Approach Business through Management, Production, And Evolutionary Insights

QUESTION 1: What readings from the first part of Foundations of Business Thought helped inform my understanding of business production later in the semester, and how?

I had little knowledge of production principles at the beginning of the semester. Although many are familiar with household brands like Nike, most lack an understanding of how companies manage to scale production. Adam Smith's "Division of Labor" discusses the concept that allows scaled production, while Elizabeth Butler's "Economic Foothold" sheds light on the consequences that laborers face under scaled production. Overall, "Division of Labor" and "Economic Foothold" were the most impactful readings for understanding this process. 

Smith introduced us to the concept of dividing labor in factories. According to his observations, ten workers performing a relatively simple task like producing pins could produce 20 pins daily. However, dividing the task into 18 more straightforward operations increased production to almost 50,000 pins daily. This method simplified the work into smaller jobs that laborers learned quickly, allowing lower pay for unskilled labor. Smith argues that the division of labor leads to the most profound productivity improvements. Understanding this principle is crucial for comprehending production in an academic context.

Butler provides a viewpoint from women who work in mass production operations. She observes most women are in machine operation rather than skilled and craft work. The principles of division of labor incentivize employers to pay unskilled workers less despite their higher output. Additionally, Butler highlights their current system creates a state conducive to low intellectual growth as their work requires little thought. Smith and Butler present a dilemma still pertinent to the 21st century. Although production increases GDP and affordable consumer goods, it can damage many laborers in the system. 

Smith's "Division of Labor" provides context for the authors we will read later in our class's production unit. Frederick Taylor, recognizing that unproductive manufacturing conditions can reduce worker productivity, wrote “The Principle of Scientific Management.” His theory includes a section titled “The Principle of the Division of Work” which claims a method for dividing laborers, understood more fully by our read of Smith’s work. Henry Ford built upon Smith's ideas in “My Life and Work,” delving into the production line's details inspired by division of labor principles. "Division of Labor" is valuable for understanding later production readings because authors like Taylor and Ford are reacting to Smith's doctrine of division of labor and trying to maximize its benefits. Smith introduces a concept that Ford and many others have leveraged in their operations, optimizing to such an extent as to create the conditions that Butler illuminates. 

Butler's "Economic Foothold" helps generate class discussion on production because she highlights considerations relevant to the 21st century. Specifically, it provides relevant discussion on how technology takes skilled jobs. She describes how the implementation of machines lead to a scenario where one machine operator can do the work of many. Operators save money by paying for unskilled work which is cheaper than artisan craft. "Machinery is labor-saving both of human strength and of the numbers of employees," she writes, which is how machines replace skilled labor. 

"Division of Labor" and "Economic Foothold" shed light on fundamental production discussions, crucial to informing our understanding of the topic later in the year. We learn that while the division of labor leads to productivity, it often harms workers (low pay, monotonous work). Most importantly, these readings are still relevant to production today as we continue to see the impact of technology on job opportunities. Understanding these principles is crucial for comprehending production and its effects on society. 

QUESTION 2: How would I behave in a management role, considering how my ideas have changed since reading Foundations of Business Thought? 

The management role is uniquely rewarding, offering career advancement opportunities from nearly any functional area. For instance, an accountant may spend the first few years of their career working with numbers, but after gaining an in-depth understanding of the company's operations, they could be better suited managing other accountants. Our class conversations have led me to consider the potential of a management role for myself and my peers. With hard work, we could advance to a management position in our respective fields. 

In the world of management, there are two parties with conflicting motives: 

1. The capital party, whose aim is to create an environment that is most conducive to high output and low costs. 

2. The labor party, whose aim is to ensure that they are not overworked and receive satisfactory wages.  

The manager, who may have once been a laborer himself, must balance the interests of his previous colleagues while also increasing productivity to advance his career. Before attending this class, I was unsure how to proceed. However, the practical perspectives Tawney, Carnegie, and Kreps presented have enlightened me to new ideas on becoming a better leader, should I ever find myself in a managerial position.

In R. H. Tawney's "The Condition of Efficiency," I was taught that the manager's role of uplifting capital and labor may not be at odds after all. Again, my preconceived perspective was that managers have the impossible challenge of producing the highest possible output and lowest possible costs, all while treating workers well in terms of expectations and payment (zero-sum game, no empowerment). Yet, Tawney writes: "There is no alchemy which will secure efficient production from the resentment or distrust of men who feel contempt for the order under which they work." According to Tawney, creating a positive work environment is crucial to maximize workers' productivity. He further explains that aiming for higher output while treating employees well is not contradictory. In fact, he states that "active and constructive cooperation" is necessary for sustainable efficiency (win-win situation, empowerment). As a manager, I want to create a work environment that supports employee satisfaction, which, as Tawney argues, is not at odds with effective work and increased output.

Now, let me illustrate how two companies grappling with these principles compete against each other (zero-sum vs. win-win). Andrew Carnegie, in "An Employer's View of the Labor Question," gives practical advice on managing. Carnegie points to a situation where two managers begin two companies and compete. The most successful operation is the one that gets the best workers. And the best workers will want to be at the company with the best pay and bonuses. From my experience, In-N-Out Burger employees are some of the friendliest and fastest fast-food workers. It may be no coincidence that In-N-Out Burger pays 30% above the national average. According to Carnegie, companies with better human capital outcompete others, justifying higher wages as an investment in attracting top talent and keeping them happy (win-win wins).

