This course is designed for students of all backgrounds who have an interest in how firms are governed, the forces that have helped define modern management practice, and the outcomes of that practice not only for the firm itself, but also for the societies in which they operate. For students who are thinking of a career in management, it may also prove useful as a basic introduction to some of the conceptual vocabulary and ideas behind modern theories of management. Using a wide disciplinary approach - from economics and history to social theory and even a smattering of biblical criticism - the course will invite students to consider several core management strategies and priorities from often unexpected perspectives in order to judge their success or failure. The key objective of the course is to bring into critical focus how we think about the function and culture of management, how managers understand their role within a firm, how they take decisions, set priorities and benchmark success and failure. Topics include: the function of the firm; the role of incentive; the ways in which narrative forces shape decision making, and how market relationships define the managerial culture in ways that can lead to sub-optimal outcomes.
The Box: Explaining Its Introduction
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From the course by IE Business School
Critical Perspectives on Management
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From the lesson
What is Innovation?
We live in the innovation economy. Firms have chief innovation officers. Innovation is, so we are told, the key to securing the future. And there are quite literally millions of books on the subject of innovation. So, what does it mean? And is it a useful idea for management? We'll consider both questions.
Meet the Instructors
Rolf Strom-OlsenProfessor
Humanities
[BLANK_AUDIO]
We've arrived at this point now in our discussion.
We've seen that innovation is a central concept in management, so
many firms seek to incorporate some kind of an innovation strategy.
I think I can reasonably suggest that if I went to many of the leading, firms,
say the top S, and the S&P 500 and I ask them, what's your innovation strategy?,
they would know what I meant.
They would actually understand what kind of a question that
was and they would have some kind of an answer.
So, clearly, innovation is something that firms are seeking to
incorporate, perhaps as we might say, as a way of thinking.
Certainly is a way of doing business.
The problem is we don't know what it means.
We attempted to crowdsource the, the concept
of innovation, and what we find are,
are a lot of ambiguous and even
contradictory ideas as to what innovation is.
Where there isn't ambiguity is on the outcomes.
So, to elucidate this problem of innovation,
I've asked you to read a book on the shipping container.
And I hope you agree with me that it's not as boring as it initially sounds.
Since it sounds initially extremely boring,
that's not setting the bar very high.
Oh, look at me, I get to read a book about shipping containers.
So even if it's just mildly
interesting, it's already exceeding very low expectations.
But I hope we might agree that its actually even
more interesting than that, because the story that we attached, then,
to the rise of the shipping container, is in a way the very story of
globalization itself, and the kind of, story that
makes sense of a class like this one.
Which is to say why would we want to come together from so many
different parts of the world to take, as a single experience, a class on management?
Why does it make sense
to internationalize, globalize management where
in this, in todays world?
And I think the answer to that is because a global economy needs a global manager.
If we go back 50 years, it wouldn't made a lot of sense for
someone from France, to sit next to someone from China, to sit next to
someone from the United States and study
management together, because management was practiced in
a national context, so what you needed
to learn were national issues of national importance.
But it's only the rise then of the global economy
that we have now the need for an international manager,
somebody who can speak a kind of international language of management.
So in a sort of strange way, and I don't want to
be overly reductivist, you're all here today, thanks to, the shipping container.
[LAUGH]
I hope not too many of you are actually arrived by shipping
container, but you're here [LAUGH] you're here thanks to the shipping container.
So the box.
How the shipping container made the world a smaller place.
What's the question, the real central question
that this reading invites us to ask?
I think the question that this reading invites us to
ask is: Why was the box introduced when it was?
Why was the, why were the 1950s and the
1960s the right time, the right place, for what is,
after all, a very old idea.
We saw in our first reading that the idea
of a standardized vessel in which you put stuff
and move it from point a to point b is as old, at least, as the Roman Empire.
The Romans had their own version of the container, did they not, right.
They had these sort of amphori that were all the same size
to make shipping easy, so you could move them, by boat effectively.
Why is it not then that
that ancient idea, is not adopted until the 1950s
and the 1960s, why does it take so long?
And I'd like to start there.
So, what factors do you think we should consider that might help
explain why it took so long for the box to be introduced?
>> For me, it's a combination of what was said before: random and environment.
So you needed the environment to be right and then you needed a
random event, which was the person in this case who had the idea.
So in terms of the environment, you have the
shipping industry which was in such a crisis that
it kind of gave the incentives for someone who
was looking for a cheap alternative to get in.
>> Okay, an element of random chance.
But, you need the right environment for that random chance and to take hold.
Okay, possibly what else, what might we want to consider?
Yes.
>> The economy during this period was particularly strong and they started
to look at how to cut the costs mainly, and to compete in a better way.
So one reason they, they needed to, to decrease the cost.
>> Okay, so you're suggesting that we should look at environmental,
oh, sorry, economic factors, in other words, it's changes to the
>> One reason could be economical-environmental and the
other the need to compete in a better way.
>> Okay, that's a good idea, this, it may be a competition question.
Is that what you're saying?
So maybe we should look at the nature of competition as it exists in this period.
Okay, what else?
