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Introduction: Japanese Technology Management Practices in Context The Japanese business system is perceived to be an alternative way to organize and manage corporate relations. That is, Japanese business organizations are distinctly different from the Western models of corporate organization and governance in large firms, where vertical integration, horizontal diversification, growth by merger and acquisition, and shareholder interests appear dominant. The Japanese business model may be emerging as one of the ideal types in Asia, and if the trend holds, Asian forms of capitalism may emerge in apposition to Western forms of capitalism. The Japanese business system represents an organizational innovation of local design but global importance and therefore must be more fully understood by U.S. industry. Industrial organization in Japan is anchored by three modal forms of organization (Fruin, 1992): 1. Focal factories are organizationally strong, because they are administratively robust and are functionally important, because they integrate upstream and downstream activities in the value chain. 2. Modem corporations are structurally complex and not widely diversified in activities. Corporations mediate, negotiate, and manage the linkages between internal organizational units and the hundreds and thousands of outside subsidiaries, affiliates, and suppliers that typically cluster around large firms in Japan. 3. Interfirm networks are the means whereby great depth and breadth of organizational capability may be mobilized through cooperative strategies. These networks tie together firms through cooperative strategies and mutually beneficial patterns of interaction. Seen as a whole, the interrelations of factory, firm, and interfirm network create a business system that is characterized by interorganizational competition and cooperation and is singular in structure and internal logic. The emergence and development of this type of business system is grounded in the history of industrialization in Japan and in the efforts of countless Japanese firms to survive and succeed in the midst of that history. In a highly competitive, global economy, the Japanese business system of interorganizational management that unites factory, firm, and interfirm networks in cooperative yet competitive ways may be seen as an organizational alternative to Western forms of corporate-capitalist endeavor.
8 Learning from Japan This simplified characterization of the Japanese business system begins to indicate the complexities of studying Japanese industry and technology management practices and implementing them in U.S. companies. In order to study industry and technology management practices in Japan and to place them within a larger context that will allow for cross-national comparison, both academic and industrial studies need to employ a framework of analysis and interpretation that focuses on industry and technology management practices as part of a larger social and economic fabric. This fabric includes government-business relations, labor-management relations, and intercorporate and intracorporate organizational relations. These relationships are features of every advanced industrial economy and, quite obviously, exert a profound effect on how industry and technology practices evolve in different national settings. Without tying the study of industry and technology management practices to these larger institutional relationships, it is impossible to make meaningful cross-national comparisons. And without meaningful cross- national comparisons, a desire to strengthen the U.S. technical base by transferring and implementing appropriate industry and technology management practices from Japan will be doomed at the outset. In effect, industry and technology management practices must be seen as elements of the total Japanese economic system, which includes not only the business system of factories, corporations, and interfirm networks, and the various social and economic relationships noted above, but also accepted models of corporate governance and established modes of corporate growth, merger, and acquisition. Although aspects of the business system may be studied in isolation and even transferred overseas, parts of a larger economic system are likely to be misunderstood out of context. They will be poorly transported across thousands of miles of social space and cultural time. Thus, while there is real value in attempting the overseas transfer and diffusion of industry and technology management practices, it makes good sense to understand the complexity of the task. Industry and technology management practices are deeply embedded in social behavior and organization; it is difficult to dislodge them from that context and even more difficult to transfer them abroad. The difficulties of cross-cultural transfer are not absolute, however. Individuals and societies have been borrowing from one another for thousands of years. But the ease and speed of the technology and organizational transfer process should not be overestimated, and the complexities of identifying just what is to be transferred and how transfer will be effected should not be minimized. Indeed, the most important lesson may be just that: cross- cultural technical and organizational transfer is possible but decidedly difficult. (Appendix C summarizes the evolution of Western understanding of Japanese culture and the culture's impact on management.) This assessment of the cultural context for the transfer of Japanese industry and technology management practices makes clear that only through a consistent, long-term examination and analysis of the total Japanese economic system can a strong understanding be gained of the sources of Japanese industrial and technical success. Much is already known about Japanese manufacturing management practices. Just-in-time production, quality circles, total quality management, and continuous improvement are just a few of the modern management practices implemented by the Japanese. Though many of these practices were originally conceived in the West, relatively few U.S. companies have had strong success in
