.

Consider other investment choices as alternatives.

Check into what (if any) tax consequences there are when buying a viatical settlement. Are you able to use 401(k), IRA, Keogh, or other qualified retirement plans when making the purchase?

If you are interested in receiving a life insurance quote, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class insurance providers - helping find the best life insurance policy for you and your family.

Is Mutual Fund Insurance For You?

2008-12-14T19:26:00.002+07:00

When deciding whether or not to purchase insurance for your mutual funds, you should be sure you understand exactly what you're getting. For most policies, the payout will only occur after you die and only if your mutual fund has lost money since the time you purchased insurance coverage. Also, your beneficiaries will only get the difference between the market value of your investment and the amount that was guaranteed by your life insurance policy.

Example

Say you invest $25,000 and your premium ranges from .01 percent to .05 percent of your investment. The company you invested with guarantees that your mutual funds, plus an annual gain of between four and five percent-with a cap-out of up to 200 percent-will be there for your beneficiaries at the time of your death. If in the event the market goes down, having insurance will guarantee that your initial $25,000 investment will increase between four and five percent. When paid out, your heirs will only get the difference of the market value and the amount that was guaranteed-so in the case of your $25,000 investment, it is highly unlikely your beneficiary will get back the full amount.

Most consumers aren't that interested in buying mutual fund insurance because the stock market has sustained an annualized 11 percent return since the Depression ended. It is cheaper than most insurance; however, there is no real need for it. "It's a good safety net for older investors who want to be "risky" and try their hand at the market, but still want to be protected just in case things don't pan out like they had hoped," notes David Roush, CEO of Insurance.com.

Products and cost

Prudential Insurance Co.'s PruTector, Sun America's Asset Protection Plan and American Skandia's AS Goodwill coverage are all basic group term life insurance policies that you can buy in conjunction with a mutual fund from one of the companies. Depending on your age, the cost of mutual fund protection does vary, as do the fees added by certain companies.

If you are interested in getting a life insurance quote, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers - helping you find the most beneficial life insurance coverage for you and your family.

Life Insurance Policies on the Web

2008-12-04T21:20:00.003+07:00

March 7, 2007
Insurance customers now have a choice: they can go to an agent, or buy their insurance over the phone or on the Internet. Some insurance companies are now offering policies, only available on the web.

Web-only life insurance policies and annuities can offer major pluses. You can get coverage cheaper and faster, and you don't have to visit an insurance agency to buy them. Your choices might be limited, however. If you require a variety of features on your policy or annuity, you might be better off going to an agent.
When is buying insurance online the best option?

Some Internet-only life insurance policies don't offer much variety in regard to policy features. More complex life insurance products, such as whole life, variable life, and variable universal life, require more explanation than some web sites provide. That's why many insurers limit their online offerings to policies that are easily understood.

"A lot of these products that agents sell have every bell and whistle you can think of," says Arthur Fliegelman, vice president and senior credit officer at Moody's Investors Service. "To sell online, you want a nice, streamlined, simple product."
Annuities in cyberspace

In addition to life insurance, you can buy annuities that are exclusive to the web.

There are drawbacks. Some popular features on variable annuities sold through agents, including long term care riders, guaranteed minimum income benefits, and bonuses, are not available on web-exclusive annuities. Some of the annuities don't carry death benefits, in which beneficiaries would receive what the annuity holder had put into the contract.

One advantage to many online annuities is the ability to make an unlimited number of transfers between funds and sub-accounts.
Hot commodities on the web?

As more people become Internet savvy, and feel comfortable making major purchases online, web-exclusive insurance might be an attractive option. Louisiana's acting Insurance Commissioner, Robert Wooley, says anyone buying insurance online should make sure they fully understand the terms of a policy, before buying it. "We're glad to see understanding is on the rise," Wooley says. "However, it's still troubling that while two-thirds of adults feel they have the right amount of insurance, only one-third seem to fully understand what they have."

Arthur Fliegelman of Moody's says online insurance providers have not done enough to give consumers the ability to service their insurance accounts, which includes paying premiums, changing an insurance beneficiary, or changing coverage. Fliegelman says online insurance providers need to make their services user-friendly, if they want to increase their share of the marketplace.

Textile manufacture during the Industrial Revolution

2008-11-25T20:20:00.000+07:00

Technological developments in Britain

Textile manufacture

Main article: Textile manufacture during the Industrial Revolution

Model of the spinning jenny in a museum in Wuppertal, Germany. The spinning jenny was one of the innovations that started the revolution

In the early 18th century, British textile manufacture was based on wool which was processed by individual artisans, doing the spinning and weaving on their own premises. This system is called a cottage industry. Flax and cotton were also used for fine materials, but the processing was difficult because of the pre-processing needed, and thus goods in these materials made only a small proportion of the output.

Use of the spinning wheel and hand loom restricted the production capacity of the industry, but incremental advances increased productivity to the extent that manufactured cotton goods became the dominant British export by the early decades of the 19th century. India was displaced as the premier supplier of cotton goods.

Lewis Paul patented the Roller Spinning machine and the flyer-and-bobbin system for drawing wool to a more even thickness, developed with the help of John Wyatt in Birmingham. Paul and Wyatt opened a mill in Birmingham which used their new rolling machine powered by a donkey. In 1743, a factory was opened in Northampton with fifty spindles on each of five of Paul and Wyatt's machines. This operated until about 1764. A similar mill was built by Daniel Bourn in Leominster, but this burnt down. Both Lewis Paul and Daniel Bourn patented carding machines in 1748. Using two sets of rollers that travelled at different speeds, it was later used in the first cotton spinning mill. Lewis's invention was later developed and improved by Richard Arkwright in his water frame and Samuel Crompton in his spinning mule.

Other inventors increased the efficiency of the individual steps of spinning (carding, twisting and spinning, and rolling) so that the supply of yarn increased greatly, which fed a weaving industry that was advancing with improvements to shuttles and the loom or 'frame'. The output of an individual labourer increased dramatically, with the effect that the new machines were seen as a threat to employment, and early innovators were attacked and their inventions destroyed.

To capitalise upon these advances, it took a class of entrepreneurs, of which the most famous is Richard Arkwright. He is credited with a list of inventions, but these were actually developed by people such as Thomas Highs and John Kay; Arkwright nurtured the inventors, patented the ideas, financed the initiatives, and protected the machines. He created the cotton mill which brought the production processes together in a factory, and he developed the use of power — first horse power and then water power — which made cotton manufacture a mechanised industry. Before long steam power was applied to drive textile machinery.

Metallurgy

Coalbrookdale by Night, 1801, Philipp Jakob Loutherbourg the Younger

Blast furnaces light the iron making town of Coalbrookdale

The Reverberatory Furnace could produce wrought iron using mined coal. The burning coal remained separate from the iron ore and so did not contaminate the iron with impurities like sulphur. This opened the way to increased iron production.

The major change in the metal industries during the era of the Industrial Revolution was the replacement of organic fuels based on wood with fossil fuel based on coal. Much of this happened somewhat before the Industrial Revolution, based on innovations by Sir Clement Clerke and others from 1678, using coal reverberatory furnaces known as cupolas. These were operated by the flames, which contained carbon monoxide, playing on the ore and reducing the oxide to metal. This has the advantage that impurities (such as sulphur) in the coal do not migrate into the metal. This technology was applied to lead from 1678 and to copper from 1687. It was also applied to iron foundry work in the 1690s, but in this case the reverberatory furnace was known as an air furnace. The foundry cupola is a different (and later) innovation.

This was followed by Abraham Darby, who made great strides using coke to fuel his blast furnaces at Coalbrookdale in 1709. However, the coke pig iron he made was used mostly for the production of cast iron goods such as pots and kettles. He had the advantage over his rivals in that his pots, cast by his patented process, were thinner and cheaper than theirs. Coke pig iron was hardly used to produce bar iron in forges until the mid 1750s, when his son Abraham Darby II built Horsehay and Ketley furnaces (not far from Coalbrookdale). By then, coke pig iron was cheaper than charcoal pig iron.

Bar iron for smiths to forge into consumer goods was still made in finery forges, as it long had been. However, new processes were adopted in the ensuing years. The first is referred to today as potting and stamping, but this was superseded by Henry Cort's puddling process. From 1785, perhaps because the improved version of potting and stamping was about to come out of patent, a great expansion in the output of the British iron industry began. The new processes did not depend on the use of charcoal at all and were therefore not limited by charcoal sources.

Up to that time, British iron manufacturers had used considerable amounts of imported iron to supplement native supplies. This came principally from Sweden from the mid 17th century and later also from Russia from the end of the 1720s. However, from 1785, imports decreased because of the new iron making technology, and Britain became an exporter of bar iron as well as manufactured wrought iron consumer goods.

Since iron was becoming cheaper and more plentiful, it also became a major structural material following the building of the innovative The Iron Bridge in 1778 by Abraham Darby III.

The Iron Bridge, Shropshire, England

An improvement was made in the production of steel, which was an expensive commodity and used only where iron would not do, such as for the cutting edge of tools and for springs. Benjamin Huntsman developed his crucible steel technique in the 1740s. The raw material for this was blister steel, made by the cementation process.

The supply of cheaper iron and steel aided the development of boilers and steam engines, and eventually railways. Improvements in machine tools allowed better working of iron and steel and further boosted the industrial growth of Britain.

Mining

Coal mining in Britain, particularly in South Wales started early. Before the steam engine, pits were often shallow bell pits following a seam of coal along the surface, which were abandoned as the coal was extracted. In other cases, if the geology was favourable, the coal was mined by means of an adit or drift mine driven into the side of a hill. Shaft mining was done in some areas, but the limiting factor was the problem of removing water. It could be done by hauling buckets of water up the shaft or to a sough (a tunnel driven into a hill to drain a mine). In either case, the water had to be discharged into a stream or ditch at a level where it could flow away by gravity. The introduction of the steam engine greatly facilitated the removal of water and enabled shafts to be made deeper, enabling more coal to be extracted. These were developments that had begun before the Industrial Revolution, but the adoption of James Watt's more efficient steam engine from the 1770s reduced the fuel costs of engines, making mines more profitable. Coal mining was very dangerous owing to the presence of firedamp in many coal seams. Some degree of safety was provided by the safety lamp which was invented in 1816 by Sir Humphrey Davy and independently by George Stephenson. However, the lamps proved a false dawn because they became unsafe very quickly and provided a weak light. Firedamp explosions continued, often setting off coal dust explosions, so casualties grew during the entire nineteenth century. Conditions of work were very poor, with a high casualty rate from rock falls.

Steam Power

2008-11-21T14:27:00.002+07:00

Steam power

Main article: Steam power during the Industrial Revolution

The 1698 Savery Engine - the world's first engine built by Thomas Savery as based on the designs of Denis Papin.

The development of the stationary steam engine was an essential early element of the Industrial Revolution; however, for most of the period of the Industrial Revolution, the majority of industries still relied on wind and water power as well as horse and man-power for driving small machines.

The first real attempt at industrial use of steam power was due to Thomas Savery in 1698. He constructed and patented in London a low-lift combined vacuum and pressure water pump, that generated about one horsepower (hp) and was used as in numerous water works and tried in a few mines (hence its "brand name", The miner's Friend), but it was not a success since it was limited in pumping height and prone to boiler explosions.

Newcomen's steam powered atmospheric engine was the first practical engine. Subsequent steam engines were to power the Industrial Revolution

The first safe and successful steam power plant was introduced by Thomas Newcomen from 1719. Newcomen apparently conceived his machine quite independently of Savery, but as the latter had taken out a very wide-ranging patent, Newcomen and his associates were obliged to come to an arrangement with him, marketing the engine until 1733 under a joint patent.^[29] Newcomen's engine appears to have been based on Papin's experiments carried out 30 years earlier, and employed a piston and cylinder, one end of which was open to the atmosphere above the piston. Steam just above atmospheric pressure (all that the boiler could stand) was introduced into the lower half of the cylinder beneath the piston during the gravity-induced upstroke; the steam was then condensed by a jet of cold water injected into the steam space to produce a partial vacuum; the pressure differential between the atmosphere and the vacuum on either side of the piston displaced it downwards into the cylinder, raising the opposite end of a rocking beam to which was attached a gang of gravity-actuated reciprocating force pumps housed in the mineshaft. The engine's downward power stroke raised the pump, priming it and preparing the pumping stroke. At first the phases were controlled by hand, but within ten years an escapement mechanism had been devised worked by of a vertical plug tree suspended from the rocking beam which rendered the engine self-acting.

A number of Newcomen engines were successfully put to use in Britain for draining hitherto unworkable deep mines, with the engine on the surface; these were large machines, requiring a lot of capital to build, and produced about 5 hp (3.7 kW). They were extremely inefficient by modern standards, but when located where coal was cheap at pit heads, opened up a great expansion in coal mining by allowing mines to go deeper. Despite their disadvantages, Newcomen engines were reliable and easy to maintain and continued to be used in the coalfields until the early decades of the nineteenth century. By 1729, when Newcomen died, his engines had spread (first) to Hungary in 1722 ,Germany, Austria, and Sweden. A total of 110 are known to have been built by 1733 when the joint patent expired, of which 14 were abroad. In the 1770s, the engineer John Smeaton built some very large examples and introduced a number of improvements. A total of 1,454 engines had been built by 1800.

James Watt

A fundamental change in working principles was brought about by James Watt. With the close collaboration Matthew Boulton, he had succeeded by 1778 in perfecting his steam engine, which incorporated a series of radical improvements, notably the closing off of the upper part of the cylinder thereby making the low pressure steam drive the top of the piston instead of the atmosphere, use of a steam jacket and the celebrated separate steam condenser chamber. All this meant that a more constant temperature could be maintained in the cylinder and that engine efficiency no longer varied according to atmospheric conditions. These improvements increased engine efficiency by a factor of about five, saving 75% on coal costs.

Nor could the atmospheric engine be easily adapted to drive a rotating wheel, although Wasborough and Pickard did succeed in doing so towards 1780. However by 1783 the more economical Watt steam engine had been fully developed into a double-acting rotative type, which meant that it could be used to directly drive the rotary machinery of a factory or mill. Both of Watt's basic engine types were commercially very successful, and by 1800, the firm Boulton & Watt had constructed 496 engines, with 164 driving reciprocating pumps, 24 serving blast furnaces, and 308 powering mill machinery; most of the engines generated from 5 to 10 hp (7.5 kW).

The development of machine tools, such as the lathe, planing and shaping machines powered by these engines, enabled all the metal parts of the engines to be easily and accurately cut and in turn made it possible to build larger and more powerful engines.

Until about 1800, the most common pattern of steam engine was the beam engine, built as an integral part of a stone or brick engine-house, but soon various patterns of self-contained portative engines (readily removable, but not on wheels) were developed, such as the table engine. Towards the turn of the 19th century, the Cornish engineer Richard Trevithick, and the American, Oliver Evans began to construct higher pressure non-condensing steam engines, exhausting against the atmosphere. This allowed an engine and boiler to be combined into a single unit compact enough to be used on mobile road and rail locomotives and steam boats.

In the early 19th century after the expiration of Watt's patent, the steam engine underwent many improvements by a host of inventors and engineers.

Chemicals

The Thames Tunnel (opened 1843)

Cement was used in the world's first underwater tunnel

The large scale production of chemicals was an important development during the Industrial Revolution. The first of these was the production of sulphuric acid by the lead chamber process invented by the Englishman John Roebuck (James Watt's first partner) in 1746. He was able to greatly increase the scale of the manufacture by replacing the relatively expensive glass vessels formerly used with larger, less expensive chambers made of riveted sheets of lead. Instead of a few pounds at a time, he was able to make a hundred pounds (45 kg) or so at a time in each of the chambers.

The production of an alkali on a large scale became an important goal as well, and Nicolas Leblanc succeeded in 1791 in introducing a method for the production of sodium carbonate. The Leblanc process was a reaction of sulphuric acid with sodium chloride to give sodium sulphate and hydrochloric acid. The sodium sulphate was heated with limestone (calcium carbonate) and coal to give a mixture of sodium carbonate and calcium sulphide. Adding water separated the soluble sodium carbonate from the calcium sulphide. The process produced a large amount of pollution (the hydrochloric acid was initially vented to the air, and calcium sulphide was a useless waste product). Nonetheless, this synthetic soda ash proved economical compared to that from burning certain plants (barilla) or from kelp, which were the previously dominant sources of soda ash,^[30] and also to potash (potassium carbonate) derived from hardwood ashes.

These two chemicals were very important because they enabled the introduction of a host of other inventions, replacing many small-scale operations with more cost-effective and controllable processes. Sodium carbonate had many uses in the glass, textile, soap, and paper industries. Early uses for sulphuric acid included pickling (removing rust) iron and steel, and for bleaching cloth.

The development of bleaching powder (calcium hypochlorite) by Scottish chemist Charles Tennant in about 1800, based on the discoveries of French chemist Claude Louis Berthollet, revolutionised the bleaching processes in the textile industry by dramatically reducing the time required (from months to days) for the traditional process then in use, which required repeated exposure to the sun in bleach fields after soaking the textiles with alkali or sour milk. Tennant's factory at St Rollox, North Glasgow, became the largest chemical plant in the world.

In 1824 Joseph Aspdin, a British brick layer turned builder, patented a chemical process for making portland cement which was an important advance in the building trades. This process involves sintering a mixture of clay and limestone to about 1400 °C, then grinding it into a fine powder which is then mixed with water, sand and gravel to produce concrete. Portland cement was used by the famous English engineer Marc Isambard Brunel several years later when constructing the Thames Tunnel.^[31] Cement was used on a large scale in the construction of the London sewerage system a generation later.

Machine tools

Sir Joseph Whitworth

The Industrial Revolution could not have developed without machine tools, for they enabled manufacturing machines to be made. They have their origins in the tools developed in the 18th century by makers of clocks and watches and scientific instrument makers to enable them to batch-produce small mechanisms. The mechanical parts of early textile machines were sometimes called 'clock work' because of the metal spindles and gears they incorporated. The manufacture of textile machines drew craftsmen from these trades and is the origin of the modern engineering industry.

Machines were built by various craftsmen—carpenters made wooden framings, and smiths and turners made metal parts. A good example of how machine tools changed manufacturing took place in Birmingham, England, in 1830. The invention of a new machine by William Joseph Gillott, William Mitchell and James Stephen Perry allowed mass manufacture of robust, cheap steel pen nibs; the process had been laborious and expensive. Because of the difficulty of manipulating metal and the lack of machine tools, the use of metal was kept to a minimum. Wood framing had the disadvantage of changing dimensions with temperature and humidity, and the various joints tended to rack (work loose) over time. As the Industrial Revolution progressed, machines with metal frames became more common, but they required machine tools to make them economically. Before the advent of machine tools, metal was worked manually using the basic hand tools of hammers, files, scrapers, saws and chisels. Small metal parts were readily made by this means, but for large machine parts, production was very laborious and costly.

A lathe from 1911, a machine tool able to make other machines

Apart from workshop lathes used by craftsmen, the first large machine tool was the cylinder boring machine used for boring the large-diameter cylinders on early steam engines. The planing machine, the slotting machine and the shaping machine were developed in the first decades of the 19th century. Although the milling machine was invented at this time, it was not developed as a serious workshop tool until during the Second Industrial Revolution.

Military production had a hand in the development of machine tools. Henry Maudslay, who trained a school of machine tool makers early in the 19th century, was employed at the Royal Arsenal, Woolwich, as a young man where he would have seen the large horse-driven wooden machines for cannon boring made and worked by the Verbruggans. He later worked for Joseph Bramah on the production of metal locks, and soon after he began working on his own. He was engaged to build the machinery for making ships' pulley blocks for the Royal Navy in the Portsmouth Block Mills. These were all metal and were the first machines for mass production and making components with a degree of interchangeability. The lessons Maudslay learned about the need for stability and precision he adapted to the development of machine tools, and in his workshops he trained a generation of men to build on his work, such as Richard Roberts, Joseph Clement and Joseph Whitworth.

James Fox of Derby had a healthy export trade in machine tools for the first third of the century, as did Matthew Murray of Leeds. Roberts was a maker of high-quality machine tools and a pioneer of the use of jigs and gauges for precision workshop measurement.

Gas lighting

Main article: Gas lighting

Another major industry of the later Industrial Revolution was gas lighting. Though others made a similar innovation elsewhere, the large scale introduction of this was the work of William Murdoch, an employee of Boulton and Watt, the Birmingham steam engine pioneers. The process consisted of the large scale gasification of coal in furnaces, the purification of the gas (removal of sulphur, ammonium, and heavy hydrocarbons), and its storage and distribution. The first gaslighting utilities were established in London between 1812-20. They soon became one of the major consumers of coal in the UK. Gaslighting had in impact on social and industrial organisation because it allowed factories and stores to remain open longer than with tallow candles or oil. Its introduction allowed night life to flourish in cities and towns as interiors and street could be lighted on a larger scale than before.

