Guest Post By Patrick Fuller
John Patterson is one of those historical figures that very few people are familiar with, but whose legacy has impacted both the business world as well as the legal profession.
Patterson was educated at Dartmouth, and following graduation, joined his brother in the coal business in Ohio. The Patterson brothers owned and operated two coal yards and a company store in the late 1870’s and early 1880’s, and John Patterson noticed that the profitability of the store should be better, and surmised that the staff was stealing from the store. During this time, most businesses operated out of cash boxes, with minimal records of transactions, creating a very tempting situation for employees to dip into the cash box.
Patterson heard about a fairly new invention – the cash register – and in particular, one that was produced in his hometown of Dayton, Ohio. These machines, produced by National Manufacturing Company, produced a printed record of the business transaction. Sight unseen, Patterson purchased five of the machines. Over the next few years, Patterson’s company’s profitability grew so much that Patterson and his brother eventually sold their business to investors from the east coast, and looked for their next venture.
In 1884, Patterson acquired National Manufacturing Company, and renamed it National Cash Register, which later became NCR. The rest, as they say, is history.
Before I discuss the positive impact Patterson made to the business world, the less-than-stellar traits should also be noted. Labor and Employment attorneys everywhere owe Patterson a debt of gratitude. Patterson was known to weigh his employees frequently and terminate their employment if their weight was outside of a very narrow acceptable range; he was well ahead of his time in eliminating both carbohydrates (no bread was allowed at NCR’s offices & plants) and butter (also banned). It is also said that he terminated employees for violations such as failing to know why flags were at half-staff or not riding a horse properly. He is famous for terminating Thomas Watson, Sr., who would later become the President of IBM. Patterson hired and fired so many senior executives that employment at NCR was often referred to as a real-world MBA.
Now, to the positive impacts made by Patterson. When Patterson purchased NCR in 1884, he noticed that the sales were very poor despite the fact that their primary product was instrumental improving profitability in his own company.
In the 1880s, there was no demand for receipts, and Patterson owned the company whose product was the only one to produce receipts. It was clear that his company possessed a unique competitive advantage, so he set out to create demand for that differentiation.
His first order of business was to create buyer demand for receipts. Below is one of the earliest advertisements run by NCR – and notice, the company name is not mentioned at all. It’s all about “getting a receipt” – the one item that only his product could produce.
With the buyer side demand growing, Patterson then launched a campaign targeting merchants, utilizing his own experiences to create demand for his receipt-producing product. NCR’s machines were more expensive, but Patterson focused on improved client profitability, not selling on cost. This is a critical learning point for law firms who find themselves consistently competing on cost.
Patterson also focused on sustainability – he knew that in order to be successful over the long term, he had to start developing behavioral succession planning with clients. This ad from 1916 is fairly self-explanatory, but it provides compelling reasons to move potential buyers.
As a sales manager, Patterson noticed that several “sales agents” had better production from others. He asked those sales agents to write down their sales and demonstration process, and then distributed it to the other sales agents for training purposes. This is one of the first uses of “best practices” in modern business, and as NCR grew, this annual Sales Primer, as it became known, evolved into the sales guide that every sales agent had to learn before they could sell.
Law Firms should take particular note about how Patterson identified a unique competitive advantage, and created demand around that differentiation. At the same time, he also focused on the profitability impact his product could make on businesses as opposed to the cost of his product. In addition, he also recognized that client succession planning was critical to the longterm success of his business. All three points, from over 100 years ago, have never been more relevant for law firms than they are right now.
Patrick Fuller is the Vice President, Market and Product Strategy of Content Pilot LLC, a strategy, design and technology company serving the legal industry.