At the heart of it, why are so many firms these days (or at least in the mid/late-90’s) advocating the use of Japanese accounting and management techniques?
When I initially queried this to the academic and business disciplines that I know of, they seemed to argue that it was because they have a more effective costing structure i.e. they were more efficient at lowering costs/ more realistic/ planned ahead in great advance etc.
Is this true for most Japanese companies? Are they more successful because of this, or indeed, are they more successful at all?
IANA Japanese Buisiness person, but American companies tend to focus on the next quarter, or next fiscal year, Japanese companies seem to be looking at the next 20 years. If you read any success or motivational book, you’ll see that they almost without fail advocate setting long term goals and then planning the steps necessary to reach them. Some American executives live their lives that way, but for some reason very few of them run their companies that way. It is a more sound philosophy, but it means that short term losses may be necessary to achieve the payoff down the road. American Investors are NOT about short term losses, they are about growth at any cost, even if it is unsustainable and/or results in failure of the company. It is really the investors that need a foundation in Japanese foresight rather than the companies themselves.
Urban Ranger is correct; the Japanese embraced the TQM philosophy of Deming (and to a lesser extent, Juran) back in the 1950’s, which is believed by many to be the single most important factor in making them a world leader in quality.
I’m not sure what books you’re reading – are they Philip Crosby, perhaps? Because Deming was never an advocate of “long term goals.” In fact, he was against the very idea of formulating goals. He instead advocated “continuous improvement.” Besides, chaos theory proves long-term goals are fairly worthless…
The much-vaunted ‘secrets’ of Japanese industrial success, particularly with regard to manufacturing quality, are mainly myth and moonshine.
There are two main reasons why, for many years, a great many Japanese companies enjoyed international success. (1) The average skilled Japanese worker is prepared to work for less money than his or her counterparts elsewhere. (2) Japanese corporations and the Japanese government are prepared to work hand in hand to enable both to focus on the long-term game - penetrate a market by saturation product dumping and price gouging, knock out most of the competition while making a loss, and then exploit the greater market share and/or near monopoly thus created.
Re point (1), instead of “are prepared to” one might arguably suggest “has been conditioned to”. There is a massive amount of social and cultural conditioning in the Japanese educational system, which places huge emphasis on ‘being a good Japanese citizen’ and which encourages the average worker to be satisfied with fewer material rewards than Western counterparts.
As regards TQM, there is a huge and ever-present market for industrial executive snake-oil, and attending conferences on ‘management techniques’ is a pastime for many white collar execs. The providers make up more or less whatever theories they want and get paid handsomely for their efforts. The payers get a day out of the office listening to presentations, and the chance for some boozing and flirting afterwards. It beats having to stay in the office and do some work. Nobody has ever undertaken any kind of analysis or evaluation of these ‘techniques’ to see if they make a difference to anything.
Before I chime in, I feel I must refute ianzin’s answer, which to me reeks of anti-Japanese bias.
Most wouldn’t consider Japanese industrial success to be myth. Even the Robert Eaton, the former CEO of Chrysler, told me in an interview that the Japanese automakers (especially Toyota) were much more skilled at making reliable cars, and were able to do the production at much lower prices – and he did not attribute that to low wages, but excellent management.
This is true of many countries, not just Japan. I don’t hear of any Honduran management techniques that should have been attributed to low wages. Furthermore, the income level in Japan is now similar to that of the U.S.
Japanese people on average work harder than in the U.S., and they have more pride in their work, companies, and country than we do. Good for them. But implying that they are being forced into this by school, society, etc. does nothing to dispel that they have good manufacturing techniques.
If you take a class in strategic management, you’ll see all companies in all countries try to do this. Although as stated, the Japanese have not done this. I can think of no country (except Japan) in which the cars are so popular as to come anywhere close to a monopoly. Fiat probably tried the same thing, but failed because their cars are junk. If somehow the evil Japanese can succeed in this where others cannot, it’s not because they are sneaky, it’s because they have better techniques. Should we say bad things about them because of this or adopt their better strategies?
There is a close working relation between gov’t and industry in Japan, but exp. with the long recession, it’s arguable that this was more of an impediment than a help.
Now that I’ve done my part to damage anti-Japanese bias, I’ll try to answer the OP.
The reason we are adopting some Japanese techniques is because they have a very different industrial system than us (in the US). Just about everything they do is done differently. Some of those techniques are bound to be better than the ones developed here. So we’re adopting them.
Most Japanese techniques we wouldn’t touch. General management there, IMHO, stinks. The companies are hugely bureaucratic. There are legions of “businessmen”, not more specifically classified because most of them push paper for 12 hours a day. That just wouldn’t fly here.
But they’re on to some things–like inventory reduction (Just In Time). If you can reduce inventory, that’s money now earning interest or return instead of sitting in warehouses. Often it works better in theory than in reality, but when it works, it works.