Glass making

The 1851 Great Exhibition in Hyde Park

A new method of producing glass, known as the cylinder process, was developed in Europe during the early 19th century. In 1832, this process was used by the Chance Brothers to create sheet glass. They became the leading producers of window and plate glass. This advancement allowed for larger panes of glass to be created without interruption, thus freeing up the space planning in interiors as well as the fenestration of buildings. The crystal palace is the supreme example of the use of sheet glass in a new and innovative structure.

Effects on agriculture

A John Fowler & Co. Ploughing Engine

The invention of machinery played a big part in driving forward the British Agricultural Revolution. Agricultural improvement began in the centuries before the Industrial revolution got going and it may have played a part in freeing up labour from the land to work in the new industrial mills of the eighteenth century. As the revolution in industry progressed a succession of machines became available which increased food production with ever fewer labourers.

Jethro Tull's seed drill invented in 1731 was a mechanical seeder which distributed seeds efficiently across a plot of land. Joseph Foljambe's Rotherham plough of 1730, was the first commercially successful iron plough. Andrew Meikle's threshing machine of 1784 was the final straw for many farm labourers, and led to the 1830 agricultural rebellion of the Swing Riots.

In the 1850s and '60s John Fowler, an engineer and inventor, began to look at the possibility of using steam engines for ploughing and digging drainage channels. The system that he invented involved either a single stationary engine at the corner of a field drawing a plough via sets of winches and pulleys, or two engines placed at either end of a field drawing the plough backwards and forwards between them by means of a cable attached to winches. Fowler's ploughing system vastly reduced the cost of ploughing farmland compared with horse-drawn ploughs. Also his ploughing system, when used for digging drainage channels, made possible the cultivation of previously unusable swampy land. The traction engine later became a common sight in working threshing machines during haymaking time and ploughing fields.

Life Insurance Medical Exam

2008-11-12T22:29:00.000+07:00

January 19, 2007
When applying for a life insurance policy, you may be asked to take a medical exam. Generally, if you’re under age 40 and applying for life insurance coverage of less than $100,000, you probably won't have to take a medical exam. However, the older you are, the less life insurance you can buy without a medical exam. Of course, these figures also depend on your health history and the underwriting guidelines of the insurance company you choose.

A typical medical exam may include a basic physical, blood work, and urine tests. Some insurance companies also require EKGs and/or treadmill EKGs (stress tests), especially for large life insurance policies. You'll also have to provide information on your medical history, including the names of doctors you've seen, dates you saw them, and any treatment recommended. A nurse or doctor (often an independent contractor) who is paid by the insurance company will normally conduct the exam.

If you have a medical condition, there's really nothing you can do to hide it. In fact, you shouldn't even try. Insurance companies have access to an amazing amount of medical information through the Medical Information Bureau, so even if you attempt to obscure the facts, there's a good chance an insurance company will find the information it needs. In addition, if the insurance company discovers you have withheld information, it will look at everything else much more closely. And if you died as a result of the illness, your insurance company may opt not to pay your death benefit.

There are a number of simple steps you can take to make sure you get the best possible results at your medical exam:
- Get a good night's sleep the night before the exam
- Fast for eight hours before the exam if possible to ensure the most accurate results
- Don't smoke for at least one hour before the exam
- Avoid caffeine for at least one hour before the exam
- Avoid alcohol for at least eight hours before the exam
- Don't engage in strenuous exercise for 24 hours before the exam
- Limit your consumption of salt and cholesterol for 24 hours before the exam
- Cancel the exam if you get sick – even a minor infection can distort the results

Ways To Save When Buying Life Insurance

2008-11-12T22:27:00.000+07:00

January 19, 2007

When it comes to shopping, savvy shoppers get the most for their money. This stays true not only when shopping for groceries or food, but for life insurance as well. So to help you get the most bang for your buck, Insurance.com has compiled a list of ways you can save the most when you're in the market to buy a life insurance policy.

Is term life insurance for you? If most of your goals are short-term and you're not as interested in saving for the long run, term life insurance is for you. Term life insurance typically offers you the most coverage for the least amount of money, and is set up based around spans of time. For example, you may get a term life insurance plan that is set to pay out after five, ten or 20 years.

No-load policies. To find lower premiums for variable life insurance, be sure to keep an eye out for "no-load" or "low-load" life insurance policies. These policies have fewer added fees, such as agent commission or fees for marketing, which makes a higher percentage of your premium go to your cash value. To find theses policies, check with a financial advisor who doesn't collect commission from life insurance companies, or inquire around. Some insurance agencies even sell these directly to the customer!

If you're healthy, stay away from guaranteed issue policies. Guaranteed issue policies, also know as "simplified" or "quick" policies, may sound too good to be true, because they really are. They do not require a medical exam, making them seemingly ideal, but ultimately much riskier for the insurer. If you are healthy, you will get much better rates by buying a life insurance policy that requires a medical test.

Check online. When shopping around for any kind of insurance, looking online is a great way to compare prices and see what different companies have to offer. The more information you give, the more accurate your insurance quote will be.

Make a change for the better. If you are overweight, are a smoker, have heart disease, high blood pressure or diabetes, finding affordable life insurance may be difficult. This is because the better your health is, the easier and more affordable it will be for you to buy life insurance. Insurance companies will issue lower premiums if the policyholder is in good health standing. The less things that may give you a risk of dying sooner, the more affordable your life insurance policy will be. Also, if you do have an outstanding medical condition, you are a smoker or overweight, and you are trying to better your health, be sure to document it. By showing the insurance company your medical files and that you have been trying to improve your health, you may save yourself some money in the long run.

Buy what you need. It's not a good idea to under-buy insurance, nor is it beneficial to over-buy, so when you're in the market for insurance, be sure to evaluate what your exact needs are and go from there. A good way of doing that is in the form of an equation: Short-term needs + long-term needs - resources = how much life insurance you will need.

Rider policies are helpful. A rider policy is an extension to an insurance policy that helps you extend you coverage. If your needs change, it may be more cost-effective to purchase a rider policy for additional life insurance-it also doesn't affect your cash value. Be sure to shop around though, you may save more by actually buying a second policy.

Buy early. Instead of waiting until there is a real problem with your health, buy life insurance early in life. As you age, the price of your life insurance will increase, so the younger you start, the more you will save. To keep your premium low, you may want to inquire about a "level premium" policy. Which keeps your premium rates the same for a set amount of time.

Run your credit report. If there are problems with your credit, you may be denied for an insurance policy or your premiums will sky-rocket because you are considered high-risk. If your credit score is low, the insurance company's main concern is that you will let your policy lapse due to non-payment of premiums. So by rebuilding your credit, you are not only helping that financial aspect of your life, but also the one concerning your insurance.

Fractional premiums. Some insurance agencies charge less depending on how you schedule your payments. By paying fractional payments-those are fewer payments over the year-you may pay less over all. For some life insurance companies the same also goes for electronic funds transfer (EFT), which is when they take out the amount of the premium directly from your checking account.

Being responsible saves you money. This goes along with making a change for the better. If you are in an expensive rate class due to high cholesterol (for example), but make a point of going to your doctor regularly and establish a history of lowering your cholesterol, your life insurance company may be willing to lower your premium.

If you are interested in finding out more about life insurance, or getting a life insurance quote, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers - helping you find the best life insurance coverage that benefits you, as well as your beneficiaries, while still being within your budget.

Life Insurance Basics for New Parents

2008-11-12T22:25:00.000+07:00

January 18, 2005
Last year, there were over 4 million babies born across the United States, and by 2017 the birth rate is projected to reach 4.5 million, a rise of more than 12 percent. As a result, an increasing number of parents will face a host of important decisions that come with the responsibility of caring for a family, including how they will provide for their loved ones if something should happen to them.

Gather Information
New parents should evaluate their existing life insurance policies to determine whether they offer suitable types of protection at competitive rates, the appropriate amount of coverage and the correct beneficiary designations. Regularly reviewing this information can reduce the cost of life insurance for families. For instance, term life insurance rates can vary considerably over time and it may be worthwhile for parents to get new quotes for their current policies, as rates have declined steadily since 1996.

After assessing their additional insurance needs, parents can begin researching and comparison-shopping online or through an insurance representative. Those seeking information online can go to Insurance.com to get quotes, compare providers, learn about the different types of coverage available, and request an application to purchase a policy from a variety of providers.

Determine Coverage
Life insurance policies can vary significantly in exactly what is covered, and how much is covered. When reviewing their policies, parents should consider:
Type of Coverage - Term life insurance policies provide protection for a specific period of time and generally provide life insurance only, with no accumulating cash value. In contrast, permanent policies can provide protection for an individual's entire life as long as adequate premiums are paid, and generally allow owners to accumulate cash value over the long term. New parents should keep in mind that the cost and availability of life insurance is influenced by a person's health, age and type of coverage requested.
Amount of Coverage - Whether it is a single or dual-income family, both parents should always carry enough life insurance to guarantee that one of them would be in a position to carry on financially in the event that something happened to the other. Even a stay-at-home parent not earning an outside income should be insured to make it possible for the family to cover expenses, such as additional childcare costs.

Designating a Beneficiary
New parents should update their beneficiary designations after the birth of a child, or the people who are named to receive the benefit of their life insurance policies. Beneficiaries should be chosen carefully, since changing the designation to another person later can be difficult. Both a primary and a contingent beneficiary should be named to ensure funds would be available immediately to the family, rather than flowing to the estate, which could result in delays and additional expenses.

In preparing for the birth of a new baby, parents may spend hours painting the nursery and searching for just the right name. Along with those activities, they should consider their life insurance needs as the due date approaches. Having children can be overwhelming at times, but knowing that their family is financially protected can bring parents peace of mind as they celebrate their new arrival.

*The VARDS [Variable Annuity and Research Data Service] Report, Marietta, GA as of 12/31/2001.

Top 10 Things to Know About Life Insurance

2008-11-12T01:36:00.003+07:00

July 29, 2004

We all recognize the importance of life insurance. After all, we want to make sure that our loved ones are taken care of when we die. But before you run out and purchase a policy, do some research ahead of time. That way, you'll be sure to get the best possible coverage at the right price. Here are some helpful tips to get you started:

1. Shop around
2. Never buy more coverage than you need
3. The healthier you are, the better the rates
4. Buy sooner rather than later
5. Realize the importance of periodically reviewing your coverage
6. You don't necessarily have to pay a commission
7. You may be paying more for monthly premium payments
8. Don't rely solely on the life insurance offered by your employer
9. Tell the whole truth and nothing but the truth
10. Buying more is sometimes cheaper

Shop around
When it comes to life insurance, it pays to shop around because premiums can vary widely. And thanks to the Internet, it's now easier than ever. Try out one of the many insurance websites that can provide you with instant quotes. Make sure the website you shop from takes into consideration the factors in your medical history that can affect the premiums.

Never buy more coverage than you need
The key to purchasing the right amount of life insurance is to have just enough coverage to meet your needs. If you have more life insurance than you need, you'll be paying unnecessarily for higher premiums. On the other hand, it's important not to have too little coverage, resulting in you being underinsured.

The healthier you are, the better the rates
It's true – healthy people get better rates on life insurance. You will be asked to pay a higher rate for anything that shortens your life expectancy (e.g., if you smoke, take medications regularly, are overweight, have a bad driving record).

Buy sooner rather than later
If you've been putting off purchasing life insurance because you don't want to pay the premiums, you may be doing yourself a disservice in the long run. The younger you are when you purchase life insurance, the lower your premiums will be.

Realize the importance of periodically reviewing your coverage
Any life change signals the need for a review of your overall financial plan. When it comes to life insurance coverage, you'll want to make sure that this major life event (e.g., birth of a child, children are grown) won't leave you underinsured or overinsured.

You don't necessarily have to pay a commission
One of the reasons for higher premiums is that most life insurance policies pay commissions to the agent/broker. However, you may be able to purchase a no-load policy through an insurer that sells no-load policies directly to consumers.

You may be paying more for monthly premium payments
You may not realize it, but you may be paying more for your life insurance if you pay your premium in monthly installments. Many insurance companies charge extra fees if you make monthly premium payments instead of paying the annual premium.

Don't rely solely on the life insurance offered by your employer
Many employers offer their employees some sort of group life insurance. But this amount of coverage is usually not enough to adequately meet your life insurance needs. In addition, group life insurance policies are not portable, meaning that if you leave your job, you can't take your life insurance coverage with you.

Tell the whole truth and nothing but the truth
If you're thinking about lying on your insurance application, think again. If your insurance company finds out that you lied about a health-related condition or your lifestyle (e.g., smoking habit), they may be able to terminate your coverage.

Buying more is sometimes cheaper
Life insurance usually costs less per thousand dollars once you get into higher coverage amounts (e.g., $250,000). If the numbers work out, you may be able to pay a lower premium while increasing your coverage.

Please note that this description/explanation is intended only as a guideline.

Life Insurance Rates for Smokers

2008-11-12T01:33:00.000+07:00

September 21, 2004

With life insurance, there are three different premium classifications: standard, preferred or preferred plus. By not smoking (or having not smoked for at least 5 years) and being in excellent health, you will be awarded with a lower life insurance rate because your chances of dying sooner are reduced. If for instance, you are classified as "normal healthy," meaning you haven't used nicotine in at least three years-then you would fall into a standard classification with a life insurance company. Under this standard classification you would pay a normal life insurance rate for your age, as opposed to a smoker, who would pay a higher insurance rate because they are tagged a potential risk. Something to think about the next time you light up a cigarette!

Are you considered a smoker?
In the world of life insurance, by answering "yes" on your application to the questions, "do you smoke?" or "do you consider yourself a smoker?," you would be considered a smoker. The same goes for answering yes to the questions of "have you used tobacco products, cigarettes, cigars or chewing tobacco within a specified time?" By insurance standards, even if you smoke socially or just once a year, you are considered a smoker. For the occasional smoker, you should answer the question as best as you see fit.

The cost of smoking
Research shows that smokers pay at least three times the premium of nonsmokers-which is what motivates many people to lie on their life insurance applications.

To lie, or not to lie
With life insurance, a nonsmoker's application is due to be reviewed more thoroughly than a smoker's life insurance policy, because the premiums are so different.

It is possible for smokers to "cheat" the system, because nicotine clears out of your system within 72 hours after smoking your last cigarette. Cotinine is the primary metabolite of nicotine, and the most common identifier of nicotine levels. If the urine test is given 72 hours after your last cigarette, the nicotine level may be low enough to escape detection. This is theoretically possible for even the heaviest of smokers.

You passed! Now what?
The policy between you and your insurance company is a legal contract, so it is important that you do not lie about your smoking habits. If you were caught lying during the underwriting process, your rates would be bumped up to a smoker's rate when your policy is approved. No insurance company is going to come right out and says they are going to drop your policy if they found out that you were lying. However, some life insurance companies will place random phone calls to applications who are questioned on a multitude of things, even smoking. The survey is designed to weed out liars by listening for inconsistencies in the applicants' answers.

What happens if you are caught?
The worst thing that could happen if you are caught is that your life insurance policy will be issued at a higher rate.

What if you start smoking after the policy is issued?
Many life insurance companies go by the "don't ask, don't tell" idea. It is important to be truthful when filling out your life insurance policy, but if you start smoking after it's issued, you are not required to tell your insurance company. If you die, and your life insurance policy labels you as a nonsmoker, when indeed you began smoking, your death benefit will not be jeopardized.

If you are interested in purchasing a life insurance policy or would just like to get some life insurance quotes, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers - helping you find the best life insurance policy for you and your family.

Accidental Death and Dismemberment Insurance

2008-11-12T01:31:00.000+07:00

Accidental Death and Dismemberment Insurance (AD&D) can provide benefits, but is it necessary? The additional cost and limited protection offered by accidental death and dismemberment insurance make its purchase difficult to recommend.

About Accidental Death and Dismemberment Insurance
Generally, you can purchase AD&D insurance as a separate policy or as rider (endorsement) on a basic life or health insurance policy. Its name states exactly what it covers; accidental death and dismemberment. However, there are limitations on the coverage. These limitations make accidental death and dismemberment insurance less useful, although it is also usually relatively inexpensive.

The first thing to consider is whether AD&D insurance is a good deal for you. Is it likely you will have to use it? In most cases, life, health, and disability insurance already cover situations AD&D protects against. It can double, or at least add to, the amount of money you receive in case of a covered accident, but it may be wiser and more cost-effective to put the money you'd be paying towards the premium into a standard life or other insurance policy instead. Dave Roush, CEO of Insurance.com, warns consumers that "AD&D is a very, very limited form of insurance. When it comes to insurance, you want to be covered and protected in all instances, not just certain ones."

What Does AD&D Cover?
In the event of a fatal accident or an accident that results in you losing your eyesight, speech, hearing, or a limb, AD&D will pay you or your beneficiaries a specified amount. However, there are stipulations to the coverage. To receive benefits related to an accident, your injuries or death must occur within three months of the accident date. Also, you will only collect benefits if your death or injuries are proven, direct results of the accident.

Dismemberment coverage works on a "per-member" basis. If you lose one member (a hand, foot, limb, sight in one eye, speech or hearing), the insurance company will usually pay 50 percent of the full benefit. If you lose two members, you will receive the whole benefit. Coverage amounts for partial or complete paralysis vary, but are usually 25 or 50 percent.

Optional coverages sometimes include hospital stay coverage after an accident, and spouse and children coverage.

Typical exclusions of AD&D coverage include death during surgery, resulting from a mental or physical illness, bacterial infection, hernia, or a drug overdose. In addition, many policies do not cover risky activities such as skydiving, car racing, and involvement in a war. "It is important to read the fine print when applying for this kind of policy. While it may seem like you're getting better and more adequate coverage, in reality, you're not," reports Roush.

Where to Buy AD&D
AD&D policies are generally underwritten by major insurers and can be purchased through credit card offers or credit unions. Some major life or health insurance companies may include or offer AD&D in their group health or life insurance plans. AD&D coverage can also often be purchased as a separate policy.

Is Accident Protection Worth It?
Accidental death and dismemberment insurance can be a good supplement to a life insurance policy. Depending on the amount of coverage needed, AD&D insurance premiums average around $60 per year. Even with the low cost of accidental death and dismemberment insurance, many would prefer to use the money they could be paying for the policy and put it towards more health or life insurance coverage. Also, since most people die from other causes than accidents, buying AD&D doesn't seem to make a lot of sense.

An accidental death policy (minus dismemberment coverage) is a similar policy to consider. If, for example, you had a $100,000 life insurance policy and you added an accidental death rider, and you were killed in a covered accident, your beneficiary would get $100,000 from your life insurance and $100,000 from you accidental death insurance.

Will It Really Help?
If you're working in a high-risk job, such as construction, the AD&D policy may be a good idea, although high-risk jobs result in higher premiums. It is inexpensive accident coverage, and it won't hurt to have the extra coverage. However, realize that an accidental death and dismemberment policy is extremely specific and thus unlikely to pay a benefit. If you already have a life insurance policy, purchasing a larger benefit amount might not cost much more, and it will cover more circumstances.

Mortgage Protection Insurance Offers Limited Benefits

2008-11-12T01:29:00.000+07:00

April 3, 2007

Mortgage protection insurance is as simple as this – you pay a non-changing premium for the duration of your life insurance policy, and if you die, the insurance pays off the rest of your mortgage. The lender becomes the beneficiary if and only if the loan gets defaulted from the borrower who is paying for coverage. Now the question is, is mortgage protection insurance for you?

How mortgage protection insurance works
Mortgage protection insurance can be purchased right when you buy a home, or later on if you feel the necessity to buy it. Your age, smoking status and value of your death benefits (the amount left on your mortgage) are taken into account when being reviewed by an insurance agency.

If your outstanding mortgage is high, your premium will be high as well, and even as you pay your mortgage down, your premium will remain the same. This is because your life insurance company is keeping your decreasing death benefits in mind.

One way to help your family receive a little extra in the event of your death is to make extra payments on your mortgage. By doing so, the death benefits will be the amount your mortgage would have been, had you been making the standard-required payments. This helps your family in that after the mortgage is paid off, they may receive the remainder of your death benefits.

Keep in mind when considering mortgage protection insurance that when your death benefits pay out, they only cover the cost of your mortgage (or maybe a little more if you paid ahead). If you want to give your beneficiaries a little more flexibility with your death benefits, it would be wise to look at a term-life insurance policy.

A couple things to look for
Depending on your insurance company, a joint mortgage protection insurance may be available that covers both you and your spouse and pays out when either of you die.

If you refinance, see if reissuing your policy will get you a better premium.

If you default on your mortgage, check with your life insurance company and see if they will extend your coverage.

Mortgage Protection Insurance vs. Private Mortgage Insurance
Though similar in names, these two insurances are different in features. Private mortgage insurance (PMI) is almost always required when you purchase a house and put less than 20% down. “Lenders take a risk when a buyer puts down less than 20%,”says David Roush, CEO of Insurance.com. “Private Mortgage Insurance is a way for lenders to protect themselves in case of a foreclosure.”

