Management, being primarily a social activity, has its roots firmly embedded in the tribal traditions of the human condition. It is not surprising therefore that the main traits of a busy manager today are more likely to be related to the prevailing cultural (tribal) norms of the host society than elsewhere. Thus we see in the Anglo-Saxon world priority given to the survival reflex than inventive thought and to a belief in the quick-fix rather than a commitment to detailed planning. The same is not true in eastern cultures. Further, by reducing everything, however complex, to strings of financial tokens, inviting little more than arbitrary arithmetic processing, western managers can simplify important issues toward the extinction of useful meaning, without fear of sanction, for the sake of immediate results that, remarkably, approximate to the arbitrary targets of their masters.
DRIVEN BY MONEY
If you look at typical accounts of the East India Company (1600-1858) you will see essentially similar patterns of numbers arrayed on the pages of their ledgers as in any company’s Annual Report today. From the earliest days of the Chartered Companies of Europe ‘viable’ simply meant profitable. It had nothing to do with enduring fitness within a fast changing environment – simply because change was far from fast and fitness (to surroundings) was an alien concept. Loyalty to the tribal leaders was culturally the norm. Until the middle of the 20th century the change cycle was at best generational; prior to that it had been hardly discernable at the workaday level. Organisations were seen as no more than the intermediary devices required to pump money towards (greedy) investors as a result of successfully matching the output of intimidated sellers to the needs of ill-informed buyers; a simple arrangement successfully designed to maximise margin. The early money-pump corporate model was more than adequate when foreign lands could be plundered, labour was cheap and capital readily available. The only real risk was from total loss at sea due to an Act of God or piracy.
The primary instincts of man’s tribal origins were well suited to the new role of the merchant adventurer. The survival habits of the hunter-gatherers of subsistence agriculture and the farm owners and merchants of the earliest known - c. 9,500BC - large agricultural settlements (Jericho in the Jordan Valley and Catalhoyuk on the Anatolian Plain) set a pattern that contrasted settled living on the one hand and the discipline of serfdom, soldiery and seafaring on the other. And thus the brutish social infrastructure of riparian (c. 4,500BC) and later maritime (c.1,200 BC) trade was practiced firstly by the Sumerians along the rivers and canals of Mesopotamia and then by the Phoenician traders around the Mediterranean littoral.
By contrast elsewhere away from the crucible of early trading long established inland rural communities with more settled, less prosperous and adventurous traditions eventually established local, and then regional, organisations to protect their interests, Firstly came the craft guilds (from c. 1100), then the livery companies (from 1394) and eventually the early professional colleges of the church, the notaries (early BC) and the physicians (c. 1500). While less brutish than the slave-masters and land-owners that developed the Levant the leaders of these generally northern European bodies explored every selfish advantage of restrictive practice authorised by the prevailing establishment – regal or republican.
DAWN OF MANAGEMENT
Thus in the western world for 6,000 years economic activity has been organised and administered by means of various skills – both formal and informal - which collectively have became known as ‘management’ or, to use the elegantly simple phrase of the political theorist Mary Parker Follet (1869-1933), "the art of getting things done through people." For the first 5,500 years or so management practice was little more than the custom of organising how the work of unpaid servants and slaves was enforced through three distinct levels of authority, namely the slave-drivers, the overseers and the Masters. However, with the opening of the Far Eastern spice trade, resulting from Vasco da Gama’s first voyage of exploration to India (1497-8), the 16th century saw a flourishing period of discovery and exploitation which continued for over three centuries driven by the lure of easy money for European speculators trading with the ill-prepared (though often more advanced) cultures of distant lands in the East.
At a time when globalisation is currently changing the world order and the centre of economic and creative activity is moving eastwards again for the first time since the Ottoman Empire’s expansion in that direction was stalled following its occupation of the Middle East in the late 17th century, the financial ambitions of world traders are little changed from the distant days of Europe’s long lasting commercial occupation of India. The brutal face of management that accompanied the East India Company’s early exploits, particularly in Bengal, and which lead to its military occupation by Clive after the Battle of Plassey (or Palashi) in 1757, was not to change until after the debacle of the South Sea Bubble (1720) and the East India Company’s effective bankruptcy in 1772. The British government intervened at this point wanting to maintain the benefits of the Company’s efforts but at the same time to emasculate it of the inordinate powers it has amassed over time by demoting it to an agent of the Crown. A century later further demotion followed the Indian Mutiny when the Crown established the Raj and finally removed the Directors of the Company from their privileged position as de facto rulers of India.
