It’s Not “Back to Basics”
Many experts believe corporate America needs a "back to basics" movement to stoke our lousy business performance. That's not only wrong; it's a dangerous delusion. It ignores the roots of our malaise and the wrenching shift of attitude we need.
For instance, on product quality, we are getting clobbered everywhere—by the Germans, Swiss, and Italians, as well as the Japanese. We didn't, as one union official said to me, "Take our eye off the ball." We never had our eye on the ball.
Let's face it. Our strengths have been our natural resources and pioneering spirit. U.S. farmers, starting with the Pilgrims, would cultivate land, wear it out, and blithely move west five miles. Every farm I've seen is a history book marked by hulks of rusted cars and agricultural equipment. Have you ever seen a single rusted auto or tractor body in Germany, France, or Japan?
When we began to manufacture, we adopted agriculture's habits—mass, not quality. Quality guru W. Edwards Deming observes, "Henry Ford made great contributions, but the Model T wasn't a quality car."
Europeans and the Japanese have lived within limits for centuries, and have had to be more careful with resources—that is, quality conscious. Dwellers in "rabbit hutch" housing in Japan value every square inch, and therefore every item, wooden or electronic. Not so in America, where homes and yards are filled with broken Christmas toys, years-old TVs, and power lawnmowers. So let's abandon the notion that we need to return to the days of pride in craftsmanship. Such days never existed. Our longstanding traditions, more than quarterly earnings pressure, are the reason we're having such a tough time coming to grips with the need for superior quality now.
We never provided good service either. Foreigners may praise Americans' openness and relative informality, but we've always been bustling and impatient. We rushed to use telephones, Federal Express, and now computer networks, because we've always been in a hurry. We value people who "get to the point," and we are irate at those who "beat about the bush." When something breaks, instead of fixing it, we junk it and buy another one.
Well, if quality and service were never our passion, big has been. I bet you can't drive more than 75 miles in any direction, from anywhere in the U.S., without running into a "biggest in the world" of some sort. Wide open spaces and an apparently limitless frontier set it all in motion.
Our factories are just another instance of our devotion to size—our pride is in the biggest auto plant, the largest smelter, the longest production line. Big railroads spurred us on by making vast markets for cheap goods accessible to industry. Railroad tycoons then used naked power to force business combinations, which they then controlled. Independents who wouldn't go along faced outrageous rail rates and were often forced out of business. The rise of big combines coincided with the War Department's perfection of mass-production techniques. Britain invented most tools of mass production, but we copied and perfected them. (It's ironic that we are now the premier inventors, and Japan, the perfectors.)
Add to this tableau our unique labor situation. Broad-skill craft guilds have always dominated in Japan and Europe, but not in the U.S. Instead, we increasingly specialized labor. American-style unionism ironically ended up solidifying labor's narrow role, by pushing for confined, inflexible job jurisdictions.
This all-American system—long production-run, mass operations—paid off with victory in World Wars I and II, and cemented subsequent U.S. economic hegemony. We won WW II with more tanks and planes, not better ones.
Then overseas economies revived, and started looking to our enticing markets. Their only entry ways were through niche markets and by offering superb quality to overcome our skepticism, such as the lousy image of Japanese products in 1955.
The quality emphasis fits nicely with European and Japanese natural skills: their craft labor bent, their predisposition to training and their use of labor as the primary source of value added. As well, their historic lack of excessive vertical integration provided unique flexibility and was the basis for short production runs needed to conquer niches. We stuck to our penchant for big, becoming enamored with large-scale automation. The Japanese took our unused designs for smaller, more flexible machine tools, cornered that market and raised fast product changeover to a high art in the process.
Add to all this the technology revolution. Yes, it was our revolution. But the Japanese took to its principal fruit—miniaturization—while we stayed wedded to mass and bigness.
And so today, we are in a pickle. Quality, service, and flexibility are to be the unquestionable hallmarks of the successful economy of the next 50 years.
A recent poll of Korean businessmen, Fortune reports, suggests that "they preferred Japanese suppliers to Americans by a margin of two to one. The Koreans complained about mediocre product quality, slow delivery times, and poor service, and added that U.S. companies were reluctant to accept small orders."
Koreans are right. But the answer is not a return to basics. Rather, we have to learn an entirely new set of skills and undo our traditional strengths, over 300 years in the making.
(c) 1987. TPG Communications.
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