Though PMI makes it easier for you to get a loan and puts you in a house quicker, it only covers a portion of the loan if you default. It should not be viewed as a substitution for life insurance or mortgage protection insurance, which will pay off all or most of your mortgage in the event of your death, so you know your family will be covered.

If you are interested in getting life insurance quotes, log on to Insurance.com. Here you will be able to evaluate multiple rates from best-in-class life insurance providers – helping you find the best life insurance coverage for you and your family.

Term Life Insurance vs. Permanent Life Insurance: Is Cash Value the Best Value?

2008-11-12T01:19:00.002+07:00

September 20, 2004

If you're looking for life insurance, aside from considering how much you need, you'll find the need to understand and possibly choose between the two basic types: term life insurance and cash value life insurance.

The main difference between the two is that term life insurance covers you relatively inexpensively for a set period, whereas cash value life insurance covers you at a much higher cost for the remainder of your life. Cash value life insurance costs considerably more than term life insurance, depending on age and health, but adds a cash value component of debatable merit.

How do term and cash value life insurance work?
Term life insurance generally offers the most amount of coverage for the least amount of money, and is the appropriate choice for most people. The most common reason to buy life insurance is to replace a person's income in case of early death, and term life insurance is the cheapest and best way to do that. Term life insurance is also an especially good choice for people and families who are just starting out, because it's relatively cheap and provides a lot of protection when replacing income is most important.

Cash value life insurance, also called permanent or whole life insurance, offers protection for your entire life (as long as you pay your premiums) and more flexibility than term life insurance. However, it usually comes at a much higher price. For example, the premium for a cash value policy can easily be 10 or more times higher than a term policy with the same level of coverage. The feature that makes permanent life insurance different is its ability to gain cash value. A portion of the money you pay into your premium goes into a cash value portion that grows over time, and becomes available for your use after a certain period.

How does cash value work?
The portion of your payment that goes toward the policy's cash value is very large in the beginning, but decreases slowly as time goes on. That's because permanent life insurance payments are made up of two parts: the regular insurance premium, which is comparable to the premium amount for the same coverage in a term life policy, and the cash value, or "overpayment" amount. The overpayment money is invested by the insurance company and later used to pay for the higher costs of insurance as you get older. In this way, the company is able to keep your premiums the same instead of increasing them over time. At a certain time, this cash value amount becomes available for your use.

A very common way people use their cash value is by taking out a loan against their policy. This loan draws from the cash value amount and uses the face value (or death benefit) of the policy as collateral, and is usually not subject to credit checks. You don't have to pay it back, but the initial amount, plus interest, will be taken out of your death benefit if you die, resulting in a lower payout. Another consideration is that the loan amount may be taxable if it is worth more than what you have paid in premiums.

Although many insurance agents recommend cash value policies because of the ability to use the cash value portion, their tax-advantaged status, and their retirement and savings features, most people can gain these same advantages with other forms of retirement and savings without the drawbacks and high prices of cash value insurance. Also, remember that there are usually penalties, or "surrender charges" for canceling a cash value policy in its early years.

The cash value component of a policy can work differently and be used for different things depending on the type of permanent life insurance you choose. There are four main variations: whole (or ordinary) life, universal (or adjustable) life, variable life, and variable universal life.

Whole life insurance is a predictable policy that provides a guaranteed benefit, a guaranteed earnings rate on your cash value, and a level premium. You may also earn dividends based on how well the company performs. Whole life is the most basic kind of permanent life insurance.

Universal life insurance is a flexible option that lets you vary your premium payments. After the first premium, you can usually make payments at any time. If you have extra money, you can pay more. If you can't afford to make a payment, you can skip it or pay less. The cash value portion usually operates in a similar manner as with whole life insurance. A problem with universal life is that if you don't make enough payments, or the company does not perform as expected, your policy could lapse. Newer types of universal life policies include guarantees that this will not happen, so be sure that you explore this option. Universal life can be one of the cheapest forms of permanent life insurance.

Variable life insurance allows you to invest your policy premiums. The problem with this is that if the investments perform poorly, the death benefit and cash value will decrease. On the other hand, if the investments perform well, the death benefit and cash value can greatly exceed those of a normal policy. Variable life is one of the most risky forms of permanent insurance, although its rewards can be great as well.

Variable universal life insurance, as its name implies, is a combination of variable and universal life insurance. It allows you to vary your payments, invest your policy premiums, and vary your coverage amount. Variable universal life insurance is the most flexible type of permanent life insurance, and can be either risky or predictable, depending on how you use it.

Making the choice
Most financial planning experts recommend term life insurance in almost all circumstances. You could potentially benefit from a cash value life insurance policy, but it's very likely that you'll overpay for what you get in return. You can receive almost all the retirement and investment benefits of permanent life insurance through traditional means, such as a 401(k) account, IRAs, bonds, etc. Even if you can afford the premiums for cash value insurance, you're probably better off buying the same amount of term life insurance and investing the difference.

If you're still unsure, remember that many term life insurance policies offer a conversion feature. This option will allow you to change the term life policy to a permanent life policy, either during a set period or at any point in the term. Some policies even allow you to credit some of the term premiums you've already paid toward your permanent life insurance policy.

If you're ready to make your decision, remember that term life insurance is a relatively cheap way to get protection for a set period, and is almost always the better choice.

Do you have any questions or comments? Please let us know.

Your Life Insurance Company: How Good Is It?

2008-11-12T01:15:00.000+07:00

Insurance companies keep tabs on you, and it is important that you keep tabs on them. If you see your insurance company in the news, be sure to find out why. It's important not only to concentrate on the policy you have, but also the company that provides it. The strength and stability of the company are important factors. To evaluate a company, you can use different tools offered by financial rating firms, industry associations like the Insurance Marketplace Standards Association (IMSA), or even your own state's insurance department.

What to look for
When you evaluate a life insurance company, remember these key points:

1. State licensing and complaints
Make sure the company is legally licensed to provide insurance in your city and state. You can check the Company's website for its license status or contact your state's insurance department to verify this information.

Each state has a different way of dealing with insurance companies and with complaints consumers file against them. Many compile a complaint report every year by tallying the total number of complaints and ranking them in relation to each company's market share. If you notice that many policyholders filed complaints against a certain life insurance company, you can check with your state insurance department to see why. Complaints can range from minor, such as a bad experience with an agent, to something more serious, like misrepresentation of a policy or problems with a claim. Keep in mind that a complaint may only prove that a customer was unhappy, not that the company did something wrong.

2. Financial strength ratings
Review your life insurance company's financial strength and stability ratings. Check with major rating companies, but remember that not all life insurance companies are rated by every service. There are five different ratings firms that issue financial strength ratings for insurance companies. They are Standard & Poor's, Fitch Ratings, A.M. Best, Moody's Investors Service, and TheStreet.com Ratings (formerly Weiss Ratings).

When a life insurance company is rated, the rating gauges its probable financial future. For example, if it receives a low rating, it generally means the company doesn't have many assets and/or financial reserves available. This could affect payment of claims or the life of the company. A financially troubled company could have trouble paying claims, or be sold or closed. It is a good idea to keep an eye on your life insurance company's ratings, because they can fluctuate at any time due to any number of circumstances. The typical fluctuations occur from bad financial decisions and investments, the loss of money, mergers, and even the news of a possible merger.

3. "Seal of Approval"
Throughout their history, life insurance industry officials have received great scrutiny from the press. As a way of strengthening public trust and support, a seal of approval called the Insurance Marketplace Standards Association (IMSA) designation was created.

IMSA membership shows that a company has passed a tough review of its practices and ethics. The assessment focuses mainly on marketing, sales, and customer service. To continue membership, a company must complete this test every three years. It should be noted that IMSA membership is a plus, not a reason to ignore other factors when considering a life insurance company.

Do you have any questions or comments? Please let us know.

Last updated November 10, 2008.

The Hunt For A Missing Life Insurance Policy

2008-11-12T01:00:00.000+07:00

Uh-oh! You're the beneficiary of a relative who just died, but their policy is nowhere to be found! What do you do? Well, don't panic, because if you find it in the near future, you may still be able to claim the death benefit. Here's what to do if a life insurance policy is missing:

Look through canceled checks or go to the relative's bank and request copies of any old checks. When reviewing the checks, see if there are any made out to life insurance companies.

Ask your relative's lawyer, insurance agent or accountant and see what information they can give you on your relative's finances.

Call their old employers and see if they bought into the company's group life insurance.

Call the Medical Information Bureau (MIB)-an organization that maintains a database showing if insurers requested your relative's medical information. If your relative applied for a life insurance policy within the past seven years, the MIB will more than likely have some kind of paper trail to help you find it.

Naming a beneficiary
If you are making someone your beneficiary, here are a couple of things you will want to do:

Be sure to provide your beneficiary with your life insurance policy details, such as policy number, insurance agent's name, company phone number and email address.

Keep your records together. To make it easier on your beneficiary, be sure to keep all of your records (financial and medical) together in one place. This will help alleviate any panic or stress if your beneficiary needs to find something after you have passed.

Different kinds of policies

Term policy—If your relative had a term life insurance policy, and they died during the term and paid their premiums, the named beneficiary will receive their death benefits. If they died outside of the term or failed to pay their premiums, you won't receive anything.

Permanent policy—If the policy was in force at the time of death, the named beneficiary will receive the death benefits. If the relative died a while ago, the beneficiary is entitled to the death benefits plus the interest accrued from the date of death.

Lapsed policy—If your relative had a permanent life insurance policy and they stopped making payments and the policy lapsed, the insurance company could switch its status to one of the non-forfeiture options selected at purchase or specified in the policy. These options include extended term, reduced paid-up, cash surrender value, and loan value. In most cases, laws specify that there are certain amounts that must be returned to a policyholder or beneficiary even if premiums were not fully paid.

Lapsed Policy Non-forfeiture Options

Extended term uses any built up cash value to buy a term life insurance policy in the amount of the current policy. If the insured dies before the term ends, the beneficiary collects the benefit. Otherwise, the beneficiary gets nothing.

Reduced paid-up means that the life insurance company uses the cash value of the policy to buy as much insurance as possible. This reduces the death benefits, but keeps the policy in force.

Cash surrender value refers to the amount of cash value a policy has. This amount is returned to the policyholder or beneficiary and the policy is canceled.

Loan value is the amount of the policy's cash value available as a loan. This amount will be returned to the policyholder or beneficiary and the policy will be cancelled.

If the policy lapses due to the death of the insured, the beneficiary will collect the full death benefit. Also, there is no time limit on when the beneficiary can collect the death benefit. The only requirement is that the death certificate is presented to the life insurance company to verify the insured's death. If the beneficiary never comes forward, then no one receives the money.

Unreported death
If the policyholder dies and the insurance company isn't informed, the policy will lapse. In this case, the life insurance company will send letters informing the insured that payment was not received and their policy may lapse if this continues. If there is still no response, the insurance company may initiate a search, but if no answer is found, the policy will automatically lapse due to delinquency of payment.

Unclaimed death benefits: are they gone forever?
If a beneficiary doesn't collect death benefits, and the life insurance company can't find the beneficiary after a few years, the money is transferred back to the state where the life insurance policy was originally purchased. The full amount must be turned over to the state comptroller department within three to five years of the insured death. There, it is put into a bank account and considered "unclaimed property."

A database with the names and addresses of lost beneficiaries is located at the state comptroller's office, and many times, they try to find the beneficiaries to distribute the death benefits to. Depending on your state, you may be able to go online, look in the paper for any unclaimed death benefits, or call the state comptroller or treasurer for information.

It should be noted that if the life insurance company doesn't know the insured has died, they are not required to turn the money over to the state. If the state doesn't have a death benefits law in place, then the money will remain at the insurance company and they can continue to search for the beneficiary. Also, it is very rare for money to be turned over to the state, because most insurance companies have their own search techniques to find beneficiaries.

Do you have any questions or comments? Please let us know.

Last updated November 10, 2008.

How Much Life Insurance Do You Need?

2008-11-12T00:57:00.000+07:00

You might be asking yourself this question: "How much life insurance do I need?"

Some financial advisors will tell you to multiply your annual income by seven. Others will tell you to buy only enough life insurance to replace the income you are expected to make between now and retirement. Some might recommend you buy only enough life insurance to cover your present debts.

While you probably can do all of those calculations in a minute, they won't give you the right answer. Simply put, calculating your life insurance needs takes homework. It requires you to do an inventory of all of your finances, and to think long and hard about how your beneficiaries would maintain their lifestyles without you. You also must consider inflation and, if you have children, future college education costs.

What not to do

What's the wrong way to calculate how much life insurance you need? Here are some common but misguided methods.

1. Multiply your annual salary by seven or eight: While it’s a simple formula, it fails to take into account your individual needs and obligations. Life insurance experts say there’s a good chance you’ll buy too little or too much coverage, simply by using a formula such as this.

2. Calculate your "human life value:" This method gives you the income you will earn from your present age until your retirement age, assuming a rate of interest that represents salary increases throughout that period. The problem is it does not take into account what your beneficiary's specific needs will be. You also end up with a figure that requires you to buy a huge amount of life insurance, possibly more than you may need. "There's all sorts of landmines in this," says Michael Snowdon, an instructor at the College of Financial Planning in Denver. "When you calculate this way, you're working with broad brush strokes."

3. Cover your debts. This involves buying only enough life insurance to cover debts such as your mortgage, student loan bills, or outstanding car notes. This method does not consider any future debts or needs, such as childcare or college education costs.

A classic formula

Many experts say the best way to pinpoint a smart life insurance figure is through a needs analysis, which can be broken down into a simple formula: Short-term needs + long-term needs - resources = how much life insurance you need. Snowdon says this method is "probably the most accurate approach in what is an inaccurate and imprecise science."

Experts advise you do an analysis at least once every three years, or whenever you have had a major life change. For example, if you have a new baby, you have to recalculate college education needs and child-care costs. If you own a home, a mortgage is likely your biggest financial burden. Because your mortgage balance decreases with each payment, it's important to include those revised figures in your calculations.

Five steps to a needs analysis

Step 1
Add up all of your short-term needs. These can be placed into three categories: final expenses, outstanding debts and emergency expenses. Among final expenses are medical, hospital, and funeral expenses, attorney or executor fees, probate court costs (if you do not have a will), and any outstanding taxes that would need to be paid if you died. Among outstanding debts are credit card balances, auto loans, college loans, and all other outstanding bills. Emergency expenses should include a cash reserve for medical emergencies and repairs to your home or car.

Calculating final and emergency expenses can be complicated, because you don't have a crystal ball that tells you how much your medical or hospital expenses will be, or if you even will have any.

Step 2
Next, add up your long-term debts, which include your mortgage and college tuition.

Calculating an education fund is tricky because you have no idea where your children will be going to college. Perhaps the best method is to use the present average college cost in the United States and the number of years away your children are from entering college. The average college costs for the 2002-2003 school year were $4,081 annually for a public, four-year institution, and $18,273 annually for a private, four-year institution, according to The College Board.

The U.S. Department of Education reports college costs traditionally have risen at about 5 percent annually, so you need to figure out what the cost will be when your child goes to college. (To calculate what costs will be in the future, see the last section: “A must-know: the equation for the future value of money.” Also be sure to calculate what the entire education will cost while taking into account the increased costs each year.)

Step 3
Next, calculate family maintenance expenses. These include such necessities as childcare, food, clothing, utility bills, entertainment, travel, and transportation. Calculate this figure based on a year's worth of expenses, then multiply that times the number of years you want to provide this income.
Once you've done that, add your short and long-term debts and your family maintenance expenses.

Step 4
Now that you've tallied all of your income needs, figure out what resources you have to meet them. To do this, add all available savings, stocks, bonds, mutual funds, existing life insurance (such as group life through your employer), and Social Security. You and your spouse can find out how much you'll get through the Social Security Administration (SSA) by visiting the SSA’s website, where you can get an estimate of how much you should have in Social Security benefits. Also add your present salary, and assume 5 percent compounded interest each year if you expect salary increases over time.

It's important to count only liquid assets (those that could be quickly converted to cash) among your resources. You shouldn't count items such as your home or automobile, because selling them for cash when you're gone would mean changing your family's lifestyle.

Step 5
Subtract your resources from your total expenses. The figure you get should represent the amount of life insurance you should buy.

Don't be daunted

Snowdon says the final figure that shows how much life insurance a person needs can be quite alarming. If you end up with an astronomical figure that requires a premium that is too high, he recommends you go through the analysis again and select areas for which you think you can allocate less money.

"Many people will look at the final figure and say, 'I can't do that,'" Snowdon says. "You have to look at it, figure out which is the most crucial, start making adjustments, and go from there."

A must-know: the equation for the future value of money

Calculating your life insurance needs will require two equations you may have picked up in Finance 101: the future and present value of money.

The future value of money equation tells you how much your money will be worth in a given number of years while earning a given rate of interest. This equation is essential if you are calculating how much money you'll need in the future because of inflation, or what your death benefit will be if you choose to invest the money at a given interest rate.

The present value of money equation tells you what your money is worth before it has been invested for a given number of years at a given rate of interest. This is important if you have an amount of money you need in the future, and you need to know how much life insurance coverage you should buy now.

If this sounds complex to you, don't fret. As long as you have a calculator (preferably a financial calculator, which is used by accountants and finance professionals), these equations are no sweat.

Here's how the future value of money equation works: Say that average college education costs are $20,000 annually for a private four-year institution, and you want to figure out how much it will cost in four years if college costs keep going up 5 percent per year. You would multiply 20,000 by 1.05 (1 represents the present cost, and .05 is 5 percent inflation) four times (or 1.05 to the fourth power).

So your equation would be this:

20,000 x (1.05)4
or
20,000 x (1.05)(1.05)(1.05)(1.05)
The answer is $24,310.13.

How to Buy Life Insurance

2008-11-12T00:53:00.000+07:00

Buying life insurance is an easy way to protect your family after you're gone. If you know what to look for, you can get great coverage at a price you can afford.

Why Buy Life Insurance?
One of the biggest reasons to buy life insurance is to provide money in case of death. If you're single and don't want to leave money to anyone, you may not need life insurance. But as you take on more responsibilities and your family grows, your need for life insurance increases. The proceeds from a life insurance policy can replace the income lost to your family upon your death. The life insurance death benefit can also pay off debts and expenses, provide money to a charity or organization, and cover final and estate expenses.

Term or Cash Value?
There are two basic types of life insurance: term life insurance, which provides life insurance coverage for a specified period of time (the term), and whole life (permanent or cash value) insurance, which combines a death benefit with a cash value component. Term life insurance generally offers the most protection for the smallest price. Many term policies are renewable, meaning that you can purchase them again for the same term even if your health or circumstances have changed, although the premium may increase on renewal. Some term policies (called "convertible") will permit you to convert the term life insurance policy to a permanent one at some point without undergoing an evaluation.

The advantage of cash value life insurance is that it offers lifetime protection. However, some types of permanent life insurance act more like investments, meaning that their ultimate value depends in part on the performance of their stocks and bonds. Permanent life insurance generally has much higher premiums, especially initially, but unlike term insurance, it can also be used as an investment and retirement vehicle. With term life insurance, you protect you family's financial future for a smaller premium payment. For a higher premium, permanent life insurance gives you financial protection now and savings for the future. To further compare types of life insurance, see our article on term vs. cash value life insurance.

Choose a Coverage Amount
The amount of life insurance protection you should buy depends on how much income your survivors will need, how much you own and owe, and the amount of other life insurance available to you. If you're married, both you and your spouse should consider buying life insurance. One of the easiest ways to estimate how much life insurance protection you should buy is to use a life insurance needs calculator.

What Term?
Term life insurance is usually offered for periods ranging from 1 to 30 years. Consider choosing a term that matches your need for life insurance protection. For instance, if your main reason for buying life insurance is to protect your 7-year-old twins until they're out of college, you'll want to buy a policy with a term of at least 15 years. Different types of term life insurance will have different premiums. Level term, in which the death benefit stays the same over the course of the policy, and renewable and convertible term life policies will tend to have higher premiums, but may offer the protections you want.

Premiums
How much you pay for life insurance will depend on a number of factors, including your age, your health, whether you use tobacco, your family health history, and the type and amount of life insurance you're buying. Keep in mind that the premium payments may change later with some types of life insurance. If your policy does not guarantee that premiums will stay the same and that benefits will not decrease, that means the insurance company may raise the rate or lower the benefits. Be especially sure to understand how and why the premium and benefit payments are calculated, and what is guaranteed. Although many policies come with example illustrations of how the insurance company expects the policy to perform, your policy may not get the same performance. If you expect or need guaranteed premium payments and benefits, make sure your policy provides them.

