Japan Seeks Next Management Breakthrough
Would you buy your next computer from a “holonic” technology company? Nippon Electric Corp.’s president, Tadahiro Sekimoto, is betting that you will.
According to Sekimoto, a holonic company is organized around the design principle of laser holography: Each part of the company reflects the structure of the whole, giving it the twin strengths of unity and diversity.
NEC’s holonic concept has captured the fancy of Japanese intellectuals and the powerful Ministry of International Trade and Industry as a management model for other companies to emulate. It’s a telling symbol of the identity crisis Japanese industry faces. The crisis is at least as big as the oil shokku of the 1970s and the yen shokku of the 1980s.
The bubble economy has burst. Six of the country’s top electronics companies just posted a drastic drop in profits. The West, particularly the United States, is no longer a source of inspiration or insight for Japanese management. Wounded and confused, Japan’s global giants are wondering how best to reorganize themselves to cope with a low-growth economy.
Indeed, Matsushita Electric Co.--the consumer electronics powerhouse that boldly shelled out $7 billion to buy MCA--humbly says its new financial mission is “profit with no growth.”
“We need to become a more muscular company,” acknowledges Mikio Higashi, a senior executive on Matsushita’s board of directors, “but we are not sure how.”
Matsushita is struggling to redefine itself in a world where traditional economies of scale and scope no longer produce strong growth.
“The leaders of industry in the past--Matsushita, Toyota, Hitachi--know they have to change their management model,” says Ikujro Nonaka, a management professor at Tokyo’s prestigious Hitotsubashi University, “so they’re now kind of desperate. . . . Being a mass-oriented company doesn’t work anymore. Just-in-time doesn’t work anymore.”
Unlike its American and European counterparts, a Japanese company’s first instinct during financially difficult times is not to fire workers. “We have to create a new management model,” Nonaka says, “but we don’t know what that model is.”
So where MITI once helped reshape industrial structures and new technological investments, today the ministry wants to suggest new metaphors and models for Japanese industry. At least one MITI study group is examining the issue.
Apparently, there is disagreement within the government about how important organizational redesign is to the future competitiveness of Japan’s industrial giants. No one, however, doubts that such redesigns will occur.
“Some companies are looking at self-organizing systems; other companies are looking at ‘chaos theory’ (a mathematical theory that business might use to explain turbulence in competitive markets),” says Sego Matsuoka, a Japanese intellectual and MITI adviser, “but everybody is looking.”
No one’s predicting whether “holonic firms” or “chaos companies” will be in the 1990s what “total quality management” or “just-in-time” were in Japan’s era of explosive growth.
And Japan’s industrial giants could decide that the easiest way to get more profitable is not by creating new management metaphors but simply cutting production capacity and workers.
But Japanese business history would suggest that industry will find a more creative solution to its identity crisis. Just when Western CEOs believed that they had caught up to “just-in-time,” they may once again have to study Japanese management philosophy.
