3.1 Georgian Londoners and Victorian Entrepreneurs

After opening the Great Exhibition of the Works of Industry of all Nations on 1 May 1851, Queen Victoria wrote these words in her diary: “This day is one of the greatest and most glorious of our lives” ^[1]. And it literally was. The Queen and all other visitors were fascinated by the Crystal Palace which was built on the grounds of Hyde Park especially for this international exposition. The Great Exhibition remained open for nearly five months and received more than six million visitors. One of them was Charlotte Brontë, the famous author, who described the venue and the exhibits as follows:

The Exhibition itself was great proof of the reality that arts, science and industry were not separable. Exhibits from Britain and the Colonies occupied half of the venue leaving the other half to exhibitors that came to London from the rest of the world. Among the exhibits were steam-powered machinery, a giant model of Liverpool docks, and the electric telegraph (p. 69 in ^[3]) along with gold watches from Switzerland; porcelain, silks, tapestries and furniture from France; McCormick’s reaping machine, Goodyear rubber goods and Colt’s fire-arms from the United States; the Koh-i-Noor diamond (which was the largest in the world at the time) from India; and many more from other countries ^[4]. Charles Babbage, mathematician and father of the programmable computer, was among the Exhibition’s closest witnesses. Being concerned with the decline in the development of labor-saving machinery in Britain and predicting a lack inin adopting science into technology (pp. 223–224 in ^[5]), Babbage published his thoughts and critiques in The Exhibition of 1851 the same year as the Exhibition was opened. This is how he described the purpose of the Exhibition in the Preface of the book:

1851 may be assumed as the peak year of an era where the British enjoyed the fruits of the global trade and the Industrial Revolution. In fact, the Georgian and Victorian eras in British history reveal much about the history of a society which witnessed and experienced remarkable changes as a collective consequence of a great sociopolitical paradigm shift, numerous technological developments, and economic growth. It spanned two centuries that saw great events and incidents that were respectively radical and quite exceptional. The United Kingdom and the United States of America came into being; Adam Smith published The Wealth of Nations; Richard Arkwright established arguably the world’s first factory in Derbyshire; Josiah Wedgwood successfully industrialized the pottery artwork; George Frideric Handel introduced Italian operas and oratorios to the English audience; the East India Company became a huge power in international trade; Stamford Raffles founded Singapore; the steam engine was invented; canals and bridges were built; railways were constructed; slavery was abolished – just to name a few examples. The thriving economy transformed Britain into the world power of the time and the British society enjoyed investing in new ventures and experiencing various tastes and traditions from around the world.

The diversity of commodities and products in Georgian London was an outcome of the mercantilist policies that controlled the flow of goods and protected the rights of the merchants. The systematic and well-organized trade contributed much to the establishment of regular businesses and to the consumption of goods available at all times. Undoubtedly, fulfilling fundamental needs was still the main purpose of work; however, working profitably and spending wisely also became an individual ability that would eventually produce a society of not mere buyers but customers who attributed value to the products and enjoyed their consumption. This led to a rise inin the number of inns, taverns, as well as coffeehouses and tearooms scattered across the city.

In what sense the Victorian era, that spans the years from 1837 to 1901, can be associated with the Georgian era is a separate debate which is out of our scope, but it is definitely an era of diverse events and remarkable developments. Although there are plenty of studies on the inventions and innovations during the second half of the nineteenth century, it is likely that Victorian entrepreneurship did not receive the deserved attention of business management scholars. However, the noteworthy work of Casson and Buckley reveals essential and invincible key points in this matter. According to the authors, “the evidence of Victorian entrepreneurship is compatible with general theories of entrepreneurship which emphasize the role of entrepreneurs in making sound decisions regarding risky innovations”. Unlike the relatively small factory or shop ownerships in Georgian times, Victorian entrepreneurship was based rather on successful partnerships between “wealthy investors and professional specialists” (p. 291 in ^[7]).

