Project Management Institute

Cultural project management

why the Japanese are first to market with high-tech products

The Japanese enjoy a significant competitive advantage over the U.S, and it's more cultural than economic: they do a better job of managing high-tech projects because their culture emphasizes consensus building.

Tim Breen

For many Westerners, modern Japan first emerged from World War II during the oil crisis of the early 1970s. The 1973 oil embargo opened the U.S. market to the fuel-efficient Japanese automobiles; overnight, it seemed, the Japanese had moved from manufacturing cheap trinkets to building low-cost, high-quality small cars.

Twenty years later, the Japanese have parlayed that opening into a yearly trade surplus with the United States of almost $60 billion. Cumulatively, they have sold some $800 billion more in goods to the U.S. than the U.S. has sold to the Japanese (See Figure 1). No other major trading relationship in history has been so one-sided. How is it that for more than 25 years, the Japanese always seem to be there first with the lowest-cost, best-quality, high-technology gizmo we Americans want and need?

Rationalizing Japanese Success

Many explanations have been offered: World War II destroyed Japan's industrial base, so they were able to start over (helped by the U.S.) with new, modern factories. Japan's labor costs were only a fraction of those in the U.S., so their prices were much lower. They used a variety of techniques—Just-in-Time Inventory, Quality Circles, Total Quality Management, Concurrent Engineering, etc.—not being used in the U.S. And finally, Japan employs unfair trade practices.

All of these no doubt played a part in Japan's phenomenal success, but even taken together, they don't account for either the magnitude or consistency of Japan's trading success. New plants and lower labor costs were initial advantages, but plants built after World War II are themselves now obsolete. Many other countries enjoyed labor costs as low as or lower than Japan's but have not built up a trillion dollar trade surplus with the United States. Over the years Japan's labor costs have grown faster than those in the U.S. so that they are now about the same as ours. Many of the management theories implemented successfully by the Japanese actually originated in the U.S.; the Japanese merely adopted them first and made them work. Basically, American businesses have copied back Japanese implementations of their own theories! And unfair trade practices can limit Japanese markets for U.S. products, so that may explain why the Japanese don't buy more U.S. products, but it hardly explains our insatiable appetite for Japanese products. It may just be that Japanese consumers want the gadgets with the best features, at the lowest cost and highest quality, the same way we do.

So if none of the commonly accepted rationales for Japan's success are valid, what does explain the greatest trade conquest in modern times? Perhaps it is the convergence of a new industrial age, the age of high technology, and a culture particularly well suited to the unique requirements of rapid development and manufacture of high-technology-based goods.

Figure 1. U.S. Trade Deficit With Japan

U.S. Trade Deficit With Japan

The Role of Culture

To understand the interplay between culture and industrial processes, consider the Industrial Revolution of the early 1900s. The assembly line enabled a new age of previously unimagined productivity. This quantum leap in productivity was achieved by standardizing both products and the industrial process. The industrial process was broken down into a series of linear sequential steps that minimized the interdependencies between the steps. The line itself defined the process and minimized the interdependencies by having the product come to the workers, rather than the other way around. The line itself took care of the coordination of the various steps in the process, so each worker needed only be concerned with keeping their piece going. There was no advantage to understanding the big picture. In fact understanding more than your function was a disadvantage because asking questions might slow down the line. You were only told about your particular function, the premium was on conformity and repetition. Just take what you get, perform your job, and send it on down the line.

America flourished during the Industrial Revolution because our culture matched well with the requirements of the assembly line. Our culture embraces individualism and authoritarian hierarchies. As individuals, we strive to find our place in the pecking order by competing with others. Once our place in the hierarchy is decided, we naturally defer to those above us and assume responsibility for and authority over those beneath us. The station on the line represents our place in the pecking order. We accept responsibility for our station and assume others are taking care of whatever comes before and after us on the line.

What if our culture was different? What if our culture was based on we rather than I and on egalitarian teams rather than authoritarian hierarchies? In such a culture the assembly line worker would want to discuss the line with the other assembly line workers to understand the whole process. Together they would want to be comfortable that, as a team, they were doing their best to accomplish their collective goals. One can imagine perplexed foremen and managers, wondering why these workers are challenging their authority and spending all of their time meeting and discussing, rather than just doing what they are told!

A New Industrial Revolution: The Cultural Requirements of High-Tech Products. Now let's consider a new industrial age, defined by the development and manufacture of products based on complex technologies. Our first realization is that the process for successfully developing and manufacturing high-technology-based products is so fundamentally different that it constitutes an industrial revolution on a par with the assembly-line-induced Industrial Revolution of the 1900s. And since the production process is so different, it may also be that a fundamentally different culture is required to successfully support the process.

What are the fundamental characteristics of producing high-technology-based products?

Products are based on complex underlying technologies. Technologies are combined into interdependent systems that interact to produce the desired result. The interaction of subsystem technologies can represent a unique technology in its own right.

Underlying technologies are in a constant state of flux as new, better and cheaper technologies render older technologies obsolete. A product incorporating an obsolete underlying technology will do less and cost more than a product utilizing the new technology.

Because of the fast pace of technological innovation, the previously distinct functions of development and manufacturing become one. New technologies are incorporated into the product, almost on the fly, causing continual disruption and modification of the manufacturing process.

Each technology is of sufficient complexity that specially trained professionals are required to implement and manage the technology.

Rather than the well-defined linear sequence of steps we are used to from the assembly line, producing high-technology-based products is more of a group grope. Any piece can change at any time, and changes in any piece can impact the other pieces. Figure 2 illustrates the two processes.

