In 1855, Daniel McCallum wrote a letter to his bosses at the New York & Erie Railroad. McCallum had risen up through the ranks from carpenter, to bridge engineer, to chief of bridges, to regional manager of the Susquehanna division of the railroad. His latest promotion, to general manager of the entire railroad, was a big one.

So he picked up his pen and put his ideas about managing the railroad down on paper. It was the first time we know of that anyone ever did this.

McCallum’s biggest problem was cost-per-mile. As fast as the railroad grew in size, operating costs grew faster. Where the company should have seen productivity improvement (declining cost per mile), it saw the opposite. Communication, coordination, operations, sales — all became more difficult, not less so, as the railroad grew.

For McCallum, a productivity problem was a general management problem. And his ideas about general management marked a turning point in business history.

Fast forward…