With the increasing need for better managers in India at the end of the 18th century the Company had established the East India Company College in 1805 in newly built accommodation at Hertford Heath (now Haileybury College) where apprentice managers (writers) nominated by EIC Directors were prepared for their duties until it was closed along with the Company in 1858. The task of management training and preparation had during the Company’s last decades been put on to a sounder foundation but none the less, the collision between the English class system (the ultimate manifestation of western tribal traditions) as represented by the newly arrived writers and factors and the Indian cast system (the ultimate manifestation of eastern tribal traditions) of the local population will have done little to change the overall style of management culture as other than being one based on command and control and the exploitation of latent opportunities for individual gain.
As an example, and a very large one at that, after Robert Clive’s victory at the Battle of Plassey the Company benefited by more than £200M (in 2005 money) as a result of its looting of the Bengal treasury while the commander-in-chief himself appropriated no less than £2.5M for his efforts, suggesting that the recognised bounty rate for top management in those days was 1.25%! The need to recognise the reality, and thereby check the excesses, of private trading was recognised in 1650 when gem 'smuggling' was at its height. The EIC Directors ruled as a result of growing losses to their voyages that Captains and crew could between them legitimately carry up to 5% by value of 'privelege' cargo for the purpose of their own private trading purposes.
As trade, commerce and mercantilism grew around the world before the birth of the nation state (which followed the Treaty of Westphalia in 1648) and Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations of 1776 and, so did the extent of military influence on management techniques, since other than the church there was no other readily available example of organisation arrangment to follow. of 1776 and, so did the extent of military influence on management techniques, since other than the church there was no other readily available example of organisation arrangment to follow.
THE INDUSTRIAL REVOLUTION
During the Industrial Revolution (1760-1830) the Quaker influence ameliorated the military model of management and working people saw the first signs of enlightened concern for their working and living conditions based upon an understanding of the need for social reforms as pioneered by Robert Owen, Jeremy Benthan and William Allen and such socially minded industrialists as David Dale, Richard Arkwright, the Darbys, Joseph Rowntree, Richard Trevithick and James Watt. At the outbreak of the 20th century there was a growing awareness of the potential benefits of bringing new scientific thinking to guide the way getting work done gets managed. These improvements were the result of very thorough time-and-motion studies pioneered by Frederick Taylor (1856-1915), the father of ‘scientific management’, and the husband and wife team of Frank (1868-1924) and Lillian Gilbreth (1878-1972).
The discipline of arbitrary commands were now being replaced by a new discipline based on scientific instructions. From the workers’ point of view little had changed – they were still not required to think or even contribute ideas, simply they were to do what they were told to do. However, as the educational and living standards of the population in general began to improve in the first part of the 20th century so did the number of employees wanting, and able, to contribute ideas about improving their working methods and conditions.
One of the longest lasting influences on formalising civilian management practice was due to a senior officer in the US Army following his investigation into the cause of what was known as the ‘Norwalk Disaster’ on the New Haven Railroad in 1853. A heavily laden passenger steam train, en route to Boston, in the charge of a relief driver failed to stop at a warning signal and promptly was derailed into the River Norwalk at an open drawbridge, whereupon 45 people died and 27 were seriously injured. As a result of the formal report on the accident the railway company was advised to institute a military style line of command procedure based on the hierachical military organisation chart to improve accountability. Managers found this administrative ‘device’ would enable them to identify (push?) the blame for any failure to the appropriate (lowest?) level within their organisation, often far away from those alone who actually had the authority and capability to bring about changes to the overall system and thus prevent failures or accidents. Command and control management – so essential to any military enterprise – had now arrived to offer civilian management a means to exercise control over the growing complexity rising from the fruits of industrialisation.