Whereas the assembly line is characterized by defined, sequential steps with minimum interactions (one from and one to), high-technology-based production is characterized by constantly changing steps and maximum interaction. Managers can't understand the complexities of the underlying technologies and so they are unable to determine or direct the appropriate process. Only the engineers (the equivalent of the assembly line workers) understand how other technologies will impact their technology and only by working in parallel with other engineers can they stay abreast of all the changes and impacts rippling through their interrelated subsystems. The success of the enterprise depends on the ability of the group to successfully communicate and work collectively to solve problems. The role of the manager shifts from directing subordinates to facilitating the group dynamics of individuals whose technical expertise exceeds that of the manager.

How does our culture match up with the requirements for successfully producing high-technology-based products? Not very well. Ninety percent of such projects fail in that they don't meet the original schedule, specification or cost objectives, as illustrated in Figure 3.

To Westerners, consensus building is a laborious, time-consuming and extremely frustrating process. We identify with our individual areas of responsibility and tend naturally to shy away from poking our noses into the responsibilities of others. We tend to plunge ahead more or less ignorant of the impact our actions will have in other areas, with the understanding that any problems that result can be fixed after the fact. We just keep at it through trial and error until we get it right, or we run out of time and either go with what we have or kill the project.

Where we are culturally disposed to waste time and resources by plunging ahead as individuals, the Japanese culture is ideally suited to producing high-technology-based products.

Emphasizing We, Not I

The Japanese culture emphasizes the we rather than the I. From infancy, the Japanese learn the art of building consensus within the team. The worker's role within the team is to understand the other areas of responsibility and to suggest ways the team can be more successful. On average, each Japanese worker makes more than 150 improvement suggestions each year compared to American workers, who average less than ten. As in the U.S., knowledge is power, but in Japan the knowledge is evenly distributed among the team, and managers have no more power, authority or status than other team members. As with all members, the manager's foremost responsibility is to make the team succeed, and his or her role in that process is to facilitate communication and consensus building. In the U.S. we like to plunge ahead as individuals; in Japan they would not even consider moving forward until all issues have been thoroughly discussed. In the U.S. we discover the problems one action causes in other areas as we go; the Japanese discover them before they occur and avoid them altogether. All this discussion and consensus building takes time, which makes it seem to Westerners that it takes forever for the Japanese to make a decision. But once a decision is made, the team is confident that the project can be successful and their commitment to that success is absolute. Consequently, flawed projects are never undertaken and the work is done right the first time. Relative to their counterparts in the U.S., who waste resources on poorly conceived projects, who redo work until they get it right, and who move resources around from crisis to crisis on a monthly basis, the Japanese enjoy a productivity advantage of more than 2-to-1.

Figure 2. Comparison of Interdependencies

Comparison of Interdependencies

Figure 3. 90 Percent of High-Technology-Based Projects Fail to Complete On Time and Within Budget

90 Percent of High-Technology-Based Projects Fail to Complete On Time and Within Budget

A Five-Step Plan for Improvement

In order to compete successfully against the Japanese, U.S. high-technology-based companies have to first recognize that the reason the Japanese are so successful is more cultural than economic, and then take steps to overcome the natural advantage of that culture. Some major U.S.-based companies have successfully implemented organization-wide project management methodologies designed to ensure that teams do communicate and function col-laboratively. Here is a simple five-step methodology I have used successfully with many large high-technology-based companies:

Organize the project. Establish the project team, clarify objectives and define the reporting requirements.

Structure the process model. Use a collaborative, interactive process of discovery by which the project team forges consensus on the technologies to be employed and then models the interdependencies.

Optimize resources. Establish requirements, resolve priorities and provide for requirements in advance.

Gain commitment. Test assumptions. Obtain final commitment from the entire project team.

Manage for success. Follow-up on commitments, track and communicate progress, facilitate collaborative problem resolution.

Each step in the methodology is executed sequentially and the team does not move on to the next step until the current step has been validated or signed-off. State-of-the-art tools support the methodology by enabling teams to col-laboratively model complex interactive processes to determine the impact on the ultimate goal and to proactively simulate problems and agree on solutions.

In the U.S. companies I have worked with, the results have been encouraging: organizations have demonstrated consistent success. Even so, it takes time for an organization to turn its own culture around. In an environment where projects have never been completed on time, goals will be set with a wink and a smile. No one really expects for them to be met and everyone knows they won't be held accountable if they aren't. As engineers experience success, they gain confidence in the process of project management and actually believe that projects can be completed according to plan. They become more willing to make firm commitments and to be accountable, along with their team members, for the project's success. Once commitment and accountability are established, metrics can be developed to help the organization improve its performance over time.

There is no easy way to consistently manage technologically complex projects successfully. Teamwork, communication and collaborative decision-making are required to tap an organization's vast knowledge base, which must be brought to bear in order to succeed. The Japanese enjoy a natural project management comparative advantage by virtue of their culture. What comes naturally to them requires investment, discipline, education and practice for us. The biggest challenge for Westerners is to understand that the requirements for successfully managing high-technology projects clash with our cultural predisposition and that traditional Western business practices limit, rather than contribute to, success. Old habits die hard; it takes generations for cultures to shift. In the meantime, Western organizations need to put programs in place that proactively educate, encourage and empower project teams to cut across cultural and organizational barriers to successfully manage technologically complex projects.

Implementing organization-wide project management systems is time-consuming and expensive. It's easy to make a wrong turn, give up and go back to the old ways. Unfortunately, the alternative may be losing world markets for high-technology-based products to more able competitors. ■

Timothy A. Breen is a director and chief executive officer of Micro Planning International, Denver, Colo. In his role of chairman of MPI's Advisory Board, he discusses needs and trends in PM with executives from many high-technology-based companies.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM Network • September 1996

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