How Has Japan Overtaken America? The Fault, Says One Expert, Lies Not in Our Cars, but in Ourselves
Its 119 million people are squeezed precariously onto four Pacific islands virtually devoid of natural resources. Much of its industrial base was reduced to rubble by the end of World War II. Yet in less than 40 years Japan has become the world's second greatest economic power, rivaling the United States in steel, producing an ever-increasing variety of high-quality consumer goods and even surpassing the U.S. in electronics and in auto production. In the economically troubled U.S. and Europe, angry calls for protectionist strictures have been accompanied by a sense of awe at Japan's efficiency. Still, the question remains: How much of its success is based on ingenious managerial techniques and how much on the unique Japanese character?
This question and others are addressed by Robert C. Christopher in his book The Japanese Mind: The Goliath Explained (Linden Press/Simon & Schuster, $16.95). A former editor at TIME and Newsweek, Christopher, 59, has been fascinated by Japan since his arrival there as a Japanese-language officer in the U.S. Occupation forces in September 1945. "I returned there for a second tour of Army duty in the Korean War and from the mid-1960s on have visited the country almost annually," says Christopher. Now living in Old Lyme, Conn., he is the administrator of the annual Pulitzer Prizes. With Assistant Editor Joshua Hammer, he discussed what can be borrowed from Japan—and what can't be.
Is the Japanese mind really much different from the American mind?
Absolutely. The Japanese are profoundly group-oriented. They have a far greater sense of loyalty to the institutions they serve than Americans do. In Japan, people join a company and stay all their working lives. They feel, and are made to feel, that the company's success rests squarely on their efforts. Furthermore, the notion that you can achieve success outside the group context is utterly alien to them. A middle manager for a very important corporation has far more prestige than a guy who started and runs his own small or medium-size business, even though the latter may be wealthier and more powerful. To be different is dangerous and regarded with great disfavor.
What accounts for this group mentality?
Historically, you had a large group of people occupying a number of small islands with very limited natural resources. People were forced to band together in support groups to make sure everything was equitably distributed. The Japanese never had the opportunity to assert their individuality because the possibility just wasn't there, economically or physically.
So a shared sense of vulnerability is a key factor in the Japanese success?
Yes. Japanese labor doesn't need to be persuaded that its interests and those of the corporation are inextricably bound up with each other. If a union has to choose between wage increases and a healthy cash flow for the company, it will opt for the cash flow. The success of the company is seen as the key to survival.
How does management cultivate that sense of individual loyalty?
Japan's big modern companies instinctively regard themselves as being responsible for the economic and psychic well-being of their workers. They do such things as furnish housing for single employees, help married employees acquire housing, sell land to them below market prices, provide low-interest loans, educational benefits for employees' children, and all sorts of medical and recreational facilities, and sponsor group outings. In general, they play a much more active role in the whole life of the employee than American firms do.
How does management structure differ from that of U.S. corporations?
Radically. In almost all Japanese companies, no executive decision is arrived at until everyone down to middle-management level and below has been given a chance to pass on it. I had a friend who for years was the top man at a Japanese shipping line. Whenever he had an idea he wanted to effect, one of his practices was to drop down to the company cafeteria at lunchtime and float the idea very tentatively in front of people four, five or six rungs down the ladder. In due course it would come back up the ladder to him and be presented as the judgment of all the people below him. And the consensus approach shows itself in union-management relations too. It's quite common for management to meet at regular intervals with union leadership. When the time comes for contract negotiations, union leaders have a very clear idea of what the company's financial resources are.
But does that "team" approach extend all the way down the ladder?
Japanese executives are not nearly as remote from people on the production line as U.S. executives are. Most of them will tell you they started out on the production line themselves—if only for a token three or four months. If a chief executive doesn't have a lunch date, it's typical for him to go to the cafeteria to see how his workers are doing. In the U.S., that would sound like a publicity gimmick. I've met many Japanese executives who have spent time in this country express astonishment at what they regard as the arrogance of the American executive.
How have the Japanese managed to surpass the U.S. in research and development?
I think the key is the difference in the nature of ownership in Japan and the U.S. A great many Japanese companies belong to loose confederations, such as Mitsui or Mitsubishi. They are controlled not by outside investors but by other firms within the same group, so their managers are answering not to a bunch of people interested solely in seeing stock prices go up but to people who want to see these companies survive long-term. They're much readier to make investments that won't pay off for years. The Nippon Electric Company, for instance, made heavy investments in the semiconductor business, but it was 13 years before they made a profit from it. No publicly owned American company would carry such a major investment for so long with no return. Any guy who tried would get his head handed to him.
Yet U.S. corporations have had the capital for such reinvestment. What have they done with it?
Some of it went for inflated wages, which I believe were not justified by any increase in productivity. A lot of it went into "agglomeration." The steel industry took capital and bought shopping centers and oil companies instead of modernizing its steel-production facilities. Then take a look at the semiconductor business. The U.S.'s initial impulse was to get cheap Third World labor to build the semiconductor chips. The Japanese made machines to produce them. That involved a costly investment initially, but those machines are far less fallible than humans. The Japanese just swept the market because of the reliability of their semiconductors.
Has American workmanship also suffered?
Partly as a result of the changing social climate, including a far greater emphasis on immediate self-gratification, the pride Americans took in their work diminished. Workers got sloppy and careless. Again, though, it comes back to management. American managers tend to treat workers as interchangeable parts. Astonishingly, a Yankelovich poll showed that American workers privately subscribe to the work ethic more strongly than the Japanese. But they don't feel they get a chance to practice it because they're not motivated by American managers.
Lots of reasons. But the primary one is the remoteness of managers from workers. Managers increasingly tend to be MBAs with no real experience making anything. They think marketing is a substitute for production. You get all these youngsters out of business school stepping into highly paid, responsible jobs. They get a sense of being in a special class, whereas in Japan the management class traditionally comes up through the ranks. Also, the starting wage for a college graduate in Japan is not much higher than for a high school grad. So you don't create those instant class distinctions.
So what can we learn from the Japanese?
There are a lot of techniques that can be adopted profitably. We could easily make constant minor improvements in our manufacturing plants. Theoretically, we should be able to make heavier investments in technology, too, though there are limitations on that because of the nature of stockholder ownership in the U.S. and the need for getting money back quickly. That's hard to change without strong management. Unfortunately, there are a number of psychological techniques we cannot adopt. As a Japanese friend once said, "There's no way you're going to get individualistic Americans to behave like group-oriented Japanese."
What about projects like the Nissan plant in Smyrna, Tenn., where American workers are being exposed to Japanese management techniques?
Until now, virtually all Japanese companies that have come to the U.S. have operated on a relatively small scale—1,000 employees or fewer. They have located themselves in Middle American communities like Smyrna, where the traditional work ethic is still very strong. I question very much, as do many Japanese, whether the whole complex of Japanese management techniques can be applied in a big American plant whose workers are heavily unionized.
For example, when Chrysler was at its nadir, it offered its workers, instead of a wage increase, a profit-sharing deal, which as it turned out would have been a lot better for them. But the minute Chrysler showed a profit, the workers repudiated the plan and were right back pounding on the door demanding parity in wages with Ford and GM. Whether Chrysler can afford that is very doubtful.
Is there any way to get American labor and management working together?
The single most important thing is for American managers to become more respectful of workers. They have to instill a sense that we're all in this together. The Yankelovich poll showed that the Japanese workers were far more convinced that the fruits of any gain in productivity would go largely to them. American workers think the fruits are going to the executives and stockholders. If that is going to change, American managers must demonstrate genuine concern, not psychological sleight of hand.
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