what we can learn from japanese management

8/7/2019 What We Can Learn From Japanese Management

1/14

Petei F. Diuckei

W hat we can learnfrom Japanese managementDecision by 'consensus,' lifetime employment,continuous training, and the godfathersystem suggest ways to solve U.S. prohlems

ForewordBusinessmen in the United States and Europe knowJapanese industry as an important supplier, customer,and competitor. But they should also know it as ateacher. Three important sets of ideas we can learnfrom Japan are described in this article. They couldhave a far-reaching impact on the quality of our ex-ecutive decision making, corporate planning, workerproductivity, and management training.

Mr. Drucker is well known to HBR subscribers fora series of memorable articles dating back to 1950. Heis also well known in Japan, which he has visited of-ten and studied for many years. Professor of Manage-ment at New York University's Graduate School ofBusiness since 1950, he is the author of The EffectiveExecutive. The Practice of Management, and otherbooks published by Harper & Row.

hat are the most important concerns oftop management? Almost any group of top ex-ecutives in the United States (or in many otherWestern nations) would rank the following veryhigh on the list:O Making eflfective decisions.O Harmon izing employm ent security with oth-er needs such as productivity, flexibility inlabor costs, and acceptance of change in thecompany.O Developing young professional m anagers.In approaching these problem areas, Japanesemanagers-especially those in business-behavein a strikingly diflferent fashion from U.S. andEuropean managers. The Japanese apply differ-ent principles and have developed diflferent ap-proaches and policies to tackle each of these

problems. These policies, while not the key tothe Japanese "economic miracle," are certainlymajor factors in the astonishing rise of Japan inthe last IOO years, and especially in Japan 'seconomic growth and performance in the last20 years.It would be folly for managers in the West toimitate these policies. In fact, it would be impos-sible. Each policy is deeply rooted in Japanesetraditions and culture. Each applies to the prob-lems of an industrial society and economy thevalues and the habits developed far earlier bythe retainers of the Japanese clan, by the Zenpriests in their monasteries, and by the callig-raphers and painters of the great "schools" ofJapanese art.Yet the principles underlying these Japanesepractices deserve, I believe, close attention and


2/14

Japanese managementStudy by managers in the West. They may pointthe way to a solution to some of our most press-ing problems.

Decisions by 'consensus'If there is one point on which all authorities onJapan are in agreement, it is that Japanese insti-tutions, whether businesses or government agen-cies, make decisions by "consensus." The Japa-nese, we are told, debate a proposed decisionthroughout the organization until there is agree-ment on it. And only then do they make thedecision.'This, every experienced U.S. manager will saywith a shudder, is not for us, however well itmight work for the Japanese. This approach canlead only to indecision or politicking, or at bestto an innocuous compromise which offends noone but also solves nothing. And if proof of thiswere needed, the American might add, the his-tory of President Lyndon B. Johnson's attemptto obtain a "consensus" would supply it.Let us consider the experience of Japan. Whatstands out in Japanese history, as well as in to-day's Japanese management behavior, is the ca-pacity for making i8o-degree turnsthat is, forreaching radical and highly controversial deci-sions. Let me illustrate:D No country was more receptive to Chris-tianity than sixteenth-century Japan. Indeed, thehope of the Portuguese missionaries that Japanwould become the first Christian country out-side of Europe was by no means just wishfulthinking. Yet the same Japan made a i8o-degreeturn in the early seventeenth century. Withina few years it completely suppressed Christian-ity and shut itself oflf from all foreign influ-encesindeed, from all contact with the outsideworldand stayed that way for 250 years. Then,in the Meiji Restoration of 1867, Japan executed

another 180-degree turn and opened itself to theWestsomething no other non-European coun-try managed to do.D Toyo Rayon, the largest Japanese manufac-turer of man-made fibers, made nothing butrayon as late as the mid-1950's. Then it decidedto switch to synthetic fibers. But it did not"phase out" rayon making, as every Westerncompany in a similar situation has done. In-stead, it closed its rayon mills overnight, eventhough, under the Japanese system of employ-ment, it could not lay off a single man.D As late as 1966, when I discussed this mat-

ter with officials, the Ministry of InternationalTrade and Industry was adamantly opposed toany Japanese companies going "multinational"and making investments in manufacturing affili-ates abroad. But three years later, the same Min-istry officials, working for the same conservativegovernment, had turned around completely andwere pushing Japanese manufacturing invest-ments abroad!Focusing on the problemThe key to this apparent contradiction is thatthe Westerner and the Japanese mean somethingdiflferent when they talk of "making a decision."With us in the West, all the emphasis is on theanswer to the question. Indeed, our books ondecision making try to develop systematic ap-proaches to giving an answer. To the Japanese,however, the important element in decisionmaking is defining the question. The importantand crucial steps are to decide whether thereis a need for a decision and what the deci-sion is about. And it is in this step that theJapanese aim at attaining "consensus." Indeed,it is this step that, to the Japanese, is the essenceof the decision. The answer to the question(what the West considers the decision) followsits definition.During this process that precedes the decision,no mention is made of what the answer mightbe. This is done so that people will no t be forcedto take sides; once they have taken sides, a de-cision would be a victory for one side and adefeat for the other. Thus the whole processis focused on finding out what the decision isreally about, not what the decision should be.Its result is a meeting of the minds that there is(or is not) a need for a change in behavior.All of this takes a long time, of course. TheWesterner dealing with the Japanese is thor-oughly frustrated during the process. He doesnot understand what is going on. He has thefeeling that he is being given the runaround. Totake a specific example:It is very hard for a U.S. executive to under-stand why the Japanese with whom he is negoti-ating on, say, a license agreement, keep on send-ing new groups of people every few months w hostart what the Westerner thinks are "negotia-tions" as if they had never heard of the subject.One delegation takes copious notes and goesback home, only to be succeeded six weeks later1. Sec Howard F. Van Zandi, "How to Negotiate in (apan," HBRNovemb er-Deeember 1970, p. 45-


