[Understanding Value]: The National Cash Register Company and Managing Company Finances

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The first mechanical cash register was invented by James Ritty in 1879, creating the National Cash Register Company. The history lessons starts in the years after the Patterson brothers (John Henry Patterson and Frank Jefferson Patterson) bought the NCR Company in 1884. 

Over the next several decades the brothers were able to grow the National Cash Register Company into one of America’s fastest growing companies by introducing, at the time, innovative strategies and tactics to grow their business. Beyond the growth story, however, is the reason why the Pattersons decided to get into the cash register business in the first place.

At the time there was not really a good way to keep accounts of your day to day cash flow. The Pattersons owned a little shop and knew their employees were stealing from them. What could you really do about the situation? There were no video cameras, they didn’t have software to keep a record of sales, and it’s not like they could oversee everything happening at their store. The Pattersons just didn’t have time to micromanage every aspect of their employee’s day and so they had to allow for a certain amount of theft, no matter how much it bothered them.

One day, the Pattersons were sold a cash register.

We take cash registers for granted but the cash register was the equivalent of investing in some new age software or unproven technology today. (The Patterson’s were innovative individuals even hiring Thomas J. Watson, IBM’s eventual CEO for 40+ years, as their general sales manager). 

The cash register acted as a way for the Pattersons to better account for their store’s sales and cash balances.

They had visibility into their finances: Theft dropped. Profits went up. 

Experiencing firsthand the solution to the problem they had faced for so many years allowed the Pattersons to see the immense value that a simple cash register would be able to bring to businesses across the United States. They knew that even though the price of a cash register was not cheap, once store owners understood the true value of being able to record their earnings the expensive machines would sell everywhere. They set about devising sales techniques that would influence the ways companies sell even today.

The trick was that they could not just sell a machine. Because of the cost, it was not an investment one would make lightly. They had to sell a process along with the tool. Without fully understanding how a cash register would help store owners retain profits, no one would buy.

The National Cash Register Company decided they would SHOW people how it worked. They went as far as setting up real life situations using real money and real products to demonstrate the different ways a store could change so they could make more money with a cash register.

They believed that once a store owner was able to see with their own eyes a better process they would be able to realize the same value the Pattersons had originally seen in their own store. 

The more people they demonstrated to, the more people understood they were looking at the solution to a very large problem. It took decades to spread across the entire United States, but the moment an owner realized the value of better financial visibility they needed to put a cash register in their store. 

The National Cash Register Corporation went public in 1925, the largest IPO at the time at $55 million. The NCR Corporation is still traded today on the New York Stock Exchange and has evolved to sell computer hardware, software and other electronics. (The Pattersons gave away most of their money during their lifetime, giving to charitable causes and social programs)


The Bottom Line

The tools and processes we take for granted today were revolutionary at the time when they were first introduced. By taking the time to understand a new tool’s application and actual value, companies are able to push past outdated ways of operating. 

Sometimes the value isn’t obvious.

Even with something as simple as a mechanical cash register, people had to be literally shown real life demonstrations to fully wrap their head around the innovation. The bottom line implications were real but they were “ahead of their time” to the majority. The Pattersons were able to see the future of how businesses would operate and wanted be the evangelists for a machine that would provide better financial visibility to deter theft.

Cash Registers were the edge in business before computers. They were the original financial software. What trend or tools are we ignoring that might significantly impact the bottom line simply because we haven’t stopped to understand how it works? Don’t go and purchase every new solution that comes your way.

Instead why not see a demonstration to better understand the value of solutions you might be overlooking. After all, everyone now knows how a cash register works.   

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About Author

Matt Lim has spent the majority of his life between British Columbia and California, where he graduated from U.C. Irvine with a degree in Economics. Matt is currently writing about business operations, best purchasing practices, and optimizing the individual & workplace.

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