The Japanese Management - 1
Japan – the land of the rising Sun. This small bunch of islands had always been under constant threat of volcano, earthquake and subsequent tsunamis; add to that the lack of natural resources and minerals. But post World War II era saw the mesmerizing rise of this country.
Well, a few centuries back, Japan was a closely guarded secret for the West. But as Japan started opening up its avenues for the westerners, the latter came to know about a lot of things that took them by surprise about the potential this small country held. By the turn of the century, the decisive win of Japan over Russia in 1905 clearly sent out signals to the West to take them seriously. As described in earlier Gyans, Japanese companies were making significant industrial progress, following the footsteps of their American counterparts. But with the World War II clouds gathering over Japan, the success of Japanese companies was soon to get eclipsed as they were forced to convert their factories to fulfill the country’s wartime needs. Subsequent destruction of Japan and iron clawed controls of US regime only made sure that the conditions would be as hostile and hopeless as possible for the industries to blossom. Japanese goods had a really bad reputation in the market. So much so that, in his famous song “Mera Joota hai Japani”, Raj Kapoor is shown wearing a torn shoe!
But in spite of all the odds, Japan sprang back to life in such a way that it can only be compared with that of Phoenix. It quickly surpassed the developed countries. Their economy was growing at a rate of 10% during 70’s. Even when the Japanese economy went through a major crisis in the 90’s, its GDP was 80% of that of US, in 1995! Giving US companies doses of their own medicine, Japanese companies made them run for their money. The whole of US industry pundits were divided into two clear sides: One who admired everything about Japan and the other who hated them equally! This hatred was expressed time and again so much so that in a movie “Rising Sun”, the Japanese Managers are shown devilish!
Well, whatever may be the consequences of the Japanese rising and downfall, the small country has contributed a lot to the world of Management.
It all started with a couple of neglected stars: W. Edwards Deming and Joseph M. Juran. I am running short of space and time to write in depth about Deming and Juran here. But, in short, these two can be attributed to think first about the quality. According to Deming, whenever we do an action, there is a “process” involved. If the process is faulty, the end product would obviously be faulty. The Management itself is largely responsible for the defects and should be held by the neck rather than the workers. It was he who introduced the concept of Total Quality Management. In essence, Quality is not a one time activity but a continuous process.
As fate would have it, no one in US listened to their words of wisdom and they were well forgotten. It was General McArthur who invited Deming and Juran to Japan to pull the Japanese industry from the shabby conditions they were in. Throughout the 1950 to 1970, through endless speeches and consulting, Deming – Juran explained the importance of quality to Japanese engineers and entrepreneurs. The efforts were soon to bear fruits.
In 1980, NBC ran a program named “If Japan can, why can’t we?” in view of Japan’s surprising progress. It was only then that America recalled their forgotten heroes. Soon, invitations and felicitations flowed in for Deming – Juran back in their home country. The circle was thus complete.
The year 1981 saw two books becoming bestsellers – William Ouchi’s “Thoery Z” (about which I had briefly talked in an earlier Gyan” ) and “The Art of Japanese Management” by Pascale and Athos. Even though, the subjects of these books were essentially different, they shared a common thread – Praise for Japanese Management. This started a flurry of American Managers making rounds of Toyota factories. On a lighter note, these managers were heard saying, “Let’s go for the Toyota pilgrimage”! The flow had changed its direction from Japan to US to the other way round.
Apart from the great work done by Deming and Juran, there were inherent differences between American way of doing business and that of Japanese. Even though, early Japanese managers made trips to US to learn about their industries, they made sure that they customize the processes learnt to suit the Japanese culture.
