Here is an excerpt from our new book, Intelligent Fanatics: Standing on the Shoulders of Giants:
Melting The Competition: Hank Rowan
“I never met him [Hank Rowan], but he is a hero of mine. I want to understand why he didn’t become everyone’s hero. Why his example didn’t spread beyond Glassboro, New Jersey.”
—Malcolm Gladwell, “My Little Hundred Million”
Malcolm Gladwell highlighted Henry “Hank” Rowan’s philanthropic story on his podcast, Revisionist History. Rowan was a trailblazer. In 1992, he donated $100 million to the small public Glassboro State University in New Jersey—an unprecedented amount of money to give to a large university, let alone a small one. While the gift caught the attention of the news and earned the admiration of many, however, the story of Hank Rowan as a human being and business builder has gone unnoticed.
Hank Rowan had been making a positive impact decades before his $100 million gift. He enjoyed challenges. It started with Inductotherm Corporation and his fight against his previous employer, Ajax Electrothermic, the towering juggernaut in the induction melting industry.
Ajax had gotten complacent and comfortable after decades of success. Its superior market presence and financial resources were withering away because the company lacked an intelligent fanatic leader and culture. Rowan was practically forced into starting Inductotherm and competing with Ajax by his friend Paul Foley, the operator of Harcraft. There was a better way of melting metal, and he was determined to design, build, and sell those furnaces to customers, no matter how tough it would be. “After all, you can’t make progress without taking some risk” was a common Rowanism.1
Rowan listed all he risked in starting Inductotherm:
“What Foley was proposing was that I leave a steady, rewarding job with prestige and promise and gamble my future—and my family’s—on starting up a new company, with no outside capitalization, to compete against the world’s leader in the business, a company that had a 40-year head start.”2
With some luck in the beginning, Hank Rowan was able to survive. Luck is more necessary at the idea stage of a company. As a company gets clients and turns a profit, luck becomes less of a factor. Growing a small business takes a series of quality decisions by the CEO-founder. If compound interest is the eighth wonder of the world, then the compounding effect of great decision making is the ninth.
As time went on, Rowan and his employees’ decisions compounded in the right direction, and over time allowed Inductotherm to jump into the number one spot in the induction melting market. To this day, Inductotherm is a market leader in multiple business segments, operating eighty operations around the world.
Hank Rowan and his team faced innumerable obstacles in the beginning. Yet Rowan could get his group to do things no one in the industry thought was possible prior to Inductotherm. These were the early signals that Inductotherm was a special company, likely to dominate its niche of induction melting.
In the early days, when a potential customer asked salesman Jerry Wollaston whether Inductotherm would be operating in five years, Wollaston would fire back, “In five years we’ll be the only induction furnace maker in business.”3 Rowan was successful in instilling a mind-set of nothing but total success. He didn’t want to be like other furnace makers, who let “existing technology, or market conditions, or their customers define what was acceptable.”4
Two years into the venture, in 1956, Inductotherm was minimally profitable, with more than 100% revenue growth each year just by picking up smaller furnace orders. It was a challenge from an early customer, Specialloy, in Chicago, that showcased the team’s superior operating culture and disregard for convention. Mitch Silverstein called Hank, letting him know that a fire had destroyed the Ajax control panel on his furnace system. Without that control panel, Specialloy was out of business. Mitch had heard it could take six weeks to get a new one from Ajax Electrothermic. In his response, Rowan didn’t follow conventional wisdom. It was a Sunday morning, but after a brief pause, Rowan told Mitch he would be back to melting by Friday.
Hank had to convince his team that they could build a 175-kilowatt control cubicle in four days, which his senior employees thought was impossible. Rowan said, “All you’re saying is that nobody’s ever done it that fast before. Here’s our chance to be first.” The team, Hank included, worked day and night to finish the project on time. Specialloy got their control unit and was melting by Friday. Hank made sure to remind workers they could achieve greatness: “Do you see what you’ve accomplished? It proves one thing: we never know what we’re capable of doing until we do it.”5 Inductotherm became known for accomplishing the unimaginable and has confirmed the reputation many times throughout the years.
While Hank was proud of the gift he made to the Glassboro State College, he said the donation was dwarfed by the contribution his business had made to the communities in which the companies operate. Hank Rowan was proud that Inductotherm had been averaging “$200 million a year in sales in New Jersey. Over the years, we’ve probably paid out $3 billion in salaries and expenditures locally. That’s worth far more to South Jersey than $100 million to the college.”6 Even so, few business operators or investors outside of southern New Jersey have heard of Hank Rowan.
Today, Inductotherm is a multibillion-dollar organization. We will go on to highlight the decisions that helped shape Inductotherm into an intelligent fanatic–led organization. Throughout, Inductotherm’s decisions, leadership, and strategies will be compared against those of Ajax Electrothermic—both that company’s early successes and its later failures.
You can read Hank Rowan’s story in our latest book, Intelligent Fanatics: Standing on the Shoulders of Giants. Become a Member and we’ll send you the eBook-Kindle version for Free.
This is a companion discussion topic for the original entry at https://intelligentfanatics.com/the-story-of-hank-rowan-and-his-100-million-gift/