Introduction to Management

Fourth edition

by Richard Pettinger

Lessons from Japan

The concept, practices and approaches adopted by managers in Japanese companies, especially those working in the countries of the EU and North America, are of interest for a variety of reasons. First, and most important, is clearly that concerned with commercial success; the Japanese 'economic miracle' of the period since the end of the Second World War is of critical global importance. However, there are other matters, both cultural and practical, which merit careful study, impacting as they do upon the activities of all companies and sectors.


Example 4: Attitudes to Quality

Organisations in all sectors have had to take an individual and involved attitude to their own product and service quality. This has arisen as the result of the transformations on product and production quality pioneered by Japanese manufacturing companies in the 1960s and 1970s, and which has set the standard for product performance ever since.

Paradoxically, attention to product and service quality was first developed in the UK and USA, through the need for standardisation and predictability that scientific management was supposed to deliver. However, this came to concentrate very narrowly on volume output, and with insufficient attention to quality; and so the result was the capability to produce large numbers of items the performance of which was unreliable and unpredictable.

However, attention to quality became understood in Japan as a critical factor in any drive for western market penetration; and so the Japanese companies made it an integral part of the continuous product development process in organisations.

In support of the drive for High quality products and outputs, Japanese companies introduced

quality circles and made them effective. A quality circle is a group of staff who meet on a regular basis to review the whole area of quality at the workplace. This involves identifying and clarifying problems, selecting issues from among these for resolution, organising and prioritising them, setting deadlines, timetables and target dates, and setting aims and objectives by which the improvements in the quality of the organisation's operations can be measured. To be effective, they require accommodation, resourcing and support from the organisation and a commitment to back the judgements of the quality circle. Organisations have to recognise that there is a pay-back, not only in improvement in quality or, at least, in problem identification, but that this is also instrumental in promoting the desired attributes of greater commitment, achievement, identity and participation by all concerned. Quality circles are voluntary, generating and selecting their own leadership, frequency and timing of meetings, and precise agenda format.

Where quality circles have worked, especially in Japanese companies, it has been because there is a greater cultural pressure to participate, together with an environment created that is both conducive to, and expectant of, a full measure of involvement (whether something is actually designated as being voluntary or not). There is also a clear, direct and visible relationship between the process of the quality circle, and the performance of the company and its products and outputs.


Gambara

There is a work ethic traditionally imbued by society that is manifest in a number of ways. A basic concept is gambara that means: 'don't give up, do your best, be persistent, put in a great effort'. This lies at the core of the Japanese work ethic. There is also a high concept of service which is much more widely regarded than elsewhere in the world - service is regarded as being not only at the customer interface, but also over the lifetime of the products provided, and also for new products and models and their lifetime to the customer. The Japanese work for the good of their group and their company above all; the view adopted is that the whole only functions effectively when all its component parts are, in turn, functioning to full effect and capacity.

The relationship between work and society is vital. Bad business is regarded as a waste of the resources of the society. Service to the society is performed through the high industrial, commercial and managerial virtues of fairness harmony, cooperation, and continuous betterment of quality, courtesy, humility, adjustment, assimilation and gratitude. Responsibility in all these spheres is fostered through managerial arrangements at the workplace; and the inherent requirement for obedience, conformity and respect are combined with an enlightened and egalitarian view of society that is the equivalent of 'from each according to his means, to each according to his needs'.

This is based on the management summary by R.T. Pascale and A. Athos 'The Art of Japanese Management', and is a variation on the 7S Model of Excellent Organisations. It illustrates the centrality of long-term commitment.

A systems approach to Japanese Management. The key input is INVESTMENT: the key output is a 'secure' FUTURE.


Figure 1 Japanese Management

The concept of interdependence also runs through Japanese companies (see Figure 2.1). This also is viewed in the widest context. As well as relationships between organisation and customer, regard is given to those relationships between the individual and his work group, interrelationships between groups, the concept of self-restraint, cohesion and harmony, senior/junior and mentor/protégé relationships. The individual is valued for his contribution on all fronts: team, group, divisional and corporate.

Japanese management practices are designed actively to prevent problems from arising. This is distinct from elsewhere in the world where great store is often set by the ability of the manager to resolve problems. The Japanese manager is expected to resolve these as and when they do occur. This, however, should be kept to a minimum; and organisation and managerial style reflect this.