The basic difference between a Japanese and a US company is their hiring policy. In US where you are handed a pink slip the moment your performance goes down or the management doesn’t find a place to fit you in the system, in Japan Life time Employment is almost guaranteed, unless you don’t really mess up with your career. The Japanese companies are very careful while recruiting people because for them, it is a life time deal compared to the “Hire and Fire” policy of the US companies. In Japan, a lot of effort goes in training the newly recruited people so that they become good enough in all the major aspects of the business. As Akio Morita of Sony puts it, it’s like building a wall using stones of different shapes. If you want to build a new wall of different size and shape, you don’t need to throw all these stones away. All you need to do is to just rearrange them to suit your needs. Precisely, that’s what the Japanese companies do. For the all-round development of employees, they are frequently shifted from department to department, making sure that the job doesn’t get monotonous that way.
The hierarchy of the Japanese companies is driven by seniority rather than by merit. Even within the ranks of Management, there are grades. Depending upon seniority, the person is put in appropriate grades and ranks. Although the ranks drive the salaries and compensation, thanks to the Job rotation policy, they may not necessarily define the job. Also, as any person, in his early years, is basically a member of the union, he can correlate his experience as a worker once he is promoted to become a manager.
In US, whatever the Boss says, it is taken as the final verdict. In Japan, however, more stress is given on explaining the workers why they are doing what they are doing. A multilayer discussion right from the bottom most people – who are actually going to execute the decision – to the top management happens. This method is called “Ringiseido” As the workers are also involved in the decision making process, they contribute towards the betterment of the process and feel a part of it. Although, this process is time consuming, once the decision is made, the execution is very quick.
Back in US, Toyoda had observed piles after piles of inventory lying and rusting. Learning from that experience, he founded the JIT concept in Japan where the space crunch was always faced. The concept of JIT – Just – in – Time is simple. Whatever parts are required for assembling; only those would be supplied just before starting with the assembly. In Toyota, for example, parts required for the production in next one hour only are stored. Instead of keeping the raw material / subcomponents just lying around – which in turn means locked money – they are moved or ordered from the suppliers as and when needed, reducing wastage of time and money. An interesting note here is: Even Ford implemented JIT in their plants at River Rouge. It became so effective over a period of time that when the miners went on a strike in some other part of the country, the plant at River Rouge stopped its production within next 4 hours!
As can be seen, the success of JIT depends a lot on the suppliers. The manufacturing company needs to have good relationship with the suppliers. Many a times, the manufacturing company itself holds a stake in the supplier company. Such supplier companies are called as “Keiretsu” Managers from the parent company move to the Keiretsu Company in order to maintain bonds with them. Due to such strong bonds with the suppliers, the Japanese companies manage to produce double the cars compared to their American counterparts.
The supplier sends a card along with the material. This card is called as “Kanban” As the stock of materials deplete, the card is sent back to the supplier to indicate that it’s time to replenish the inventory.
As preached by Deming and Juran, quality is maintained at every stage of the process. Even a worker on the shop floor can stop the whole assembly line if he finds some defect. In a company which manufactures a car every minute, this delay would mean millions. But to the Japanese companies, these millions are well spent if they prevent a faulty piece to roll out of the assembly line. This practice is called as “Jidoka”. Every worker tries to improve the quality and the process. This continuous improvement is called as Kaizen and the groups of workers who discuss about the scope of improvement are called as Quality Circles.
A single concept mentioned above is worth writing pages after pages and I have just touched upon them very briefly. I’m sure I’ve missed out on many details like Poka Yoke and other such ideas Japanese Management gifted to the world.
After talking about all the good things, a small note on why it failed at some points.
As mentioned above, the continuous improvement is an integral part of Japanese Management. But while the company is busy improving the existing products only, the development of new concepts and products are neglected. A couple of good examples could be:
1) Japanese companies were trying to improve on the memory storage devices when their competitor Intel moved out of it and got a decisive headstart in Microprocessor manufacturing – a field hardly thought of by Japanese.
2) As Japanese companies continued improving cassette players and related stuff, advent of CDs, MP3 Players and computers took them by surprise.