TWO WORLD WARS RESHAPE MANAGEMENT
Sixty years later with the demands of the war in Europe, and America realising that with the resumption of unrestricted submarine warfare it was going to be drawn into the War the Emergency Fleet Corporation of the US Shipping Board was established (in late 1916) to increase the size of the US merchant fleet by 1,000 new vessels – a task demanding a tenfold increase in the number of competent shipyard workers. In January 1917 the Board selected Charles Allen to head the necessary training programme based on the success of his ‘4-Step Method’ of supervisor development which he had developed as a vocational instructor prior to 1914. (Charles Allen subsequently published full details of his work in 1919 under the title ‘The Instructor, the Man, the Job: A Handbook for Instructors of Industrial and Vocational Subjects.’)
The ‘4-Step Method’ created by Allen saw workers and their supervisors as a co-operating team where command and control was inadequate to the task of production improvement. His approach was based on his (then novel) conviction that ‘people must be treated as individuals.’ Further he was of the general opinion that ‘if the learner hasn't learned, then the teacher hasn't taught’ – hardly a view that would have been endorsed by many traditional business leaders of the day. He also stressed the importance of learning by doing , which evolved into solving problems on the job with the guidance of a properly trained instructor. This was an advance on Taylor’s approach of managers solving the problem and then telling the workers precisely how to do what, when.
Allen was amongst the first management leaders to realise and promote the importance of the roles played by first line managers – or supervisors. Every Supervisor he maintained should have mastery of five areas of expertise: 1) Knowledge of the Work; 2) Knowledge of Responsibility; 3) Skill in Improving Methods; 4) Skill in Instructing; and 5) Skill in Leading. The Company was obviously responsible for areas 1) and 2) while supervisors would be responsible for the other three areas. Success by supervisors in the areas 4) and 5) would eventually result in operators realising their contribution to the areas 3), 4) and 5) and consequently become more involved in their work and its continuing improvement.
The role of the supervisor remained important thereafter throughout the thirties and when France fell to the Germans in 1940 the US military once again realised that it would need to provide industry with help as it geared up to war production levels again. Accordingly, the US War Manpower Commission’s Bureau of Training set up an organisation known as Training within Industry (TWI) to ‘improving supervisors and their interface with employees’ which it was believed would be the critical factor to boost war production. The TWI service was created in August 1940 and it operated until September 1945. Its declared aim was: ‘To assist war production industries to meet their manpower needs by training within industry each worker to make the fullest use of his best skill up to the maximum of his individual ability, thereby enabling production to keep pace with war demands.’ which it was believed would be the critical factor to boost war production. The TWI service was created in August 1940 and it operated until September 1945. Its declared aim was: ‘
TWI established a nationwide volunteer network of industrial professionals from private industry, on loan from their companies, and available by invitation only to companies seeking help to boost their productivity. After a false start that almost overwhelmed it the head of TWI said: ‘We decided to make a major shift in the whole approach to the task, and some of the original plans, such as giving contractors a consulting service on a broad range of in-plant training problems, were abandoned. Instead, the needs of the supervisors were to be the area of concentration because the serious shortage of experienced men had forced numerous plants to appoint many who were not qualified to do the job.’ Together with his colleagues the top men in TWI had all become experienced in Allen’s 4-Step method during the First World War.
During its five years TWI certificated over 1,750,000 people from some 16,500 organisations involved in the wartime production effort. Each person passing through the training course underwent five two-hour workshops. TWI’s approach was based on what it called its Multiplier Principle: ‘Develop a standard method, then train the people who will train other people who will train repeated groups of people to use the method.’ It was an elegantly simple way to ensure the quick spread of improved supervisory management know-how throughout America’s war production system. At the end of the war the pressure on management rapidly reduced and with America the only source of volume production available for the re-structuring of a flattened Europe there was no loss in demand for its manufacturing capacity. A buyers’ market soon established itself and the main aim of most American corporations became one of ‘shipping boxes’ rather than delivering reliable, quality products to the military. Thus returned to centre stage, albeit in a new guise, the historic money-pump principle of business.
A NEW STYLE OF MANAGEMENT
However a few Americans were still concerned about improving production capabilities – they were the specialist engineering officers at Supreme Headquarters of the US Occupation Forces in Japan. The war had destroyed virtually all Japan’s production capacity and the American government took the decision to help Japanese middle management (all top management having been imprisoned) to re-establish vital industries. Following the defeat of Japan three American engineers, Frank Polkinghorn, Charles Protzman and Homer Sarasohn, found themselves posted to join Gen. MacArthur’s central staff in his General Headquarters in the Dai Ichi Insurance Building in central Tokyo, the higher floors of which overlooked the Imperial Palace. The three were all assigned to the Civil Communication Section and Sarashon was put in charge of establishing a radio receiver industry so that the occupation powers could effectively communicate with the Japanese people.
