| Back to Top | White Papers | Keith & Faye's Home Page | Photo Albums |
During the past several years, I have had the privilege of studying various management techniques and approaches to quality in use in Japan and North America. I have also had extensive dialogues with employees and managers around the world, both in tr
aditional enterprises and in Baldrige-winning companies.
What I will do here is put forth my ideas about what is good about the Western business culture in comparison to Japanese culture. I will make this comparison in a black and white fashion for the purpose of illustration, when we all know that the worl
d is varying shades of gray.
Specifically, there will be obvious exceptions to each point that I make. I will contend that The Exception Proves the Rule. The very existence of such exceptions tends to reinforce the fact that they are NOT the norm, and,
in reality, they reinforce the basic premise of this article.
What I have done is to document what may represent the respective positions of the two cultures on a variety of items, based on what is available or observed through behaviour or through opinions from numerous sources. So here is a summary of my black
and white comparisons to stimulate dialog:
Component America Japan
National Life, liberty and the Become the premier economic
Vision: pursuit of happiness force in the world
Skills: Arts, economics, politics, Science, engineering, quality,
management, law, medicine, process control, other...
(in order) engineering, science
Education: 30 hours/week for 10/8 mos 48 hours/week for 12 months
Culture: Strength through diversity Unitary (and closed)
Work Individual competition - Teamwork - Face-saving and in
Approach: may the best person win! pursuit of common goals
Large Promotion/entitlement Fanatical focus on beating the
Corporate through networking and competition at all costs
Model: seniority
Innovation Invent its own and protect Adopt wherever practical and
Sources: it through various barriers excel through execution
Success Superior innovation Superior execution
Model:
Rewards: Satisfy the boss, conform Produce superior output, apply
to culture, look good ideas effectively, be good
Role Model: Best gun in the west Baseball team player
Raw Good access Poor access
Material:
Close to Good (North America/Europe) Limited (Great for High Tech)
Markets:
Financial Good (Wall Street) Excellent (Tokyo Banks)
Depth:
Investment Medium range (but manage Long range (at short term pain)
Attitude: the next quarter too!)
While there are many successful companies that operate on the right hand side of this table in North America today, think of the number of people in aggregate that are employed in our large corporations and government agencies that operate on the left
side. I am asking you to accept the basic premise that differentiates the two extremes, even if you may have trouble with some of the components.
The challenge to a culture in the 1990s is to gain maximum return on Intellectual Capital. To do this, we must set our free spirits truly free of the bondage of institutional procedures and hierarchy that have grown entrenche
d in stone during our period of unprecedented prosperity. I am not proposing corporate anarchy here, only that those who are innovative and creative be given opportunities to direct those strengths in the direction ("vision") that their organizations want
to go. Some freeing from the rules of business cases and procedures will be needed to help this process.
In the past, financial market concentration and strength helped many North American companies to succeed in developing their initiatives. This often compensated for the relatively low numbers of innovative ideas that made it through the maze of organi
zational roadblocks.
Today, the financial markets are truly international, and no longer are a source of international competitive advantage for North America as they have been in the past. In fact, the financial market power has shifted to the Far East along with the Ind
ustrial Revolution. Low cost labor aggravates this shift as major North American manufacturers actively seek facilities in the Far East to maintain their competitive advantage.
On the technology side, many organizations have relied on patent protection to guarantee a fair return on their investments in spite of inefficiencies and delays in getting their products to market.
Most patents are only transient protection because alternative innovations will present opportunities for competition. Licence revenues from such patents will be small in comparison to the earnings opportunities from superior execution of the innovati
ons in global markets.
In spite of all this, there is significant opportunity for sustained competitive advantage. The world is in the midst of a long term migration to a service-based economy. Manufacturing has been migrating to the best place that combines low cost mater
ial supply, low cost manufacturing, and low cost distribution expense. This trend is impacting Japan now like it impacted North America during the last decade. Western cultures definitely have the lead in developing services for their more demanding set
of users.
The challenge facing us is to do a realistic assessment of our strengths internationally, and find ways to capitalize on those strengths in the international world of commerce.
Many business leaders are trying to adopt the techniques which the Japanese have used successfully. This is a good idea. However, many of these approaches have been successful because Japan has been working at them for several decades. Others have b
een well-suited to their inherent cultural differences.
While we should continue to adopt approaches that make sense regardless of where they were invented or have been successfully applied first, we also need to recognize the possibility that the best we might achieve with this approach is second place whe
n the approaches have already been successful elsewhere (especially where they are better suited to these other cultures).
The remainder of this article will focus on those aspects of our culture which can provide us with leverage to achieve a leadership position because they are fundamental to our culture. I will take each of the categories in the table above and propose
an approach to take advantage of the unique American strengths.
