Ouchi Will Put Business Ideas to Work for Riordan : City Hall: New chief of staff has successfully advised corporate leaders. He says concepts will work in politics.

When Los Angeles Mayor Richard Riordan needed to find someone to fill the powerful role of chief of staff, the search literally lasted about a second. The one name on his list was William G. Ouchi.

Theirs would seem to be a match made in management heaven: The mayor, who wants to take more control of a sprawling, untamed city government, and Ouchi, the scholar who has made a career of advising corporate executives faced with similar challenges.

“It’s a good fit,” said Ouchi, a UCLA professor of management, consultant to Fortune 500 companies--and City Hall novice--who will take a substantial pay cut to help his friend of 15 years.

Ouchi’s grand adventure in City Hall will be an experiment in applying ideas from the world of business to the world of politics. Riordan calls Ouchi his chief “strategist and tactician” as they seek to transform the bureaucratic culture in accord with the mayor’s mantra: Take chances. Make mistakes. Ask for forgiveness later. In the long term, the two also hope to amend the City Charter to give the mayor more constitutional clout.

Ouchi (pronounced O-chee) says he has hurdled similar Mission Impossible barriers, helping private companies overhaul their organizational structures. Indeed, he contends that corporate and academic politics are every bit as Byzantine and nasty as the real thing, and that he is up to his new task.

Soft-spoken and personable, Ouchi makes it sound simple. “Half of it is technically understanding how the organization works and how it could be reconstituted. The other half is understanding the politics,” said the 51-year-old scholar, who spent the first year of the Riordan Administration as an off-the-books consultant in the mayor’s back office, quietly studying the city bureaucracy and mapping ambitious plans to overhaul it.

Ouchi spent the first days after his appointment meeting many of the 15 City Council members for the first time.

Some of them were impressed. Zev Yaroslavsky, chairman of the budget committee, said Ouchi should not be underestimated as some ivory tower guru. “He works and plays in the real world also,” Yaroslavsky said.

But other insiders asked whether Riordan was wise to take his top staff job away from William McCarley, a 33-year City Hall veteran, and put it in the hands of an academic.

“Is L.A. ready for egghead politics?” wondered political consultant Joe Scott, who worked on Riordan’s campaign but did not join his Administration. Scott said he could recall no other big city where the mayor had made a similar appointment. “You can play with models all you want but in the real world there are tensions, crises, things that need to move quicker than in the lab.”

Ouchi brings minister-like passion to his work, which attempts to make organizations function more productively. A key to his strategy is empowering individuals to realize greater potential in organizations that often squash initiative and reserve power for a few higher-ups.

Ouchi, who grew up in a Japanese American family of professionals in Honolulu, once considered becoming a minister, but changed his mind in college when “I discovered that I loved the study of human behavior in small groups.”

He achieved commercial success with his best-selling book “Theory Z,” a treatise on how U.S. companies could learn from Japanese management techniques. Its key message: “No one is smart enough to tell another person how best to perform his or her job.”

Yet for all the humanism inherent in his theories, Ouchi has been known occasionally to trample on the feelings of some near him who thought their own potential was overlooked.

He has offended some City Hall workers by bringing in high-powered outside consultants to do work, such as staging mayoral appearances, that employees felt they were capable of doing themselves. One City Hall colleague, who asked not to be named, described Ouchi as “quite the elitist.”

He also has his share of contradictions: Ouchi typically displays impeccable manners and charm, yet sometimes surprises co-workers by appearing to ignore them when he passes by in the hall.

He was driven enough, he said, to work 110 hours a week for years, as an assistant professor striving to climb the academic ladder. Yet he seems relaxed and has a sense of whimsy, reflected by the sound-activated, fake fish in his office that wags its tail when he snaps his finger.

Changing human behavior, of course, takes more than the snap of a finger.

Ouchi has used lengthy questionnaires to uncover what people inside an organization really think and to facilitate change.

Last year, for example, he helped Amgen, a huge biotech firm, figure out how to get new drugs to world markets more quickly. The company had been faced with making applications that often ran as long as 100,000 pages in an overall development process that has cost more than $200 million, said its chairman, Gordon M. Binder.

Ouchi helped figure out a way to streamline the process by negotiating a new plan for which groups of employees got involved--and when.

In his personal life, Ouchi also has flourished as a negotiator--maneuvering between suspicious, even hostile factions.

He played a key, behind-the-scenes role in arranging the controversial merger of two of the most prestigious private schools in Los Angeles in 1989, all-girls Westlake and all-boys Harvard.

Ouchi, who had children at both schools, was a Westlake trustee. Passions ran high among loyalists of both schools. Ouchi’s own daughter stopped speaking to him briefly when she learned that he was pushing for the deal.

But he said that although he loved the idea of all-girls education, he had no choice, because Westlake faced financial jeopardy unless the deal went through. “My obligation as a trustee went beyond my own children.”

Ouchi’s unusual journey to City Hall began in Hawaii.

His father was a successful dentist, and the family was close to a Congregationalist minister who lived next door. The minister took Ouchi under his wing and arranged for him to spend part of a summer milking cows in New England when Ouchi was 11. Ouchi also visited prestigious Williams College on that trip--and from then on there was no doubt that was where he would go.

Williams, where Ouchi is now a trustee, had a special tie to the pastor’s church. It had sent Christian missionaries to Hawaii in the 19th Century.