Shop Around
When comparing life insurance quotes, make sure that the policies and insurance coverage you're comparing are similar. And remember, any policy that you buy is only as good as the company that issues it. Find out what rating the company has received from major ratings services, such as A. M. Best or Standard & Poor's. These companies evaluate an insurer's financial condition and claims-paying ability. The company giving you an insurance quote should provide you with this information. You can also contact your state's department of insurance to find out more about an insurer's record.

Submit an Application
Once you're ready to purchase a life insurance policy, you'll fill out a life insurance application that contains questions about your current and past health history and lifestyle. You'll generally be required to take a medical exam, arranged and paid for by the insurance company. The answers you give on your application, along with the results from the medical exam and your past health history, will help the insurance company determine whether to offer you a policy, and if so, at what price. Be sure to answer the questions fully and carefully, because intentionally misrepresenting yourself or hiding information can cause the policy to be cancelled. There are many life insurance options and many companies. Even if you're not eligible for a policy from one company, you can usually get a policy somewhere else.

Read and Understand Your Policy
Life insurance contracts aren't written to be exciting, but read and understand yours. Policy provisions, the amount of benefits, the premium, and other charges you'll pay will be listed along with other important information such as the beneficiaries you've named and the premium guarantee period. Make sure you understand everything in the policy. Under the laws of your state, you may have a "free look" period (typically at least 10 days) during which you can cancel the policy without penalty. If your life insurance policy doesn't meet your needs, it's easier to change it during this period than later, when you may face cancellation penalties.

Do you have any questions or comments? Please let us know.

Top 10 Most Dangerous Jobs

2008-11-12T00:46:00.001+07:00

Do you work in a dangerous occupation? According to the Bureau of Labor Statistics, a job is considered dangerous based on the fatality rate, which is a ratio between deaths and the total number of people employed in the profession. The top 10 most dangerous jobs (by fatality rate) in 2007 were:

Fishers and related fisher workers

Logging workers

Aircraft pilots and flight engineers

Structural iron and steel workers

Farmers and ranchers

Roofers

Electrical power-line installers and repairers

Drivers/sales workers and truck drivers

Refuse and recyclable material collectors

Police and sheriff's patrol officers

This list does not reflect the actual number of deaths—for example, the occupation with the highest actual number of fatalities was "Drivers/sales workers and truck drivers" with 908 deaths in 2007.

Do you have the life insurance protection you need?
It's a fact that some occupations are riskier than others. But no matter what you do for a living, take a look at your life insurance needs. Life insurance can help you financially protect your loved ones after you die. If you're single, and no one is depending upon your income for support, you may not need life insurance. But if any of the following is true, consider buying life insurance:

You're married and your spouse depends on your income

You have children

You have an aging parent or disabled relative who depends on your income

Your retirement savings, pension, or other cash accounts won't adequately support your loved ones after you die

You have a large estate and expect to owe estate taxes

You own a business

You'd like to donate life insurance proceeds to a charity or school

Calculators and worksheets are available to help you determine how much life insurance you need. You may want to contact an insurance agent or broker who can help you determine what type of life insurance is best for you and the amount of coverage you need.

Do you have the disability insurance you need?
If you work in a high-risk occupation, you probably know how important it is to have disability insurance coverage. But don't rely on government programs such as Social Security and workers compensation as your main source of protection. In reality, government programs pay only limited benefits under restrictive terms (e.g. you must meet a strict definition of disability to qualify).

Your employer may offer group disability insurance at low or no cost to you. This coverage is called Accidental Death & Dismemberment Coverage. But you may also want to consider purchasing an individual disability insurance policy. Although you'll pay more for individual coverage than for a group policy, you often get more benefits. And keep in mind that if you leave your job or otherwise terminate your relationship with a group, you can't take your disability policy with you, and you usually can't convert it to an individual disability policy. This means that you may be left without disability coverage when you need it most.

Shop around for coverage
Since many different types of life and disability policies are available, it's important to shop around for coverage to find a life insurance policy that meets your individual needs. Since premium costs vary widely, get quotes from several insurance companies. Just make sure you're comparing policies that offer similar benefits.

Do you have any questions or comments? Please let us know.

Last updated November 10, 2008.

Textile manufacture during the Industrial Revolution

2008-11-10T21:15:00.000+07:00

Technological developments in Britain

Textile manufacture

Main article: Textile manufacture during the Industrial Revolution

Model of the spinning jenny in a museum in Wuppertal, Germany. The spinning jenny was one of the innovations that started the revolution

Metallurgy

Coalbrookdale by Night, 1801, Philipp Jakob Loutherbourg the Younger

Blast furnaces light the iron making town of Coalbrookdale

Since iron was becoming cheaper and more plentiful, it also became a major structural material following the building of the innovative The Iron Bridge in 1778 by Abraham Darby III.

The Iron Bridge, Shropshire, England

Mining

Steam power

Main article: Steam power during the Industrial Revolution

The 1698 Savery Engine - the world's first engine built by Thomas Savery as based on the designs of Denis Papin.

Newcomen's steam powered atmospheric engine was the first practical engine. Subsequent steam engines were to power the Industrial Revolution

James Watt

In the early 19th century after the expiration of Watt's patent, the steam engine underwent many improvements by a host of inventors and engineers.

Chemicals

The Thames Tunnel (opened 1843)

Cement was used in the world's first underwater tunnel

Machine tools

Sir Joseph Whitworth

A lathe from 1911, a machine tool able to make other machines

Gas lighting

Main article: Gas lighting

Glass making

The 1851 Great Exhibition in Hyde Park

Effects on agriculture

A John Fowler & Co. Ploughing Engine

Team Leadership

2008-11-10T20:59:00.000+07:00

‘A set of persons working together’. That’s a bald definition of ‘team’ from the dictionary, and it tells you all too little about the term in a business management context. You don’t know how big or small the ‘set’ has to be before it ceases to be a team. More important, you don’t know what ‘together’ means. Working in the same department on separate matters isn’t teamwork: that over-used word implies exchange of information, views, ideas, contributions, etc. That exchange should result in synergy, that magical process by which two and two makes five (if not more).

If true teamwork is achieved, the magic is real enough. The joy of working together is supposed to cement the collective power of a group of people - a power which, so psychologists aver, is greater than that of a single brain, however brilliant. The gains from that power, moreover, are by no means small. The American Society of Training and Development learned from 230 personnel executives that they had seen the following team-driven gains in performance in their companies: productivity, up 78%; production quality, 72% higher; job satisfaction, 65% up; time wastage, down 54%.

To cap all these solid internal achievements, the key index of external performance - customer satisfaction - had improved by over half. However sceptical you are about such surveys, and however amply justified that scepticism may be in general, few managers will want to challenge these findings. After all, they endorse the received wisdom. The more closely any set of persons works together, surely, the better that work must be. Irrespective of the results, moreover, ‘team’ has good, powerful, emotional correlations.

ORGANISATIONAL DEMERIT

No manager would boast of being a bad teamworker; that’s a demerit in any organisation. A good team, on the other hand, virtually defines good management. It is well-led towards precise objectives, decision and action alike are effective, communication is top-class, and every member works towards meeting those clear targets - for the group and for themselves. Nor would any manager deny that forming and nurturing teams of itself contributes to this high-level management.

All that being so, why is good teamwork so difficult to achieve? One answer is that sometime demon, human nature. Writing in the Harvard Business Review, two authors, Vijay Govindajarajan and Chris Trimble, study the case of CoreCo and NewCo - an established business and a start-up launched by top management in the pursuit of new growth. Everybody in both divisions shares an important interest in NewCo’s success. Yet the latter encounters obstruction rather than genuine cooperation from CoreCo’s people, who perceive that NewCo will.....

• cannibalise their revenues
• damage existing CoreCo products
• damage CoreCo business relationships
• damage bonus payments by its losses
• compete for scarce resources

In a word, then, it’s a matter of trust. CoreCo’s managers are deeply suspicious of anything the newcomer’s leaders may do; the presumed danger to the veterans’ established interests far outweighs the benefits, in their minds, that a new and vital business would confer on the group. As the authors remark, establishing trust between two very different outfits is the problem, compounded by jealousy:

‘CoreCo managers are jealous of NewCo… They have worked for years or decades to advance within CoreCo, and now CoreCo may appear inferior to a much younger…sexier division’.

The analogy with teams is obvious. In theory, the existing members should welcome new talent with open arms. The better the new recruit performs, the better the team will do - and, again in theory, team success is everyone’s primary concern. In practice, however, that demonic human nature will rear its ugly head.

Just like the CoreCo veterans, established team managers will feel threatened. In a bizarre twist, the new person’s failure may be more welcome to the envious colleagues than his and the team’s success.

DISRUPTIVE RIVALRY

This is by no means theoretical. The HBR authors cite the troubles which beset New York Times when it was tempted, like most media owners, by the promise of the Internet. ‘Tensions rooted in rivalry’ proved disruptive and interactions took on an ‘us versus them’ undertone. The net people aimed to be ‘fast moving, anti-bureaucratic, risk-taking and experimental’. The Times newspaper staff resented the implication here that they were sluggish, bureaucratic, risk-averse and tied to ‘the way we do things round here’.

Which they probably were. Companies are most commonly formed on divisive lines which entrench the status quo. Bureaucracies serve hierarchies of power. Where the matrix rules, product, geography and function have hardened into strong and separate baronies. The company may be decentralised into ‘strategic management units’: under that or any other name, these profit centres are walled off from what should be corporate partners.

Very few businesses are truly entrepreneurial, with flat structures and a pro-risk culture, and even fewer are truly people-based, giving the employees ownership of their jobs and full responsibility for execution. Yet this is the wave of the future, and the reason why the role of teams in management is clearly and strongly rising in importance. The significance of the NewCos is waxing while that of the CoreCo is waning. And NewCos are the natural ground for team working, which expresses the positive aspects of human nature in groups.

Benign human nature, economic trends, key management principles and technological change all point in the direction of more and better teams. Man is a gregarious animal to whom group loyalties are very powerful - witness the devotion in all social and economic classes to football clubs with which the fan may have no link other than his loyalty and whose teams are largely composed of multinational mercenaries who have no loyalties themselves.

LOYALTY DRIVE

Harness the loyalty drive of its members to any company team, and you maximise the benefit from their collective power. You need that power to exploit the new opportunities which must be taken at a time when core activities are being commoditised, outsourced, pooled, etc.

Even if they remain cash cows, the milk is less rich; and bovine businesses are no match for rising stars. The latter’s rise, however, will be slowed and even frustrated unless entrusted to truly independent teams.

The difficulties reported in the HBR article explored above frequently hinge on misplaced efforts to restrain the NewCo’s freedom of decision and action. At Corning a new venture in micro arrays for handling DNA samples had a rough passage for two years: ‘All of CMT’s troubles’, the authors comment, ‘were probably inevitable from the moment CMT adopted Corning’s organisational design.’ At New York Times, success on the net only followed when ‘company leaders carefully monitored interactions with the newspaper’ - basically to stop the latter from strangling the infant in its crib.

It makes no difference whether a team is building a lasting new entity (as in the above cases); tackling a major issue that is intended to cease (like putting two companies together after a merger); combining back offices of separate businesses in an outsourcing move; or running a drive to improve production quality.

In any operation, the likely best approach is to build units around a discrete activity and then divide the overall project into the most efficiently manageable sub-units, teams in their own rights and themselves managed on the same principles of delegation and autonomy. Stand-alone project management is the prime example of teamwork, and has of necessity spread fast throughout the corporate world. While there are many other possible areas of teamwork, from the boardroom to the finance department, the more they share the stand-alone virtues the better.

The starting point naturally comes first - a purpose. Why has the team been created? In the justly famous case of IBM’s Personal Computer, the object was not just to develop a rival to Apple in this new computing market, but to do so at unprecedented speed, while offering significant improvements in the technology.

The fact that it was a crash programme proved to be a major asset. That always gives the project a driving urgency and enables a team to sweep potential constraints out of its way - here, independence even embraced freedom to break IBM’s insistence on making and buying all components in-house.

PHENOMENAL WORK

The world-changing rise of personal computing, however, drew heavily on the phenomenal work of an even greater team, the Palo Alto Research Center established by Xerox. Although its aims were grand and relevant - to combine the many Xerox technologies for a great leap forward into a new age - PARC lacked the focus of IBM. Nobody knew exactly what the lab was supposed to achieve. When the prototype PC emerged from the combined brilliance of the team, nobody knew what to do with the wonder. It didn’t fit mentalities developed to make and sell copiers.

Team purpose should be very precise and germane to the business: and the bigger the objective the better. Think small, and you’re liable to end small. Think big, and you may well be most agreeably surprised: self-fulfilling prophecies are the best forecasts of all. To its own amazement, IBM was swamped by the totally unexpected flood of orders for the new PC. In many other companies and cases teams given unreasonable aims have greatly exceeded the expectations of their sponsors. Thus NCR’s engineers in Dundee, asked to double the reliability of ATMs, trebled it and set the company on the way to world leadership.

One vital asset of team purpose is that it can be shared. It’s the keystone of participation, which in turn breeds total commitment, both to the overall plan and to the agreed sub-plans needed for the whole. It tells all the team members where they are going and why – from the bottom to the leadership at the top. The leader, of course, is the chief custodian of the purpose and is responsible for seeing that the team members, and the team as a whole, achieve the desired performance. Do not forget: teams exist to produce superior outcomes.

In obtaining their good results team leaders turn into conductor rather than driver, enabling others to play the right music, not by hands-on domination of all decisions and execution, but by providing inspiration, invigilation and stimulus. Dominance obviously fits ill with what should be the collective ethos of the team. Its leader is, or should be, primus inter pares, a first among equals; not the typical CEO, who is primus - and never mind about the equality.

Another article in the HBR identifies seven types of leadership, only one of which mentions teams. That’s the Achiever, who ‘meets strategic goals’: he/she ‘effectively achieves goals through teams’. You would suppose this character to be the hero of authors David Rooke and William R. Torbett. Not so - even though, when it comes to implementing the strategies, the Achiever significantly outdoes the Opportunist (‘wins any way possible’), the Diplomat (‘avoids overt conflict’) and the Expert (‘rules by logic and expertise’).

But the Achiever in turn is beaten to the performance punch by three others: the Alchemist (‘generates social transformations’), the Strategist (this type ‘generates organisational and personal transformations’), and the Individualist (‘interweaves competing personal and company action logics’).

OBVIOUS PARADOX

The paradox in this classification is obvious. How can any of the other six types perform well without the Achiever’s ability to effectively achieve goals through teams? For that matter, how can the Achiever succeed without deploying the powers of the Diplomat, etc? And why does the Achiever account for 30% of the research sample, three times as many as those described as Alchemists and Strategists, if the latter are ‘most effective for organisational leadership’?

The questions recall Meredith Belbin’s first, famous account of the seven roles needed for team success: coordinator, ideas person, critic, implementer, external contact, inspector, team-builder. Somebody has to fill each role, and the team leader (a role not identified with any of the seven) has a part to play under each heading. The same truth applies to the Rooke-Torbert types. The Achiever-leader plays many parts, but only in part. The rest is delegation. That’s what gives teams their special strength and their pole position in today’s races for success. That demon, human nature, has many facets, good and bad. The well-led team of well-chosen, well-deployed people negates the bad and accentuates the good - and everybody wins.

Management Advice

2008-11-10T20:58:00.000+07:00

Advice is plainly a highly desirable commodity - if it’s good advice. Everybody will at several points in their careers ask for, or receive gratis, advice, whether professional management consulting or friendly words of wisdom - real, supposed or plain dubious. So it was a great idea of Fortune magazine to ask 29 career stars, mostly business people, to identify the best advice they had ever received; the words that had most influenced them on their several ways to the top.

In fact, advice, like so much else in management, has become institutionalised in recent years. Mentors, coaches and councillors have always operated at the lower levels of business, but paid providers are now to be found advising at much higher levels. The analogy is obvious. If a tournament-winning golf pro, or any other athletic star, employs a full-time coach to improve his brilliant game, why shouldn’t a CEO have the same assistance, as he or she goes about their difficult (but highly paid) task?

There’s nothing new about top hands requiring helping hands. Business history contains several examples of executive suite partnerships in which one of the partners (usually a super-boss) was far more equal than the advisor. One such tycoon (so I recall) called his right-hand man ‘my day wife’, which described the relationship rather neatly. In politics too the concept of the ‘eminence grise’ advisor is well-known - the wise and devious grey eminence who lurks in the king’s shadow and under his protection.

PERSONAL SUPPORT

Many executives have used top management consultants, who are very eminent and often grey, as personal support systems. It’s by no means a bad choice. The people who get to the highest posts in consultancy are highly intelligent, enormously well informed about the practices and pranks of other chief executives, skilled at recognising situations which are repetitive, and quick at getting on to the client’s wavelength. The relationships can last for years – as demonstrated by Peter Drucker, the greatest of mentors.

Two of the Gang of 29 swear by Drucker, including author Jim Collins (who learnt from a day with the grand guru that ‘The real discipline comes in saying no to the wrong opportunities’). And church founder Rick Warren still likes to ‘go sit at the feet of Peter Drucker on a regular basis’. Many business leaders have found those feet (now 95-years old) equally inspiring. Some of Drucker’s great store of wise anecdotes stems from these encounters.

Thus, he used to advise a New York banker once a year at meetings where, no doubt, they exchanged views and ideas about the financial system in general, and the bank’s management in particular, to great effect. But Drucker noticed two odd, extraneous things - that the meetings always lasted exactly an hour and a half, and that they were never interrupted.

When Drucker asked for an explanation the banker replied that experience had taught him that meetings were never useful after an hour and a quarter, because people began to repeat themselves. So at exactly that time he would ask the other party to sum up, which took quarter of an hour.

And the lack of interruptions? ‘While we meet my secretary is under orders only to put through a call if the President of the United States or my wife should ring. The President seldom rings - and my wife knows better’.

Note that here the highly disciplined banker was turning the tables, advising his advisor. Much advice is of this kind - the offer of one person’s experience as a guide to the better performance of other people. There is a very human tendency to believe that if someone else’s success has involved a particular method, that method must have some direct connection with the success, and by repeating the method, you increase your chances of being equally successful, at least within your own terms.

ASLEEP AT THE WHEEL

That argument is appealing, but flawed. Super-tycoon John D. Rockefeller I's habitual pose in meetings was prone - he would lie on a sofa with his eyes shut, saying nary a word, apparently asleep, but listening intently behind his closed eyes.

I don’t suppose for a moment that Rockefeller’s billionaire fortune would have been one cent smaller had he kept his eyes open or sat at the table like the others. But his eccentricity served three purposes: it set the boss apart as an unusual individual whose eccentric ways had to be respected, it reminded everybody there of the sovereign importance of listening, and it kept the great man from dominating the discussion - as great men are wont to do.

So the Rockefeller story is really a parable. What he did was less important than what it conveyed. There are some good examples of parable in the Fortune article. The best advice ever received by Vivek Paul, the brilliant Indian businessman who turned Wipro Technologies into a global force, came from an elephant trainer in the jungle. The elephants were large, but tethered to small stakes. How come?

The unlikely guru explained; ‘When the elephants are small, they try to pull out the stakes and they fail. When they grow large, they never try to pull out the stake again’. Paul drew from this strategy a powerful lesson; that ‘we have to go for what we think we’re fully capable of, not limit ourselves by what we’ve been in the past’.

POWER OF THE PARABLE

Note that the power of the parable doesn’t lie in the story itself, which isn’t especially arresting, but in Paul’s interpretation - and still more in the ambitions he proceeded to form and turn into remarkable deeds. To receive really good advice, in other words, you must be a really good advisee. That requires LLL, PPP, AAA:

1. LLL: Listen, Look and Learn

2. PPP: Priority of Powerful Purpose

3. AAA: Act , Advance and Achieve.

Paul’s story is an especially convincing demonstration of the threefold advisee kit. How many bicycle tourists in that Bangalore jungle would have noticed the size of the stake or questioned the trainer? Every day everybody, metaphorically speaking, walks past an elephant, notices nothing, and asks no questions.

You can’t, of course, follow up every elephant and cross-examine every trainer. In my latest book, Seven Summits of Success, co-written with the famous mountaineer Rebecca Stephens, she tells a parable about filling a bowl with stones of various sizes. An Eastern guru uses this humble operation to put across a high lesson: Put the important things first. They have to be important to you, well worth doing, and purposive; that is, they convert into the third stage, the AAA of Act, Advance, Achieve.

People like Paul, of course, have the Triple A built into their genes. Jack Welch, the 20-year hero CEO of GE, must have told many others about his habit, on landing in New York, of imagining that this was his first day in the chair, succeeding ‘a real dud’. Like all the others who heard this, Paul listened to the Welch questions; ‘What would I do that was different from the guy before? What big changes would I make?’ But how many others, having heard Welch, promptly decided, as Paul did, ‘to zero-base myself’ every Christmas?