3.2 London Coffeehouses and the Georgians

English chaplain William Biddulph who visited Istanbul in the beginning of the seventeenth century once wrote that coffee was the common drink of Turks, and described this precious commodity as:

According to Biddulph, coffee suited the Turkish constitution very well, while it did not suit that of the Englishman. As Ellis denotes, “coffee was the sign of Turkish difference” ^[12], and unsurprisingly Biddulph, as a preacher who accompanied English merchants at that time, could have been rather reluctant to build a cultural connection between the idea of drinking coffee and the existing English customs. However, only a few decades later, England was to discover the taste and joy of this mystic hot drink. Coffee trade began in Oxford in 1650, and arguably the first coffeehouse in London was opened in 1652 ^{[12], [13]}. To the English, coffee was new and coffeehouses were neoteric. Compared to alehouses, these little shops acted as cozy places of sociability where people gathered to exchange news and to meet with other people. Although coffee has never been a rival against beer and wine, coffeehouses – on account of the lack of alcohol – also served as perfect centers for engaging in business networks and dealing with serious money issues that necessarily required sobriety. By the end of the century, the number of coffeehouses began to rise. The Queen Anne period and the Georgian era saw the opening of numerous coffeehouses. Even a particular style of coffee table – a light and comfortable piece of furniture – was named after Queen Anne and is still manufactured and sold in stores today. However, it was actually with the beginning of the Georgian era that London became the city of pleasure where many inns, taverns, gardens and of course, coffeehouses filled out the streets (pp. 169–170 in ^[14]).

Coffeehouses were exotic yet functional places where intellectual debates over philosophy and politics were often seen, social gatherings around particular interests occurred, and even new money-making trends emerged. For instance, Jonathan’s coffeehouse in Exchange Alley was the popular place where the South Sea Company shares were intensively traded. The company was established in 1711 by the Earl of Oxford to improve the trade with Spanish America. Relying on the company’s anticipated revenues from the trade with the New World, many people were zealous to buy its shares. However, the company went bankrupt and failed to repay its debts (p. 168 in ^[15]). Isaac Newton and John Gay (who later wrote The Beggar’s Opera) were among these shareholders (p. 54 in ^[16]). Alternatively, marine insurers, who used to meet in the Royal Exchange until the Great Fire of 1666, began to crowd the recently opened Lloyd’s coffeehouse to exchange and to discuss the latest information on maritime business matters. A few years later, landlord Edward Lloyd (c. 1648–1713) decided to disseminate the news via a special gazette, which still publishes issues under the name of Lloyd’s List – holding in some sense the title of the oldest running journal in the world (p. 147 in ^[14]). Conversely, more amusing and exciting events happened in Button’s – the favorite coffeehouse of poets and playwrights. Here, a roaring lion’s head made of white marble was placed on the wall. By dropping envelopes into the lion’s mouth, amateurs could submit their essays and stories with the hope of getting them selected for publication ^[17] and (pp. 314–316 in ^[18]).

Many other groups of people other than exchange dealers, stockjobbers, insurers and playwrights crowded the coffeehouses of Georgian London. Booksellers, lawyers, clergymen, artists, authors, military men, and members and supporters of political parties were frequenters of their respective coffeehouses scattered around the capital (p. 170 in ^[14]). According to the Swiss traveler César de Saussure, who witnessed the diverting growth of London in the 1730s, coffeehouses were not well-groomed and nicely decorated places; besides, they were full of people and full of smoke. Yet, he admitted that the Englishmen were ‘newsmongers’ as every morning they were anxiously reading the latest news in these shops. As a matter of fact, thanks to the coffeehouses, Georgian London became an essential stage for the emergence of many newspapers that enhanced civil liberty (pp. 170–171 in ^[14]).

Coffeehouses also played a functional role in the introduction of two more hot drinks to the British market. Only five years after the first coffeehouse was opened in London, “an excellent West India drink” called chocolate was introduced by a French tradesman. In France and Spain, chocolate drink was associated with the social elite, while in London it became available in many coffeehouses ^[19]. The other hot drink is of course tea which was introduced during the same era and later became eminently associated with the Victorian lifestyle.

Many coffee chain stores as well as boutique coffee shops are scattered across cities of the world today. These entities are usually associated with such concepts as conversation, creativity and business. This shows that coffee still acts as a tie-builder between people sharing a common interest or interacting each other for the exchange of news. Thanks to milk and many other additional ingredients, contemporary shops today introduce many serving options for coffee. However, as coffee was just ‘boiled coffee’ in Georgian London, it is not surprising that most coffeehouse frequenters may have found it tasteless, and even compared its taste to ‘ink’, ‘soot’ and ‘mud’! On the other hand, this tasteless yet addictive substance was believed to revive the body and to open the mind ^[17]. Coffee was a mere product but a coffeehouse was a platform for an individual experience.

