All Too Japanese < Part-4 / Japanese Management : Art and Practice > ...

Having given away its secrets, Japan, many argue, retains exclusive rights only to those things that nobody else wants. The system of lifetime employment has kept Japanese companies horribly fat, while the weakness of shareholders has allowed some firms to remain hopelessly unfocused. The country's white-collar sector is only two-thirds as efficient as its equivalent in Europe and America. Japan's overregulated economy discourages innovation and imposes high costs on businesses. In "creative" industries, such as software and multimedia, which are booming in the West, Japan is way behind, isolated by language and hampered by a conformist educational system. Japan's universities are sleepy finishing schools, not vital sources of innovation; and Japan's banks are reluctant to invest in unproved companies.

What gives these criticisms added bite is that they are being made by Japanese as well as Americans. The more sophisticated Japanese managers are stocking their libraries with Western management books and littering their conversations with words like "Downsizing" and "Re-engineering."

The Japanese are also beginning to question two of their mooted strengths: kaizen and consensus. While Japanese companies have continued to churn out ever smarter versions of the same thing, industry-changing products have tended to be made elsewhere. Sony and Matsushita devoted their energies to making ever more complicated Walkmans, but American firms were inventing the real breakthroughs in consumer electronics, such as the personal computer and the cellular telephone. By the mid-90's, for all their extra wing mirrors, Japanese cars were beginning to look the same. Indeed, the extra wing mirrors were cluttering up production. What was needed were simpler, bolder designs.

Meanwhile, the emphasis on consensus has made managing foreigners difficult. Japan's multinationals traditionally concentrated on exporting rather than investing abroad, partly because they felt that their manufacturing system was so Japanese that it could not survive on foreign soil. Now, thanks to the high yen, fears of protectionism abroad and globalization, they have no choice. The Nomura Research Institute predicts that, by 1998, almost 40 percent of the production of Japan's five biggest electronics groups will be offshore. In 1994, Toyota produced 48 percent of its cars overseas; by 1998, that portion will be around 65 percent.

The basic lean-production system has actually been relatively easy to export. However, merely getting people to manufacture things efficiently is often not enough. Clever multinationals have been able to engage their foreign workers' brains as well as their hands. Yet Japanese salarymen have famously found it impossible to manage hairy artistic types: witness Sony's and Matsushita's nightmares in Hollywood. But the cultural insensitivity of many Japanese executives can even make it difficult to manage humble production workers. Sanyo Electric provoked an angry strike in Indonesia when it refused to allow 33 female assembly-line workers to wear traditional Muslim dress, citing safety reasons.

Western employees in Japanese banks complain that there is a two-tiered management system -- a dummy one in the host country and a real one between the Japanese management and their bosses in Tokyo. They are forever making decisions, they murmur, only to have them countermanded by a telex from Tokyo. In 1991, a Congressional committee looking into the employment practices of Japanese-owned companies in the United States listened to a litany of complaints: that a handful of Japanese made all the most important decisions, in collusion with the head office; that a "rice paper ceiling" stood between the non-Japanese employee and serious promotion; that the Japanese discriminated on the grounds of race and sex; and that the Japanese were unwilling to listen to ideas from foreigners. Consensus, it seems, is only consensual if you are Japanese.

While the rice-paper ceiling has deterred foreigners from working for Japanese firms, xenophobia has also kept able Japanese from working abroad. Fearing that a spell away from headquarters may handicap them in the promotion race, many salarymen refer to "overseas banishment." Mothers often stay at home so that children can continue in Japanese schools, an arrangement that imposes huge strains on families. Those children who spend any length of time abroad run the risk of being ostracized at school and accused of "smelling of butter."Japan's dithering over innovation and internationalization seems to reflect a failure not just of particular business leaders, but of Japan's whole approach to leadership. All that concern about consensus was fine when Japan's economy was growing by 10 percent a year. But a flat economy is testing the ability of bosses to make hard choices. They have to get rid of surplus workers (or at least retire them early) and decide which line of business to focus on. Competition from tightly managed Western companies means that Japanese companies need to make decisions quickly. And Japan's increasing involvement with the rest of the world, through joint ventures and overseas operations, means that Japanese managers can no longer rely on a decision-making process that is comprehensible only to their fellow Japanese.