Welch’s own best advisor, a business acquaintance, told him to ‘Be yourself’; that is, remember how you got where you are, and don’t pretend to be someone else, especially when you get all the way to the top. The background of your best adviser, to judge by the Gang of 29, is most likely, like Welch’s, to be business. That may be coincidental; fathers or bosses are obvious and frequently excellent sources of advice; the former are often in business, the latter, of course, always. Both types are likely to be father-figures, even when there is no parental connection.

LOVE THAT JOB

However, the authentic father-figures are no use if they act the domineering, prescriptive parent of fact and fiction. Rather, the good ones encourage offspring to do what they really want. Anything else would contradict an attractive theme that runs through the 29, epitomised by TV anchor man Ted Koppel (‘Do what you love’) and ad-man Donny Deutsch (‘If you love something, the money will come’). The burden of Drucker’s invaluable advice to author Collins was to give up any idea of starting his own organisation and concentrate on what he would enjoy most.

There are other wise and pragmatic counsels among the 29 - one of them in reverse. Warren Buffett stepped on the road to the world’s greatest investment fortune by disobeying, not one mentor, but two: his guru and teacher, Ben Graham, and his own father. In 1951 both men advised young Warren that the stock market was too high, and that he should stay clear. He disobeyed - but in doing so followed their most important advice, which most people find exceptionally hard.

‘You’re right not because others agree with you, but because your facts are right’. The words are Graham’s, but the thinking is fundamental. In management, as in all life, there is at any given moment an accurate, factual description of events which can be discerned and described by logical analysis. The nearer you can get to that truth, and the closer your actions to what the truth demands, the better you will do - in anything.

Andy Grove, Intel’s genius CEO, followed this faith when his life was threatened by prostate cancer. Experience as a trainee engineer had taught him, in his professor’s words, that ‘When “everyone knows” something to be true, it means that nobody knows nothin’. That was the case with Grove’s cancer; he did all his own research - and survived.

Reduced to one-liners, some of the other advice received by the 29, while sound as a bell, hardly ranks among the World’s Great Thoughts. ‘Balance your work with your family’: ‘Let others take the credit’: ‘Have the courage to stick with a tough job’: ‘Don’t listen to nay sayers’: ‘You can learn from anyone’. You might find these in a cracker, but you couldn’t build a career on them - not even ‘Recognise the skill and traits you don’t possess, and hire people who have them’.

That sounds like a statement of the obvious, even when you know that, uttered by the leadership guru Warren Bennis, it had a great influence on Howard Schultz of Starbucks - who has used Bennis as a (presumably paid) adviser for many years. Enough of the 29 have such relationships to confirm, as noted earlier, that having a professional mentor is no fad. As your career matures, the frank advice of someone you trust is an antidote to arrogance, prejudice, inability to face uncomfortable truths and perplexity.

SPECIFIC ADVICE

Professional advisors can also be superb mentors. Sumner Redstone, the omnipotent boss of Viacom, has known and used Ace Greenberg of bankers Bear Stearns for over 15 years. But I’m sure that Greenberg’s specific advice on Redstone’s deals was more valuable than this; ‘Follow your own instincts, not those of people who see the world differently’. Redstone is an exemplar of common traits of the 29. They know who and what they are, trust their instincts, and rarely need any second bidding to follow them. Nor should you.

Two thoughts stick out, though. Klaus Kleinfeld, the new head of Siemens, always envisions the outcome of his proposed actions two years on. He’s right to do so.

And what advice does Peter Drucker, mentor of mentors, value most? That of his first editor, who told him, in effect, ‘Get good - or get out!’ Advice learnt in youth thus stays a long, long time - but it’s the value of how you use it, not the advice, that truly counts.

Management Teams

2008-11-10T20:56:00.000+07:00

Suppose that every organisation had within it four teams, each of which had a specific task. People on these teams would have other roles as well, but would work together as a team for the specific role of that team. The focus of each team would be distinct, and it is important that this distinctiveness is preserved. The rigidity of this team structure might surprise those who believe that creativity should be free and unstructured.

Team one is the values team. The role of this team is to find and figure out values that matter. Values might be permanent or temporary. Values might change. There might be trends. There is a certain amount of sense in asking focus groups, etc. to indicate their values. Such a process is usually not very productive, because people are good at pointing out what is wrong, but they are not so good at designing new needs and possibilities.

It may be useful to try out values designed by the design team on focus groups to see if such values are acceptable or desirable. This is different, however, from asking the group to come up with values.

My book Six Value Medals would provide a broad framework, but within this framework there would be a need to design specific values. Another book of mine called Supertition could also be useful in the design of values.

Values might arise from social observation. Values might be triggered by changes in technology. For example, the development of mobile phones creates a whole range of new values and possibilities.

Technology might even create negative values, and then there will be a need to get rid of the negative values.

For example, there might be a growing need to look at ‘privacy’ and ‘tranquillity’.

• How can you be undisturbed but not detached from the world and those who need to contact you?

• How can the value of dieting be combined with the value of enjoying your food?

• How can the value of comfort in travel be combined with the value of excitement?

• What are the values inherent in the investment process?

Team two is the idea team. The idea team takes the defined values from the value team and seeks to design an idea that would allow defined values to be delivered in a practical way. It isn’t just a matter of delivering the values, but of delivering them with sound business management skills and in a way that is good business sense. There has to be profitability and there has to be cost control.

It is possible to define values in a very broad and general way. It is also necessary to define values very precisely. It is not enough to say that you would solve a problem by finding ‘a suitable solution’. There is a need for ‘valufacture’ (a word I created to describe the creation of value).

The idea team takes the defined values from the value team and seeks to design an idea that would allow the values to be delivered in a practical way.

It is not just a matter of delivering the values, but of delivering them in a way that makes business sense. There has to be profitability and there has to be cost control.

This team has a real need for formal creative processes such as lateral thinking. The goal is clearly defined: how can we deliver the specified value?

At first this separation of ‘value design’ from ‘idea design’ might seem artificial, but it has the practical merit of defining targets more precisely. In too many cases a creative person has an idea and then looks around to see what value it might deliver. Here the process is reversed.

If the value is ‘instant viewing of photographs’, then the idea team might think in terms of Polaroid photography or stand-alone digital printers, which can print the photographs from your digital camera cards immediately.

Team three is the implementation team. At first it may seem that this function duplicates the ‘idea team’ function. At times there may be an overlap.

If the idea team comes up with stand-alone digital printers, then the implementation team looks into the availability or possibility of these. The implementation team would also do the decision making on who would own and service these machines.

• Would they be in stores or on their own in shopping malls?

• What existing organisations might be interested inco-operating in the matter? - and so on. Implementation has to go into detail in a very specific way. It is not enough to say: ‘there would be a way of doing this’. The specific way would have to be spelled out.

• How is it going to be done?

• Who is going to pay for it?

• What might the problems be?

The implementation team needs to be able to answer all such questions in a detailed and specific way. There may be a need for new creative ideas in the way that an idea is implemented. There may even be a need to modify the original idea to allow it to be implemented in a particular way.

Team four is the assessment team. There has been a defined value. There has been an idea for delivering that value. There has been a specific suggestion as to how the idea might be implemented. The assessment team can now look at the whole picture.

• Will the idea work?

• Will the idea be acceptable?

• Are the costs acceptable?

• Will the idea be profitable?

• Will the idea be durable?

• How strong a competitive advantage does the idea provide?

Many of these questions will already have been considered by the preceding teams, who may be asked to give their answers to the questions.

The assessment team is not just a critical team. It is the team which can look at the total idea. The team should function in a positive and constructive sense. Where necessary, modifications might be suggested. The assessment team should contain creative people as well as number-crunchers.

FUNCTION

The proposed teams - Value, Idea, Implementation, Assessment - work separately, but together: like the four legs of a horse or the four wheels of a car.

Another analogy might be the human digestive tract. Each part does its prescribed job and then passes matters on to the next section.

The clearly defined function of each team clarifies the thinking and ensures that every aspect of an innovation is fully considered.

Creative Thinking Techniques

2008-11-10T20:55:00.000+07:00

Some months ago a Nobel prize economist told me that at the top level economics meeting in the US they had been using my Six Hats method. This is now in wide use around the world because it is so much better a way of exploring a subject than argument wandering discussion. Meeting times are reduced to one quarter or even one tenth of the normal time. Most important, every person present has to contribute fully - not just in the usual critical mode.

The purpose of thinking is to enjoy and to deliver our values. But what are those values? Everyone is aware of the importance of values. If pressed, almost everyone can spell out the values that matter. There is a lot of ‘lip-service’. There is almost as much lip-service about values as about creativity and innovation. These things are important but talking about them is much less trouble than acting on them. To be seen to consider all values is what matters most.

Values are vague, general and poorly defined. We know what they are and we can recognise them, but looking for them is not easy because they are far from concrete. Why do we give names to vegetables? You would recognise a tomato even if it had no name. It would not be so easy to go into a greengrocer and ask for ‘those round red shiny vegetables that we use in salads’. It is very much easier to ask for ‘tomatoes’.

PERCEPTION

Perception is a key part of thinking. Research at Harvard has shown that 90% of the errors in thinking are errors of perception. Improving perception through my thinking programmes in schools has a dramatic effect. In one case, teaching this thinking to youngsters in a special school, which took youngsters too violent to be taught in normal schools, reduced the actual rate of criminal convictions over a 20-yearperiod to one tenth of the rate for those not taught thinking. This is powerful stuff.

With perception we can only see what we are prepared to see. The untutored eye looking a painting sees only that the painting is agreeable. The art critic can focus on the composition, the space, the brushwork, etc. etc.
In watching a game of soccer you actually see much more if you know some of the possible plays and can then see them in action.

If a person who is born blind is suddenly enabled to see then it takes quite a while for that person to see things. The brain has to get used to recognising shapes and forms. It is very much the same with values. Unless we have a clear picture of the different values it is not easy to see them.

Furthermore, it is not enough just to see values. We also need to talk about them and to discuss them. We
need to compare the different values in alternative courses of action. The Six Hats provides a language for talking about thinking and the new framework provides a means for focussing on values and talking about them. The new framework is THE SIX VALUE MEDALS. The metaphor of the ‘medal’ has been chosen because a medal is a reward. In the same way, if you deliver value you deserve a reward.

GOLD MEDAL

The Gold Medal represents ‘human values’. These are the values that matter to people. There can be positive values and also negative values. Being ignored or humiliated are obvious negative values. Being appreciated and having your contribution recognised are positive human values. When GE asked its creative people what reward they wanted for creative effort, the simple answer was ‘recognition’. They wanted someone to recognise they had contributed an idea.

SILVER MEDAL

Silver Medal values represent ‘organisation values’. Most often it would be a business corporation but organisations can include families, governments, clubs, teams, etc. The most obvious Silver Medal value is survival. If the organisation does not survive then not much else matters to that organisation. There maybe a clash of values if the ‘shareholder’ group wants the organisation wound up. There are obvious Silver Medal values like profits, market share and brand equity. Having happy and hard-working employees may need to combine Gold Medal values with Silver Medal values.

STEEL MEDAL

Steel with poor quality is poor steel. The Steel Medal values are directly quality values. Quality means that whatever is being done is done with quality, whether it is a service or a product. Quality means fulfilling the desired or offered function. A camera which takes poor quality pictures is a poor quality camera. A cafe with very slow service is a poor quality cafe. There are many programmes directed at quality management and improvement and most of them do a good job. The Steel Medal Values area way of recognising such values, not an attempt to teach how to get them.

Again there may be a clash of values. Improvement in Steel Medal values might mean an increase in production costs (like employing more people in the cafe) and this may impact Silver Medal values by reducing profitability. In the long run, however, poor quality will affect Silver Medal values through loss of business or losing out to better quality competition. If we believe that quality is essential then there is no clash of values at this point.

OTHER MEDALS

There are three other medals. The Glass Medal is for innovation, creativity and change. The Wood Medal is for ecological values in the broadest sense - not just nature. The Brass Medal is for perceptual values because brass looks like gold but is not. These other medals are described in more detail in the book SIX VALUE MEDALS (published by Vermillion Press in the UK, March 2005).

One of the advantages of having a perceptual framework is that it becomes possible to lay out the values in a ‘value map’. This means that comparative values may be seen at a glance. It becomes possible to see where the values are strong, where they are weak and where they are negative. Two such value displays are suggested in the book.

The idea of a ‘negative’ value is really a contradiction in terms, because values are seen as positive. But if we take the broader view of values as something which ‘influences’ or ‘has an effect’ then that effect may be positive or negative. There is no need to indicate the positive values as such but there is a need to indicate ‘negative’ values.

To describe negative values as ‘harm’ or ‘danger’ is weak and makes it difficult to see all the different values at a glance. Having the concept of positive and negative values makes it possible to scan them all on the same sheet.

LABELS

As people become familiar with the Six Value Medal system, the values may come to be referred to simply as ‘Gold Values’ or ‘Steel Values’. There is no need to keep repeating the ‘medal’ part.

The importance of the labels is that they provide a perceptual framework which makes values more tangible. The framework also allows us to focus more clearly on the different values and so to see where they are strong and where they are weak or even negative.

Business Ideas

2008-11-10T20:54:00.000+07:00

Any managements which don’t find the present day challenging must be either very lucky or completely comatose. It doesn’t matter whether the business is a long-term, high-tech growth star, like Finland’s Nokia, or a solid, stolid retail empire, like Britain’s Marks & Spencer. Get your present-day strategy wrong, and retribution, as in those and many other cases, is swift to follow. The marketplace, the media, and the financial markets turn on former heroes with a vengeance – and this reaction, of course, only intensifies the pressure on those who have lost their way.

Note that these observations apply to present-day strategy - how companies are managing in the here and now, and never mind the problematical future. But if managements are unable to meet the challenges that surround them now, tangible and visible, they can’t offer much hope of surmounting the much harder challenges of the future. The future, remember, cannot be known. You can make intelligent predictions. But you don’t know whether they really are intelligent until much later - which will often be too late to avert catastrophe.

NOWHERE TO HIDE

Thus Nokia can’t be excused for missing the threat posed by the union of Sony and Siemens in mobile phones, or the possibility of a resurgence of its major Scandinavian rival, Ericsson. Nor can M&S hide from its culpability in missing the challenge created by its customers and competitors as the former responded to faster-moving fashions and more stimulating formats - the creations of newer and fresher minds and eyes that the old champion could deploy.

Yet both companies can be forgiven in theory (they won’t be forgiven in practice) if their vision of the year 2014 proves to be hopelessly wrong. The decisive phenomenon of the present-day is the revolution in information and communications technology (ICT). The digital onrush has created an entire new economy which impacts on the old economy at every turn. But the significance of the World Wide Web couldn’t be surmised until it existed, and even then the correct response to this marvel was evidently difficult to devise. The dot.com bust wasn’t a failure of the technology or the systems, but a result of profound misunderstanding and crass mismanagement.

The challenge for managers is therefore to manage the present better - much better - as preparation for the unforeseeable. Companies have no option but to live by the old Boy Scout maxim, Be Prepared. And that is what ties present and future together.

After correctly recognising and interpreting what is happening now, inside and outside the firm, you can at least ensure that the present nature and standards of management are appropriate and effective.

That’s the foundation on which you build the future - not on forecasts of the future as a whole, but on ideas strong enough to create your very own future. Nokia, as it happens, is a rightly famous example of doing precisely that - throwing away the entire contents of a ragbag of businesses to concentrate on the one market where it had the chance of developing real competitive edge. Its continuous stream of innovations both stimulated and satisfied demand. In doing both, Nokia closed the gap between the dreary present it knew and the golden future which it wished to achieve.

CREATING YOUR FUTURE

Closing the gap, however, applies to other key aspects of today’s management challenge. To create your own future, you have to close the gap between generating ideas and achieving results: and that also means closing the large gap between the typical organisation’s current behaviours and those that foster ideation. And that is something that the typical manager finds difficult - and shouldn’t.

Here, for example, are what I diagnosed as ten prime attributes of a critical Nokia supplier: ARM, designer of 75% of the silicon chips used in mobile phones. ARM’s attributes offer further penetrating insights into the 21st century ‘Ideas Company’.

1. Get the business model right – and keep it that way
2. Make the customers into real and treasured partners in the business
3. Honour and reward the innovators
4. Foster - and never lose - a desire to survive and succeed
5. Develop new ideas to attack new markets
6. Give R&D its own special place in the organisation
7. Ensure a proper balance between current development and future research
8. Make sure that there’s a place and hearing for whacky and far-out thinking
9. Create closely knit teams of people at all levels of the company
10. Regard challenges as the source of the best opportunities - and take them.

Are any of those policies ones which would strain your organisation? Do you consider any of them wrong-headed, or dangerous? On the contrary, the ten are not only practical and beneficial; they constitute part of the template for the Ideas Company, the one that can create its own future.
But there’s another question: how many of the ten actually feature in the management of your workplace?

My educated and experienced guess is that very few established companies practise more than a handful of these behaviours. They may have a business model, but it will be much the same as that of the competition, providing no useful edge, let alone a transcendent one.

Despite many fine words about customer relations, these are often antagonistic. Firms pay lip-service to innovation, but little else. Unorthodox thought and thinkers are equally important - but ignored. And if meeting the challenges involves disruptive action, it will be delayed as long as possible - too long.

GROWN-UP START-UP

True, ARM is a grown-up, high-tech start-up that doesn’t have the historical lumber or organisational deadweight that hamper businesses of greater age and slower-moving technology and markets. But weren’t the gee-whiz digital growth stars supposed to become the models for the 21st century company? Of course, many stars were nothing like what they were cracked up to be. But their speed of reaction and innovation was and is real enough. And that speed is in itself armour against the unexpected: i.e., the future

For a complete contrast, I visited a company that is about as far from ARM as you could find. It is old-established (1876), sells a very traditional product (English ale), and is largely confined to one area, the East of England(whose Development Agency commissioned my three studies). ARM is a public company that has been riding the high-tech seesaw. The brewer, Charles Wells, is private and family owned. As for the future, not long ago it didn’t seem to have one: giants were mopping up the independents.

So what behaviours had kept the company thriving and growing?

1. Base new development on a foundation of lasting and relevant virtues.
2. Make continuous improvement over time the basis for radical change.
3. Build the brand – manage both the corporate brand and the products.
4. Be old-fashioned about good financial house-keeping and strategic prudence
5. Be innovatory about everything else, with new projects at all levels and in all activities.
6. Don’t insist on being first – but insist on being best.
7. Be very patient but extremely determined in breaking new ground.
8. Keep close to the customers and develop new ideas around satisfying their needs.
9. Involve staff fully in the company’s strategy and its progress.
10. Have a unifying and bold ambition to which everybody can respond.

The difference in flavour between ARM and Wells is evident - as you would expect, given the differences in their markets, products, ownership and history. That expectation is in itself an important point. My recent book, The Fusion Manager, made this point most emphatically - that there is no one right answer, only the best answer you can produce at the right time.

Neither of these two companies is run by theorists, but both are essentially pragmatic. They follow the philosophy of a stock market professional I once knew: he never acted on predictions, but only followed ‘money on the table’ - the amount of cash investors were actually placing on their bets.

THE PERFECT COMPANY

That doesn’t sound very clever, but it made him exceedingly rich. Yet there is a valuable place for theory and experiment. At HFL, my third subject, the astonishing aim is to create ‘The Perfect Company’.

This is, of course, impossible, since perfection is not given to man. But the pursuit of perfection is eminently feasible, hard to better as an animating, driving force.

The bedrock of HFL’s business is bio analysis, primarily testing racehorse and greyhound samples to check that no illegal substances have been used to enhance the animal’s performance. Since scientific perfection is within reach, the work is a good match for HFL’s ceaseless and many-sided search for perfect corporate performance. The ten key principles I found there are vigorous and vital.

1. Set all targets and ambitions at the highest feasible pitch.
2. Use every available channel of communication, and invent ones of your own.
3. Make voluntary activity a critical element of the ideas organisation.
4. Use IT as a positive means of storing and exchanging ideas.
5. Lead from the top, but to animate and facilitate rather than command and control.
6. Relate all innovatory activities to the strategy and the economic performance of the business.
7. Look for new ideas in management and people policies, not only in products and processes.
8. Use informal methods to reinforce the formal elements of the organisation
9. Never be shy about ‘creative swiping’
10. Invest in people’s personal as well as their professional development.

MORE AVANT-GARDE

As noted, this list is more avant-garde than at ARM or Charles Wells: yet it’s hard to believe that the other two managements could not subscribe to the HFL policies.

Investing in your staff’s personal development is obviously a sound idea, for instance. So is the stress on communication, and the openness to new ideas in all departments. So is making the intranet into the digital lifeblood of the company. Recognising the high value of these policies, however, is one thing. Putting them into action is quite another. It’s the gap-closing issue again - closing the usual gulf between good intentions and inadequate, or even absent execution.