3/14

Harvard Business Review: March-April 1971by another team of people from different areasof the company who again act as if they hadnever heard of the matter under discussion, takecopious notes, and go home.Actuallythough few of my Western friendsbelieve itthis is a sign that the Japanese takethe matter most seriously. They are trying toinvolve the people who will have to carry outan eventual agreement in the process of obtain-ing consensus that a license is indeed needed.Only when all of the people who will have tocarry out the agreement have come together onthe need to make a decision will the decision bemade to go ahead. Only then do "negotiations'really startand then the Japanese usually movewith great speed.There is a complete account of this process atworkthough it does not concern a businessdecision. The account deals with the decision togo to war against the United States in 1941.-'Undertaking action,when the Japanese reach the point we call a de-cision, they say they are in th e action stage. Nowtop management refers the decision to what theJapanese call the "appropriate people." Deter-mination of who these people are is a top man-agement decision. On that decision depends thespecific answer to the problem that is to beworked out. For, during the course of the dis-cussions leading up to the consensus, it has be-come very clear what basic approaches certainpeople or certain groups would take to the prob-lem. Top management, by referring the ques-tion to one group or the other, in eflfect picksthe answerbut an answer which by now willsurprise no one.This referral to the "appropriate people" is ascrucial as the parallel decision in the U.S. po-litical process which baffles any foreign observ-er of American governmentthe decision as towhich committee or subcommittee of the Con-gress a certain bill is to be assigned. This deci-sion is not to be found in any of the books onU.S. government and politics. Yet, as everyAmerican politician knows, it is the crucial stepwhich decides whether the bill is to becomelaw and what form it will take.Increased effectivenesswhat are the advantages of this process? Andwhat can we learn from it?

In the first place, it makes for very eflfectivedecisions. While it takes much longer in Japanto reach a decision than it takes in the West,from that point on they do better than we do.After making a decision, we in the West mustspend much time "selling" it and getting peopleto act on it. Only too often, as all of us know,either the decision is sabotaged by the organi-zation or, what may be worse, it takes so longto make the decision truly effective that it be-comes obsolete, if not outright wrong, by thetime the people in the organization actuallymake it operational.The Japanese, by con trast, need to spend abso-lutely no time on "selling" a decision. Every-body has been presold. Also, their process makesit clear where in the organization a certain an-swer to a question will be welcomed and whereit will be resisted. Therefore, there is plenty oftime to work on persuading the dissenters, or onmaking small concessions to them which willwin them over without destroying the integrityof the decision.Every Westerner who has done business withthe Japanese has learned that the apparent in-ertia of the negotiating stage, with its endlessdelays and endless discussion of the same points,is followed by a speed of action that leaves himhanging on the ropes. Thus:It may take three years before a licensingagreement can be reached, during which timethere is no discussion of terms, no discussion ofwhat products the Japanese plan to use, no dis-cussion of what knowledge and help they mightneed. And then, within four weeks, the Japaneseare ready to go into production and make de-mands on their Western partner for informationand people which he is totally unprepared tomeet.Now it is the Japanese who complain, and bit-terly, about the "endless delay and procrastina-tion" of the Westerner! For they understand ourway of making a decision and acting on it nobetter than we understand their way of consid-ering a decision and acting on it.The Japanese process is focused on understand-ing the problem. The desired end result is cer-tain action and behavior on the part of people.This almost guarantees that all the alternativeswill be considered. It rivets management atten-tion to essentials. It does not permit commit-2. See Japan's Decision for War, Records of the 1941 Policy Conferences.translated and edited by Nobutuka Ike (Stanford, California, StanfordUniversity Press, 1967I.


4/14

Japanese managem entment until management has decided what thedecision is all about. Japanese managers maycome up vy^ith the wrong answer to the problem(as was the decision to go to war against theUnited States in 1941), but they rarely come upwith the right answer to the wrong problem.And that, as all decision makers learn, is thereally dangerous course, the irretrievably wrongdecision.Improved focusAbove all, the system forces the Japanese tomake big decisions. It is much too cumbersometo be put to work on minor matters. It takes fartoo many people far too long to be wasted onanything but truly important matters leading toreal changes in policies and behavior. Small de-cisions, even when obviously needed, are veryoften not being made at all in Japan for thatreason.

With us it is the small decisions which areeasy to makedecisions about things that donot greatly matter. Anyone who knows Westernbusiness, government agencies, or educationalinstitutions knows that their managers make fartoo many small decisions as a rule. And noth-ing, I have learned, causes as much troublein an organization as a lot of small decisions.Whether the decision concerns moving thewater cooler from one end of the hall tothe other or phasing out of one's oldest busi-ness makes little emotional difference. One deci-sion takes as much time and generates as muchheat as the other!To contrast the Japanese approach and theWestern approach, let me illustrate:I once watched a Japanese company workthrough a proposal for a joint venture receivedfrom a well-known American company, onewith which the Japanese had done business formany years. The Orientals did not even discussthe joint venture at the outset. They started outwith the question: "Do we have to change thebasic directions of our business?" As a result, aconsensus emerged that change was desirable,and management decided to go out of a numberof old businesses and start in a number of newtechnologies and markets; the joint venture wasto be one element of a major new strategy. Unti lthe Japanese understood that the decision wasreally about the direction of the business, andthat there was need for a decision on that, theydid not once, among themselves, discuss thedesirability of the joint venture, or the terms on