Towards the end of 1948 Sarasohn’s efforts had so impressed Gen. MacArthur that he supported his Section’s recommendation that a university level management training programme be established. The course was prepared by Sarasohn together with Charles Protzman. They wrote it simply drawing on their experience of American industry before the war. It became formalised in a document called the CCS Manual which was circulated from 1949 and thereafter helped to spread American manufacturing experience deeply into the minds and practice of the newly emerging leadership level of Japan's slowly recovering economy. This course drew upon the work of Walter Shewhart, an engineer with Bell Labs who developed real time quality manufacturing techniques that enabled AT&T to rapidly and economically expand its telephone system across America during the late twenties.
Thus did two young, but insightful, engineers shape the early course of post-war economic history by explaining simply and clearly what they had been taught during the war by the Western Electric training programme. Little did they realise that their colleagues at home had opted for the easier way of management which ignored the facts and emphasised the financial fictions that were to slowly help to destroy American economic supremacy over the next five decades. By 1950 the three engineers were leaving Japan, their work done. The next phase of American help was to be divided between targeted help for top management on the one hand (a series of visits by Edwards Deming, the statistician) and first line management on the other. For the latter it was decided to import the successful TWI programme of supervisor training would not only help in the rebuilding of Japanese industry but also infuse democratic principles throughout Japan.
A memo from 1949 describing the situation in Japan: ‘Supervision is ordinarily a haphazard, rule-of-thumb process, and … in-plant a new man under an experienced worker picks up his skills as well as he can. Such practices are incompatible with modern industrial methods and with the achievement of high output per worker.’ The Occupation authorities decided to move the TWI resource to Japan in 1950 and spread the job improvement philosophy of American wartime management to revive Japan’s exhausted economy. Four US instructors spent six months training the selected local ‘TWI’ trainers who then carried the supervisory message into the workforce using the Multiplier Principal that worked so well in contributing to the very destruction the allies were now intent on repairing. By 1995, almost 100,000 TWI instructors had been certified. In addition, many certified instructors set up non-certified TWI programs inside their own companies, the classic example being the Toyota Motor Co Ltd which in the early 1950s implemented an improvement programme called Toyota Training Within Industry (TTWI). This led directly to the implementation of the Toyota Production System (TPS) in 1970.
JAPAN SUCCESSFULLY DEVELOPS NEW STYLE MANAGEMENT
One US engineer who joined Toyota in the US in 1983 discovered TWI materials in the process of adapting some Toyota training materials for the NUMMI project with GM in California. During the process of explaining the material to their American colleague his Japanese mentors tabled a aging copy of the original English language training manual which they had received 30 years previously from their, then, American mentors. Thus the circle was closed!
Before Pearl Harbour few Japanese appreciated the productive capability of the United States economy. In the late thirties a group of Japanese military leaders had visited Britain and America to study western economic development. On their return they warned their superiors that they had discovered how America, in particular, would be capable of overwhelming the productive capacity of both Japan and Germany if war was joined. One of their number, Admiral Isoroku Yamamoto, later to lead the attack on Pearl Harbour, said "In the first six to twelve months of a war with the United States and Great Britain I will run wild and win victory after victory. But then, if the war continues after that, I have no expectation of success."
Japanese business, notably the electronics and automobile industries, never faltered in its efforts to learn about American management techniques from the inter-war years, particularly those relating to the education of first-line supervisors for quality control and continuous improvement, an area of activity which they singularly identified by their word ‘kaizen’ which translates in essence as ‘to become good through continuing change based on study of results’. This is of course an example of the fact that where the language of one people (or tribe) requires a sentence or phrase to explain a single word concept from another’s it is unlikely that the concept will readily be accepted, let alone adopted, by the newcomer.