You may feel that the pressures of business leave no room or time for doing all these desirable deeds. But the future will not wait for you to catch up. These three companies share three crucial pillars – unreasonably high ambitions, shared by everybody; people-centric management, pervading all policies and processes; and determination to build their respective Ten Commandments into the fabric of the organisation - ’the way we do things round here’.

That cannot be done overnight. When you embark on the creation of a company fit for the future, you are looking ten years ahead. In other words, you are also committing the whole organisation to attitudes and approaches that are designed to achieve effective change right through to 2014. That isn’t futurology: it’s ‘the way we’re going to do things round here’.

Strategic Planning

2008-11-10T20:51:00.000+07:00

Management Strategy 2

2008-11-10T20:50:00.000+07:00

One advantage of having a very long memory for strategic management (and mismanagement) is that you can check the allegedly heroic present against the foolish past. But long memories are scarce in this field.

Royal Dutch-Shell can thus more easily promote its current top-level reshuffle as a sweeping, radical modernisation, bringing the blessings of ‘clarity and simplicity…efficiency…accountability’; and, of course, conferring much credit on its authors.

The reality, however, is that the architects of reform had been deeply implicated in perpetuating a system that was unclear and complicated, inefficient and inadequately accountable. Radical reformation only followed in the wake of the oil reserves scandal - the deliberate misreporting that cost the chairman, Sir Philip Watts, his job. It is, of course, right and proper that the chief executive should pay the price of such monumental error. But that isn’t what happened - for Watts was not the chief executive.

Nobody was, believe it or not. The unusual split of the group’s ownership between the Dutch company (representing 60% of the equity) and the British was reflected by two boards, two equities, and two chairmen. True, the operating interests were combined under the banner of Shell Petroleum. Its managing directors (usually seven in number) acted as a kind of collective CEO under the leadership of a ‘senior managing director’: but that ramshackle set-up was hardly fit for the 21st century.

INFLEXION POINT

How could so extraordinary a fix have come about? How could a vast multinational corporation, staffed with brilliant people and stuffed with billions in cash, have so basically mismanaged its affairs? The answers aren’t specific to Shell or to large public organisations.

Small family companies commit exactly the same mistakes and for much the same reasons - or rather lack of reasons. They pass what may be called the ‘management inflexion point’ - the moment when the practices and precepts that have served well enough in the past no longer apply.

The consequent decline may take decades rather than days. Never mind being unfit for the 21st century. Actually, Shell’s structure wasn’t even fit for the early Sixties, which is when the appointment of a single CEO was first proposed. The proposers were McKinsey consultants, who launched their astounding rise to British fame and fortune on the back of their work for Shell. The rejection of their (literally) central recommendation wasn’t based on any factual argument or alternative and superior theory. McKinsey’s standard solution was (and no doubt still is) that corporate effectiveness rests on having ‘streamlined decision-making with clear lines of authority and an empowered chief executive’.

The Shell directors who put their names to the above sentence have as much to explain as the predecessors who saddled the group with four decades of clumsy decision making and fuzzy lines of authority - although nearly every other major business, inside and outside oil, had the clearly superior structure now being adopted. The truth is that Shell was inordinately proud of its differences, including the time-honoured ‘committee of managing directors’. Now to be abolished, this bevy of barons was once an object of great internal pride.

UNDERSTANDABLE PRIDE

Now, pride in your company, its history and its uniqueness is wholly understandable and even valuable for its contribution to morale. But a moment’s logical thought makes it clear that the pride is emotional and is attached, not to strengths that can be rationally analysed, but to accidents of history and misreadings of the present. Most groups of people like to believe that they and their organisation are ‘the best’. But it’s plain that everybody can’t be the best.

In other words, self-delusion is rampant. That explains the typical reaction when anybody - like McKinsey at Shell - suggests changes that a company, above all its leaders, finds deeply unpalatable. The response is basically ‘why should we change when what we’re doing now works so well?’. To crack this barrier, people need to be persuaded of three crucial points:

• that ‘what we’re doing now’ doesn’t work so well, and may even be working badly

• that unless the top managers do embrace change, they will be courting failure

• that others, including critical insiders and external observers, know better than you do

All three of these ideas are far less welcome than the alternative belief that yours is the best of all possible companies. The first of the trio demands self-criticism; the second raises the fear of failure; the third involves a degree of self-abasement. At least, that’s how it looks to managers who do not understand the essence of good management. That hinges on intelligent self-criticism, plus readiness to accept the reality of weaknesses and threats, with equal acceptance of the wise contributions of others - inside or outside the company.

Once again, emotion is confronted by logic: but once again emotion generally wins, unless it is brought down to earth by a really humiliating disaster like Shell’s - or the recently announced first loss in J. Sainsbury’s long history. Emotion is so powerful that it can even swamp the personal self-interest of people who are in a position to intervene in the company’s affairs: notably family shareholders. The Sainsburys have nearly two-fifths of the supermarket company’s shares. How did they ever allow the mismanagement of the business to reach this pass?

Sir John Sainsbury, the all-powerful boss who took the chain to the top of the supermarket tree, is still alive; and many other family members exist, all of them sharing the sorry injury inflicted on their fortunes by the sitting managements. Families may even not react as soon as the unmistakable evidence of systemic failure appears. As at Sainsbury and Shell, awakening can take years, even decades. And really valuable intervention averts failure by intervening to nip mistaken policies in the bud.

CLASSIC NON-EXEC CODE

These family owners, however, abide by the classic code of all non-executives. You appoint a chief executive of whose abilities you have been convinced, and you thereafter leave him or her alone to get on with the task. The code, however, goes further than this basically sensible rule. The code holds the CEO innocent until proved very guilty, and shies away from early intervention - for that would plunge the family or other non-executive directors into the unwelcome waters of management upheaval.

It took even the eminently sane Warren Buffett two years of increasing disaster to initiate action against the blundering CEO of Coca-Cola, Doug Ivester. At IBM, there on the board sat Thomas Watson, Jr., the hero who had converted the business into by far the largest and best force in computing: and who sat there during the ten years, ending in 1993, during which John Akers as chief executive, despite (or partly because of) one reorganisation after another, led the company down a slippery slope. We will probably never know what efforts, if any, Watson made to avert that slide: but Akers for long seemed to be sacrosanct, no matter how convincing the evidence of failed leadership.

Part of the problem is that appointing a CEO is an act of very substantial faith, requiring true believers who thereafter cling irrationally to their beliefs. Right now I have no idea whether appointee Jeroen van der Veer is the right man to lead Shell into a new era. But I would be surprised if the non-executives who voted for his appointment know much more. And I will be downright astonished if van der Veer (or anybody else, for that matter) can handle the massive burdens placed on his shoulders in these intriguing words:

‘The chief executive will be empowered to drive strategy implementation, operational delivery and cultural change. To reinforce the focus on delivering the Group’s strategy and priorities, management will accelerate the existing programmes of standardising systems and processes and establishing global businesses and global operating models’.

WHO DRIVES STRATEGY?

Key aspects of this job description raise more questions than they answer. Van der Veer is to drive strategy implementation, but just who devises the strategy? The second sentence implies that a strategy and priorities already exist. Were these threshed out by the previous twin boards of directors? Is strategy now in the hands of the newly unified board? If so, does anybody believe that a huge committee of fifteen people, ten of them non-executive, can ever shape a business strategy, or do more than merely rubber-stamp somebody else’s proposals?

The true strategic power must surely lie in the hands of the executive committee headed by van der Veer and consisting of four top managers: the chief financial officer and three barons (or rather two barons and a baroness) who divide the operating interests between them. This condensed version of the now abolished ‘committee of managing directors’ has similar faults.

Its three baronial members will be largely preoccupied with the many operational concerns of impossibly wide areas of global responsibility. That fact of life must affect van der Veer himself, who isn’t likely to have much time left over for the amorphous business of ‘driving cultural change’.

That’s been a hobby of top Shell executives for a long time - dating right back to the early Sixties mentioned earlier. This culture lust is by no means confined to Shell. But whenever chief executives mention cultural change, reach for your gun. Nobody knows what it means; nobody knows how to achieve it; and nobody knows how to measure its results. What you really want is to change people’s behaviour, not culture. Then you might not find one of the world’s oldest and often most successful multinationals falling so far behind - only getting round to setting up ‘global businesses’ and establishing ‘global operating models’ in late 2004.

As for standardisation of systems and processes, I was involved several years ago in a massive programme to provide a worldwide IT platform for the group. My role was to help train trainers, lecturing to those
Who would go forth to embed the new systems in the minds and practices of Shell people. Whether or not this would-be office revolution was concluded as planned, it must have left large gaps behind. Otherwise, why is standardisation so prominently featured on the late-2004 reform menu?

ETERNAL GIVEAWAY

That’s the eternal giveaway - when new policies are declared and implementation decreed, only for the same bad practices to survive after many years and immense numbers of man hours. Peter M. Senge of MIT never wrote truer words than these: ‘however hard you push, the system pushes back harder’. During John Akers’ long and losing struggle to reform IBM, he once got ‘goddam mad’ and declared that ‘Everyone is too comfortable when the business is in crisis’. That’s when the management inflexion point is passed - when the intensity of the crisis is hidden from people by the comfortable corporate ways and the familiar system.

How can people be made more uncomfortable? There is no substitute for rigorous efforts to unearth the truth telling what those who work for and do business with your company truly feel and think about its goods, services, people and performance. That truth, though, only starts to add value when converted into action plans which aim at correcting the negatives revealed (they will be abundant) while exploiting and enhancing the (invariably fewer) positives.

Action plans, as the words say, demand action. So each plan must be clearly allocated to responsible people with whom a tight, tough timetable is agreed and whose progress is efficiently monitored. The chief monitor is the CEO. But the beginning of wisdom is to abandon the blind faith that he or she can do it all.

Strategic Thinking

2008-11-10T20:47:00.000+07:00

A fat man and a thin man are running a race. For reasons which will become obvious later, we shall change from a ‘race’ to ‘running after the girls’. The thin man will come out ahead in most cases - unless the thinness of the thin man is due to illness or starvation! Let us look at some different thought approaches to this situation.

CATEGORY APPROACH

Here we put the fat man into the appropriate ‘fat man’ category. We then know that fat men do not run very fast. This is the approach adopted by psychologists, psychiatrists and business executives in general. Once we can ‘box’ the situation, we know the expected behaviour. If it is this type of situation, then we know, from experience, how the situation will develop.

The whole of our ‘thinking software’, as developed by the GG3 (Greek Gang of 3) is about identifying the standard situations and thus knowing all about them. A doctor does this all the time. The doctor diagnoses the illness. Once the diagnosis has been made, the probable course of the illness is known. The possible complications are known.

Most important of all, the standard treatment is known. Identifying the category immediately indicates the required action. While this may be very useful in predicting the outcome of the competition between the thin and the fat man, it does not help the fat man at all.

THE GENES APPROACH

This is even more fundamental than the category approach. Here we say that the fat man has ‘fat man genes’. There is nothing he can do about it. He will always be fat, because that is the way his metabolism works. So he had better adjust to the situation and stop trying to compete with thin men.

While this approach may seem rather negative, it also seems practical. Why attempt the impossible? Be pragmatic. Do what can be done. Assess the actual capabilities of your organisation and yourself, and then play to those capabilities.

This can rather easily translate into: ‘be content with the existing situation and do not strive to change it’.

The result is complacency. Many organisations have this strategy, even though they would rarely admit it: ‘You cannot change your genes - so do not waste your time trying.’

THE ANALYSIS APPROACH

This would probably be the most common, because it arises from the way in which we are taught thinking at school, at university, in business schools etc. We analyse the situation: the fat man cannot run fast because he is fat.

We now seek to put things right. We analyse further. Why is this man fat? We refuse to accept the passivity of the ‘gene approach’. We suspect that the man is eating too much. So, based on our analysis, we take action to put things right. We put the man on a strict diet. The hope is that the fat man will indeed lose weight and will then compete with the thin man.

Analyse the situation. Find the cause. Remove the cause. You have now put things right and solved the problem. This approach works quite often. At this point we may believe that we have covered all the approaches. But we have not. The best approach is still
to come.

THE BICYCLE APPROACH

We provide the fat man with a bicycle, and he will now surely outdistance the thin man. At this point we can see why the ‘race’ metaphor would not have applied, because the rules of the race would have precluded a bicycle. The approach is not that of analysis, but the approach of ‘designing the way forward’. Here is the situation. How do we design a way forward to reach the values that we want? Design is very different from analysis.

DESIGN AND ANALYSIS

When Greek thinking was re-introduced into Europe at the Renaissance, schools and universities were largely run by the Church. The Church had a great need for the ‘truth’. This was needed to prove heretics wrong. Education became truth-obsessed. Analysis is part of the search for the truth. What are the elements here? How is this made up? What is the underlying truth?

We believed, and still believe, that if you have the truth, then action is easy. You can have the truth about the present and the past, but you cannot have the truth about the future. Design is about the future. Analysis is about the past.

You can never have the truth about something which is not yet there and will not be there until you have designed it. As a result ‘design’ has never been a part of formal education. Education is about the way things are and about the ‘truth’. Of course, there are certain fields like architecture which are all about design - even though they are too often taught as the ‘analysis of different styles’. But, in general, design is not adequately taught.

PRACTICAL IMPORTANCE

Most people working on human thinking set out to analyse the different stages of thinking. They then set out to teach these stages. But description does not provide an operational tool. The same people seek to analyse why someone thinks in a certain way. They then seek to correct any obvious faults. This is the traditional analysis approach. So what is the ‘design’ approach?

In the ‘design’ approach we design frameworks and structures which people can learn and use deliberately. So the Six Thinking Hats is a designed structure that can be learned and used. It is so practical and simple to use that it is in fact used by four-year-olds, by senior executives and by top economists. It is a far better way of exploring a subject than the absurdity of argument.

• A major corporation in Finland used to spend thirty days on its multi-national project discussions. Using the parallel thinking of the Six Hats, the discussions now take only two days.

• MDS, a company in Canada, did a careful costing and showed that using the Six Hats saved $20 million in the first year.

Another example of a ‘designed’ framework is the CoRT thinking tools which bring about an expanded perception. The Hungerford Guidance Centre in London takes youngsters who are too violent to be taught in normal schools. When David Lane was the principal, he started teaching these thinking tools to the youngsters. He has now done a 20-year follow-up, which has shown that the rate of crime, measured by convictions, is far lower in the group taught thinking than in the group not so taught. This is a remarkably powerful effect. Sadly, most people in education – and business - have no idea that designed thinking tools can make a huge difference.

DESIGN

Design means putting together what we have in order to deliver a value that we want. In the beginning every business was a design. Later, maintenance and problem solving take over, and the design element disappears.

Business Management

2008-11-10T20:43:00.002+07:00

In an increasingly complex world society, the advancing complexity of business management is inevitable. It’s been visible for at least four decades, and no doubt will continue indefinitely. You can follow one cause (and effect) in the changing preoccupations of the largest companies. In the mid-Sixties their concerns were primarily internal – but the outside world was about to assert itself.

Before that sea-change, the world’s major markets were astonishingly stable. The giant companies set the tone and managed the economy. They were by and large production-led, paying lip-service to marketing orientation, but actually churning out goods and services as they (and not the customers) saw fit. Their output featured fairly continuous improvements, but no great attention to cost. Markets were served on a take-it-or-leave it basis; but mostly customers had to take it, for lack of any alternative to the big brands.

CHALLENGED MODELS

Today’s successor companies have no such luxury. Markets and their exploitation have evolved into new, fluctuating patterns that challenge both the business models and the marketing means. To take just one factor, the internet is continuing to revolutionise the entire customer process from information to after-sales service. Very few companies have fully mastered this new chain of communication and execution. But what might be called the Dell model, after one of the very best users, is the tidal wave of the future.

Among the myriad consequences, process change has become much faster. Websites can be changed far more rapidly than factory layouts - but the latter reforms should also have been speeded up by the new technology. Grasping its implications and potential is plainly possible: witness the achievements of the vendors of high-tech itself. Intel, Apple, Microsoft and the above-mentioned Dell have achieved speeds of effective response that traditional management modes could never match, but which are now badly needed.

The high-tech tools, however, still must be applied to issues that are neither technical nor new. Management still hinges on correct analysis of situations, correct decisions on how to turn these situations to optimum advantage, correct execution of the decisions, correct response to feedback as results in the real world flow in. And then you repeat the process. ‘Analyse, Decide, Execute, Feedback, Again’ (ADEFA) is the management mantra. How would you apply it to these five scenarios, picked by Fortune as among ten of the toughest challenges around today?

1. Your banking business needs greater organic growth, but must simultaneously cope with the damage done to its reputation by scandal and corruption: plus the departure of many of its experienced managers.

2. Your soft drinks business, long a wholly reliable source of growth and profits, has run out of the former. How can you replace 85% of turnover with a more powerful driving force?

3. As a fashion retailer, your offerings are looking tired. Both managers and customers are deserting you, and the need is to match the brand strength with better market penetration.

4. The company sells pharmaceuticals, but one of its big sellers has had to be withdrawn because of lethal side-effects. Just when you need a new blockbuster, the shelves look alarmingly empty.

5. You have a quasi-monopoly in the world’s leading technology. But almost every one of your markets is under threat from newcomers and long-standing competitors alike. How can you defend your position?

SWOT ANALYSIS

The five companies are Citigroup, Coca-Cola, Gap, Merck and Microsoft - five of the most successful businesses the world has ever seen. Is there any common denominator that explains their very similar dilemmas? One is very clear: the difficulties have developed over a period. At any point, SWOT analysis would have shown that their Strengths had been weakening, relatively speaking, while their Weaknesses were become more serious. Their Opportunities required new entrepreneurial drive, and the Threats were real and potentially lethal.

So when did you last conduct a SWOT analysis, either on the whole business or the section in which you manage? It’s not a fashionable piece of management technology. But its disregard can be deadly. Another article in the same issue of Fortune shows in a brilliant study of General Motors what happens to a company whose Strengths are exaggerated, whose Weaknesses are ignored as Opportunities are missed, and whose Threats are brushed aside.

In all five companies, as at GM, the supreme tendency was to forget the bad news and concentrate on the good. The same factor has bedevilled the vicious three years of war in Iraq. Any planning for the occupation was ruled unnecessary because the Iraqis would be so thrilled to be occupied and so grateful for US ‘reconstruction’ of the country. The actual, awful experience was likewise wished away by the occupiers because it contradicted the basic assumptions on which they had gone to war.

Similarly, GM’s top management cannot face up to the all-too real prospect of bankruptcy. In their misguided eyes, the car giant is still the greatest manufacturer in the world. Nor will you find many at Coke ready to admit that the business has run out of steam: that the largely financial reforms instituted by Roberto Goizueta have exhausted their once-for-all magic; that the great CEO’s achievements only put off the evil day when lack of diversification and innovation would come home to roost.

THIRD CEO SINCE 1992

The present CEO, Neville Isdell, is the third since 1992, which is both a bad sign and an evil in itself. Launching hundreds of new products is not likely to be any more effective than the rapid-fire changes of CEO. These stem from the second key cause of large company failure: excessive faith in the ability of one high-and-mighty boss to design and implement the ADEFA cycle. Even Goizueta missed out (in diversifying into Hollywood and bombing with a deeply unloved effort to replace the much loved traditional Coke formula).

Any solution to Coke’s huge problems will complicate the management process. Top down rule by the CEO is simpler, but simply inappropriate in modern markets. Study P&G, widely hailed for having escaped from a bad case of Big Company Blues. The escape rested on a new innovation model - ‘Connect and Develop’. P&G would forget its old reliance on internal innovation and seek new ideas from outside the company’s doors.

The search was based on:

(1) identifying the Top Ten consumer needs

(2) identifying adjacencies – ‘new products or concepts that can help us to take advantage of existing brand equity’

(3) ‘technology game boards’, used when you need answers to key questions:

• Which of our key technologies do we want to strengthen?

• Which technologies do we want to acquire to help us better compete with rivals?

• Of those technologies which we already own, which do we want to licence, sell or co-develop further?’

The answers to such questions help to direct the networking with proprietary networks which involve ‘technology entrepreneurs and suppliers’, and the ‘open networks’ which connect P&G with hundreds of thousands of experts. I particularly like ‘Your Encore’, whose participants are 800 high-performing retired scientists and engineers. Tapping such knowledge makes every kind of sense. The innovatory cycle of Discover, Evaluate, Launch and Co-create works as well with outside talent as with insiders.

Using outsiders does, of course, dissipate the control traditionally exercised by the corporate centre. P&G does indeed have a vice president for innovation and knowledge who has day-to-day accountability for connect-and-develop. But his role is that of overseeing initiatives which he cannot ‘manage’ in the traditional way. The CEO, A. G. Lafley, set the new approach going and named a broad goal - to acquire half of P&G’s innovations from outside the company. By definition, that radically changed the way P&G managed itself.