which it might be set up. It has, by the way,been doing very well since its formation.In the West we are moving in the Japanese direc-tion. At least, this is what so ma ny "task forces,""long-range plans," "strategies," and other ap-proaches are trying to accomplish. But we do notbuild into the development of these projects the"selling" which the Japanese process achievesbefore the decision. This explains in large mea-sure why so many brilliant reports of the taskleaders and planners never get beyond the plan-ning stage.U.S. executives expect task forces and long-range planning groups to come up with recom-mendationsthat is, to commit themselves toone alternative. The groups decide on an answerand then document it. To the Japanese, how-ever, the most important step is understandingthe alternatives available. They are as opinion-ated as we are, but they discipline themselvesnot to commit themselves to a recommendationuntil they have fully defined the question andused the process of obtaining consensus to bringout the full range of alternatives. As a result,they are far less likely to become prisoners oftheir preconceived answers than we are.Security e) productivityJust as many Americans have heard about con-sensus as the basis for Japanese decisions, somany of us know about Japanese "lifetime em-ployment" policies. But the common under-standing of "lifetime employment" is as far offthe mark as is the common interpretation ofconsensus.Myths et) realitiesTo be sure, most employees in "modern" Japa-nese business and industry have a guaranteedjob once they are on the payroll. While they areon the job, they have practically complete jobsecurity which is endangered only in the eventof a severe economic crisis or of bankruptcy ofthe employer. They also are paid on the busisof seniority, as a rule, with pay doubling aboutevery 15 years, regardless of the type of job. Tobe accurate, the picture must be qualified withsuch facts as the following:0 Won ien are almost always considered "tem-porary" rather than "permanent" employees,- sothey are exempted from the benefits.


5/14

Harvard Business Review: March-April 19710 In most "traditional" Japanese businesses,such as workshop industries producing lacquer,pottery, and silk, workers are hired and paid bythe hour.0 Even in the "modern" industries there is a

slowly shrinking, but substantial (perhaps 20%),body of employees who, by unilateral manage-ment decision, are considered "temporary" andremain in that category for many years.But, while job security and compensation arequite favorable for Japanese workers as a whole,the picture does not have the implications aWestern businessman might expect. Instead ofa rigid labor cost structure, ]apan actually haslemarkabh flexibility in her labor costs andlaboT force. What no one ever mentionsandwhat, I am convinced, most Japanese do noteven see themselves-is that the retirement sys-tem itself (or perhaps it should be called th e non -retirement system) makes labor costs more flex-ible than they are in most countries and indus-tries of the West. Also, it harmonizes in a highlyingenious fashion the workers' need for job andincome guarantees with the economy's need forflexible labor costs.Actually, most Japanese companies, especial-ly the large ones, can and do lay off a largerproportion of their work force, when businessfalls off, than most Western companies are like-ly or able to do. Yet they can do so in such afashion that the employees who need incomesthe most are fully protected. The burden of ad-justm ent is taken by those who can afford it andwho have alternate incomes to fall back on.Official reti rem ent in Japan is at age 55for everyone except a few who, at age 45, be-come members of top management and are notexpected to retire at any Hxed age. At age 55, itis said, the employee, whether he is a floorsweeper or a department head, "retires." Tradi-tionally, he then gets a severance bonus equalto about two years of full pay. (Many com-panies, strongly backed by the government,are now installing supplementary pension pay-ments, but by Western standards these paymentsare still exceedingly low.)Considering that life expectancy in Japan isnow fully up to Western standards, so that mostemployees can expect to live to age 70 or more,this bonus seems wholly inadequate. Yet no onecomplains about the dire fate of the pensioners.More amazing still, one encounters in everyJapanese factory, office, and bank, people whocheerfully admit to being quite a bit older than

55 and who quite obviously are still working.What is the explanation?The rank-and-file blue-collar or white-collaremployee ceases to be a permanent employee atage 5 5 and becomes a "temporary" worker. Thismeans that he can be laid off if there is notenough work. But if there is enough workand,of course, there has been during the past 20yearshe stays on, very often doing the samework as before, side by side with the "perma-nent" employee with whom he has been work-ing for many years. But for this work he nowgets at least one third less than he got when hewas a "permanent" employee.The rationale of this situation is fairly simple.As the Japanese see it, the man has somethingto fall back on when he retiresthe two-yearpension. This, they freely admit, is not enoughto keep a man alive for 15 years or so. But it isusually enough to tide him over a bad spell. Andsince he no longer has, as a rule, dependent chil-dren or parents whom he has to support, hisneeds should be considerably lower than theywere when he was, say, 40 and probably hadboth children and parents to look after.If my intent were to describe the Japaneseemployment system, I would now have to gointo a great many rather complicated details,such as the role of the semiannual bonus. But Iam concerned only with what we in the Westmight learn from the Japanese. For us, the maininterest of the Japanese system, I submit, is theway in which it satisfies two apparently mutu-ally contradictory needs: (a) job and incomesecurity; and (b) flexible, adaptable labor forcesand labor costs. Let us look at the way thisis done and draw comparisons with the U.S.system.Meeting workers' needsIn the West, during the last 25 years, more andmore employees have achieved income main-tenance that may often exceed what the Japa-nese worker gets under "lifetime employment."There is, for instance, the Supplementary Em-ployment Compensation of the U.S. mass-pro-duction industries which, in effect, guaranteesthe unionized worker most of his income evenduring fairly lengthy layoffs. Indeed, it may wellbe argued that labor costs in U.S. mass-produc-tion industries are more rigid than they are inJapan, even though our managements can rap-idly adjust the number of men at work to theorder flow, in contrast to the Japanese practice