Introduction implementing them; even many Japanese firms have had difficulty using these practices in their plants in the United States. Although the practices are known, they are not fully understood in the way that could result from a rigorous, multidisciplinary body of research and analysis. KEY ATTRIBUTES OF JAPANESE TECHNOLOGY MANAGEMENT The Air Force Office of Scientific Research (AFOSR) U.S.-Japan Industry and Technology Management Training Program provides the opportunity to develop the needed understanding of the multifaceted sources of Japanese success in world markets. Its unique focus is to study the management of technology, rather than just management or technology as individual topics. U.S. managers have limited understanding of how Japanese companies manage technology, particularly leading-edge technology applied to world-class products and manufacturing processes. What U.S. companies need to adopt from the Japanese is not technology per se, but rather their adaptability and their ability and persistence in pursuit of continuous learning. These are the key sources of Japanese success. There are three principal aspects of Japanese management of technology: (1) continuous improvement, (2) robustness (i.e., minimizing performance variability around a target), and (3) market responsiveness. U.S. companies need to understand how Japanese managers interact with and learn from technological, economic, and other factors, both inside and outside of their company. The idea of robustness in Japanese management evolved following the quality improvements that fueled much of the Japanese market success in consumer goods during the last three decades. The fast time-to-market achieved by some Japanese companies suggests their effectiveness is related to something other than technology. The coupling of research to development to manufacturing processes to markets is a complex process that must be understood in detail. U.S. universities and companies do well with the earlier part of this development stream; the fact that Japanese companies excel at the downstream part is the major reason for studying and teaching Japanese industry and technology management practices. Continuous Improvement Continuous improvement of products, manufacturing processes, worker skills, and other technological and production factors is a hallmark of Japanese management and contrasts sharply with standard U.S. practice. Good Japanese managers will continuously seek supporting data from the marketplace to discover which technology best answers the perceived or latent needs of the intended customers. They then link the knowledge learned in the market to their manufacturing and research and development efforts. Note that the market" may be a different function within the business and the "customer" may be a worker on the production line, so markets both external and internal to the firm are sources of knowledge. I!
10 Learning from Japan This approach to learning makes discovery of mistakes an opportunity for improvement rather than something to be denied. The result is a process of collective learning that integrates all levels of the organization. U.S. managers, on the other hand, typically seek concrete goals for projects (usually internally generated). Once they meet these goals, they consider the job done. No rationale or support exists for seeking further improvement. Because the company's technological, cost, and other goals are defined more by internal demands than external market factors, many U.S. managers attempt to force into the marketplace technology that is not ready or that may be inappropriate for use in its present form. One example is the failure of gas turbine engines for automobiles in the 1960s and 1970s because of poor vehicle performance and cost; another example is AT&T's picturephone in the 1980s. Japanese executives are often astounded at the breadth and depth of technology that is developed in the United States only to be abandoned or brought to market prematurely or haphazardly. While U.S. laboratories invent a remarkable diversity of new technologies, many of these do not achieve market success for the company that developed them. This situation may be due to an internal focus on technology development that puts a premium on inventing one's own solutions instead of having a systematic process for reviewing, on a continuous basis, all technologies that could be used in the specific situation. Sharing research and development resources and risks with suppliers is another means used by some Japanese companies to expand beyond their own walls. This requires long- term partnerships between original equipment manufacturers and a select group of capable and resource-ready suppliers. These types of partnerships are starting to appear among leading U.S companies. Some contend that "understanding the kaisha kyodo-tai (the communal business group) is a key to understanding Japanese-style management" (Kawamura and Sone, 1993). Properly focused research could develop understanding of how these linkages work in Japanese industry. These characteristics of a Japanese organization reinforce the point that learning how the Japanese increase their effectiveness may be more important than learning their technology. Robustness The coupling of design of the product and processes of manufacturing early in the development cycle may provide additional insight into how the Japanese manage technology. Many laboratories in U.S. companies do not consider quality assurance to be part of their mandate and thus may release premature technology into the product development process. U.S. companies often need to improve their understanding of the effects that interactions between product design and process designs have on quality and cost of manufacture. In recent years, many U.S. companies have made progress in unifying, under the direction of one top-level manager, the efforts of many parts of their organizations in 'Japanese companies also have their failures in deploying market-ready technology. For example, four- wheel steering has had little market penetration in the United States after being introduced with great fanfare in the 1980s.