Kaizen and Consensus < Part-2 / Japanese Management : Art and Practice > ...

Improvements can be achieved thru step-by-step incremental progress or thru a-big-breakthrough-jump .... this is basic difference between Japanese way & West way of doing.

If lean production represents the core of "the Japanese miracle," there are two other ingredients that, until relatively recently, were also considered indispensable parts: the doctrine of continuous improvement, or kaizen, and the value of consensus, especially when applied to long-term strategic thinking. A good way to look at both is through the work of Kenichi Ohmae.
Mr. Ohmae is now best known inside Japan for his attempt to set up a new political party. But he began to write the books that made his name in the rest of the world while working as a consultant for McKinsey & Company.

For most of the past quarter century, outsiders, particularly American business people, have been fascinated and frightened by Japan. Mr. Ohmae has explained it to them -- showering his books with good insider examples of how Japanese companies work and usually criticizing American firms in the process.

Mr. Ohmae has generally tended to exalt the Japanese way of making new products through continuous improvement. Innovation, he argues, is useless unless it adds value for consumers. He tends to pour scorn on big R.&D. projects, such as high-definition television, and revels in meeting challenges incrementally, particularly in mundane fields. Can you make a better coffee machine -- i.e., not just one with lots of fancy gadgets but one that makes better coffee? Yes, we discover, if you add a water purifier, because the taste of coffee depends as much on the quality of the water as it does on how you percolate the beans. Can you make a better camera? Yes, if you get it to do the focusing for you (i.e., removing the human error that ruins most pictures) and include an automatic flash.

A strategy of churning out products with lots of minuscule improvements fits in quite nicely with lean production. After all, one advantage of a flexible assembly line is that it can be altered quite easily to incorporate a new insight and include a new innovation. It also means that you can smother your market with new versions of the same old thing. One classic example of this process was the Sony Walkman, which came in hundreds of different shapes and sizes. Japanese companies such as Sharp and Canon have often jumped ahead by mixing different sorts of technology, such as photography and office machines. One way Japanese car makers have generally outfoxed their rivals is by rapidly updating their model range and adding extras such as vanity mirrors and intermittent windshield wipers. By contrast, American and European manufacturers have seemed obsessed with a "one big solution'' approach to research.

The trick of Japanese management is to marry this relentless incrementalism to a long-term strategy based on consensus. Mr. Ohmae points out that while Western companies modeled themselves on the military, with clear lines of command and a rigid distinction between the officers (who do the thinking) and the rest, Japanese firms are rooted in village communes."Grossly oversimplifying," Mr. Ohmae writes, "one could say that in Japan every member of the village is equal and a generalist." Rather than issuing orders from on high, Japanese companies prefer to put their emphasis on nemawashi (consensus building) and ringi (shared decision-making). The hope is that every decision will spring from tireless discussion, with managers obliged to gain the enthusiastic support of their workers.

This emphasis on communal decision-making means that the Japanese have an idiosyncratic approach to leadership. Where American bosses are brash and bullying, their Japanese counterparts are modest and retiring; and where Americans live to make decisions, the Japanese prefer to let decisions make themselves. They like to compare leadership to air -- necessary for life but invisible and insubstantial. They rise up the corporate ranks by out-conforming their colleagues, religiously putting the group before the individual, and, having reached the top job, lead by consensus rather than command. It is not unusual for leaders to sit in silence throughout much of a meeting, while their underlings debate the pros and cons of policy. The art of leadership is to divine the will of the group, not to electrify the organization with charisma.

It also means that the Japanese have an idiosyncratic approach to forming long-term strategy. In the West, strategy has traditionally been clear and definite, drawn up by professional strategists and written down in formal plans. In Japan, it is a much looser affair, generated by the whole organization and expressed in terms of visions and missions rather than precise plans.To the Western mind, producing plans like this is a recipe for disaster. But, according to Mr. Ohmae, the Japanese can do it because it fits in with their general approach to employment. The system of lifetime employment means that core workers identify with the long-term future of the company. The habit of rotating people among different departments means that they soon come to think like strategists. And the convention that everybody must start on the shop floor means that senior managers know what is going on in the guts of their organizations.