Evidence that new management techniques would become an important factor in the later half of the 20th century were generally experienced at the individual level. The western business establishment would be the last to learn as the usual way of working – shipping boxes and pumping money – were so successful. The author’s first experience was in the humble world of the zip fastener – a device which was in the 1960’s becoming widely used and prone to jamming. In 1966 a Japanese zip fastener company, YKK, founded in 1934, opened a London office and offered a product far superior to any other.
The reason for YKK’s global success – it has 250 plants and offices in 60 countries – may be traced to the philosophy of its founder, Mr Tadao Yoshida. Called ‘The Cycle of Goodness’ it means that "No one prospers unless he renders benefit to others." According to this philosophy, Mr. Yoshida believed that he must manufacture high quality zip fasteners that would benefit, or enhance, the end-use goods in which they were installed so that those goods would perform perfectly longer and better than others on the market. When they did, all involved would benefit. To achieve this guiding principle, YKK became involved in not only producing the zip fasteners, but also making the machines that make the zippers, and producing many of the raw materials that go into the zippers, such as the polyester and brass that make up the tape, teeth and sliders. It is not surprising therefore that YKK not only mastered the humble zip fastener but a wide range of other clothing fastener products.
After YKK successful foray overseas it was not long before world markets saw the arrival of a wide rand growing range of high quality Japanese electrical goods, cars and cameras – all designed and built in accordance with kaizen principles originally learned from the Americans but with distinctibe differences that accorded with the ‘tribal rites’ of Japanese society.
The concept of culture has been defined in many different ways and there is no single agreed definition. For the purposes of business management it might be useful to consider it as simply the expression of an organisation’s collective behaviour. Where the leadership behaviour is clear and well communicated the culture will be likewise clear and readily identifiable. Where there is no such clear – and predictable – leadership behaviour – the culture will be hard to define. Of course national (tribal) culture imposes itself on the individual’s behaviour and thus plays an important role in shaping the corporate culture. Cultural differences between countries are therefore significant in matters of international business management. Culture has a significant influence on management behaviour in different countries.
American culture is very much one of stretch for success and then reflect on the consequences whereas Japanese culture is one of reflect on how to be successful and, only when ready, stretch. One is natural to a resource rich society; the other for a resource poor society. The evidence of business history over the past two centuries is that short term success for a resource rich society can be managed adequately by ‘stretch and reflect’ whereas where resources are limited management has to aim for the long term as there can be no luxury of a second chance. In this case only reflect and stretch can deliver success and this success will be of a long term nature.
Japan has a well developed system of what American’s would generally term ‘bottom-up’ management decision making. This is known as the ‘ringi sei’ system from the word’s meaning of ‘making collectively deliberative proposals to ones’ master’. In this system, the responsibility for initiating actions rests largely with supervisors who consult with the ‘ei’, or membership, of the organisation to prepare and submit a proposal (‘ringi-sho’), while formal and ultimate authority to execute any decisions remain at the top. Ringi-sho is generally preceded by a systemic consensus building exercise that the Japanese call ‘nemawashi’, This is the important stage of having informal discussions and consultations, often outside the working environment, to diffuse hierarchical boundaries and inhibitions. (The term ‘nemawashi’ originates from the horticultural practice of cutting roots and rotating the trunk of a tree to free it for transplantation.) The sudden submission of a proposal without ‘nemawashi’ would be seen as contrary to the Japanese culture of preserving a harmonious atmosphere within an organisation. Accordingly the ‘ringi sei’ system is highly diffused amongst the holders of know-how and those to be implicated by the proposal, which by the time it is authorised is deemed to carry the active support of the majority and the understanding and latent support of any discontents.
It is interesting to reflect on the fact that while the Japanese approach to consensus builds on the long established strengths of Japanese cultural traditions can inherited from the Tokugawa era (1600 to 1868) which immediately preceded the Meiji Restoration and the modernization of Japan it also is soundly rooted in the traditions of natural harmony – as evidenced by the key term of ‘nemawashi’. Tokugawa Japan had a very rigid and vertically structured society with strong emphasis on authoritarian control on the one hand and obedience on the other hand, giving rise to a series of highly regulated patterns of interpersonal relationships.
WAKING UP TO A CONNECTED WORLD
It is the author’s view that the greatest secret of human development is the work of an larger than life polymath called Stafford Beer.
Work currently still in progress . . . .