Personally, I’m not very impressed with Japanese management techniques, but that may be from having to work under them as an outsider.
Until recently, most employees at large companies could expect lifetime employment as long as they kept their heads down and just did as they were told. Dismissals came not from incompetence or poor performance, but from being disruptive and not working in harmony with everyone else. After 20-30 years of this kind of system, the result is an executive class with almost pathological risk-aversion, where nobody is willing to try anything radically new for fear of being saddled with the blame if it fails. This means that few are able to come up with new ideas (rather than minor revisions of established practices) when the old ones fail, fewer still are able to convince the rest of the company to go along with them (by doing nothing, you can point at those who try and fail as less effective than you), and almost noone is willing to step up and go through with reforms when times go bad.
As the economy gets worse, most of the largest companies are going to have to undergo some major changes in the way they do business if they’re going to have any hope of surviving. Many, however, are making only cosmetic changes, laying off staff while still doing things the old-fashioned way and hoping that everything will go back to ‘normal’ soon, all the while complaining to the government that smaller, more flexible companies (and foreign firms) are coming in and stealing their lunch money.
During the late 80’s when American firms were falling over themselves trying to adopt Japanese management techniques, there was a good deal of gloating from Japanese economists about how their techniques had been proven superior to the West’s. During the 90’s, however, the trend went the other way, and many Japanese economists were advocating adopting ‘American’ management methods, which were seen as more flexible in dealing with crises.
(my browser is acting snotty when I try to preview, so please forgive any typos)
Did you read the post you replied to? Ianzin didn’t say that Japanese management or manufacturing were worthless. He said the so-called “secrets” and semi-mythical super-powers attributed to it were less than reality.
I feel that I can answer your question with some authority, having worked for and studied Japanese companies for virtually all of my adult life.
First, I don’t think any firms are actually advocating the use of Japanese accounting techniques. Japan just recently instituted international standard accounting practices, in large part because of all the shenanigans that were going on under the domestic accounting practices. Japanese management and planning techniques are quite popular.
Now to answer your question, which was why they were so popular. As you know, Japan had great economic success in the post-war era. Japan literally went from a smoking ruin to the second largest economy in the world in about 30 years. Of course, now Japan is languishing in a long, seemingly unbreakable recession/malaise. But still the success is hard to argue with. The success was the result of a lot of factors, some of which are transportable to other countries and locations, and some of which are not. However, ‘Japanese management techniques’ have the appeal of apparently being responsible for one of the greatest success stories in recent history, and also a good dash of ‘oriental mysticism’ which fascinates a lot of folks who really don’t understand, but think it’s cool to drop random Japanese words, like kaizen, kanban, or nemawashi, into their conversation. (In fairness, there are a lot of Japanese who drop random English words into their conversation as well. Both are equally vacuous.)
Now the reality is that the Japanese have taken the Quality concepts of Demming and Juran, and taken them to a new level. Japan went from a nation that was famous for producing cheap junk to the widely recognized world leader in quality. Remember that line from ‘Back to the Future?’ Doc complains to Marty that the problem with the Time Machine is that it’s made with cheap Japanese parts. Marty replies that in his time, all the best stuff is made in Japan. That’s impressive. In addition, the Just-In-Time manufacturing technique is popular because it virtually eliminates costly inventories and can make companies that implement it much more nimble than their traditional counterparts. A huge advantage when dealing with a chaotic market.
The problems with Japanese manufacturing and quality techniques is that they work best with a fairly-skilled, self-motivating, stable workforce, something that until recently was available in abundance in Japan. The realities of the workforces other countries, such of the United States, is quite different. The average Japanese worker will make great personal sacrifices for the company, and the system depends on that. Americans are much less willing to do so.
Japanese companies have been moving production overseas in large numbers for about the last 15 years, so we can see how transportable these techniques are. The answer has so far been mixed. Japanese plants that have been located in areas with a plentiful mid-skill employment base, a strong local work ethic, and a weak motivation towards unionization have generally done well. Those who have located in areas that don’t meet these criteria have struggled.
Don’t get me wrong, there is a lot to be learned and gained from a thorough understanding of Japanese manufacturing and planning techniques. However they are not the end-all be-all.
Odd, I have the same question for you. Who said anything about worthless? Considering that I answered several points in Ianzin’s post, I’m not sure how you could come to the conclusion that I didn’t read it (unless you hadn’t read it). I think the question you were trying to ask was, “Did you misinterpret what he meant by ‘secrets’?”
No one in any previous post had said anything about “secrets”. Most reasonable people would therefore infer that he was not bringing up a new topic without refering to what secrets he was talking about, but that he was referring to management and manufacturing techniques as “secrets” and calling them such because of the way they are presented, as you said, as though they have semi-mythical super-powers. At the same time, he’s playing on the old stereotype of Japanese being sneaky.