6/14

Japanese managementof maintaining employment for "permanent"employees almost regardless of business condi-tions. Increasingly, also, we find in the heavilyunionized mass-production industries provisionsfor early retirement, such as were written in thefall of 1970 into the contract of the U.S. auto-mobile industry.Still, unionized employees are laid off accord-ing to seniority, with the ones with the leastseniority going first. As a result, we still offer theleast security of jobs and incomes to the menwho need predictable incomes the mostthefathers of young families (who also may haveolder parents to support). And where there is"early retirement," it means, as a rule, that theworker has to make a decision to retire perma-nently. Once he has opted for early retirement,he is out of the work force and unlikely to behired back by any employer. In short, the U.S.labor force (and its counterparts in Europe) lacksthe feeling of economic and job security whichis so pronounced a feature of Japanese society.We pay for a high degree of "income main-tenance" and have imposed on ourselves a veryhigh degree of rigidity in respect to labor costs.But we get very few tangible benefits from thesepractices. Also, we do not get the psychologicalsecurity which is so prominent in Japanese so-cietyi.e., the deep conviction of a m an of work-ing age that he need not worry about his joband his income. Instead we have fear. Theyounger men fear that they will be laid off first,just when the economic needs of their familiesare at their peak; the older men fear that theywill lose their jobs in their fifties, when they aretoo old to be hired elsewhere.In the Japanese system there is confidence inboth age groups. The younger m en feel they canlook forward to a secure job and steadily risingincome while their children are growing up;the older men feel they are still wanted, stilluseful, and not a burden on society.

In practice, of course, the Japanese system isno more perfect than any other system. Thereare plenty of inequities in it; the treatment ofthe older people in particular leaves much to bedesiredespecially in the small workshop indus-tries of "preindustrial" Japan and in the multi-tude of small service businesses. But the basicprinciple which the Japanese have evolvednotby planning rationally, but by applying tra-ditional Japanese concepts of mutual obligationto employment and labor economicsseems tomake more sense and works better than theexpensive patchwork solutions we have devel-

oped th at do not come to grips with the problemitself. Economically, it might be said, we havegreater "security" in our systemwe certainlypay more for it. Yet we have not obtained whatthe Japanese system produces, the psychologicalconviction of job and income security.More meaningful benefitsToday there is talkand even a little actioninU.S. industry concerning "reverse seniority" toprotect newly hired blacks with little or no se-niority in the event of a layoff. But we mightbetter consider applying "reverse seniority" toolder men past the age of greatest family obliga-tions, since so many labor contracts now pro-vide for early retirement after age 55. Undercurrent conditions, these men may be expectedto be laid off when they qualify for early retire-ment. Why not give them the right to comeback out of early retirement and be rehired firstwhen employment expands again? Some suchmove that strengthens the job security of tbeyounger, married employee, with his heavy fam-ily burdens, might well be the only defenseagainst pressures for absolute job guaranteeswith their implications for rigid labor costs.Even more important as a lesson to be learnedfrom the Japanese is the need to shape benefitsto the wants of specific major employee groups.Otherwise they will be only "costs" rather than"benefits." In the West-and especially in theUnited Stateswe have, in the last 30 years,heaped benefit upon benefit to the point wherethe fringes run up to a third of the total laborcost in some industries. Yet practically all thesebenefits have been slapped on across the boardwhether needed by a particular group or not.Underlying our entire approach to benefitswith management and union in complete agree-ment, for onceis the asinine notion that thework force is homogeneous in its needs andwants. As a result, we spend fabulous amountsof money on benefits which have little meaningfor large groups of employees and leave unsatis-fied the genu ine needs of other, equally substan-tial groups. This is a major reason why our bene-fit plans have produced so little employee satis-faction and psychological security.Willingness to changeIt is the psychological conviction of job andincome security that underlies what might bethe most important "secret" of the Japanese


7/14

Harvard Business Review: March-A pril 1971economy: cheerful v\^illingness on the part ofemployees to accept continu ing changes in tech-nology and processes, and to regard increasingproductivity as good for everybody.There is a great deal written today ahout the"spirit" of the Japanese factory, as reflected inthe company songs workers in big factories singat the beginning of the working day. But farmore important is the fact that Japanese work-ers show little of the famous "resistance tochange" which is so widespread in the West.The usual explanation for this is "national char-acter"always a suspect explanation. That itmay be the wrong one here is indicated hy thefact that acceptance of change is hy no meansgeneral throughout Japan. For example:D The Japanese National Railways suffer fromresistance to change fully as much as any other

railway system, including the U.S. railroads. Butthe num erous private railways that crisscross thedensely populated areas of Japan seem to befree from such resistance. That the Japanese Na-tional Railways are as grossly overstaffed as anynationalized industry in the world may he partof the explanation; the workers know that anychange is likely to create redundancy.D The other industries in Japan that sufferfrom resistance to change are also the ones thatare organized according to Western concepts ofcraft and skill. The industries that apply Japa-

nese concepts, as do the private railways (on thewhole), do not suffer from resistance to change,even though their employees may know that thecompany is overstaffed.The secret may lie in what the Japanese call"continuous training." This means, flrst, thatevery employee, very often up to and includingtop managers, keeps on training as a regular partof his job until he retires. This is in sharp con-trast to our usual Western practice of traininga man only when he has to acquire a new skillor move to a new position. Our training is pro-motion-focused; the Japanese training is perfor-mance-focused.Second, the Japanese employee is, for the mostpart, trained not only in his job but in all thejobs at his job level, however, low or high thatlevel is. To illustrate:D The man working as an electrician will au-tomatically attend training sessions in every sin-gle area in the plant. And so will the man whopushes a broom. Both of them may stay in theirrespective jobs until they die or retire. Their payis independent, in large measure, of the joh they

are doing, and is geared primarily to the lengthof service, so that the highly skilled electricianmay well get far less money than the floorsweeper. But hoth are expected to be reason-ably proHcient in every job in the plant that is,generally speaking, at the same level as theirown job.D An accountant is expected to be trainedor to train himself through a multitude of cor-respondence courses, seminars, or continuationschools availahle in every big cityin every sin-gle one of the professional jobs needed in hiscompany, such as personnel, training, and pur-chasing.D The president of a fairly large company oncetold me casually that he could not see me on acertain afternoon hecause he was attending hiscompany's training session in weldingand as a

