Malcom McLean’s fundamental insight, commonplace today but quite radical in the 1950s, was that the shipping industry’s business was moving cargo, not sailing ships. That insight led him to a concept of containerization quite different from anything that had come before. McLean understood that reducing the cost of shipping goods required not just a metal box but an entire new way of handling freight.
Steel Box
Container shipping remade global supply chains.
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After years of working with corporations on their systems problems, MIT’s Jay Forrester likes to say that the average manager can define the current problem very cogently, identify the system structure that leads to the problem, and guess with great accuracy where to look for leverage points—places in the system where a small change could lead to a large shift in behavior. This idea of leverage points is not unique to systems analysis—it’s embedded in legend: the silver bullet; the trimtab; the miracle cure; the secret passage; the magic password; the single hero who turns the tide of history; the nearly effortless way to cut through or leap over huge obstacles. We not only want to believe that there are leverage points, we want to know where they are and how to get our hands on them.
Containerization changed the math by making shipping more reliable, enabling firms to push their inventorying back onto vessels, and enabling smaller orders to be produced at more reasonable costs. Toyota in particular realized that with changed shipping norms, manufacturing could evolve from a big-batch model to more of a steady product stream. This new “just-in-time” inventorying system allows firms to place orders for a few-day supply of widgets as little as a month in advance, with those fresh supplies arriving just as their last orders are running out.
Several phrases would later be coined to describe these revolutionary approaches—phrases like “just-in-time manufacturing” or “total quality control”—but the essence was this: ... Deming’s approach—and Toyota’s, too—gave ownership of and responsibility for a product’s quality to the people who were most involved in its creation. Instead of merely repeating an action, workers could suggest changes, call out problems, and—this next element seemed particularly important to me—feel the pride that came when they helped fix what was broken. This resulted in continuous improvement, driving out flaws and improving quality.
A mass-scale, rapid retreat from the current state is impossible, but the pro-globalization sentiment has been weakening for some time. The accelerated deindustrialization of North America, Europe, and Japan, and the shift of manufacturing to Asia in general and to China in particular, has been the leading reason for this reappraisal.
Globalization has made people in one country utterly dependent on markets in other countries, but automation might unravel large parts of this global trade network with disastrous consequences for the weakest links. In the twentieth century, developing countries lacking natural resources made economic progress mainly by selling the cheap labor of their unskilled workers. Today millions of Bangladeshis make a living by producing shirts and selling them to customers in the United States, while people in Bangalore earn their keep in call centers dealing with the complaints of American customers.
Indeed, an invention or idea is not really tremendous unless it can be tremendously abused. This should be the first law of technological expectation: The greater the promise of a new technology, the greater its potential for harm as well.