Vision
The apparent dominance of the arts and other leisure-time pursuits by American creators suggest that the vision of life, liberty and the pursuit of happiness has produced rewards in the culture and output of the nation. These tend to be classed as As Japan Inc. has maintained the focus on worldwide economic domination, much of the social development in soft skills have been ignored in favour of hard skills that are often the outgrowth of science and engineering. The pursuit of freedom as a fun
damental underpinning of our culture has resulted in a diverse set of soft skills emerging. These skills are often the result of a higher liberal arts content in the chosen field of endeavour. Many industrial leaders throw up their hands in panic and sa
y we must increase the content of science and engineering. While this would help, it is by nature a long term pursuit, and cannot result in any impact during the 1990s. A more pragmatic approach is to determine what business endeavours will benefit from such soft skills and aggressively develop them and export the results of those developments. Let me give two examples. First, the concept of DisneyLand has been succ
essfully exported to both Europe and Japan. This evolved from the inherent creativity indigenous to North America AND the availability of leisure time. Even the European operation is eventually expected to build a local market as well as to attract an e
xceptional number of Japanese tourists. We have over two decades of experience in perfecting this outstanding outlet for leisure time and in creating a fantasy world of illusion. Secondly, the worldwide acceptance of Hollywood as the source of fantasy is clearly a testimonial to the creativity and innovation that result from the American culture. Not only does this represent a major worldwide triumph, but even the Japanese hav
e recognized that they cannot catch up and must acquire these skills because they are dependent on our unique cultural evolution. The analogy is used that the Japanese can dominate the hardware business (in this case, VCRs and other audio/visual reproduc
tion equipment) while North America dominates the software business (the set of creative material that makes the hardware deliver value to the end users). Sony's acquisition of CBS Columbia really underscores this phenomenon. What I am saying is that the entertainment industry has grown out of the Pursuit of Happiness as part of the national vision. As the cost of building the hardware declines, more and more financial returns will bee available from the creative component
, the software. Japan is investing in software factories in order to capitalize on their fundamental strengths of superior production that have got them where they are today. While they will make inroads, they will have difficulty overcoming the tremend
ous lead that America has built up in a culture that encourages soft skill development as a result of the national vision. Skills Fortunately, the post-industrial society is also shifting from the predominance of the hard skills associated with manufacturing to the soft skills associated with the growth of services. There is a t
remendous latent talent among the workers of America that has been untapped by the organizations that employ them. These people are frustrated by their inability to use their skills when they are pigeon-holed into some very specialized slot in their corporate process. Their formal training and relatively good leisure time gives them an ong
oing set of soft skills and knowledge that could be used to competitive advantage by their employers. Ironically, the executive who must make all the tough decisions is not given the luxury of enough leisure time to pursue reading and education outside of their set of core skills. (Business people often use what little time they have to read managing a
nd motivation or leadership material which is directed to improved job performance.) They are being paid highly for the skills which they demonstrate by consistently superior performance in their chosen specialty (CFO, CIO, Sales Manager, Manufacturing Executive, etc.). But the demands of the business are exhausting and mentally-draini
ng; they must devote their reading time to staying current in their specialty if they want to maintain their internal advantage. In fact, they are also pigeon-holed in their own way. In any true leisure time, they will often seek a total break from the he
ctic pace like golfing, sailing, skiing, etc. The strategic focus on what can be gained from the tremendous reservoir of soft skills within their command goes untapped. Often, they do not even appreciate what soft skills exist because there is no focus on them within their corporate culture. An
example of the potential for soft skill being tapped is the success that can result from having a psychology major deal with user requirements for new systems. Their training in what makes people tick is more valuable in some cases than
formal systems training which tends to focus on what CAN be done and not on what NEEDS to be done. Education There is significant potential to increase the effectiveness of the American education systems investment. The buildings, infrastructure and administration can be considered as fixed costs. There is limited potential to expand the contact hours given
the natural resistance to work longer for no pay in the political process known as education. Naturally, the potential to expand the pay for teachers to work more hours is limited by the reluctance of the taxpayer to take on any additional tax burden. It should be practical to restructure the use of existing resource and tax base during the school year to better utilize facilities and staff. For example, by increasing the average daily hours to nine from six, similar to the average working hours de
veloping in the 1990's, 45 contact hours could be achieved each week. To avoid any exposure to overtime (increased taxes), the same total hours would be maintained, in effect compressing the school year by one third or about three months per year. This