student, rather than as an observer or teacher.This is an exceptional example. But the com-pany president who takes a correspondencecourse in computer programming is fairly com-mon. And the young personnel man does so asa matter of course.It would take a fat book on Japanese economicand industrial history to explain the origins ofthis systemthough in its present stage it is justabout 50 years old and dates back to the laborshortages during and right after the First WorldWar. It would take an even fatter book to dis-cuss the advantages, disadvantages, and limita-tions of the Japanese system. The limitation s arevery great indeed. For example, the young, tech-nically trained peoplescientists and engin eers -resent it bitterly and resist it rather well. Theywant to work as scientists and engineers and areby no means delighted when asked to learn ac-counting or when shifted from an engineeringjob into the personnel department.Moreover, there are exceptions to the ruleSuch highly skilled and highly specialized menas papermakers and department store buyersusually are not expected to know other jobs orto be willing to fit into them. But even thesetypes of workers continue, as a matter of rou-tine, to perfect themselves in their own specialtylong after any training in the West would haveended.Built-in advantagesOne result of the practices described is that im-provement of work quality and procedures isbuilt into the system. In a typical Japanese train-


8/14

Japanese managementing session, there is a "trainer." But the real bur-den of training is on the p articipants themselves.And the question is alv^ays: "What have welearned so we can do the joh better?" A newtool, process, or organization scheme becomesa means of self-improvement.

A Japanese employer who wants to introducea new product or machine does so in andthrough the training session. As a result, thereis usually no resistance at all to the change, hutacceptance of it. Americans in the managementof joint ventures in Japan report that the "bugs"in a new process are usually worked out, or atleast identified, before it goes into operation onthe plant floor.A second benefit is a built-in tendency to in-crease productivity. In the West we train untila "learner" reaches a certain standard of perfor-mance. Then we conclude that he has masteredthe job and will need new training only whenhe moves on or when the job itself is changed.When a learning curve reaches the standard, itstays on a plateau.Not so in Japan. The Japanese also have astandard for a joh and a learning curve leadingup to it. Their standard as a rule is a good deallower than the corresponding standard in theWest; indeed, the productivity norms whichhave satisfied most Japanese industries in thepast are, by and large, quite low by Westernmeasurements. But the Japanese keep on train-ing. And sooner dr later, their "learning curve"starts breaking above the plateau which we inthe West consider permanent. It starts to climbagain, not hecause a man works harder, but be-cause he starts to work "smarter." In my view,the Japanese pattern is more realistic and morein tune with all that we know about learning.In the West we are satisfied if the older workerdoes not slacken in his productivity. Decliningperformance is a problem, too, in some Japaneseindustries; young women assembling precisionelectronics, for instance, reach the peak of theirfinger dexterity and their visual acuity aroundthe age of 20 and , after age 23 or so, rapidly slowdown. (This is one reason tha t the Japanese elec-tronics industry works hard to find husband s forthe girls and to get them out of the factoryby the time they are 21 or 22.)But on the whole the Japanese believe thatthe older employee is more produc tive; and theirfigures would bear this out. W ith pay based onseniority, the output per yen of wages may bemuch higher in a plant in which the work forceis largely new and young. But output per man-

hour is almost invariably a good deal higher inthe plant that has the older work populationalmost the exact opposite of what we in theWest take for granted.Lifetime training conceptIn efiect, the Japanese apply to work in b usinessand industry their ow n traditions. The two greatskills of the Samurai, members of the warriorcaste that ruled Japan for 300 years until 1867,were swordsmanship and calligraphy. Both de-mand lifetime training. In both one keeps ontraining after one has achieved mastery. And ifone does not keep in training, one rapidly losesone's skill. Similarly, the Japanese schools ofpaintingthe Kano school, for instance, whichdominated Japanese official art for 300 yearsuntil 1867taught that even the greatest masterspends several hours a day copying. Thus, hetoo keeps in "continuous training." Otherwise,his skill, and above all his creativity, would soonstart to go down. And the greatest judo masterstill goes through the elementary exercises ev-ery day, just as the greatest pianist in the Westdoes his scales every day.When employees and efficiency experts takethis attitude toward work, the result is a subtlebut important change in emphasis. A leadingindustrial engineer of Japan told me one day:"One difference I find hard to explain to myWestern colleagues is that we do exactly thesame things that the industrial engineer does inDetroit or Pittsburgh; but it means somethingdifferent. The American industrial engineer laysout the work for the worker. Our industrial en-gineers are teachers rather than masters. We tryto teach how one improves one's own produc-tivity and the process. What we set up is thefoundation; the edifice the worker builds."Scientific management, time and motionstudies, m aterials fiow we do all tha t, and nodifferently from the way you do it in the States.But you in the States think that this is the endof the job; we here in Japan believe it is the be-ginning. The worker's job begins when we havefinished engineering the job itself."'Generalist' visionThe concept of "continuous training" in Japangoes a long way toward preventing the extremespecialization and departmentalization plaguingU.S. business. Generally speaking, there are nocraft unions or craft skills in Japanese indus-


9/14

Harvard Business Review: March-April 1971try. (The most significant exception is the Japa-nese National Railways, which imported craftspecialization from Great Britain and from Ger-many, together with steel rails and locomotives,and which is perhaps even more fragmented bycraft and jurisdictional lines than American orBritish railroads are.) Part of the explanation ishistorical. In the early days of Japanese indus-trialization, craftsmen flatly refused to work inthe new factories. The plants therefore had tobe staffed by youngsters, fresh from the farm,who had no skills and who had to be taughtwhatever they needed to know to do the joh.

