"KAIZEN"

THE MISSED OPPORTUNITY

by N G Nelson
ngnnelson@yahoo.co.uk

The Concept of Interdependancy

In an idealised form, Japanese Company's could be viewed as an extended family structure, from the shop floor to the boardroom the same social rules should apply. Hannam states that this co-operative ethos united Japanese industry on a scale unheard of in the West. In addition, this culture of co-operation also crossed corporate lines, as larger Japanese Company's had an interest in each others development, being part owned by their potential competitors via interlocking share ownership. [5] Because of interlocking share ownership a self perpetuating dynamic was created, in so far as there was a real incentive for companies to co-operate with their competitors, each company having a vested interest in ensuring their "rival" not only survived, but that it also expanded its market share in order to provide real financial and innovative returns for the investing company. In this way, the dynamics of individual competition inherent within the capitalist system were harnessed and channelled creatively to perpetuate the expansion of the Japanese industrial sector as a whole.

This self perpetuating dynamic of "Cooperating while Competing" was geared toward industrial expansion and it helped deliver Japanese Corporate dominance on a global scale. What undermined this successful corporate interdependency model was the outflow of short-term foreign investment capital and contraction of demand caused by the collapse of East Asian Markets which began with the collapse of the Thai Baht in 1997. Stiglitz observes that over a period of 7 years the IMF and US Treasury forced Asian Governments to abandon their hands-on prescription for macroeconomic stability, by insisting they rapidly liberalise thier Capital Accounts (liberalise their financial and capital markets to allow a massive non regulated inflow of short term capital). This created a massive un-regulated investment bubble which eventually burst. The consequent rapid outflow of international investment and widespread contraction of demand had a disastrous effect on highly leveraged companies within the region. [14] This collapse of regional markets undermined the interdependent regional economy. It also caused a contraction of the Japanese economy, forcing Japanese companies to abrogate their life-long commitment to their employees, a foundation stone of their KAIZEN orientated CIP.

While interlocking share ownership created a self-perpetuating dynamic for corporate expansion within the Japanese macro-economic environment, the concept of "Continuous Improvement" created a dynamic for expansion and innovation within each individual corporate micro-environment. In western companies ideas are often only "encouraged" from employees, while policies are generated by policy makers. Ideas and policies will only be discussed by a restricted number of managers and professionals, often being approved before most people in the organisation know anything about them. The idea then is to sell these ideas/policy decisions to those who are involved in their application. Contrary to predominant Western business culture, Japan's most successful company's ideas are developed by those actually involved in their application. This employee involvement in the creative process is the crucial element in creating the dynamic which drives the long term Continuous Improvement Process. Within the CIP environment the majority of project/strategy/policy decisions are not made by the Board, they are made at the levels involved in their application, and then passed upward for approval. These decisions may either be accepted by the Board, or referred back to their originators for further consideration. [7]

The values which evolved from Japanese village culture helped to maintain the discipline of Japanese society and industry. These values appeared to have been transferred to Japanese corporate structures, which could in effect be viewed as self contained communities, based on groups and multi-generational households. They were in effect, artificial extended families. In the workplace the strength of the bonds which bind together the members of the "Group" is much stronger in Japan than in the West, even to the extent that it is the "Group" which takes responsibility for such things as wedding arrangements for individual members. Leaving a "Group", whether a family or a work group, is far more significant for the individual in Japan. This absorption of the individual within the group facilitated the close bonding which took place in teams within Japanese industry, and it is doubtful that such team loyalty could ever be transposed into an industrial environment in the West.[6] Indeed, in view of the depth of social conditioning necessary to achieve such singular commitment to the group, neither would it be deemed desirable. Within such a system pressure is to an extent exerted on the innovative character traits of intelligent individuals to facilitate consensus decision making within the group. As Seigfried Roth observes, in Japanese society it is "better to remain silent than say 'No' or 'I have a different opinion'", as this may disturb the social harmony present within the Group."[10]

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