Yes, Alexander. >> I think it is a matter of
economy because it was after World War
II and European manufacturing was destroyed almost.
>> Yep.
>> And the U.S. economy was very good, it was booming.
That's why they need new transportation system
to bring their goods to market in Europe.
>> Europe is on its knees after the destructive forces of World War II.
American economy, American manufacturing is booming,
sending exports overseas to help with the reconstruction.
Then somebody comes along and says, you know what would make this even better?
A box.
>> I think it is partially driven by labor costs due to labor scarcity in part
because of a booming US economy driving up wages and also the consequences of war.
>> This is a market in need of change
because it represents, it has a very high cost structure.
There are, there's a very
high cost of using the market as a result of the labor, or
as a result of the disposition of labor in the, in the, marketplace.
>> It was government intervention that
couldn't allow companies to integrate the different
transport systems of the time, the rail, the shipping industry and the trucks.
>> Okay, another reason why you might explain the timing is prior
to the 1950s and '60s, governments were not willing to introduce the
kind of changes or other regulatory and things that were needed in
order to bring about this kind of a solution, okay that's possible.
Yes.
>> Yeah I just wanted to add like probably had something
to do with also the let-go of protectionist attitude amongst countries.
I don't know how it was intertwined, because that is something which is, which,
sort of led to the to, to globalization or to inter-country trade.
The precursors of GATT and, and things like that.
>> That's certainly true.
I mean, one of the things that we should remember here, 1950s and 1960s, definitely
we see a liberalization of global trade in the sort of post World War II environment.
And I think the other point to note about
that is that trade importantly becomes a diplomatic tool.
What's the best way,
in the context of the Cold War when you
have these ideological battle lines that are drawn, what's
the best way for the United States to try
and secure strong ties with a country like South Korea.
Build close trading relationships, from close
economic relationships come strong political friendships.
So the value of trade in a, in
a diplomatic political sense in increasing during this period.
That's certainly true. In the back.
>> I think it
takes somebody from outside the industry to make
the change, because anybody within the industry couldn't, imagine,
such a radical change and couldn't, and saw
all the problems that could be caused by it.
So, they ultimately have the [INAUDIBLE].
>> Okay.
So, that's the idea that this market changes when it does, because...
Mr. and Mrs McLean had Malcolm McLean and
then he grew up to be a trucking
magnate, obsessed with cost cutting, turned his attention to
the shipping industry, snapped his fingers, abracadabra and suddenly
you have an entirely new way of doing things.
[NOISE]
Sss
>> sss Sounds like he [INAUDIBLE] [LAUGH]
>> I actually think they were before that, during World War I and World War II,
all their resources were focused on the war so all the steel which they needed was
actually focused on producing arms, armies,
and clothes, and shipping for the war.
So, that's where most attention was put and once when
the wars ended, they actually had a lot of resources.
>> Yeah. >> Left over.
Probably that was one thing that triggered it, but
>> Well this is true.
On the other hand I mean, let's remember what we're talking about here.
We're talking about some people sitting around saying here's a
good idea, let's put everything in about roughly the same
size box because it's going to make things cheaper and more efficient.
And I think the idea that you need a sort of
a visionary to be able to articulate what is a relatively
simple idea in terms that are very compelling is maybe worth
our consideration, without the innovator, you don't actually have the innovation.
Yes?
>> It was also compared to that of the McLean
family and McLean in particular.
He looked at it from a very broad perspective.
The statement in the case says that the
business of shipping was moving goods and not sailing.
So, he looked at the box as just a part of the problem and also the associated
engineering and stuff, which made the loading and unloading a very easy thing.
I think so, and I, I think that the, the whole
concept began with the thought, I guess, that we need to
move goods sooner as cargo not sailing. >> You need to trigger that insight.
Yeah, absolutely.
[BLANK_AUDIO]
Well, let's consider some of these ideas a bit more systematically.
Let's take the first idea, which is the role of McLean
himself being the agent that triggers, then, this very profound change.
There's certainly a, a story of innovation here wrapped around the
figure of McLean, that when we read it, seems very compelling.
First of all, it's somebody who brings an outside perspective to bear, right?
We have this idea of new
eyes, somebody who's looking at an old problem in a new way.
And so one of the things that
the innovation literature tells us is, "change your
perspective, look at the problem in a different way," and he seems to have that.
We also have somebody who
seems relentlessly focused on cost-cutting, right?
This guy shows up every day at the office
thinking, "what's another cost that I can cut today?"
So he's got this kind of single-minded dedication
to reducing Cost of operations.
And of course, the shipping market is an ideal, place to go and cut costs.
Third; we're talking about somebody who's capacity or appetite for risk is huge.
Right?
Here was a guy who had a,
basically a successful trucking, trucking company; and in
order then to advance his ideas about
bringing reforms into the shipping industry has to
take an enormous risk.
Sell his existing company, start up a new
one, build this leverage financing and so on.
That appetite for risk we also would associate with right, innovation.
So from that point of view it seems like
we have a very good story of innovation here.
We have a risk taker, with a relentless focus on
solving problems, who's coming to this problem from an outside perspective.
That's a classic tale of innovation.
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