Still, it is not really true, as Japanese officialdoctrine asserts, that "men are freely movedfrom job to job within a plant." A man in awelding shop is likely to stay in a welding shop,and so is the fellow in the next aisle who runsthe paint sprays. There is much more individualmobility in office work, and especially for mana-gerial and professional people. A Japanese com-pany will not hesitate to move a young managerfrom production control into market research orthe accounting department.The individual departments in an office tendto be rigidly specialized and highly parochial inthe defense of their "prerogatives." Yet the tun-nel vision afflicting so many people in Westernbusiness is conspicuously absent in Japan. Forinstance:The industrial engineer I quoted earlier in-sists meticulously on the boundaries between theindustrial engineering and personnel functions.He himself never worked in any other function,from the day he graduated from engineeringschool to the day when, at age 55, he was madepresident of an affiliate company in the corpo-rate group. Nevertheless, he knew the work ofevery other function. He understood their prob-lems. He knew w hat they could do for his indus-trial engineering department and what, in turn,his people had to do for them. He is the purestof specialists in his own work, and yet he is atrue "generalist" in his knowledge, in his vision,and in the way that he holds himself responsiblefor the performance and results of the entireorganization.This approach he attributes to the fact thatthroughout his career he was subjected to "con-tinuous training" in all the work going on at hisjob level. When he was a junior industrial engi-neer, he took part in the training sessions of alljuniors, whether engineers, accou ntants, or sales-men, and since becoming a member of top man-agement, he has belonged voluntarily to a group

which meets two evenings a week, usually witha discussion leader from the outside, to trainitself in the work of top management.Adapting the conceptWe in the West emphasize today "continuingeducation." This is a concept that is still aliento Japan. As a rule, the man or woman whograduates from a university there never sets footon campus again, never attends a class, nevergoes back for "retreading." N ormal education inJapan is still seen as "preparation" for life ratherthan as life itself.Indeed, Japanese employers, even the largecompanies and the government, do not reallywant young people who have gone to graduateschool. Such people are "too old" to start at thebottom. And there is no other place to start inJapan. Graduate students expect to work as "spe-cialists" and to be "experts" rather than submitto training by their employers. Resistance to thehighly trained specialist is considered by manythoughtful management people in Japan to bethe greatest weakness of Japanese businessandof government. There is little doubt that, in theyears to come, "continuing education" will be-come far more important in Japan than it nowis, and that the specialist will become more im-portant, too.

But, at the same time, Japan's continuoustraining has something to teach us in the West.We react to worker resistance to change and in-creased productivity largely along the lines ofMark Twain's old dictum ahout the weather.We all complain, but no one does anything.The Japanese at least do somethingand withconspicuous success.Gontinuous training is not unknown in theWest. A century ago it was developed bythe fledgling Zeiss Works in Germany and ap-plied there to all employees in the plant eventhough most of them were highly skilled glass-blowers and opticians with many years of crafttraining behind them. The world leadership ofthe German optical industry until World War Irested in large measure on this policy, whichsaw in advanced craft skill a foundation for,rather than the end of, learning.With craft jurisdictions in the United States(and Great Britain) frozen into the most rigidand restrictive unio n con tracts, continuous train-ing is probably out of the question for manyblue-collar workers on the plant floor. But itcould be institutedand should be instituted


10/14

Japanese managem entfor nonunionized employees. To be sure, manycompanies not only have massive training pro-grams, but encourage their younger technical,professional, and managerial people to keep ongoing to school and to continue their education.But in all too many cases the emphasis in theseprograms is on a man's becoming more special-ized and on not learning the other areas ofknowledge, skills, and functions.In most of the U.S. company training pro-grams I know, the emphasis is entirely on theone function in which a young man alreadyworks; at most he is being told that "other areasare, of course, important." As a result, he sooncomes to consider the other areas as so muchexcess baggage. And when it comes to educa-tion outsidein evening courses at the local uni-versity, for instancea young man's supervisorwill push his subordinate into taking more workin his specialty and away from anything else.The approach should be the opposite: oncea young man has acquired the foundations of aspecialty, he should be systematically exposedto all the other major areas in the businesswhether in company training courses or in "con-tinuing education" programs outside. Only inthis way can we hope to prevent tomorrow'sprofessional and managerial people from be-coming too departmentalized.

Cam &) feeding of the youngThe House of Mitsui is the oldest of the world'sbig businesses; it dates back to 1637, half a cen-tury before the Bank of England was founded.It also was the largest of the world's big busi-nesses until the American Occupation split itinto individual companies. (As these companiescome back together into a fairly close confeder-ation, it may well become again the world'sbiggest business.)In the more than 300 years of its businesslife, Mitsui has never had a chief executive (theJapanese term is "chief banto"literally, "chiefclerk") who was not an outstanding man and apowerful leader. This accomplishment no otherinstitution can match, to my knowledge; theCatholic Church cannot, nor can any govern-ment, army, navy, university, or corporation.What explains this amazing achievement? InJapan one always gets the same answer: untilrecently, the chief bantohimself never a mem-ber of the Mitsui family but a "hired hand"had only one job: manager development, man-

ager selection, and manager p lacement. H e spentmost of his time with the young people whocame in as junior managers or professionals. Heknew them. He listened to them. And, as a re-sult, he knew, by the time the men reached 30or so, which ones were likely to reach top man-agement, what experiences and developmentthey needed, and in what job they should betried and tested.Appraisal &) assignmentAt first sight, nothing would seem less likely todevelop strong executives than the Japanese sys-tem. It would seem, rather, to be the ideal pre-scription for developing timid men selected forproved mediocrity and trained "not to rock theboat." The young men who enter a company'semploy directly from the universityand by andlarge, this is the only way to get into a com-pany's management, since hiring from the out-side and into upper-level positions is practicallyunknownknow that they will have a job untilthey retire, no matter how poorly they perform.Until they reach age 45, they will be promotedand paid lay seniority and by seniority alone.There seems to be no performance appraisal,nor would there be much point to it when aman can be neither rewarded for performancenor penalized for nonperformance. Superiors donot choose their subordinates: the personnelpeople make personnel decisions, as a rule, oftenwithout consulting the manager to whom a sub-ordinate is being assigned. And it seems to beunthinkable for a young manager or profession-al to ask for a transfer, and equally unthinkablefor him to quit and go elsewhere.This practice is being questioned by highlytrained technical personnel, but it is changingvery slowly. It is stiil almost unheard of for ayoung man to take a job in another companyexcept with the express permission of his previ-ous employer. Indeed, every young managerialand professional employee in Japanese organiza-tions, whether business or government, knowsthat he is expected to help his colleagues lookgood rather than stand out himself by brillianceor aggressiveness.This process goes on for 20 to 25 years, duringwhich all the emphasis seems to be on conform-ing, on doing what one is being asked to do, andon showing proper respect and deference. Thensuddenly, when a man reaches 45, the Day ofReckoning arrives, when the goats are separatedfrom the sheep. A very small group of candi-