How Japan became a major power in industry and how US companies retaliated to the Japanese all round attack is all very interesting and enriching. About that some other time some other day, but the fact remains that the Japanese Management did leave its mark on the whole world…
Regards,
Abhishek
Well, a few centuries back, Japan was a closely guarded secret for the West. But as Japan started opening up its avenues for the westerners, the latter came to know about a lot of things that took them by surprise about the potential this small country held. By the turn of the century, the decisive win of Japan over Russia in 1905 clearly sent out signals to the West to take them seriously. As described in earlier Gyans, Japanese companies were making significant industrial progress, following the footsteps of their American counterparts. But with the World War II clouds gathering over Japan, the success of Japanese companies was soon to get eclipsed as they were forced to convert their factories to fulfill the country’s wartime needs. Subsequent destruction of Japan and iron clawed controls of US regime only made sure that the conditions would be as hostile and hopeless as possible for the industries to blossom. Japanese goods had a really bad reputation in the market. So much so that, in his famous song “Mera Joota hai Japani”, Raj Kapoor is shown wearing a torn shoe!
But in spite of all the odds, Japan sprang back to life in such a way that it can only be compared with that of Phoenix. It quickly surpassed the developed countries. Their economy was growing at a rate of 10% during 70’s. Even when the Japanese economy went through a major crisis in the 90’s, its GDP was 80% of that of US, in 1995! Giving US companies doses of their own medicine, Japanese companies made them run for their money. The whole of US industry pundits were divided into two clear sides: One who admired everything about Japan and the other who hated them equally! This hatred was expressed time and again so much so that in a movie “Rising Sun”, the Japanese Managers are shown devilish!
Well, whatever may be the consequences of the Japanese rising and downfall, the small country has contributed a lot to the world of Management.
It all started with a couple of neglected stars: W. Edwards Deming and Joseph M. Juran. I am running short of space and time to write in depth about Deming and Juran here. But, in short, these two can be attributed to think first about the quality. According to Deming, whenever we do an action, there is a “process” involved. If the process is faulty, the end product would obviously be faulty. The Management itself is largely responsible for the defects and should be held by the neck rather than the workers. It was he who introduced the concept of Total Quality Management. In essence, Quality is not a one time activity but a continuous process.
As fate would have it, no one in US listened to their words of wisdom and they were well forgotten. It was General McArthur who invited Deming and Juran to Japan to pull the Japanese industry from the shabby conditions they were in. Throughout the 1950 to 1970, through endless speeches and consulting, Deming – Juran explained the importance of quality to Japanese engineers and entrepreneurs. The efforts were soon to bear fruits.
In 1980, NBC ran a program named “If Japan can, why can’t we?” in view of Japan’s surprising progress. It was only then that America recalled their forgotten heroes. Soon, invitations and felicitations flowed in for Deming – Juran back in their home country. The circle was thus complete.
The year 1981 saw two books becoming bestsellers – William Ouchi’s “Thoery Z” (about which I had briefly talked in an earlier Gyan” ) and “The Art of Japanese Management” by Pascale and Athos. Even though, the subjects of these books were essentially different, they shared a common thread – Praise for Japanese Management. This started a flurry of American Managers making rounds of Toyota factories. On a lighter note, these managers were heard saying, “Let’s go for the Toyota pilgrimage”! The flow had changed its direction from Japan to US to the other way round.
Apart from the great work done by Deming and Juran, there were inherent differences between American way of doing business and that of Japanese. Even though, early Japanese managers made trips to US to learn about their industries, they made sure that they customize the processes learnt to suit the Japanese culture.
The basic difference between a Japanese and a US company is their hiring policy. In US where you are handed a pink slip the moment your performance goes down or the management doesn’t find a place to fit you in the system, in Japan Life time Employment is almost guaranteed, unless you don’t really mess up with your career. The Japanese companies are very careful while recruiting people because for them, it is a life time deal compared to the “Hire and Fire” policy of the US companies. In Japan, a lot of effort goes in training the newly recruited people so that they become good enough in all the major aspects of the business. As Akio Morita of Sony puts it, it’s like building a wall using stones of different shapes. If you want to build a new wall of different size and shape, you don’t need to throw all these stones away. All you need to do is to just rearrange them to suit your needs. Precisely, that’s what the Japanese companies do. For the all-round development of employees, they are frequently shifted from department to department, making sure that the job doesn’t get monotonous that way.
