By the late 70s, the West had started to notice how successful Japanese industry had become. In industry after industry, including steel, watches, ship building, cameras, automobiles, and electronics, the Japanese were surpassing American and European companies. Westerners wanted to know why.
Numerous theories were put forward to explain the Japanese success including:
- Higher employee morale, dedication, and loyalty;
- Lower cost structure, including wages;
- Effective government industrial policy;
- Modernization after WWII leading to high capital intensity and productivity;
- Economies of scale associated with increased exporting;
- Relatively low value of the Yen leading to low interest rates and capital costs, low dividend expectations, and inexpensive exports;
- Superior quality control techniques such as Total Quality Management and other systems.
Although there was some truth to all these potential explanations, there was clearly something missing. In fact by 1980 the Japanese cost structure was higher than the American. And post WWII reconstruction was nearly 40 years in the past. The first management theorist to suggest an explanation was Richard Pascale.
In 1981, Richard Pascale and Anthony Athos claimed that the main reason for Japanese success was their superior management techniques. They divided management into 7 aspects:
- Strategy
- Structure
- Systems
- Skills
- Staff
- Style
- Shared values
The first three of the 7 S's were called hard factors and this is where Western companies excelled.
The remaining four factors were called soft factors and were not as well understood by European and American businesses of the time. Great value was not placed on corporate culture, shared values and beliefs, and social cohesion in the workplace. In Japan the task of management was seen as managing the whole complex of human needs, economic, social, psychological, and spiritual. Elsewhere, work was seen as something that was separate from the rest of one's life. It was quite common for Americans and Europeans to exhibit a very different personality at work compared to the rest of their lives.
What this means
Businesses that succeed do so by:
- Getting to know the customer, and therefore providing better value for the customer than competitors;
- Treating staff with respect and being rewarded with productivity;
- Sticking to what they know well, and keeping things simple.
No comments:
Post a Comment