11/14

Harvard Business Review: March-April 1971dates is picked to become "company directors"that is, top management. They can stay in man-agement well past any retirement age known inthe West, with active top management peoplein their eighties by no means a rarity. The restof the group, from "department director" ondown, generally stay in management until theyare 55, usually with at best one more promo-tion. Then they are retiredand, unlike therank-and-file employees, their retirement is com-pulsory.Limited but important exceptions to this ruleare made in the case of outstanding men who,while too specialized to move into the top man-agement of the parent company, are assigned tothe top management of subsidiaries or affiliates.In such positions they can stay in office for anindefinite period of time.Informal evaluatorsTo an outsider who believes what the Japanesetell himnamely, that this is really the way thesystem worksit is hard to understand on whatbasis the crucial decision at age 45 is made. It iseven harder to believe that this system producesindependent and aggressive top managers whohave marketed Japanese exports successfully allover the world and who have, in the space of 20years, made into the third-ranking economicpower in the world a nation that, at the eve ofWorld War II, was not even among the flrstdozen or so in industrial production or capital.It is precisely because Japanese managers have"lifetime employment" and can, as a rule, beneither fired nor moved, and because advance-ment for the first 25 years of a man's workinglife is through seniority alone, that the Japanesehave made the care and feeding of their youngpeople the first responsibility of top manage-ment. The practice goes back at least 300 years,to the time when the Samurai, as retainers of amilitary clan, were organized in tight hereditarycastes with advancement from one to the otherofficially not permitted. At the same time, thegovernment of the clan had to flnd able peoplewho could run the clan's affairs at a very earlyage and take their opportunities without offend-ing higher ranking but less gifted clansmembers.Today, of course, it is no longer possible forthe chief banto of Mitsui to know personal-ly the young managerial people as his predeces-sor did a few generations ago. Even muc h sm allercompanies are too large and have far too manyyoung managerial and professional employees

in their ranks for that to be done. Yet top man-agement is still vitally concerned with theyoung. It discharges this concern through an in-formal network of senior middle-managementpeople who act as "godfathers" to the youngmen during the flrst ten years of their careers inthe company.Managerial godfathersThe Japanese take this system for granted. In-deed, few of them are even conscious of it. Asfar as I can flgure out, it has no namethe term"godfather" is mine rather than theirs. Butevery young managerial employee knows whohis godfather is, and so do his boss and theboss's boss.The godfather is never a young man's directsuperior, and, as a rule, he is not anyone in adirect line of authority over the young man orhis department. He is rarely a member of topmanagement and rarely a man who will get in-to top management. Rather, he is picked fromamong those members of upper-middle man-agement who will, when they reach 5 s, be trans-ferred to the top management of a subsidiary oraffiliate. In other words, godfathers are peoplewho know, having been passed over at age 45for the top management spots, that they are notgoing to "make it" in their own organizations.Therefore, they are not likely to build factionsof their own or to play internal politics. At thesame time, they are the most highly respect-ed members of the upper-middle managementgroup.How is a godfather chosen for a young man?Is there a formal assignment or an informalunderstanding? No one seems to know. The onequaliflcation that is usually mentioned is thatthe godfather should be a graduate of the sameuniversity from which the young man gradu-atedthe "old school tie" binds even more tight-ly in Japan than it did in England. Yet every-body inside the company knows who the god-father of a given young man is and respects therelationship.During the flrst ten years or so of a youngman's career, the godfather is expected to be inclose touch with his "godchild," even thoughin a large company he may have 100 such god-children" at any one time. He is expected toknow the young man, see him fairly regularly,be available to him for advice and counsel, and,in general, look after him. He has some func-tions that reflect Japanese culture; for instance.

X"


12/14

Japanese managementhe introduces the young men under his wingsto the better bars on the Ginza and to the rightbawdy houses. (Learning how to drink in publicis one of the important accomplishments theyoung Japanese executive has to learn.)If a young man gets stuck under an incompe-tent manager and wants to be transferred, thegodfather knows where to go and how to dowhat officially cannot be done and, accordingto the Japanese, "is never done." Yet nobodywill ever know about it. And if the young manis errant and needs to be disciplined, the god-father will deal with him in private. By the timea young man is 30 the godfather knows a greatdeal about him.It is the godfather who sits down with topmanagement and discusses the young people.The meeting may be completely "informal."Over the sake cup, the godfather may say quiet-ly, "Nakamura is a good boy and is ready fora challenging assignment," or "Nakamura is agood chemist, but I don't think he'll ever knowhow to manage people," or "Nakamura lneanswell and is reliable, but he is no genius and bet-ter not be put on anything but routine work."And when the time comes to make a personneldecision, whom to give what assignment, andwhere to move a man, the personnel people willquietly consult the godfather before they makea move.An outsider's glimpseA few years ago I found myself, by sheer acci-dent, a "temporary godfather." My experiencemay illustrate how the system works:One of my ablest students in 20 years at NewYork University's Graduate Business School wasa young Japanese. Let me call him Okura. Theson of a diplomat, he went to Oxford for hisundergraduate work and then took the JapaneseForeign Service Examination, which he passedwith h onors. But then he decided to go into busi-ness instead, came to our school in New York,and went to work for one of Japan's big inter-national companies.A few years ago, while I was in Japan, hecame to see me. I said, "Okura, how are thingsgoing?" He said, "Fine, but I think I may needsome help. This is why I have come to see you."I shall mention just the highlights of the storyhe told me. "Not hav ing gone to school in Japan,I do not really have anyone in my company whofeels responsible for me," he said. "All our man-agement people have gone to school in Japan.