RADICAL RESULTS

In turn, this radically changed the results. ‘Our R&D productivity has increased by nearly 60%. Our innovation success rate has more than doubled, while the cost of innovation has fallen. R&D investment as a percentage of sales is down from 4.8% in 2000 to 3.4% today’. The essential point is that such success would have been utterly impossible without a revolution in ‘the way we do things round here’, and without a surrender of direct power by Lafley and his cohorts. Responsibility and authority are not affected. But involvement is simply redefined.

The following words ring very true: ‘Leadership is not defined by the exercise of power but by the capacity to increase the sense of power among those who are led. The most essential work of the leader is to create more leaders’. There’s only one trouble with this excellent statement. It was published by one Mary Follett in 1924.

Over all the intervening decades, management hasn’t caught up with her wisdom. Follett’s book was titled Creative Business - and innovative creativity, as at P&G, is where new approaches to management are most required.

The entrepreneur is essentially a creative innovator. In a recent blog, I recounted the nine attributes of the entrepreneur as identified in the HBR at end-1979. They convert into nine questions. Do you have?...

• A high level of drive and energy

• Enough self-confidence to take carefully calculated, moderate risks

• A clear idea of money as a way of keeping score, and as a means of generating more money still

• The ability to get other people to work with you and for you productively

• High but realistic, achievable goals

• Belief that you can control your own destiny

• Readiness to learn from your own mistakes and failures

• A long-term vision of the future of your business

• Intense competitive urge, with self-imposed standards.

If you haven’t answered with nine resounding shouts of Yes, don’t despair. As I wrote in the blog, these attributes are not immutable elements of personality.

Every one of the nine can be developed, if you are prepared to confront your shortcomings and then to work to change your behaviour. These are basics of management and leadership alike. However, there’s something missing - the combination of marketing and innovation that creates a great customer franchise.

CUSTOMER PROPOSITION

My blog describes how I spotted this Wow! Factor when writing about nine great entrepreneurs who each exemplified one of the nine attributes in particular(although they actually were proficient at them all).

The story was the same whether it was Miguel Torres in wine, Bill Hewlett and Dave Packard in electronics, William Morris in cars, Gottlieb Duttweiler in cut-price groceries, Marcel Dassault in aircraft, Akio Morita of Sony in consumer electronics, Camillo Olivetti in office machinery, Ruben Rausing in packaging, or Robert Bosch in auto components. Each of them had grasped a great new idea which, with the aid of excellent execution, had metamorphosed into an irresistible customer proposition.

Each man had developed an irrefutable answer to the fundamental question: Why should the customer buy from me, and not from anyone else? As the P&G story shows, getting the right answer, and the answer right, is much more complicated in the complex world I described earlier. But when Hewlett said ‘If I have to tell a guy something, I consider myself a failure as a manager’, he was articulating a philosophy that Mary Follett would have applauded, and that Lafley seems to be following at P&G.

The complex challenges won’t be mastered without innovation in products and processes (including the processes of management itself). The leader’s role is to develop and encourage as many sources of ideas as possible, within the business, outside the business, and in combinations of external and internal. You deploy the attributes of the entrepreneur to break complexity down into manageable parts set in a frame of basic disciplines - above all, self-discipline. And you win.

Transport in Britain during the Industrial Revolution

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Transport in Britain

Main article: Transport during the Industrial Revolution

At the beginning of the Industrial Revolution, inland transport was by navigable rivers and roads, with coastal vessels employed to move heavy goods by sea. Railways or wagon ways were used for conveying coal to rivers for further shipment, but canals had not yet been constructed. Animals supplied all of the motive power on land, with sails providing the motive power on the sea.

The Industrial Revolution improved Britain's transport infrastructure with a turnpike road network, a canal, and waterway network, and a railway network. Raw materials and finished products could be moved more quickly and cheaply than before. Improved transportation also allowed new ideas to spread quickly.

Coastal sail

Sailing vessels had long been used for moving goods round the British coast. The trade transporting coal to London from Newcastle had begun in mediaeval times. The major international seaports such as London, Bristol, and Liverpool, were the means by which raw materials such as cotton might be imported and finished goods exported. Transporting goods onwards within Britain by sea was common during the whole of the Industrial Revolution and only fell away with the growth of the railways at the end of the period.

Navigable rivers

See also: List of rivers of United Kingdom

All the major rivers of the United Kingdom were navigable during the Industrial Revolution. Some were anciently navigable, notably the Severn, Thames, and Trent. Some were improved, or had navigation extended upstream, but usually in the period before the Industrial Revolution, rather than during it.

The Severn, in particular, was used for the movement of goods to the Midlands which had been imported into Bristol from abroad, and for the export of goods from centres of production in Shropshire (such as iron goods from Coalbrookdale) and the Black Country. Transport was by way of trows—small sailing vessels which could pass the various shallows and bridges in the river. The trows could navigate the Bristol Channel to the South Wales ports and Somerset ports, such as Bridgwater and even as far as France.

Canals

Main article: History of the British canal system

Pontcysyllte Aqueduct, Llangollen, Wales

Canals began to be built in the late eighteenth century to link the major manufacturing centres in the Midlands and north with seaports and with London, at that time itself the largest manufacturing centre in the country. Canals were the first technology to allow bulk materials to be easily transported across country. A single canal horse could pull a load dozens of times larger than a cart at a faster pace. By the 1820s, a national network was in existence. Canal construction served as a model for the organisation and methods later used to construct the railways. They were eventually largely superseded as profitable commercial enterprises by the spread of the railways from the 1840s on.

Britain's canal network, together with its surviving mill buildings, is one of the most enduring features of the early Industrial Revolution to be seen in Britain.

Roads

The Iron Bridge (1781)

The first large bridge made of cast iron

Much of the original British road system was poorly maintained by thousands of local parishes, but from the 1720s (and occasionally earlier) turnpike trusts were set up to charge tolls and maintain some roads. Increasing numbers of main roads were turnpiked from the 1750s to the extent that almost every main road in England and Wales was the responsibility of some turnpike trust. New engineered roads were built by John Metcalf, Thomas Telford and John Macadam. The major turnpikes radiated from London and were the means by which the Royal Mail was able to reach the rest of the country. Heavy goods transport on these roads was by means of slow, broad wheeled, carts hauled by teams of horses. Lighter goods were conveyed by smaller carts or by teams of pack horse. Stage coaches carried the rich, and the less wealthy could pay to ride on carriers carts.

Railways

Main article: History of rail transport in Great Britain

A replica of the early locomotive Sans Pareil at a 1980 restaging of the Rainhill Trials of 1829

Wagonways for moving coal in the mining areas had started in the 17th century and were often associated with canal or river systems for the further movement of coal. These were all horse drawn or relied on gravity, with a stationary steam engine to haul the wagons back to the top of the incline. The first applications of the steam locomotive were on wagon or plate ways (as they were then often called from the cast iron plates used). Horse-drawn public railways did not begin until the early years of the 19th century. Steam-hauled public railways began with the Stockton and Darlington Railway in 1825 and the Liverpool and Manchester Railway in 1830. Construction of major railways connecting the larger cities and towns began in the 1830s but only gained momentum at the very end of the first Industrial Revolution.

After many of the workers had completed the railways, they did not return to their rural lifestyles but instead remained in the cities, providing additional workers for the factories.

Railways helped Britain's trade enormously, providing a quick and easy way of transport.

Social effects

In terms of social structure, the Industrial Revolution witnessed the triumph of a middle class of industrialists and businessmen over a landed class of nobility and gentry.

Ordinary working people found increased opportunities for employment in the new mills and factories, but these were often under strict working conditions with long hours of labour dominated by a pace set by machines. However, harsh working conditions were prevalent long before the Industrial Revolution took place. Pre-industrial society was very static and often cruel—child labour, dirty living conditions and long working hours were just as prevalent before the Industrial Revolution.^[32]

Factories and urbanisation

Manchester, England ("Cottonopolis"), pictured in 1840, showing the mass of factory chimneys

Industrialisation led to the creation of the factory. Arguably the first was John Lombe's water-powered silk mill at Derby, operational by 1721. However, the rise of the factory came somewhat later when cotton spinning was mechanised.

The factory system was largely responsible for the rise of the modern city, as large numbers of workers migrated into the cities in search of employment in the factories. Nowhere was this better illustrated than the mills and associated industries of Manchester, nicknamed "Cottonopolis", and arguably the world's first industrial city. For much of the 19th century, production was done in small mills, which were typically water-powered and built to serve local needs. Later each factory would have its own steam engine and a chimney to give an efficient draft through its boiler.

The transition to industrialisation was not without difficulty. For example, a group of English workers known as Luddites formed to protest against industrialisation and sometimes sabotaged factories.

In other industries the transition to factory production was not so divisive. Some industrialists themselves tried to improve factory and living conditions for their workers. One of the earliest such reformers was Robert Owen, known for his pioneering efforts in improving conditions for workers at the New Lanark mills, and often regarded as one of the key thinkers of the early socialist movement.

By 1746, an integrated brass mill was working at Warmley near Bristol. Raw material went in at one end, was smelted into brass and was turned into pans, pins, wire, and other goods. Housing was provided for workers on site. Josiah Wedgwood and Matthew Boulton were other prominent early industrialists, who employed the factory system.

Child labour

A young "drawer" pulling a coal tub up a mine shaft

The Industrial Revolution led to a population increase, but the chance of surviving childhood did not improve throughout the industrial revolution (although infant mortality rates were reduced markedly).^[33]^[34] There was still limited opportunity for education, and children were expected to work. Employers could pay a child less than an adult even though their productivity was comparable; there was no need for strength to operate an industrial machine, and since the industrial system was completely new there were no experienced adult labourers. This made child labour the labour of choice for manufacturing in the early phases of the Industrial Revolution between the 18th and 19th centuries.

Child labour had existed before the Industrial Revolution, but with the increase in population and education it became more visible. Before the passing of laws protecting children, many were forced to work in terrible conditions for much lower pay than their elders.^[35]

Reports were written detailing some of the abuses, particularly in the coal mines^[36] and textile factories^[37] and these helped to popularise the children's plight. The public outcry, especially among the upper and middle classes, helped stir change in the young workers' welfare.

Politicians and the government tried to limit child labour by law, but factory owners resisted; some felt that they were aiding the poor by giving their children money to buy food to avoid starvation, and others simply welcomed the cheap labour. In 1833 and 1844, the first general laws against child labour, the Factory Acts, were passed in England: Children younger than nine were not allowed to work, children were not permitted to work at night, and the work day of youth under the age of 18 was limited to twelve hours. Factory inspectors supervised the execution of the law. About ten years later, the employment of children and women in mining was forbidden. These laws decreased the number of child labourers; however, child labour remained in Europe up to the 20th century.^{[citation needed]}

Housing

Over London by Rail Gustave Doré c. 1870. Shows the densely populated and polluted environments created in the new industrial cities

Living conditions during the Industrial Revolution varied from the splendour of the homes of the owners to the squalor of the lives of the workers. Cliffe Castle, Keighley, is a good example of how the newly rich chose to live. This is a large home modelled loosely on a castle with towers and garden walls. The home is very large and was surrounded by a massive garden, the Cliffe Castle is now open to the public as a museum.

Poor people lived in very small houses in cramped streets. These homes would share toilet facilities, have open sewers and would be at risk of damp. Disease was spread through a contaminated water supply. Conditions did improve during the 19th century as public health acts were introduced covering things such as sewage, hygiene and making some boundaries upon the construction of homes. Not everybody lived in homes like these. The Industrial Revolution created a larger middle class of professionals such as lawyers and doctors. The conditions for the poor improved over the course of the 19th century because of government and local plans which led to cities becoming cleaner places, but life had not been easy for the poor before industrialisation. However, as a result of the Revolution, huge numbers of the working class died due to diseases spreading through the cramped living conditions. Chest diseases from the mines, cholera from polluted water and typhoid were also extremely common, as was smallpox. Accidents in factories with child and female workers were regular. Dickens' novels illustrate this; even some government officials were horrified by what they saw^{[citation needed]}. Strikes and riots by workers were also relatively common.

Causes of the Industrial Revolution

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Causes of the Industrial Revolution

All across England, the recent turn of the century has gone largely unnoticed. The vast majority of the country's population lives in the countryside, completely isolated or in small communities like Bedlington. The principal trades are growing grain or raising sheep for wool, both of which require a lot of manual labour. Farming tools are common, but machines are not; animals are raised, but not used extensively for cultivating the land. Life in the countryside depends on nature in many ways: good weather in the summer means a good crop, just as a long winter can mean hunger and discomfort. People rise with the sun and go to bed when it gets dark.

The Cottage Industry

At the dawn of the eighteenth century, farming was the primary livelihood in England, with at least 75% of the population making its living off the land. (Kreis) This meant that many English families had very little to do during the winter months except sit around and make careful use of the food and other supplies that they stored up during the rest of the year. If the harvest had been smaller than usual or if any other unexpected losses had come about, the winter could be a very long, cold, and hungry one. The cottage industry was developed to take advantage of the farmers' free time and use it to produce quality textiles for a reasonable price.

To begin the process, a cloth merchant from the city needed enough money to travel into the countryside and purchase a load of wool from a sheep farm. He would then distribute the raw materials among several farming households to be made into cloth (Cottage Industry). The preparation of the wool was a task in which the whole family took part. Women and girls first washed the wool to remove the dirt and natural oils and then dyed it as desired. They also carded the wool, which meant combing it between two pads of nails until the fibres were all pointed in the same direction. Next, the wool was spun into thread using a spinning wheel and wound onto a bobbin (this was often the job of an unmarried daughter; hence, the word "spinster" is still used today to describe an unmarried woman). The actual weaving of the thread into cloth was done using a loom operated by hand and foot; it was physically demanding work, and was therefore the man's job (The Textile Industry). The task of transforming raw wool into cloth could be done entirely by one household, or split between two or more (ie. spinning in one home, weaving in another). The merchant would return at regular intervals over the season to pick up the finished cloth, which he then brought back to the city to sell or export, and to drop of a new load of wool to be processed.

The cottage industry proved to be profitable for the urban merchants, since they could sell the finished cloth for far more than they paid the famers to make it. The cottage industry helped to prepare the country for the Industrial Revolution by boosting the English economy through the increase of trade that occured as the country became well-known overseas for its high-quality and low-cost exports. Previously, tradesmen had done all the manufacturing themselves, so the idea of subcontracting was new and appealing. The cottage industry was also a good source of auxiliary funds for the rural people. However, many farming families came to depend on the enterprise; thus, when industrialization and the Agricultural Revolution reduced the need for farm workers, many were forced to leave their homes and move to the city.

Enclosure

Although serfdom in England had disappeared by the end of the seventeenth century, most farms were established on "common land" which local farmers typically leased from a wealthy proprietor who owned large areas of land in a district. There were, however, rules which prevented a landlord from expelling a tenant without a reasonable cause, and so farms could be passed down through a peasant family for generations. Traditionally, the land was divided into long narrow strips which grew smaller as the land was split into more parts for each succeeding generation. When new methods of agriculture began to be developed, it became clear that they would be more efficient with larger plots of land. Enclosure is defined as "the process of inclosing (with fences, ditches, hedges, or other barriers) land formerly subject to common rights" (Inclosure). This meant that the land that peasants had been cultivating on their own was returned to the control of the landowners and redistributed. Scavenging on someone else's land became illegal, and small farmers (who had no political influence and were generally given the poorer plots) often lost access to wood and water (Enclosure Acts). Although the process was not standardized until the General Enclosure Act of 1801 (Inclosure), many private acts had been passed since the 1750's and enclosure had been common for well over a century before. The urbanization of the English population was largely fueled by dispossessed peasants who moved to the city in the hopes of finding new work (Kreis).

Why was Britain First?

Why was Britain the first country to industrialize? This change, which occurred between 1750 and 1830, happened because
conditions were perfect in Britain for the Industrial Revolution. Having used
wood for heat instead of coal, Britain was left with large deposits of coal
remaining to fuel the new ideas. Any raw supplies Britain itself did not
have could be provided by its many colonies. These colonies also provided
captive markets for the abundance of new goods provided by the industrial
revolution (Gernhard). The product was cotton. Cotton was a simple, cheap,
and easily made product that everyone could use. So, between 1796 and 1830
cotton production tripled (Haberman 48). The new production was easily
transported, because there remained an old commercial fleet (Gernhard).

The Product and Market were the simple requirements, and many countries had them.
What set Britain apart from the others, however, were three unique social
elements: education, "modern" work attitudes, and a "modern" government.
Great Britain had a larger educated workforce to run the machines and create
manuals. The Enlightenment not only meant a larger educated population but
also more modern views on work. The population in Great Britain was ready to
move out of the country and to the city to work. Britain also had the large
middle class and flexible mercantile class necessary. English society,
unlike many others, was not opposed to "new money," and as such was eager to
accept the new wealthy and their new ideas (Industrial Revolution: The Industrial Revolution in Great Britain).
Lastly, Britain's government, a long-time constitutional monarchy, was just
right for the situation. The government was flexible enough to support the
new system and to a certain degree accepted Adam Smith's capitalistic
"invisible hand." The Dutch were the forerunners financially, but with the
establishment of the Bank of England in 1694, their supremacy was
challenged (Industrial Revolution: The Industrial Revolution in Great Britain). The government and the bank provided
incredible backing to new ideas, which soon turned into new wealth (Haberman 49).

Many of these elements were achieved because of the insularity of England.
This meant that the industrial development was rarely interrupted by war (Gernhard).
This combination of necessary elements led to the early
mechanization of Britain. Between 1838 and 1850 Britain's rail lines went
from 540 to 6621 track kilometers; rail lines were considered the best way to monitor a
country's industrialization (Haberman 49). The elements needed or preferred for the
Industrial Revolution can be summarized as follows:

modern work attitudes
education
a product
transportation for the product
large market
"modern" government
money

Financial Situations

What were the financial situations necessary to support the Industrial Revolution?

A new banking system

In Britain, expansion had led to new "private banking," a new money economy,
and trading organizations such as the Hanseatic League. Modern credit
facilities also appeared, such as the state bank, the bourse, the promissory
note, and other new media of exchange. This created economic
stimulus which in turn gave the people more money to spend (Commercial Revolution).
A stable environment

The steady economic systems present under the new national
monarchies created a reliable atmosphere for the new Revolution. The most
notable of these governments were in Portugal, Spain, the Netherlands, and
England (Commercial Revolution).
A large amount of capital for investment

From the New World had come gold and silver, which in less than a century
more than doubled European prices and stimulated economic activity, which in
turn gave the wealthy more money to spend on new ideas (Commercial Revolution).
Capitalism

The capitalism of Adam Smith, or the "invisible hand," was another
important new economic system and gave the people a desire to further the
industrialization and gain money. The competition created a boom
in economic expansion (Commercial Revolution).

The Origins of the Industrial Revolution in England

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The political and moral advantages of this country,
as a seat of manufactures, are not less remarkable than its physical
advantages. The arts are the daughters of peace and liberty. In no
country have these blessings been enjoyed in so high degree, or for so
long a continuance, as in England. Under the reign of of just laws,
personal liberty and property have been secure; mercantile enterprise
has been allowed to reap its reward; capital has accumulated in safety;
the workman has "gone forth to his work and to his labour until the
evening;" and, thus protected and favoured, the manufacturing
prosperity of the country has struck its roots deep, and spread forth
its branches to the ends of the earth. [Edward Baines, The
History of the Cotton Manufacture in Great Britain, 1835]

In the eighteenth century, a series of inventions
transformed the manufacture of cotton in England and gave rise to a new
mode or production -- the factory system. During these years, other
branches of industry effected comparable advances, and all these
together, mutually reinforcing one another, made possible further gains
on an ever-widening front. The abundance and variety of these
innovations almost defy compilation, but they may be subsumed under
three principles: the substitution of machines -- rapid, regular,
precise, tireless -- for human skill and effort; the substitution of
inanimate for animate sources of power, in particular, the introduction
of engines for converting heat into work, thereby opening to man a new
and almost unlimited supply of energy; the use of new and far more
abundant raw materials, in particular, the substitution of mineral for
vegetable or animal substances. These improvements constitute the
Industrial Revolution. [David Landes, The Unbound Prometheus,
1969]

The Industrial Revolution of the late 18th and early 19th
centuries was revolutionary because it changed -- revolutionized -- the
productive capacity of England, Europe and United States. But the
revolution was something more than just new machines, smoke-belching
factories, increased productivity and an increased standard of living. It
was a revolution which transformed English, European, and American society
down to its very roots. Like the Reformation or the French Revolution, no
one was left unaffected. Everyone was touched in one way or another --
peasant and noble, parent and child, artisan and captain of industry. The Industrial
Revolution serves as a key to the origins of modern Western society. As
Harold Perkin has observed, "the Industrial Revolution was no mere
sequence of changes in industrial techniques and production, but a social
revolution with social causes as well as profound social effects" [The
Origins of Modern English Society, 1780-1880 (1969)].