One can learn a lot from the epic of Starbucks. Without repeating the noteworthy and well-known story here, we can still remember a couple of fundamental ideas that transformed a modest coffee shop in Seattle into a global network of coffee stores. Today, Starbucks and many other coffee stores might be referred to as places of inspiration and innovation where ideas sparkle, business thinkers and designers discuss and dealers negotiate. In fact, at the time of its foundation Starbucks itself was an innovation. It was designed as a creative and profitable platform where frequenters (or guests) would feel as comfortable and relaxed as at home and as motivated and organized as at work. As Howard Schultz, the key figure behind the story, mentions in his book, Starbucks was established due to the need of a ‘Third Place’ – a place outside of work and home. Referring to German beer gardens, English pubs and French cafés as providers of “a neutral ground where all are equal and conversation is the main activity” (p. 120 in ^[20]), Schultz continues as follows:

An experience-driven innovation is a challenging but fruitful process. Customers that benefit from a company’s products and/or services are not mere buyers and users but also great potential sources of information for a company that intends to survive in a market. Such information is usually tacit; neither company managers nor customers may directly articulate it. Right on this account, it would not be wise for a manager or a business owner to deny the importance of each individual interaction between the company and its customers. Every individual interaction reveals how the company operates its platform for the individual customer and every individual customer experience possesses essential information. The need of Americans for a community was observed by Schultz, just as the need for the dissemination of news via a special gazette was realized by Edward Lloyd. No matter whether a coffee addict or not, it was and it still is the platform that brought and continues to bring a frequenter to an English coffeehouse or a contemporary coffee store. For each visit, the frequenter anticipates experiencing the ambiance emerged on the platform. Coffee is the central component of this ambiance; in fact it is the nucleus that brings together all other components such as hearing the latest news, discussing political matters, exchanging shares, talking business and chatting with friends.

3.3 Shipping Frozen Meat from New Zealand to London

The mid-nineteenth century saw the scarcity of staple commodities in Britain, and meat was perhaps the most essential of them. The urban population in industrialized cities was growing so fast that food supply was becoming a major problem. On the contrary, the southern hemisphere – particularly Australia and New Zealand – was facing a surplus flocks of sheep which were intentionally grown for their wool. Exporting livestock to the UK was not a practical solution to the surplus problem as the long-distance voyage that took months was quite a challenge to keeping the animals alive on board ^[21]. In 1869 canning technology was initiated to preserve and export the meat produced in New Zealand. However, it was apparent that canning could not be a solution as only the best part of the carcass could be preserved and the rest was waste. This and many other inefficient attempts to respond to the shortage in Britain continued until refrigeration technology was enhanced enough to transport frozen meat from New Zealand to Britain.

William Soltau Davidson (1846–1924), a Canadian-born entrepreneur from Scotland who was responsible for sheep farming in a land company highly involved in the wool business, was concerned with the inefficient use of the huge flock of sheep of his company. He later became the director of the New Zealand and Australia Land Company (NZALC). As the international wool trade was becoming more threatened and less profitable as a consequence of the hastily multiplying sheep population in Australia and New Zealand, Davidson felt more determined to overcome the difficulties in exporting his company’s high quality meat to Britain. An iron ship called Dunedin originally designed for fast passages in the emigrant trade with a capacity of 400 passengers was installed with Bell–Coleman cold-air refrigeration machines. The voyage began in February 1882 with a cargo of around 5,000 frozen mutton and lamb carcasses, and it took Dunedin 98 days to reach Britain’s shores. Except for a few incidents on board, the first ever trip for long-distance shipping of frozen meat was successful. The carcasses were immediately brought to London and sold out within two weeks yielding a huge profit (^{[21] [22] [23] [24]} and p. 65 in ^[25]). Davidson’s undaunted and determined efforts proved that even companies in countries as remote as New Zealand might take their place in international markets with their products. His creative perseverance made NZALC the pioneer of the frozen meat shipping industry which would soon contribute much to the development of the New Zealand economy while creating a brand new industry in Britain.