three months that is freed up could be used for no charge industry internships without pay in areas outside the primary specialty. Such an investment by industry and the students would build on the American Strength Through Diversity. It might also be used by the teachers for research assignments to upgrade skill levels within their chosen specialties. Industry would bear a slight cost in taking on a no charge student, but would be compensated in the short and long term with improve
d entry level candidates for permanent employment. Existing free time in the summer months would be preserved for the current uses. The resulting broader and deeper development of our soft skills strengths should help us to increase our existing competitive advantage in this emerging area of useful skills as the world markets mature. Culture In our history, the variety of competing cultures in our society has been a source of conflict. This diverse culture often led to differing strengths and interests. Although many of the stereotyped skills attributable to cultures have been rapidly dis
appearing (Swedish tennis players, Russian hockey players, Italian tenors,...), the richness of diversity that they have introduced into North America remain. We need to reap the benefits of this diversity by finding ways to cross-fertilize the disciplines, much as we have done with biomedical electronics, voice and data processing, and computer-generated music and art. Relative cultural strengths in psychology and the arts can help us accelerate our current competitive advantage in the emerging service-based economies. Work Approach The reverence surrounding the successful gunslinger from our early days, many of whom are still well-known, is indicative of the very individualistic nature of our pursuit of happiness or personal goals. The Japanese, by contrast, we
re struggling to survive on their small islands, lacking any natural resources to be self-sufficient. This was especially true after World War II. They had to pull together to flourish after enduring the devastation from the world's only atomic bomb att
ack. In spite of the inherent individualism in our culture, many of the large postwar institutions are suffocating the individual initiative in their organizations by forcing people to conform to a common set of rules and many unwritten codes of appropr
iate behaviour. Largely, this is an attempt by these organizations to lock-in the formula for success that appeared to work in the postwar Industrial Revolution. Ironically, these rules and bureaucracy were made necessary by the very individualistic nature of our culture. It was an attempt to avoid the apparently outrageous behaviour of a few leftover gunslingers. It was reinforced b
y many years of tremendous success as supplier to the world of just about everything. As a society, we need to capitalize on the few individual spirits that remain free by getting them into suitable jobs for their skills, abilities and interests, either within the current organization or in a more suitable organization. At the same tim
e, we should adopt some of the teamwork approaches that are necessary to avoid the narrow-minded over-specialization that will result if our newly freed individuals are given mandates that are too specific. Eventually, the cross-training that results from the revamped education system will make people more naturally interested in areas outside their own specialties. We will create generalists by the in-depth training and experie
nce of our people in many diverse specialties, rather than trying to create generalists by formal training. Such people often lack the depth in any area that is essential to remaining on the competitive edge. This mistake of the eighties is still haunti
ng many organizations in the nineties. Large Corporate Model Most Japanese corporations have an almost fanatical desire to beat their competition in the markets they have selected. This externally-focused threat tends to pull the workers together against the common foe. This may be rooted in their collective pos
twar struggles for survival. It is a tremendous catalyst for teamwork, and works toward breaking down the functional barriers to efficiency. The large corporation in North America developed a carefully-defined structure as their very success allowed them the luxury of multiple layers in their hierarchies. Although their markets were generally competitive, the sheer size of the world market
s made it possible for nearly everyone to thrive. The focus was on instituting the correct execution of doing what we do best, and was inherently more inwardly-focused. The functional specialisation that Henry Ford initiated with h
is assembly line became the model for the enterprise. The well-educated, postwar employees viewed their personal success as their ability to move up the organization. Level and perceptions became more important than content. External trappings of this upward migration such as title, size of office, and
perqs became the badges of success. As their businesses boomed, fueled by the unprecedented postwar prosperity, huge fortresses of functional hierarchy evolved, creating artificial barriers (and resulting turf wars) between functions as Senior Executive V
ice Presidents ensured that they maintained their power bases (sometimes at the expense of the company). The real problem was that once anyone moved up beyond the direct supervisor level, it became increasingly difficult to maintain unbiased measures of job performance. This was because the very functional nature of the organization made direct accountab
ility impossible. It was always easy to find another piece of the puzzle to blame in the event of a foul-up. And giving anyone rewards for the successes was similarly elusive, and tended to be based upon who the more senior executives wanted to reward.
