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Capitalist Revolutions Analyzed in MBA "Foundations" Course
When HBS professor Leonard A. Schlesinger and the other architects of the new MBA introductory "Foundations" curriculum decided that a thorough understanding of capitalism's underpinnings was essential, they asked Professor Thomas K. McCraw and other members of the School's Business History Group for help. McCraw, a Pulitzer Prize-winning historian, enlisted his colleagues in the effort, and the group immersed itself in the project. All together, eight different authors contributed cases. Two years, thousands of hours, and hundreds of written pages later, the new course, The Dynamics of Capitalist Revolutions (DCR), was born. Taught initially in January 1996 by McCraw and Assistant Professor Nancy F. Koehn, another business historian, DCR drew an enthusiastic response from the first students to take it.
Essentially an overview of hundreds of years of international capitalism, DCR is rooted in the popular MBA elective, The Coming of Managerial Capitalism: The United States, an offering designed in the 1980s by HBS professors Alfred D. Chandler, Jr., and Richard S. Tedlow. To expand this course into the global arena while compressing it into a shorter time frame was a Herculean endeavor, McCraw and Koehn recall with a shared laugh. "We had endless debates with our colleagues inside and outside our unit about how the course should be structured and which countries should be chosen for inclusion," McCraw notes. Indeed, settling on the course's framework - four countries (Great Britain, Germany, the United States, and Japan), three cases per country, and a time span of three industrial revolutions - ultimately became a two-year, all-or-nothing process.
The draft of the first case, a one-hundred-page treatise on German capitalism, McCraw elaborates, was "exceptionally rich but much too dense, and ludicrously unsuccessful." Even rewriting the case and dividing it into two sections, one a broad look at German capitalism and the other an examination of Thyssen Steel, did not make the material much more manageable. "It seemed that every step of the way we realized we had a lot more work to do," adds McCraw, noting that every one of the case drafts was discussed publicly and at length in the Business History Seminar of 1995.
Undaunted, the group decided to examine capitalism in each country in a separate case, complementing these "country" cases with two others on particular companies in each country. To catch students' attention immediately, they chose companies with name recognition, such as Toyota, Wedgwood, Ford, and IBM.
The companies were also selected to include functional areas of interest and to fall within one of the three industrial revolutions under consideration: the first (1760-1840), second (1840-1950), or third (1950-present). The mix presented fundamental business problems involving marketing, finance, operations, and human resource management. Koehn's case on Josiah Wedgwood's pottery business, for example, focuses on how brand equity born in the first industrial revolution in England has survived for two hundred years. Another case, on Southland Corporation and Seven-Eleven Japan, examines retailing in the third industrial revolution in two very different environments, the United States and Japan. A case on IBM examines human resources and the management of technology, while a Deutsche Bank case covers universal banking.
"We wanted to develop a framework for students that would help them understand the rest of their HBS experience," says Koehn, a prize-winning teacher whose own first book, The Power of Commerce: Economy and Governance in the First British Empire, is set in the eighteenth century. She and McCraw were determined to challenge their students. "We wanted to give them materials that were chock-full of relevant issues," Koehn says. For example, after spending two weeks gathering primary source material at Wedgwood's archives in Staffordshire, Koehn had hundreds of pages of information on the company's founder, on mid-eighteenth-century popular British culture, and on customer loyalty. At Wedgwood, she found the first examples of money-back guarantees, an employee time-clock system, and "inertia selling," the term for the shipping of unsolicited goods, a practice not unfamiliar to contemporary record clubs.
"We really set the bar as high as possible," says Koehn. "It was a big gamble, but it worked. The students rose to the occasion magnificently." The two instructors emphasize that in addition to wanting each case to be relevant and to focus on a broad spectrum of concepts, they felt strongly that the course as a whole needed to be greater than the sum of its parts. As they discuss their first experience teaching The Dynamics of Capitalist Revolutions, they both beam with excitement. Student evaluations, notes McCraw, "were an overwhelming collective valentine to the course."
The Dynamics of Capitalist Revolutions — Cases in Point
British Capitalism
How the first industrializer set a standard for others to match
Josiah Wedgwood and the First Industrial Revolution
Two hundred years of brand equity after a dramatic breakthrough in the 1760s
Rolls-Royce and the Rise of High-Technology Industry
From luxury cars to aeroengines
German Capitalism
How a new country industrialized rapidly using an unorthodox strategy
Thyssen Steel
A German family steel business becomes a giant industrial powerhouse
The Deutsche Bank
The evolution of a champion universal bank
American Capitalism
How the most market-oriented of all major national economies evolved
IBM and the Two Thomas J. Watsons
Maintaining competitive advantage while shifting from the second to the third industrial revolution
Henry Ford and Alfred Sloan Corporate strategy and marketing techniques used by pioneers in the American automobile industry
Japanese Capitalism
How a late developer caught up fast with the West and in some industries surpassed it
Toyoda Automatic Looms and Toyota Automobiles
Looms in the first Japanese economic miracle (1920s); cars in the second (post-World War II)
Convenience Store Retailing in Two Countries: Southland and Seven-Eleven Japan
How Japanese managers learned from their American counterparts, then taught the teachers
The Harvard University Press will pubish these cases in 1997 in a book tentatively titled Dynamics of Capitalist Revolutions: A Business History of Great Britain, Germany, the United States, and Japan.
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