The hierarchy of the Japanese companies is driven by seniority rather than by merit. Even within the ranks of Management, there are grades. Depending upon seniority, the person is put in appropriate grades and ranks. Although the ranks drive the salaries and compensation, thanks to the Job rotation policy, they may not necessarily define the job. Also, as any person, in his early years, is basically a member of the union, he can correlate his experience as a worker once he is promoted to become a manager.
In US, whatever the Boss says, it is taken as the final verdict. In Japan, however, more stress is given on explaining the workers why they are doing what they are doing. A multilayer discussion right from the bottom most people – who are actually going to execute the decision – to the top management happens. This method is called “Ringiseido” As the workers are also involved in the decision making process, they contribute towards the betterment of the process and feel a part of it. Although, this process is time consuming, once the decision is made, the execution is very quick.
Back in US, Toyoda had observed piles after piles of inventory lying and rusting. Learning from that experience, he founded the JIT concept in Japan where the space crunch was always faced. The concept of JIT – Just – in – Time is simple. Whatever parts are required for assembling; only those would be supplied just before starting with the assembly. In Toyota, for example, parts required for the production in next one hour only are stored. Instead of keeping the raw material / subcomponents just lying around – which in turn means locked money – they are moved or ordered from the suppliers as and when needed, reducing wastage of time and money. An interesting note here is: Even Ford implemented JIT in their plants at River Rouge. It became so effective over a period of time that when the miners went on a strike in some other part of the country, the plant at River Rouge stopped its production within next 4 hours!
As can be seen, the success of JIT depends a lot on the suppliers. The manufacturing company needs to have good relationship with the suppliers. Many a times, the manufacturing company itself holds a stake in the supplier company. Such supplier companies are called as “Keiretsu” Managers from the parent company move to the Keiretsu Company in order to maintain bonds with them. Due to such strong bonds with the suppliers, the Japanese companies manage to produce double the cars compared to their American counterparts.
The supplier sends a card along with the material. This card is called as “Kanban” As the stock of materials deplete, the card is sent back to the supplier to indicate that it’s time to replenish the inventory.
As preached by Deming and Juran, quality is maintained at every stage of the process. Even a worker on the shop floor can stop the whole assembly line if he finds some defect. In a company which manufactures a car every minute, this delay would mean millions. But to the Japanese companies, these millions are well spent if they prevent a faulty piece to roll out of the assembly line. This practice is called as “Jidoka”. Every worker tries to improve the quality and the process. This continuous improvement is called as Kaizen and the groups of workers who discuss about the scope of improvement are called as Quality Circles.
A single concept mentioned above is worth writing pages after pages and I have just touched upon them very briefly. I’m sure I’ve missed out on many details like Poka Yoke and other such ideas Japanese Management gifted to the world.
After talking about all the good things, a small note on why it failed at some points.
As mentioned above, the continuous improvement is an integral part of Japanese Management. But while the company is busy improving the existing products only, the development of new concepts and products are neglected. A couple of good examples could be:
1) Japanese companies were trying to improve on the memory storage devices when their competitor Intel moved out of it and got a decisive headstart in Microprocessor manufacturing – a field hardly thought of by Japanese.
2) As Japanese companies continued improving cassette players and related stuff, advent of CDs, MP3 Players and computers took them by surprise.
How Japan became a major power in industry and how US companies retaliated to the Japanese all round attack is all very interesting and enriching. About that some other time some other day, but the fact remains that the Japanese Management did leave its mark on the whole world…
Regards,
Abhishek
posted by Gyan for the Day! | 5:10 am
1 Comments:
Oooohhhh. SO this is why Japanese manufacturing company (especially in the Philippines) like PAPTI really excelled in their particular industry. Really cool!
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