Japanese Management: Made In The U.s.a.?

Not quite. But big companies that want to copy Japan's success should look at the American small business model.

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As Japanese economic successes become more apparent, the big American corporations are rushing to emulate what is now referred to as the "Japanese Management Model." But these giant corporations apparently don't realize how radically different Japanese management styles are from their own, or that there is already an American management model that effectively rivals the Japanese approach. It's provided by a group we've always treated as a subculture of the American business community, but are now beginning to see is the most vital and productive sector of that community -- American small business.

Note: This table may be divided, and additional information on a particular entry may appear on more than one screen.

THE JAPANESE MANAGEMENT MODEL: "MADE IN U.S.A."

Japanese U.S. Small

Model Business Model

Primary financial

objective Sales growth Sales growth

Decision making:

process Decentralized, informal Decentralized, informal

Responsibility Highly centralized Highly centralized

Employee Close, harmonious Close, often familial

relations

Commitment by Lifetime Some long-term;

employees some "for now"

Commitment by

management Lifetime Lifetime or long-term

Career orientations Generalists Generalists

Community

involvement High High

Management style Personal, subjective Personal, subjective

U.S. Technocratic

Corporate Model

Primary financial

ojbective Profit maintenance

Decision making:

process Centralized, formal

Responsibility Somewhat diffused

Employee Detached, often

relations confrontational

Commitment by "For now"

employees

Commitment by

management "For now"

Careet orientations Specialists

Community

involvement Low, often reluctant

Management style Impersonal, objective

The Japanese corporation differs from the American big business even in its primary objectives. The Japanese company's overriding objective is growth, while profit is usually the primary aim of the U.S. corporation. The Japanese habitually invest today's profits for tomorrow's growth. Our large corporations too willingly mortgage future growth for today's profits in the hope that the market will reward them with higher stock prices.

The decision-making process is also radically different in Japan. American corporate decisions are usually made by the chief executive officer or an executive committee. In Japan, decision-making authority is diffused among virtually everyone in the organization. The results are naturally quite different. Our quick decisions meet with interminable delays in implementation. The frustratingly slow Japanese ringi process results in decisions that are immediately implemented because everyone affected was involved in reaching the consensus.

If a decision goes awry, the Japanese leader assumes full responsibility for the failure. The American corporate head is more likely to blame labor, imports, the government, or the fickle consumer as the cause of his corporate woes.

The Japanese corporation hires with the expectation that an employee will remain with the company for the rest of his or her life. This practice enforces harmony within the company because everyone has to get along. Employees of U.S. corporations assume they are there "until something better comes along" -- an attitude that breeds suspicion, resentment, and confrontation even among the corporate leadership. Because of the custom of lifetime employment, the Japanese strive to make their employees generalists, with a broad view of the entire workings of the companies in which they spend their lives. The American corporation, with its high job mobility, encourages the narrow perspective of the specialist.

The American corporation is usually so far-flung that it has very little identification with its local community, and its involvement with the national community is, too often, reluctantly engaged in simply to protect its self-interest. Because the Japanese firm is a community of its own, it sees itself as an extension of the local and national communities.

At the heart of the two management approaches are completely opposite views of the human environment. Japanese management maintains a personal and subjective relationship with whomever it encounters.The American firm, as it grows larger, tends to become impersonal and technocratic. Even when they try to adopt the "japanese Model," large U.S. corporations often formalize it into impersonal policies, "objective" edicts, or technocratic systems -- all of them the antithesis of Japanese management style.

But before we throw up our hands in despair and surrender to the Japanese onslaught, let's look at the American-grown model provided by small business. The management style of the successful small business in America is, in fact, quite close to that of the so-called "Japanese Model." And it's the same management approach that built our major corporations, which then rejected it for more "sophisticated" technocratic management methods.

American entrepreneurs, like the Japanese, have historically been more concerned with growth than with profit. And small business managers, while they generally have a great deal of autonomy in making decisions, usually "kick it around the shop" to reach an informal consensus. Society, banks, and their families, however, assign them total responsibility for those decisions. And though their workers may not always view themselves as lifelong employees, their relationships are usually close, long-term, and almost familial. Small business people are usually active in their local civic organizations and quite integral to their communities. Generalists by nature and necessity, they can't afford to be impersonal and technocratic.

We used to regard these traits as a function of size. We assumed that as small businesses became more successful, they would "outgrow" their "old-fashioned" ways. But these "unsophisticated" management approaches and attitudes created the productivity explosion that catapulted the United States into world economic dominance. The technocratic corporate model, after all, is a relatively new aberration. It evolved from the "scientific management" fathered by Frederick Taylor early in this century and accepted with almost religious zeal by its proponents. Even Lenin was known to speak favorably of "Taylorism."

The rigid application of scientific method to human organization dehumanized our larger political and economic institutions. Impersonal objectivity replaced close working relationships. Cumbersome policies blunted responsiveness. Complicated organization charts and rigid job descriptions stuffed rich, round personalities into dull, square holes. The resulting frustration vented itself in resentment and confusion. To maintain control, corporate managers poured overlapping, internally oriented systems over our organizations like glue. The result has been clumsy, inefficient, unresponsive, and quite boring institutions.

Fortunately, small business had neither the patience nor the money for such nonsense. And even more fortunately, our small businesses still have a bountiful supply of the independent risk-taking spirit that has traditionally spurred American inventiveness and innovation.

If Japanese Management is supposed to be the secret weapon in their programs of economic expansion, our larger corporate "big guns" are turning out to be a Maginot Line -- large, majestic, noisy, but frozen in managerial concrete. Small business is the one force in the American economy that's still armed with efficient and responsive management that can effectively counter the Japanese.