Further, Carnegie proposes employee ownership to motivate employees to work harder and longer. With employee ownership, employees have a share in the company, meaning if the company succeeds, the value of their shares will increase. Tawney wrote, "Institutions must be adapted to human nature, not human nature to institutions." It is inherent in human nature that workers are more likely to justify putting in extra effort if that effort is for their own benefit, in terms of sharing the fortunes (profit-sharing), rather than for the employer's profit only. Employee ownership is a worthwhile concept for managers seeking to increase efficiency.

Among Carnegie's suggestions for employee compensation, he suggests encouraging unions. His experience is that "trades unions, upon the whole, are beneficial both to labor and to capital." He believes that labor unions provide a platform for workers to understand the relationship between capital and labor parties. Additionally, they help to identify the most suitable and reasonable workers who can represent the laborers effectively. He believes an environment without a union structure encourages radical workers who can create a revolution against the capital party. 

Carnegie recommends several strategies, one of which is to have effective arbitrators to settle disputes. He refers to having an HR team that maintains employee relationships and is open to new ideas that benefit workers without incurring significant costs. Carnegie explains how paying employees twice a month instead of once made them happier. He also mentions offering a discount on the company's products to employees. These changes were only possible because he implemented a system to listen to his workers. 

The perspectives of workers under management are crucial, and it is essential to listen to all views. In "The Sources of Inequality," Juanita M. Kreps gives a valuable perspective of women under management. She highlights men's hesitancy to promote women to executive positions, citing concerns such as maternity leave, family commitments, and a desire to create an environment where women in their workplace are feminine. Suppose I am to be an effective manager. In that case, I must consider the various needs of individual employees, such as a woman who is good enough to be in an executive position and wishes to start a family. Here is an example of a modern woman who effectively addresses the criticisms of men in "The Sources of Inequality." Heather holds an executive position at Fidelity Investments and can balance her work and family life due to Fidelity's hybrid work-from-home policy. Second, the notion that women in executive positions will always become more masculine seems false. Heather balances the life of a mother at home and a career on the laptop simultaneously. Third, training interim executives in case of extended absences, including maternity leave, ought to be standard practice for both men and women in executive roles. Provisional training is best practice because interim executives help ensure business continuity despite long-term absences, regardless of gender.

Tawney, Carnegie, and Kreps teach that in a manager's position, the capital and labor parties are not at odds with each other. Tawney suggests that motivated workers will lead to the best results. Carnegie gave specific ideas like incorporating employee ownership, union support, fair arbitration, and employee discounts. Finally, Kreps highlighted workplace conflicts that are preventable via the incorporation of optional hybrid work and training workers for interim executive positions. My ideas on management have changed based on what these authors propose: adopting worker-friendly principles as a manager is a valid strategy in surpassing the competition. 

QUESTION 3: What readings would I recommend to the CEO of a large corporation and why?

Children grow up hearing, "Find what you're good at, and stick with it." But when recommending three readings from our curriculum to a CEO, I would frame my advice around being a generalist instead of a specialist. For the sake of this essay, my suggestions can be thought of as being presented to Chris Jung, CEO of LG Electronics North America. He, like many CEOs, could benefit from any one of these suggestions, especially the last one brought by Tawney and Ghandi. 

To provide Jung with a generalist's understanding of business, I suggest a variety of readings from different functional areas, including management, marketing, and production. A CEO's job is unique in that they must oversee many company sectors. I suggest Jung visit each company sector and ask his specialists to teach him. This way, he can collaborate better with these sectors and better understand the sectors’ intricacies. 

Jung ought to read Carnegie's work on management. One part of his advice is particularly useful for generalization. Carnegie discussed the importance of a leader holding close relations with his workers in "An Employer's View of the Labor Question." Of what he noted, he wrote that strikes seldom occur in establishments where the owner comes into direct contact with his men and "knows their qualities, their struggles, and their aspirations." He states that the uninvolved leader is responsible for worker disputes, drawing from a need for more understanding for his people. "Unless the relations between manager and workmen are not only amicable but friendly, the owners miss much." Out-of-touch leaders ought to take advantage of many vital details only their workers live with daily. Jung may consider investments in union support and a collaborative approach to employee relations. Asking for employees' advice will earn goodwill and respect and help Jung discover small changes that can have significant impact. 

Great CEOs are excited about their company's projects when they present them to the press. Look at Sam Altman of OpenAI or Elon Musk of many companies. Harnessing marketing principles can help a CEO improve press conferences, which can be used as free advertising if entertaining. On marketing, I would recommend Chuck Klosterman's excerpt from Eating the Dinosaur titled "It Will Shock You How Much It Never Happened." Klosterman illuminates how breaking norms and even pure confusion can contribute to brilliant marketing. On targeted advertising, Klosterman points to how PepsiCo may have deliberately fostered outrage from design changes. Klosterman claims that consumers counterintuitively enjoy being targeted by sinisterly clever, psychologically driven corporate marketing. Because "even as they mock [PepsiCo], they think, 'That's kind of interesting. That's kind of flattering [being in the target market].'"  Marketing can seem counterproductive, but as Klosterman points out, "A feeling is a feeling is a feeling," and often, a CEO can benefit from getting consumers to feel. 

Finally, ideas of production are becoming more critical as CEOs face pressure to incorporate new technologies, including AI.