Ouchi considered the ministry the highest calling but decided he lacked the necessary discipline. He toyed with becoming a doctor, until a professor dissuaded him. “I am personally affronted by your performance on this examination,” the professor wrote on Ouchi’s chemistry exam.

Ouchi, whose own life provided some rare windows into Japanese corporate behavior, was ultimately drawn to the study of management.

His father-in-law utilized some Japanese principles in running his insurance business in Hawaii. And his wife’s uncle was an attorney advising Sony Chairman Akio Morita on how to operate in the U.S. market.

Ouchi vaulted to public prominence in 1981 by melding his knowledge of Japanese and American management techniques in “Theory Z,” based on his research at Hewlett-Packard and other corporations.

Coming at a time of rising concern about Japan’s economic challenge to the United States, “Theory Z” reported Ouchi’s view of the strengths of Japanese management, such as an inclusive, consensus style of decision-making, with more responsibility vested in the rank and file.

Moreover, it offered a comforting message to Americans who were increasingly anxious about Japan: that country’s approach was at least partly transferable to corporate America.

Involved workers, he wrote, “are the key to increased productivity.”

“Theory Z,” a bestseller for five months, was published in 14 foreign editions--and transformed Ouchi from anonymous scholar to sought-after speaker and consultant.

Michael S. Leeds recalls that after reading the book, his father invited Ouchi to the summer conference of their family firm, CMP Publications on Long Island.

“He came in and trained all the managers of the company in consensus decision-making and shared responsibility,” said Leeds, president of the family-owned publisher.

That was 10 years ago. Today, it remains one of Ouchi’s two private clients, along with Amgen.

Ouchi met Riordan through a mutual friend. When Ouchi moved to Southern California to work at UCLA, he and his wife of 28 years settled in what has become the fashionable, north-of-Montana Avenue section of Santa Monica. A neighbor was Carl McKinzie, the mayor’s law partner.

As a favor to McKinzie, Ouchi spoke at seminars for the law firm’s clients, one of whom invited him to serve on a corporate board with Riordan.

Riordan, whose personal wealth is estimated at $100 million, hit what he calls his “home run” with that firm, Convergent Technologies, which pioneered “intelligent” computer work stations, made possible by the advent of smaller computer chips. He saw his investment multiply nearly 300 times.

As Ouchi and Riordan flew back and forth to board meetings in San Jose, the two men got to know each other well.

It was on one of their trips that Ouchi asked Riordan why he had never given money to UCLA. Riordan, a noted philanthropist, replied that he had never been asked.

Over the next eight months, the men squabbled over how to structure what became the Riordan Scholars program, which teaches minority high school students about business. They also worked on a management program for minority college students and summer studies for professors at black colleges.

A mutual admiration emerged. The two men treated one another as equals, a bond that even now distinguishes Ouchi’s relationship with the mayor from that of a typical assistant.

“It became instantly clear that I couldn’t simply tell Dick what I wanted him to do and he would keel over . . . and he couldn’t tell me what he wanted me to do and have me keel over,” recalls Ouchi.

Today, the two are almost like family. When Riordan moved into City Hall, he stationed Ouchi in his inner office. Riordan, whose aides often describe him as a visionary, describes Ouchi as his “strategist and tactician. He’s a visionary too.”

For his own part, Ouchi describes his boss in terms that many subordinates would not dare. “Like many creative people, he’s not fully socialized,” Ouchi said of the mayor. Riordan, he explained, is an original thinker who is not especially concerned with conventional ways to solve problems.

Already, Ouchi can claim impact. He played a key role in drafting Riordan’s five-year plan to add nearly 3,000 police officers. He also brought together a group of business executives who proposed ways to tap city pension funds, improve bill collections and wring money out of city departments.

During the first year, a private, nonprofit group funded by the business community helped pay Ouchi and reimbursed UCLA for his $120,000 salary. Now that he has agreed to take a staff position, that setup has been scrapped and Ouchi is braced for a big pay cut.

All told--counting speeches and consulting fees--he has customarily earned between half a million and $1 million a year, said one associate. Ouchi declined to comment.

In a compensation package that is still being negotiated, Ouchi will probably be paid about $100,000 by the mayor’s office and be allowed to keep consulting for Amgen and CMP Publications, since neither does business with the city. But he will have to give up far more lucrative speechmaking for fear of running into conflicts of interest.

Ouchi said he is not sure how long he will stay in his new job. It depends, he said, on how long his colleagues at UCLA are willing to do without his services and on how effective he is.

The challenge he faces is truly daunting--reorganizing a $9-billion city government, enlisting the cooperation of 40,000 employees and a sometimes hostile City Council, and somehow finding the money to put more police on the streets, upgrade technology and retrain workers.

To do these things, Ouchi knows he will have to build a reliable coalition for the mayor on the City Council. Ultimately, he hopes the council will give up some of its own power by putting a charter amendment on the ballot that would “rebalance” the system. The City Charter ordains a weak mayor system; power was further eroded by Proposition 5.

That measure, passed in 1991 in the wake of the Police Commission’s attempt to discipline former Chief Daryl F. Gates, gave the council unprecedented authority to veto decisions by influential commissions appointed by the mayor.

Sound impossible?

“That’s the kind of thing I work on,” Ouchi said.