Considering that Ianzin then gave theories to the success of Japanese companies that discounted the role of manufacturing techniques and management, he obviously doesn’t believe they played an important role in Japan’s success in manufacturing. If this is what he believes, would it follow that in a conversation about management and production that a quote like “…the ‘secrets’…of success…are mainly myth and moonshine,” is supposed to mean “Though I think that their management and manufacturing techniques are quite sound, they don’t deserve a mythological reverance.”?
So, let’s look at these two quotes again:
From his post, Ianzin obviously thinks JMaMT are bunk. So why would anyone interpret his quote above to mean anthing but that? So, no, he didn’t say Japanese management and manufacturing techniques were worthless, nor did I say that he did, but he did say they were myth and moonshine (by which he probably meant worthless).
One clarification – I should have said “Most wouldn’t consider **the role some JMaMTs played in **Japanese industrial success to be myth.”
I work for a Japanese company (Ibanez/Tama) located here in the US. The one thing I have noticed about the Japanese is their almost fanatical approach to work. There is a small group of Japanese buyers that are here on average 14-16 hours a day (on salary). You rarely see that kind of dedication from an American worker, myself included. They tend to place work above all else, including family.
Another little item I was taught as an inventory/purchasing type person. Japanese companies tend to stick more to “just in time” and “lean” type product handling where US companies tend to have too much money tied up in inventory. The result is companies that become cash poor and product heavy and unable to adapt or improve a product because all of their budget is tied up in older parts/product.
The company I work for is slowly working towards a leaner model but multi-billion dollar a year companies don’t often turn on a dime. Many times real change cannot occur until people are slowly replaced by employees brought up on newer methods.
“Just in time” and other inventory control techniques tend to work better in Japan than in the United States, in part because there are more labor stoppages in the US. When some sub-contractor stops shipping a critical part because of a strike, inventory is nice to have.
True but in many cases an alternative supplier can be found. Striking workers in some cases shoot themselves in the foot in this regard. Example UPS. To many smaller companies like California Overnight the UPS strike was a godsend.
There are more “layers” to competition than just price. Consistent quality parts on time could easily be worth far more in the long run than a few percent price break for crap parts or for a company that has work interruptions.
i am with ianzin. it’s a bunch of smoke…the japanese economy was doing better at the time and all of the u.s. cars sucked from mid 70s-early 80s while the japanese had good ones that were fuel efficient. it was an economic luck of the draw thing. the legendary lifetime job security started going downhill in the late 80s. The japanese management techniques are the same that every good businessman does. When the japanese economy is better it’s called japanese management technique. when the u.s. economy is better it’s the u.s. technique. as a matter of fact, in the 80s, when all of the JMT nonsense started, the japanese businessmen were saying that they were doing the same thing that u.s. businessmen were doing years earlier, but, naturally, the ugly american let it go in favor of some sort of decadent imperialistic technique. it was really ludicrous to hear so many experts talking of JMT instead of how to make good products.
Though it’s good to look at them skeptically, rejecting them outright will prevent you from finding the good parts.
Some of the JMTs are quite common-sense and useful. Toyota has the lowest shop-floor manufacturing costs, by far, of any manufacturer (and they developed many of the JMTs). It’s reasonable to assume they are working, so why not learn from them?
-Lower inventory. Before American car companies started to reduce their inventories, they’d keep a crapload on hand, sometimes hundreds of millions worth. It’s much better to have that money working for you, either in interest, capital improvements, extra workers, etc.
-Bottom up improvements. When Toyota wanted to lower costs for an area, they’d go to the machinists and assemblers in the area and charge them to find a way to make their parts 10% more efficiently. Compare and contrast that with the all-too-common ivory tower approach of American companies, where the top-ranking person with operational duties typically mandates what will happen at the base operations – and it makes no sense because he’s too removed from that level. And think of their typical response to this suggestion. “You think a factory worker can figure out how to reduce costs?”
-Relations with suppliers. Toyota tries to make sure that suppliers’ interests are aligned with theirs. GM, in contrast, used to tell all their suppliers every year that they will be buying the same parts for 10% less than they used to, regardless of the part they were making or how much time or effort they’d put into it, and if they didn’t like it, GM would get the parts from somewhere else. That made the suppliers much more wary of spending money to make the parts better or to spend the capital required just to make the part, considering they would just get an arbitrary price squeeze the next year or get dumped. Toyota’s suppliers were much more willing to work with Toyota to make improvements both to the design and the manufacting of parts since they thought that would help them stay a Toyota supplier insead of more likely to be dumped, as in GM’s case.
But that being said, I think general Japanese management is for the birds, and most people do. But they do have few good ideas.