Introduction 11 activities called simultaneous or concurrent engineering. Although helpful, these concurrent engineering teams still leave some production startup and process development problems that need to be resolved during product launch. This is costly, and may result in products with low quality and poor functionality. Ideal coupling of the design and production process would mean the development of technology to the required level of "robustness" before detailed design and production startup. Because the outcome would be more predictable, the results would be reduced risk, improved confidence, and shorter cycle times for product development. Taguchi has led efforts by the Japanese to define the variations in process, so countermeasures are translated into robust designs that meet or exceed market requirements (see Taguchi and Wu, 1979). Toyota has publicized its development of a model that predicts boundaries that occur in metal forming, so that the design of styled, formed parts can take place with minimal risks and reduced time-to-production. Market Responsiveness The relationship of technology to the perceived business opportunities in world markets raises questions that have been largely unanswered about Japanese companies: Do successful companies have a better process for adapting technology to markets? Do they have a better method of defining the level of technology needed for markets? Do they have better methods of utilization of technology within their own companies, so they can deliver products more quickly to markets? The accomplishments of Japanese industry in the camera, consumer electronics, and automobile markets have been chronicled by the business press. Now fears are expressed that they may dominate in emerging markets like semiconductors or biotechnology, as they devote more of their resources to basic research in those areas. How do Japanese companies go about dealing with the process of technology development? Is this process driven by the quest for knowledge or is it driven by the intended market? There is evidence that some U.S. companies do not understand the significance of what can be learned about technical management from the Japanese. There are many Japanese companies that successfully stayed alive through fierce competition, and these companies tend to keep their survival-mode attributes even after winning the survival battle in the market. They continue to pursue further improvement persistently. U.S. technology managers need to learn the effect this has on the performance of successful Japanese companies and how to apply continuous improvement in U.S. industry. PROGRAM OBJECTIVES The committee is convinced that the U.S.-Japan Industry and Technology Management Training Program can provide a much-needed boost to U.S. understanding of Japanese management practices, as well as of the organizational, cultural, historic, and economic factors that create the environment for Japanese success. By conducting well-structured
12 Learning from Japan research in Japanese industryânot only in Japan but also in Japanese plants in the United States, Europe, and elsewhere in Asiaâand by training a new cadre of U.S. scientists, engineers, and managers in Japanese technology management practices, this program can create an enduring cycle of improved understanding of the total Japanese business system. The committee believes this objective is what the Congress had in mind when it created the program. Based on the language in the authorizing legislation (see Appendix A), the objective of the Congress in creating the U.S.-Japan Industry and Technology Management Training Program is to prepare scientists, engineers, and managers to learn from their Japanese counterparts by being able to work closely with them throughout their careers in government or industry. . .. the program should be structured to help keep American government and industry abreast of Japanese scientific and technical developments and their importance. (U.S. House of Representatives, 1990) In other words, the Congress has provided financial resources to strengthen U.S. knowledge about Japanese industry and technology practices and to disseminate that knowledge to the national scientific and technical community. In considering this objective for the overall program, and in reviewing the activities of the first eight awardees, this committee has identified two major goals that AFOSR, as the program manager, should strive to achieve. The first addresses the academic community receiving the funds. The funding authorized by the Congress has provided the opportunity to create a strong academic specialization in Japanese industry and technology management (J/TIM). An academic specialization in J/TIM would incorporate appropriate disciplines, including language, culture, economics, engineering, business, and management, to create an integrated, multidisciplinary academic program with the richness necessary to strengthen understanding of the complexities of Japanese technology management. Building such a multidisciplinary specialization would provide a framework for research, publications, curriculum development, and continuing education activities. It would provide much-needed focus for a wide range of activities now typically scattered across academic departments, which would facilitate the emergence of a comprehensive program of study. Research and education within the J/TIM specialization would build on present knowledge of Japanese practice, integrate it with what is known about Western technology and industry management, keep tabs on the evolution of technology management practices in Japan and the West, and maximize the usefulness of the results to U.S. managers. The committee's argument for creating an academic specialization is based on the need to ensure that J/TIM is not just an engineering or business school subfield and not simply an internship and Japanese language training program for engineers and business students. As this chapter has described, there is much to learn from Japanese technology and industry management practices. J/TIM should be an integrated, multidisciplinary area of research, education, and outreach, using a rich array of resources from across university departments. This objective still leaves room for flexibility in implementation, however, and the committee does not endorse one approach over another. The Stanford approach of housing
Introduction 13 the J/TIM program in the engineering school; the Berkeley approach of housing it in the business school; and the Massachusetts Institute of Technology (MIT) approach of creating a separate program, the MIT Japan Program, are all legitimate mechanisms for managing J/TIM activities. Each is arguably best for the culture and resources present at each institution. Some schools focus on training undergraduates and others, graduate students. Because an academic specialization in J/TIM does not imply a degree program, but more likely a certificate to provide recognition for the additional skills achieved by the students, it can focus on the different levels of students in the different settings to best take advantage of the resources at each school. The second goal addresses the needs of U.S. industry and technological enterprises. To be truly successful, the AFOSR program must demonstrably help U.S. firms and laboratories improve their technology management practices. Such a goal requires that the university programs emphasize outreach to industry to maximize their responsiveness to industrial needs. Research, education and training, internships, and other activities funded through this program should reflect the needs and constraints of U.S. manufacturers and government laboratories. Emphasis must be given to maintaining industrial relevance; taking steps to provide educational programs for midcareer scientists, engineers, and managers; and making efforts to channel research findings quickly to constituents in industry. The committee recognizes that achieving these two goals will be difficult. Success depends on maximizing the effective use of limited resources across the program, on generating much stronger industrial interest and support than has been evident to date, on overcoming barriers within the academic culture itself to creating multidisciplinary specializations such as this, and on understanding the relevant cultural issues that determine how effectively Japanese management practices can be transferred to U.S. industry. The committee addresses all of these issues in the following chapters.