Evaluations became increasingly dependent on appearances and political correctness. This problem is very difficult to correct. Attempts to add real contribution measurements to the higher management levels can be subverted by the very people who have become masters at managing by numbers. Current downsizing efforts can aggravate the
situation if the real corporate contributors get sacrificed in favour of the politically correct. More needs to be said about this issue. It is beyond the scope of this article and will be addressed in a subsequent one. Consistent with the heritage of the gunslinger, American enterprise is very proud of its record in innovation. The number of patents produced, and the number of products brought to market from those patents is a major measure of corporate success. Inno
vation and patents were the licence to print money. Recently, significant activity in cross-licensing of patents with competitors is emerging, as companies discover that they can make more money collectively than they can individually. Historically, the Japanese have been more willing to adopt the ideas
of others, and achieve their success through superior execution of those
ideas in bringing products to market. American companies need to spend
more R©D resources shopping the world
or relevant patents while investing in better ways to accelerate the cycle of bringing product to market. American companies have indigenous skills in the areas of training, documentation, user interfaces, and access mechanisms to company skills. These are areas of significant competitive advantage internationally, as the accelerating pace of the technolog
y revolution puts more people in direct interaction with advanced equipment. The growing complexity of ways to make TV's and VCR's do all the things they are capable of doing is a testimony to the inability of Eastern manufacturers to master the end-user
interface. Most users of these devices are pressed to the limits of their patience to set the time on their VCR, let alone do 14-day programming! The engineering and disciplined focus of the Japanese domestic market contributes to this propagation of s
uch user unfriendly devices. Success Model American companies have developed innovative ideas and protected them through patents, copyrights, and other barriers to entry (such as capital) while maintaining elevated market prices. The typical American company will charge high prices while they d
ominate the market, then drop prices as competitors emerge. The initial high prices make the entry of competitors more attractive financially. Japanese companies have assumed that competing technologies or approaches will emerge so they concentrate on rapid market development through short product cycles and aggressive pricing to develop both total demand and market share quickly. In additio
n to building the market demand more quickly, it forces new entrants to have deep pockets. They may have learned this lesson from the VCR market, where the technically-superior Sony Beta format lost out to the aggressively-priced and openly-distributed JVC VHS format. By the time Sony discovered what the real battle was, they had lost the w
ar. Technical superiority and patent protection are no longer the keys to market success. They must be accompanied by superior roll-out capacity, including pricing to expand demand. Forward-thinking companies will shift investment resources from basic research and patent attorneys to marketing-oriented soft-skilled generalists who work with customers to accelerate successful implementations in the marketplace. Such companies would also be wise to participate in Japan on their terms in order to stay in touch with emerging technology. An investment in Japanese operations might have better returns than patent protection in the 1990's. Rewards The large American company has rewarded employees who conform to the corporate culture. Typically, those that satisfy the boss and present the best and most consistent image are likely to get the move to the next rung on the corporate ladder. They are
also most likely to be recognized and rewarded in current job levels. This often causes the politically-astute messenger to get the rewards that the innovators deserved. It has contributed to many high technology start-up firms. The innovators got the
ir education and built their values in the large organizations, but got frustrated and bitter at the lack of genuine recognition. They often left to start their own companies where none of this would hinder them. Starting from their own niche, these com
panies often became sufficiently successful that they caused pain for the very corporation that trained them in the first place. By restructuring to be able to hold executives accountable for results, rewards can be tied to performance in the marketplace. Sustained, multiple year performance must be rewarded. The associated longer job tenure should minimize short term initiati
ves that bring long term disadvantages. By combining results-oriented rewards with education on the benefits of teamwork, functional barriers will be reduced in time. The true innovators (contributors) in the organization will get their deserved rewards
and will be more likely to stay. All endeavours will not be successful. Risk-taking needs to be encouraged and not punished. One failure needs to be considered healthy. Only a string of failures constitutes reason for executive punishment. As long as an organization has more successes than failures in economic terms, they will flourish. This attitude will make them more nimble in the marketplace by reducing all the excessive risk-reduction activity that weighs them down today. Summary and Call for Action The thesis presented here is threefold: first, the initiatives that are being taken to learn from the successes of others is encouraging. Americans must learn to adopt the inventions of other cultures at a faster rate and excel in the marketplace throu
gh superior execution. We can no longer afford the luxury of relying on our superior inventions and protecting the entry of competition through patent barriers. Competing nations have demonstrated that alternative technologies can be combined with superio
r roll-out capacity to beat us in the marketplace. Third, the costs of developing hardware are steadily dropping and providing fewer jobs in the developed nations. The software components such as music to play on the CD's, books to ship on the CD-ROMs, or video to play in the VCRs and game machines ar
e a steadily growing opportunity and one that we have proven our lasting capability to produce competitively. By achieving a balance between adopting techniques where others have the lead, and continuing to forge our own unique positions of leadership, we may hit upon the formula for The Renewal of North American Enterprise. While you may take issue with many of my specific assertions, I hope to have stimulated an idea or insight that will cause you to take a new initiative in your pursuit of success. If enough of us act, there are indeed good prospects for our continued
wellbeing and renewed economic prosperity as a society. Copyright the authors and/or Keith Cowan
======> Return to YTI table of contents/Reload home page
Or just click here to send us your eMail.