The story of the frozen meat shipping industry can arguably be regarded as one of the many proofs of Schumpeter’s seminal and prominent arguments on innovation and entrepreneurial activities. The entrepreneur as a change agent is considered to be the person “who makes the untried into a fact”; and “entrepreneurship is innovation and the actualization of innovation” (p. 65 in ^[26]). Apart from scientific activities and inventions, Schumpeter puts a distinctive emphasis on what we should understand from the concept of innovation as – in his words – “innovation is possible without anything we should identify as invention and invention does not necessarily induce innovation” (p. 84 in ^[27]). As clarified by Reisman, Schumpeter was concerned with neither scientific novelties nor developments but with “how these developments like electrical power and the motor car become commercialized into a new production function” (p. 65 in ^[26]). In our case, it is quite evident that what an ordinary consumer in London would have seen as innovation was not how the meat was brought refrigerated and fresh after a three-month voyage from New Zealand, but the outcome of the whole transportation process: “The high quality meat from far away lands at a reasonable price sold right here in the market.”

The Dunedin story is a typical Victorian case that reflects the undaunted and persistent characteristic of the post-Industrial Revolution entrepreneurial mindset. The story itself can be investigated like the two sides of the same coin. While the heads side illustrated a picture of the opportunity to create a new industry based on long-distance shipping of frozen meat, the tails side showed the potential challenges caused by the newness of the technology. Even though Davidson and his partners were lucky enough to benefit from the recently developed refrigeration technology, they had to face the ambiguity that emerged because of the many unique problems that were usually inexplicable and compelling. The Bell–Coleman cold-air refrigerating machine that was installed in Dunedin required a steam engine for power. Before the ship’s first attempt at departure by the end of 1881, the engine’s crankshaft broke and halted freezing. As a result, 641 carcasses that were already loaded and frozen were unloaded and sold in the local market. The departure was possible only after a new crankshaft was made; so the voyage of Dunedin began in February 1882 with new carcasses loaded and frozen on board. Davidson took an earlier trip to London in order to arrange the paper work and organize the distribution of the cargo ^[28]. The voyage itself was unsurprisingly more ambiguous. The shipping may be assumed to be a modest act of commerce; however the risk that Davidson undertook in solving his company’s livestock surplus problem was noteworthy. Here is one of the incidents that proves the risk he had undertaken from Critchell and Raymond’s History of the Frozen Meat Trade which was published in 1912:

On the heads side of the coin is ‘the opportunity to reinvent an industry’ – as there was already an increasing demand for staple food and particularly for meat in London, the target market. So Davidson’s concern was not about introducing a brand new product but it was a question of distribution.

Dunedin’s success led to a growth of interest in using steamships for shipping frozen meat from New Zealand ^[30]. In a sense, what the whole effort caused may be regarded as a disruptive innovation – thanks to a new technology integrated into the distribution channel, a new market was created (^[31] and see also: ^{[32] [33] [34]}). At first, London butchers and salesmen were doubtful about the quality of the frozen meat from New Zealand. However, once they saw that the carcasses were as clean and bright as the fresh British meat, they were convinced enough to find it suitable for the English market and to describe its quality “as perfect as meat could be”. The shipment was discussed even in the House of Lords (p. 42 in ^[29]). It was a turning point in the British meat market that saw the emergence of the frozen meat industry along which would come new ways of brand engagement, new business models, new packaging systems, new manufacturing processes and many other innovations.

3.4 A Final Remark

The above text borrowed from Hawkins’ foreword to Creativity Revealed by Jeffrey reveals, perhaps, the most crucial ingredient of an innovation process: inspiration. In this chapter, we might not have expressed much interest in this concept; however it would be unrealistic to deny that all those coffeehouse owners in Georgian London or Davidson in New Zealand were inspired by something. Inspiration has been associated for many centuries with arts rather than technology; in fact it is an intrinsic experience – it is neither inoculated nor installed into one’s mind. An unfamiliar commodity like coffee certainly provided Edward Lloyd with a great opportunity to open a coffeehouse yet it must also have caused a big change in his world view. After having observed for a while the people who were frequently coming together to exchange the latest news in his coffeehouse he was inspired enough to start publishing a journal –something perhaps he would never think to do. As for William Davidson, it was all about his environment and his awareness. Apparently, he was inspired to see the opportunity of doing the right business – selling meat – once he realized that he was in the right place at the right time... just as Lloyd was. And just as accurate as a reply to the question Peter Drucker once posed can be: “How much of innovation is inspiration, and how much is hard work?” ^[36].

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