The decision-making process is a combination of nemawashi, which means 'binding the roots' and has come to mean 'thorough preparation'; and ringi which is the outcome of this. In practice, the process involves full consultation and the engagement of the cooperation of all those who are to be affected by a decision before it is taken. Preparation and pre-preparation time and effort is everything; and to those who do not come from within the culture, it is said that the process appears inert for a very long period. However, once ringi is reached, once everyone's support is engaged, it is understood that the matter in hand will go ahead at full speed from that point onwards, because there is nothing further to consider. The provision of information and the means for full participation, involvement and consultation on the part of all is critical to the success of operations if this style of management is to be adopted successfully and effectively. Japanese companies adopt a philosophy of 'management of the whole organisation', not a series of components. It is the effective functioning of the whole that is critical to operational success, not some of the parts only. To this extent adequate and effective communication and consultation systems are essential.


Kaizen

Kaizen refers to the constant progress of humanity, and the continuous striving for perfection. In management terms, this has become 'constant continuous improvement'. It refers to all aspects of all organisations:

  • continuous staff training and development;
  • continuous product improvement;
  • continuous production and output improvement;
  • continuous attention to procedures and administration to make these as simple and clear as possible;
  • continuous attention to the 'whole' - the Japanese organisation is seen overwhelmingly as one entity, rather than a collection of parts and divisions.

At its best, the result is continued output of high volumes of high quality products, often at premium (i.e. high) prices. This is supported by adaptation and innovation rather than creativity - the Japanese have no particular reputation for invention and creation; they are experts at taking existing products and improving each and every aspect. This is, in time, supported by an absolute commitment to high levels of investment in all aspects of staff, business and technology. It is reinforced by the high levels of expectations placed on staff, the high degree of conformity required, and the high levels of pay offered. Japanese companies set out to offer lifetime employment to their staff, and lifetime service to their customers. This can only be achieved if the company exists for a lifetime, and ensuring this is the required result of Kaizen.


Mu

Related to Kaizen is Mu, or 'complete openness'. This constitutes a refusal to be hidebound by policies, constraints, directions and structures. It means being receptive to ideas, innovations, opportunity and potential; and engendering the qualities of vitality, flexibility, and adaptability, to organisations and their staff. The guiding principle of the company is to 'live for a long time', rather than to be 'the best airline' or 'the best car company'. It was this approach that enabled Mitsubishi to transform relatively easily from shipbuilder to car makers. Purposes and goals are set according to the demands and opportunities of the business-sphere, rather than preordained internal strategies - indeed, corporate strategy consists of having the staff, capital, technology and capability to respond to these demands and opportunities.

In the pursuit of this, the Japanese company sets great store by creative, innovative and extensive research and development activities. Only by investing and prioritising heavily in these areas is a continuing run of fresh offerings for the markets ensured. In addition, different applications for existing technologies may be found in this way, as are capacities for introducing a hitherto exclusive product to mass markets.

In the pursuit of this also, the Japanese company takes a very different view of failure from that elsewhere. Failure is when a commercially offered product fails to satisfy the customer. It is not a judgement generally made at the research or inception stage. Any product or idea that is generated, but which does not progress to the output stage, is nevertheless retained as the subject for the research or prudent activity, or else is kept in storage until market perceptions change and it can be commercially developed at a later date. Finally, while it may come to nothing in itself, the creative spark that engendered it may come up next with a market leader.

The stakeholders in an organisation and their relative positions of importance may easily be inferred from this. Staff come first - success is only possible through top quality, secure employees. The major Japanese corporations adopted philosophies of lifetime employment and have managed to practise this up to the present day (though there are signs of current difficulty in some organisations). Customers are next. Third comes the shareholder, very often one of the large banks, and often also, underwritten by the Japanese exchequer. In addition, shareholders are often customers of the companies that they underwrite. The emphasis on continuity, performance, satisfaction and the customer is therefore underlined again, rather than, as elsewhere, concentrating on dividends and shareholder benefits. Japanese consumers want the best. They expect this to extend across the entire range of consumer goods and services based on principles of continuity, service and quality enhancement.

The other reasons for the initial and continuing success of Japanese companies are as follows.

