Professors’ picks offers a weekly curated selection of FT articles by and for business school faculty to connect classrooms to current events and to develop students’ critical thinking.
Read all submissions at http://www.ft.com/bschoolpicks. Save this link in myFT to receive emails alerting you to each new edition. Search the tags for relevant teaching topics. Encourage students to join the debate in the comments section beneath the article.
Summary: Changing the culture of an organisation has long been an sought after and elusive goal for leaders. Recent research has determined that visible behaviour and actions, rather than communication and messaging, are the most important factors defining the success of culture change efforts. “If culture isn’t consistently modelled at the highest levels, it won’t take root anywhere else,” the authors said. “Middle managers cannot enforce what senior leaders won’t embody. Culture isn’t a message to be passed down. It’s a behaviour to be practised up close.” In addition, corporate culture and structure are interlinked, in that the structure of an organisation can drive or inhibit culture change.
Classroom application: This article provides an opportunity to discuss different frameworks for organisational culture change and their application to real-world situations.
Questions:
Moshe Cohen, Master lecturer, Questrom School of Business, Boston University
EU steelmakers plead for tariffs on cheap imports to avert collapse
Tags: EU, protectionism, steel, tariffs, trade
Summary: European steelmakers are urging the European Union to impose US-style tariffs on imports, warning the industry could collapse under cheap Chinese steel and Donald Trump’s tariffs on EU exports. Companies like Thyssenkrupp say rising imports and high energy costs threaten Europe’s industrial base, especially car making. France and others propose a 50 per cent duty above quotas and a “melted and poured” rule to block Chinese steel via third countries. The EU imported 28mn tonnes of steel in 2024, double that of a decade earlier, while exports to the US are shrinking. Brussels plans new safeguards, but details remain uncertain.
Classroom application: This article provides an opportunity for faculty and students to analyse how companies can successfully make the case for government support.
Amazon’s Zoox enters robotaxi race with Las Vegas rollout
Tags: Experimentation, Lean Startup, first-mover advantage, pivoting
Summary: Amazon’s Zoox has launched its first public-facing driverless taxi service in Las Vegas, marking a bold experiment in the highly competitive autonomous vehicle space. Instead of rolling out broadly, Zoox is in a single location, namely the Las Vegas Strip, with restricted pick-up and drop-off locations. This mirrors the Lean Start up in entrepreneurship: a controlled test environment where demand is proven and learnings can be rapidly gathered — and Zoox is offering initial rides for free to attract riders who can then provide critical feedback.
Unlike rivals Waymo and Tesla, Zoox is not retrofitting existing cars. Instead, it committed to designing a bespoke vehicle purpose-built for autonomy. This differentiator comes with risks (greater capital costs, reliance on suppliers), but it also positions Zoox to solve problems competitors face in adapting traditional car designs. It shows entrepreneurial willingness to challenge assumptions in pursuit of a stronger long-term advantage. However, it is also competing against players already in the market: Alphabet-owned Waymo and Tesla.
Classroom application: The case highlights that, given the uncertainties surrounding entrepreneurship, until a product or service is rolled out, it is not clear how customers may react and what may encourage them to buy. Following the Lean Start up approach (to build, measure and learn), user feedback and data are gathered to test assumptions. Based on this information, the venture can then decide to pivot (change part of the business model or product/service) or persevere with current plans.
Under this process, entrepreneurs are encouraged to fail fast. However, Zoox faces a dual dilemma: given the safety issues paramount in the autonomous vehicle industry, failure of a driverless taxi service may be hugely different from failure of a harmless consumer-product venture; and given the valuable brand of parent company Amazon, the noise from a safety-related failure of Zoox would roar far beyond the casinos, hotels and restaurants of the Las Vegas Strip. As CEO Aicha Evans stresses in the FT article, Zoox needs to prioritise safety while adhering to a mentality of “don’t go too slowly, but don’t go too quickly, too”. It’s a tough balance to strike for any enterprise, big or small.
Discussion questions:
This case highlights several tensions and issues inherent in entrepreneurship and innovation: it’s difficult to assess demand until it is properly tested, and such tests hold risks; the balance between moving too fast and too slow is greatly amplified in safety-related sectors; and Zoox’s late entry into the market brings up questions on market entry timing — as being a first mover can be seen as an advantage, but this has been shown to not always be the case.
Monique Boddington, Management practice associate professor, Cambridge Judge Business School
Tesla seeks to award Elon Musk $1tn if carmaker hits formidable targets
CEO pay at top US companies accelerates at fastest pace in 4 years
Tags: CEO compensation, inequality, Tesla, stock options, executive pay
Summary: In 1976, Prof Jensen and Prof Meckling published a seminal paper Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure (with complex formula thrown in!) that built on Milton Friedman’s 1970 New York Times article, the “social responsibility of business is to increase its profits”. Jensen saw the link between the compensation structure and the CEO’s behaviour and wanted to pay good CEOs more and bad CEOs less. Years later, President Bill Clinton vowed to limit extravagant CEO pay.
The CEO pay now at America’s 100 largest low-wage employers is 632 times the average worker. As the FT article notes, the highest paid S&P 500 CEO last year was Rick Smith who raked in $164.5mn mostly from stock awards. Brian Niccol of Starbucks was second with $95.8mn, again mostly from stock awards. His annual pay was 6666 times greater than the total pay for the median employee!
According to Plato, a community’s highest wage should not exceed five times its lowest. Peter Drucker wrote that CEO pay should not exceed 25 times an average worker’s pay. It seems companies are not getting to Drucker’s number soon, or to Plato’s number ever!
Classroom application: Unfortunately, in complex systems, few can predict the unintended consequences of their actions. Having a broad understanding of the principal-agent problem involving the CEO pay will help students “join the dots” and appreciate its unintended consequences — harming companies and investors and eventually exacerbating income inequality.
South Korea denounces ‘shocking’ US treatment of detained workers
Disciplines: Entrepreneurship, Finance, Strategy, International Business, and Business Planning
Tags: Jobs report, US economy health, cross-border investment, labour market trends
Summary: The treatment of hundreds of Korean workers who were detained by US immigration authorities during a raid at a Hyundai-LG battery plant in Georgia was harshly criticised by South Korea’s labour minister, Kim Younghoon, who claimed that the workers were treated “worse than prisoners of war.” After lengthy diplomatic negotiations, the workers who had been assisting in the construction of a facility that was supposed to generate American jobs were shackled and eventually sent back home. While officials from both governments promised to form a joint working group to address visa issues for Korean workers, their return to Seoul sparked emotional scenes. With some workers vowing never to return to America, the incident has strained perceptions of the US-Korea alliance, stoked public ire in South Korea, and prompted questions about the accountability of Korean companies for using improper visas.
Classroom application: The main benefit of this article is that it provides faculty with an interesting departure point to discuss cross-border investment. As part of the tariff negotiations, non-American governments have offered investments in the US, which ostensibly means (eventually) employing US workers. However, the South Korean government decided to use some of its own workers during the construction process either because of language and culture or in an effort to initially boost its own economy. The US government clearly disagreed.
Case discussion positioning: Here are other associated articles:
US share of global foreign direct investment surges to record
China’s Belt and Road investment and construction activity hits record
The ‘quiet’ crisis brewing between the US and South Korea
Donald Trump announces 15% tariff on South Korean goods
Hyundai: the carmaker caught in the storm over US immigration raids
Gregory Stoller, Master Lecturer, Boston University Questrom School of Business
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