The
INDUSTRIAL REVOLUTION can be said to have made the
European working-class. It made the European middle-class as well. In the
wake of the Revolution, new social relationships appeared. As Ben Franklin
once said, "time is money." Man no longer treated men as men,
but as a commodity which could be bought and sold on the open market. This
"commodification" of man is what bothered Karl Marx -- his
solution was to transcend the profit motive by social revolution (see Lecture
24).

There is no denying the fact that the Industrial
Revolution began in England sometime after the middle of the 18th century.
England was the "First Industrial Nation." As one economic historian commented in the 1960s, it was England which first executed
"the takeoff into self-sustained growth." And by 1850, England
had become an economic titan. Its goal was to supply two-thirds of the
globe with cotton spun, dyed, and woven in the industrial centers of
northern England. England proudly proclaimed itself to be the
"Workshop of the World," a position that country held until the
end of the 19th century when Germany, Japan and United States overtook it.

More than the greatest gains of the Renaissance, the
Reformation, Scientific Revolution or Enlightenment, the Industrial
Revolution implied that man now had not only the opportunity and the
knowledge but the physical means to completely subdue nature. No other
revolution in modern times can be said to have accomplished so much in so
little time. The Industrial Revolution attempted to effect man's mastery
over nature. This was an old vision, a vision with a history. In the 17th
century, the English statesman and "Father of Modern Science, Francis
Bacon (1561-1626), believed that natural philosophy
(what we call science) could be applied to the solution of practical problems, and so, the
idea of modern technology was born. For Bacon, the problem was this: how
could man enjoy perfect freedom if he had to constantly labor to supply
the necessities of existence? His answer was clear -- machines. These
labor saving devices would liberate mankind, they would save labor which
then could be utilized elsewhere. "Knowledge is power," said Bacon, and
scientific knowledge reveals power over nature.

The vision was all-important. It was optimistic and
progressive. Man was going somewhere, his life has direction. This vision
is part of the general attitude known as the idea of progress, that is,
that the history of human society is a history of progress, forever
forward, forever upward. This attitude is implicit throughout the
Enlightenment and was made reality during the French and Industrial
Revolutions. With relatively few exceptions, the philosophes of the 18th
century embraced this idea of man's progress with an intensity I think
unmatched in our own century. Human happiness, improved morality, an
increase in knowledge were now within man's reach. This was indeed the
message, the vision, of Adam Smith, Denis Diderot, Voltaire, Thomas
Jefferson and Ben Franklin (see Lecture 10).

"Tremble all ye oppressors of the world," wrote
Richard Price -- and tremble they did (see Lecture
14). The American and French
Revolutions, building on enlightened ideas, swept away enthusiasm,
tyranny, fanaticism, superstition, and oppressive and despotic
governments. "Sapere Aude!" exclaimed Kant -- Dare to
know!. With history and superstition literally swept
aside, man could not only understand man and society, man could now change
society for the better. These are all ideas, glorious, noble visions of
the future prospect of mankind. By the end of the 18th century, these
ideas became tangible. The vision was reality. Even Karl Marx understood
this when he wrote, "Philosophers have only interpreted the world in
various ways; the point, however, is to change it."

Engines and machines, the glorious products of science
began to revolutionize the idea of progress itself. If a simple machine
can do the work of twenty men in a quarter of the time formerly required,
then could
the New Jerusalem be far behind? When you view the Industrial Revolution
alongside the democratic revolutions of 1776 and 1789, we cannot help but
be struck by the optimism so generated. Heaven on Earth seemed reality and
no one was untouched by the prospects. But, as we will soon see, while the
Industrial Revolution brought its blessings, there was also much misery.
Revolutions, political or otherwise, are always mixed blessings. If we can
thank the Industrial Revolution for giving us fluoride, internal
combustion engines, and laser guided radial arm saws, we can also damn it
for the effect it has had on social relationships. We live in the legacy
of the Industrial Revolution, the legacy of the "cash nexus," as
the mid-19th century Scottish critic Thomas
Carlyle (1795-1881) put it, where the only connection between men is the one of money, profit and
gain.

The origins of the Industrial Revolution in England
are complex and varied and, like the French Revolution, the Industrial
Revolution is still a subject of a vast historical debate over origins,
developments, growth and end results. This debate has raged among
historians since at least 1884, when Arnold
Toynbee (1852-1883), an English historian
and social reformer, published the short book, Lectures
on the Industrial Revolution in England. Toynbee was in a fairly good position to assess the
revolution in industry -- England had, by the 1880s, endured more than a
century of industrialization.

Still, like any revolution, the Industrial Revolution
leaves us with many questions: was the revolution in industry simply an
issue of new machinery or mechanical innovation? did young boys and girls
work and live shoulder to shoulder for more than twelve hour a day? was
industrial capitalism nothing more than a clever system devised by clever
capitalists to exploit the labor of ignorant workers? was the revolution
in industry the product of conscious planning or did it appear
spontaneously? I can't answer all these questions in one lecture --
indeed, an entire course of study on the subject would perhaps get us no
closer to the answers to these important questions. However, we can make one
serious confession -- what the Industrial Revolution accomplished was
nothing less than a structural change in the economic organization of
English and European society. This is what made the Revolution
revolutionary. In other words, England, then the Continent and the United
States, witnessed a shift from a traditional, pre-modern, agrarian society
to that of an industrial economy based on capitalist methods, principles
and practices.

In general, the spread of industry across England was
sporadic. In other words, not every region of England was industrialized
at the same time. In some areas, the factory system spread quickly, in
others not at all. Such a development also applies to the steam engine --
one would think that once steam engines made their appearance that each
and every factory would have one. But this is clearly not the case. The
spread of industry, or machinery, or steam power, or the factory system
itself was erratic. I imagine the reason why we assume that
industrialization was a quick process is that we live live in an age of
rising expectations -- we expect change to occur rapidly and almost
without our direction. Late 20th century developments in technology are perhaps most
responsible for this attitude. We know that technology supplies a
constant stream of products that are "new and improved." We know
that the moment we bring home a top of the line computer that within six
months it will become not necessarily obsolete but "old."

Historians are now agreed that beginning in the 17th
century and continuing throughout the 18th century, England witnessed an
agricultural revolution. English (and Dutch) farmers were the most
productive farmers of the century and were continually adopting new
methods of farming and experimenting with new types of vegetables and
grains. They also learned a great deal about manure and other fertilizers.
In other words, many English farmers were treating farming as a science,
and all this interest eventually resulted in greater yields. Was the
English farmer more enterprising than his French counterpart? Perhaps, but
not by virtue of intelligence alone. English society was far more open
than French -- there were no labor obligations to the lord. The English
farmer could move about his locale or the country to sell his goods while
the French farmer was bound by direct and indirect taxes,
tariffs or other kinds of restrictions. In 1700, 80% of the population of
England earned its income from the land. A century later, that figure had
dropped to 40%.

The result of these developments taken together was a
period of high productivity and low food prices. And this, in turn, meant
that the typical English family did not have to spend almost everything it
earned on bread (as was the case in France before 1789), and instead could
purchase manufactured goods.

There are other assets that helped make England the
"first industrial nation." Unlike France, England had an
effective central bank and well-developed credit market. The English
government allowed the domestic economy to function with few restrictions and
encouraged both technological change and a free market. England also had a
labor surplus which, thanks to the enclosure movement, meant that there
was an adequate supply of workers for the burgeoning factory system.

England's agricultural revolution came as a result of
increased attention to fertilizers, the adoption of new crops and farming
technologies, and the enclosure movement. Jethro
Tull (1674-1741) invented a horse-drawn hoe as well as a mechanical
seeder which allowed seeds to be planted in orderly rows. A contemporary
of Tull, Charles
"Turnip" Townshend (1674-1738), stressed the value of
turnips and other field crops in a rotation system of planting rather than
letting the land lay fallow. Thomas William Coke (1752-1842) suggested the
utilization of field grasses and new fertilizers as well as greater
attention to estate management.

In order for these "high farmers" to make the
most efficient use of the land, they had to manage the fields as they saw
fit. This was, of course, impossible under the three field system which
had dominated English and European agriculture for centuries. Since
farmers, small and large, held their property in long strips, they had to
follow the same rules of cultivation. The local parish or village
determined what ought to be planted. In the end, the open-field system of
crop rotation was an obstacle to increased agricultural productivity. The
solution was to enclose the land, and this meant enclosing entire
villages. Landlords knew that the peasants would not give up their land
voluntarily, so they appealed by petition to Parliament, a difficult and
costly adventure at best. The first enclosure act was passed in 1710 but
was not enforced until the 1750s. In the ten years between 1750 and 1760,
more than 150 acts were passed and between 1800 and 1810, Parliament
passed more than 900 acts of enclosure. While enclosure ultimately
contributed to an increased agricultural surplus, necessary to feed a
population that would double in the 18th century, it also brought disaster
to the countryside. Peasant formers were dispossessed of their land and
were now forced to find work in the factories which began springing up in
towns and cities.

England faced increasing pressure to produce more
manufactured goods due to the 18th century population explosion --
England's population nearly doubled over the course of the century. And
the industry most important in the rise of England as an industrial nation
was cotton textiles. No other industry can be said to have advanced so far
so quickly. Although the putting-out system (cottage industry) was fairly
well-developed across the Continent, it was fully developed in England. A
merchant would deliver raw cotton at a household. The cotton would be
cleaned and then spun into yarn or thread. After a period of time, the
merchant would return, pick up the yarn and drop off more raw cotton. The
merchant would then take the spun yarn to another household where it was
woven into cloth. The system worked fairly well except under the growing pressure
of demand, the putting-out system could no longer keep up.

There was a constant shortage of thread so the industry
began to focus on ways to improve the spinning of cotton. The first
solution to this bottleneck appeared around 1765 when James
Hargreaves (c.1720-1778), a
carpenter by trade, invented his cotton-spinning jenny. At almost the same
time, Richard Arkwright
(1732-1792) invented another
kind of spinning device, the water frame. Thanks to these two innovations,
ten times as much cotton yarn had been manufactured in 1790 than had been
possible just twenty years earlier. Hargreaves' jenny was simple,
inexpensive and hand-operated. The jenny had between six and twenty-four
spindles mounted on a sliding carriage. The spinner (almost always a
woman) moved the carriage back and forth with one hand and turned a wheel
to supply power with the other. Of course, now that one bottleneck had
been relieved, another appeared -- the weaver (usually a man) could no
longer keep up with the supply of yarn. Arkwright's water frame was based
on a different principle. It acquired a capacity of several hundred
spindles and demanded more power -- water power. The water frame required
large, specialized mills employing hundreds of workers. The first
consequence of these developments was that cotton goods became much
cheaper and were bought by all social classes. Cotton is the miracle fiber
-- it is easy to clean, spin, weave and dye and is comfortable to wear.
Now millions of people who had worn nothing under their coarse clothes
could afford to wear cotton undergarments.

Although the spinning jenny and water frame managed to
increase the productive capacity of the cotton industry, the real
breakthrough came with developments in steam
power. Developed in England
by Thomas Savery (1698) and
Thomas Newcomen (1705), these early steam
engines were used to pump water from coal mines. In the 1760s, a Scottish
engineer, James Watt (1736-1819) created an engine that could pump water
three times as quickly as the Newcomen engine. In 1782, Watt developed a
rotary engine that could turn a shaft and drive machinery to power the
machines to spin and weave cotton cloth. Because Watt's engine was fired
by coal and not water, spinning factories could be located virtually
anywhere.

Steam power also promoted important changes in other
industries. The use of steam-driven bellows in blast furnaces helped
ironmakers switch over from charcoal (limited in quantity) to coke, which
is made from coal, in the smelting of pig iron. In the 1780s, Henry Cort
(1740-1800) developed the puddling furnace, which allowed pig iron to be refined in
turn with coke. Skilled ironworkers ("puddlers") could
"stir" molten pig iron in a large vat, raking off refined iron
for further processing. Cort also developed steam-powered rolling mills,
which were capable of producing finished iron in a variety of shapes and
forms.

Aided by revolutions in agriculture, transportation,
communications and technology, England was able to become the "first
industrial nation." This is a fact that historians have long
recognized. However, there were a few other less-tangible reasons which we
must consider. These are perhaps cultural reasons. Although the industrial
revolution was clearly an unplanned and spontaneous event, it
never would have been "made" had there not been men who wanted
such a thing to occur. There must have been men who saw opportunities not
only for advances in technology, but also the profits those advances might
create. Which brings us to one very crucial cultural attribute -- the
English, like the Dutch of the same period, were a very commercial people.
They saw little problem with making money, nor with taking their surplus
and reinvesting it. Whether this attribute has something to do with their "Protestant work ethic," as Max Weber put
it, or
with a specifically English trait is debatable, but the fact remains that
English entrepreneurs had a much wider scope of activities than did their
Continental counterparts at the same time.

| Table of Contents |

| The History Guide | |

Watt Steam Engine

2008-11-10T18:16:00.003+07:00

A late version of a Watt double-acting steam engine, the steam engine that propelled the Industrial Revolution in Britain and the world, located in the lobby of the Superior Technical School of Industrial Engineers of the UPM (Madrid).

The Watt steam engine was the first type of steam engine to make use of steam at a pressure just above atmospheric to drive the piston helped by a partial vacuum. Improving on the design of the 1712 Newcomen engine, the Watt steam engine, developed sporadically from 1763 to 1775, was the next great step in the development of the steam engine. Offering a dramatic increase in fuel efficiency, the new design replaced Newcomen engines in areas where coal was expensive, and then went on to be used in the place of most natural power sources such as wind and water. James Watt's design became synonymous with steam engines, due in no small part to his business partner, Matthew Boulton.

1 Introduction

2 Separate condenser

3 The Partnership of Matthew Boulton and James Watt

4 Later improvements

5 Preserved Watt engines

6 See also

7 References

8 External links

Introduction

In 1698, the English mechanical designer Thomas Savery invented a steam pumping appliance that drew water directly from a well by a vacuum, then sent it up to a higher level by steam pressure. The appliance was also proposed for draining mines, but limited pumping height made this impracticable. It also consumed an inordinate amount of fuel.

The model Newcomen engine upon which Watt experimented

The solution to draining deep mines was found by Thomas Newcomen who developed an "atmospheric" engine working only on the vacuum principle. It employed a cylinder containing a moveable piston connected by a chain to one end of a rocking beam that worked a mechanical lift pump from its opposite end. The top side of the power cylinder was open to the atmosphere, steam being introduced at top stroke to the underside of the piston then water sprayed in, condensing the steam and creating a vacuum; thus atmospheric pressure acting on the upper side of the piston drove it down.

It was both powerful and useful and for the first time water could be raised from a depth of over 150 feet. The first example from 1711 was able to replace a team of 500 horses that had been used to pump out the mine. In the next fifty years only a few small changes were made to the basic engine, seventy-five examples of which were at mines in Britain, France, Holland, Sweden and Russia.

The system brought great practical benefits, but still at the price of very high coal consumption as the water jet into the cylinder cooled the walls at each stroke; this meant that when the next charge of steam was introduced it would continue condensing until the cylinder approached working temperature once again.

Separate condenser

A Scottish instrument maker, James Watt, was given the job in 1763 of repairing a model Newcomen engine for the University of Glasgow, and noted how inefficient it was. In 1765, while wandering across Glasgow Green he conceived the idea of a separate condensing chamber for the steam engine. Watt's idea was to separate the condensation system from the cylinder, injecting the cooling water spray in a second cylinder, connected to the main one. When the piston had reached the top of the cylinder, the inlet valve was closed and the valve controlling the passage to the condenser was opened. External atmospheric pressure would then push the piston towards the condenser. Thus the condenser could be kept cold and under less than atmospheric pressure, while the cylinder remained hot.

Watt also realised that the new operating cycle might increase engine speed and the power produced; low pressure steam could now be substituted for atmospheric pressure. If the top of the cylinder was closed off, the steam could act upon the piston during the power stroke; the low steam pressure would not be sufficient to move it in normal circumstances, but it could if acting upon a vacuum.

The major components of a Watt pumping engine.

This led to the fully developed version of 1775 that actually went into production ^[1]. There was no spray, the condenser being immersed in a water tank and at each stroke the warm condensate was drawn off and sent up to a hot well by a vacuum pump which also helped to evacuate the steam from under the power cylinder. The still-warm condensate was recycled as feedwater for the boiler.

The Partnership of Matthew Boulton and James Watt

The separate condenser showed dramatic potential for improvements on the Newcomen engine but Watt was still discouraged by seemingly insurmountable problems before a marketable engine could be perfected. It was only after entering into partnership with Matthew Boulton that such became reality. Watt told Boulton about his ideas on improving the engine, and Boulton, an avid entrepreneur, agreed to fund development of a test engine at Soho, near Birmingham. At last Watt had access to facilities and the practical experience of craftsmen who were soon able to get the first engine working. As fully developed, it used about 75% less fuel than a similar Newcomen one.

In 1775, Watt designed two large engines: one for the Bloomfield Colliery at Tipton, completed in March 1776, and one for John Wilkinson's ironworks at Willey, Shropshire, which was at work the following month. A third engine, at Stratford-le-Bow in east London, was also working that summer.^[2]

Boulton and Watt's practice was to help mine-owners and other customers to build engines, supplying men to erect them and some specialised parts. However, they mainly profited from their patent by charging a licence fee to the engine owners, based on the cost of the fuel they saved. The greater fuel-efficiency of their engines meant that they were most attractive in areas where fuel was expensive, particularly Cornwall, for which three engines were ordered in 1777, for Wheal Bussy, Ting Tang, and Chacewater mines.^[3]

Later improvements

Driving the engines by the pressure differential between low-pressure steam and a partial vacuum raised the possibility of reciprocating engine development^[4]. An arrangement of valves could admit steam to either end, or connect either end with the condenser. Consequently, the direction of the power stroke might be reversed. The resulting double action gave a very even movement to the beam and made possible the development of rotative engines. Furthermore, the linkage to the beam had, until then, been by means of a chain, which meant that power could only be applied in one direction, by pulling; it had to be made possible for the piston to also push the beam whilst keeping the piston rod vertical; this Watt achieved by developing his parallel motion.

In order to avoid patent rights already claimed by another party, on the use of the crank, he adopted the epicyclic sun and planet gear system suggested by an employee William Murdoch, only later reverting once the patent rights had expired to the more familiar crank seen on most engines today.

Because factory machinery needed to operate at a constant speed, Watt adapted the centrifugal governor (earlier used to automatically control the speed of windmills) linked to a steam regulator valve.

These improvements allowed the steam engine to be used to replace water wheels, thereby freeing British industry from geographical constraints and becoming one of the main drivers in the industrial revolution.

Watt was also concerned with fundamental research on the functioning of the steam engine. His most notable measuring device, still in use today is the Watt indicator incorporating a manometer to measure steam pressure within the cylinder according to the position of the piston; this enabled a diagram to be produced representing the action of the steam throughout the cycle.

Preserved Watt engines

The 1817 engine on the A38(M) in Birmingham, at 52°29′33″N 1°53′17″W / 52.492537, -1.888189

The oldest working engine in the world is the Smethwick Engine, brought into service in May 1779 and now at Thinktank in Birmingham (formerly at the now defunct Museum of Science and Industry, Birmingham). The oldest still in its original engine house and still capable of doing the job for which it was installed is the 1812 Boulton and Watt engine at the Crofton Pumping Station. This was used to pump water for the Kennet and Avon Canal; on certain weekends throughout the year the modern pumps are switched off and the two steam engines at Crofton still perform this function. The oldest rotative steam engine (the third rotative engine ever built) is located in the Powerhouse Museum in Sydney, Australia. A Boulton-Watt engine of 1788 may be found in the Science Museum, London.^[5], while an 1817 blowing engine, formerly used at the Netherton ironworks of M W Grazebrook now decorates Dartmouth Circus, a traffic island at the start of the A38(M) motorway in Birmingham.

The Henry Ford Museum in Dearborn, Michigan houses a Watt rotative engine manufactured in 1788 by Charles Summerfield. This is a full-scale working replica of a Boulton-Watt engine. The American industrialist Henry Ford moved the engine to Dearborn around 1930.

References

^ Hulse David K (1999): "The early development of the steam engine"; TEE Publishing, Leamington Spa, U.K., ISBN, 85761 107 1 p. 127 et seq.

^ R. L. Hills, James Watt: II The Years of Toil, 1775-1785 (Landmark, Ashbourne, 2005), 58-65.

^ Hills, 96-105.

^ Hulse David K (2001): "The development of rotary motion by the steam power"; TEE Publishing, Leamington Spa, U.K., ISBN, 1 85761 119 5 : p 58 et seq.

^ "Rotative steam engine by Boulton and Watt, 1788". Science Museum.

External links

Watt atmospheric engine - Michigan State University, Chemical Engineering

Watt's 'perfect engine' - excerpts from Transactions of the Newcomen Society.

Boulton and Watt Steam Engine at the Powerhouse Museum, Sydney

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