  • Conformity: and the harnessing of this characteristic of Japanese society to the requirements of profitable business; in order for this to be successful, it requires vision and direction from the top of companies that is both profitable and worthy of respect from the staff and customers.
  • Adaptation and adaptability: very few of the products made by Japanese companies were invented in Japan; Japanese technologists, researchers and business developers have rather seen the potential of inventions from other parts of the world adapted to existing products for other purposes; been able to standardise production both to a high level of quality, and to a price that makes the products available to mass consumer markets; and been willing to promote and develop a full range of related products, after-sales and back-up services to ensure a high level of repeat business.
  • The emphasis placed on the long term, rather than the immediate, return. There is an advantage in the financial system of Japan, which basically consists of the underwriting of Japanese business and industry by the government (at least over the short to medium term); this in turn allows both flexibility and confidence on the part of the industry to experiment, to pioneer, to develop new products and initiatives in the expectation of long-term success and profitability, without having short-term financial products or targets as priorities.
  • Investment in staff training at all levels of the organisation: for example, Nissan spent millions of pounds and dollars training production operatives at Washington, Tyne and Wear, UK, and Smyrna, Tennessee, USA, before a single car was produced; as well as the high quality of the finished product, the returns are measurable in terms of employee commitment, positive attitudes, identity (rather than alienation), and minute levels of absenteeism.
  • Concentration on, and commitment to, the development of managers and supervisors: especially in the areas of staff management and problem-solving there is great pressure on the manager in a Japanese company to resolve issues successfully himself, rather than refer them through 'channels' (as in a more traditional Western bureaucracy); there is also a great cultural pressure not to get into institutionalised disputes, and above all, not to lose them.
  • Single workplace status: there is a strong social hierarchy in Japan; it is reflected to an extent at the workplace, in that the senior is worthy of respect; however, the workplace requires that this is translated into business needs only, and in this situation everyone is important in their role, whatever that may be; it is usual for everyone to wear the same uniform; to go through the same basic induction and orientation programme; to use the same facilities (e.g. canteen, restaurant and recreation); and to be on the same basic terms and conditions of employment.
  • A strong identity on the part of all staff with the company is both required and insisted upon: in managerial and professional occupations within the organisation this may involve, for example, working very long hours, taking an active part in corporate hospitality and business-related activities in the evening. Similarly, activities designated 'voluntary', are not voluntary to such staff in Japanese companies.

Example 5 Konosuke Matsushita (1892-1989)

Matsushita founded what is now the largest consumer electrical and electronic goods company in the world, and was also a much respected Japanese manage­ment guru.

He embodied all the principles outlined here. The three qualities that he required of his production processes were, high volume, high quality and low prices. Staff were taken on for life time employment and the company accepted any obligation inherent in that for re-training and development as new technologies came on stream and had to be used.

Matsushita was an advocate of different management styles, in different parts of the organisation. This should also apply in organisations of different size, technol­ogy, sophistication and complexity. Finally, management style must also change as the organisation itself changes, grows and diversifies; it is not possible to find a single successful formula by which it would work. He summarised this as: when to lead from the front; when to lead from the middle; and when to lead from behind.

He adopted the painstaking and deliberate expansion, development and diver­sification policies of the concept of nemawashi and ringi, so that risk was eliminated as far as possible from such initiatives and business success was, for a long period of time, assured.

He was a proponent of the business relationship between society and industry, advocating that it should be mutually profitable. Business operations that were not profitable should be closed down.

His leadership style was that of benevolent, enlightened and commercially orientated paternalism. He kept in constant touch with his senior managers, and also regularly visited all of his plant and production areas. He commissioned a company song that all employees had to sing at the start of each working day. He preached the virtues of self-sacrifice and self-discipline in the pursuit of company permanence and excellence. By doing this, all would benefit - company, custo­mers, staff, and Japan.

The lessons from Japan are at present being translated into activities or planned activities in China, India and central and eastern Europe – the former communist states of the EU. However, those organisations and managers who wish to ensure that the same success is enjoyed in these locations as was the case with Japanese companies, are going to have to ensure that they make the same kind of commitments. Especially, much of the ‘investment’ presently being carried out by western companies in China, India and eastern Europe, is delivering the perception that they are going there only because it is cheap. And this is no basis for enduringly productive and profitable ventures.