As a result, there is no one in upper manage-ment who can tell the personnel people that Iam ready for a managerial job in one of ourbranches abroad. I know they considered mewhen theyflUed he last two vacancies in SouthAmerica, but no one knew whether I wanted togo there, whether I was ready, and what myplans were. I know that you are going to havelunch with our executive vice president in a dayor two, and, having been my professor, you canspeak for me."I asked, "Okura, won't your executive vicepresident be offended if an outsider interferes?"He said, "Oh, n o. On the contrary,- he'll be grate-ful, I assure you."He was right. When I mentioned Okura'sname to the executive vice president, his facelit up and he said, "You know, I was going toask you to do us a favor and talk to Okura-sanabout his plans. We think he is ready for a bigmanagement assignment abroad, but we haveno way of talking to him,- none of us went tothe same university he went to."Three months later Okura was posted to headthe company's branch office in a fairly imp ortantcountry in Latin America!Implications for theIn the West, though relationships are far lessformal, we still need, just as much as the Japa-nese do, the senior manager who serves as ahuman contact, a listener, a guide for the youngpeople during their flrst ten years or so in busi-ness. Perhaps the greatest single complaint ofyoung people in the large organization today isthat there is nobody who listens to them, no-body who tries to flnd out who they are andwha t they are doing, nobody w ho acts as a seniorcounselor.Our management books say that the flrst-linesupervisor can flU this role. That is simply non-sense. The flrst-line supervisor has to get thework out; all the sermons that "his flrst job ishuman relations" will not make it otherwise. Asupervisor tries to hang on to a good man andnot let him go. He will not say, "You havelearned all there is to learn in this place." Hewill not say, "You are doing all right, but youreally don't belong here." He will not ask ayoung man, "Where do you want to go? Whatkind of work do you want to do? How can Ihelp you to get there?" In fact, the supervisor isalmost bound to consider any hint of a desire tochange or to transfer on the part of a young and


13/14

Harvard Business Review: March-April 1971able subordinate a direct criticism of himself.As a result, young m anagerial and professionalpeople in American business and industryandin Europe too"vote with their feet." They quitand go elsewhere. The absence of a genuinecontact is an important reason for the heavyturnover among these people. Often, when Italk with them, I hear them make statementslike these:O "The company is all right, but I have no-body to talk to."O "Th e com pany is all right, but I am in thewrong spot and can't get out of it."O "I need someone to tell me what I am do-ing right and what I am doing wrong, and whereI really belong, but there isn't anybody in mycompany to whom I can go."They do not need a psychologist. They needa human relationship that is job-focused andwork-focused, a contact they have access to, amentor who is concerned with them. This iswhat the Japanese have had to supply for a longtime because of the impersonal formality of theirrigid system. Because they cannot admit official-ly that the godfather practice exists, they haveset it up in the right way. For it is clearly astrength of their system that the godfather func-tion is not a separate job, is not a part of person-nel work, and is not entrusted to specialists, butis discharged by experienced, respected, and suc-cessful management people.But it is not only the young people in Ameri-can and European companies who need a com-munication system. Senior executives could al-so make good use of it. Let me illustrate:In a number of companies with which I havebeen working, an attempt has been made tohave senior executives meet fairly regularlywith younger menoutside of office hours andwithout respecting lines of function or author-ity. In these sessions the senior man does notmake a speech, but asks, "What do you have totell meabout your work, about your plans foryourself and this com pany, about our opp ortuni-ties and our problems?" The meetings have notalways been easy going. But the young people.

though at flrst highly suspicious of being patron-ized, after a while have come to look forward tothe sessions. The real beneflciaries, however,have been the senior executives. They havelearned what the young managers are thinking.The godfather concept of the Japanese may betoo paternalistic for us in the West; it may evenbe too paternalistic for the young Japanese. Butthe need for some system enabling young mana-gerial and professional people to become thespecial concern of senior men is especially acutein this age of the "generation gap."

ConclusionAny Japanese executive who has read this arti-cle will protest that I grossly oversimplify andthat I have omitted many salient features of Ja-panese management. Any Western student ofJapan who has read this will accuse me of beinguncritical. But my purpose has not been to givea scholarly analysis of Japanese management oreven to attempt an explanation of Japan's mana-gerial performance. I am fully aware of themany frustrations of the young manager in Ja-pan. I am aware of the tremendous tensionsin the Japanese economy and society createdby the nation's economic achievementtensionswhich are so great as to make me highly skep-tical about all those current predictions that the"twenty-flrst century will be Japan's century."Indeed, if I were a Japanese, this predictionwould scare me out of my wits.Whether anyone can learn from other peo-ple's mistakes is doubtful. But surely one canlearn from other people's successes, \yhile theJapanese policies discussed in this article are notthe "keys" to Japan's achievement, they are ma-jor factors in it. And while they are not the an-swers to the problems of the West, they containanswers to some of our most pressing problems,suggest help for some of our most urgent needs,and point to directions we might well explore.It would be folly to attempt to imitate the Japa-nese; but we might well try to emulate them.

Japanese poetry has as its subject the human heart.Kamo Mabuchi, 1697-1769


14/14

what we can learn from japanese management

Documents