New Work Ethic or New Management Ethic?

Tom Peters

Newsweek‘s January 19 issue reports that “competitiveness” is most likely the issue for the 1988 presidential elections; Republicans and Democrats are racing to capture the high ground. Nothing less than a “new work ethic” for America may be called for.

New work ethic seems to imply that “workers” are the problem. Or is a new management ethic needed?

In my view, the evidence is decisive. Workers stand ready to unleash their potential, if they are asked. For 150 years, American management focused on big scale and labor specialization. Management has not only fractionalized labor’s contribution, but has systematically tried to eliminate it.

For instance, we pioneered automation, but with the avowed purpose of driving workers out of the system. Today the watchwords are flexible manufacturing, which couples automation with workers’ creative input to produce short runs for a large variety of products, which consumers in every market are increasingly demanding.

In the November/December 1986 Harvard Business Review, Ramchandran Jaikumar studies half of the flexible manufacturing systems installed so far in the United States and Japan. He calls the U.S. application a “desert of mediocrity.” The Japanese, fully utilizing labor’s skills, have employed the new tools as intended. Their average system makes 93 parts. U.S. manufacturers are using the tools to enhance our traditional bias for mass; our average flexible system makes just ten parts, with volumes seven times higher than the Japanese average.

But automation is the least of it. Japanese managers traditionally have asked every worker to add ideas. And Japanese experts—for instance, engineers—live on the factory floor, supporting the worker. The Japanese word for all this is kaizen. It implies constant refinement. The U.S. counterpart is breakthrough. We characteristically look to leapfrog, concentrating on scientists’ brilliant schemes rather than labor’s day-to-day contributions.

Japanese factory managers devote 60 percent of their investment dollars to incremental improvements; we devote only 25 percent to that task. A recent study by consultants McKinsey & Co. calculated that the Japanese spend just one-sixth to one-half as much as we do on big-bang automation: “The bulk of their [efficiencies] come from the home-grown approaches to design and manufacturing of production equipment.”

Masaaki Imai explains in his brilliant book, Kaizen, that a Japanese engineer tackles constant-improvement projects as eagerly as he takes on exotic design activities. U.S. engineers are only enamored by the jobs with the glory.

Even in Japan, of course, differences exist. An MIT professor’s new study of how Toyota surged ahead of Nissan in the 1960s and 1970s concludes that the former concentrated its activities on the work force, while Nissan “poured money into computers and robots.”

The constant-improvement philosophy encompasses marketing strategy, too. In Second to None, author Bob Christopher demonstrates that Japan’s marketing prowess stems from “establishment of small distinctions … minor improvements in convenience, function, miniaturization, and the like … the cumulative effect is immense.”

Harvard’s respected Bob Reich argues persuasively in his just-published Tales of a New America that advanced nations can no longer succeed via mass production; only specialized, flexible manufacturing will prove viable. We therefore must upgrade, not denigrate, labor’s contribution; our work force simply must add much more value to justify its higher wages. He calls for “collective entrepreneurship,” in which every worker adds ideas, in contrast to the current convention of leaving entrepreneurship to the Steve Jobs (Apple) and the Fred Smiths (Federal Express). In other words, Reich prescribes an American version of kaizen.

A Yankelovich poll of Japanese and American workers is illuminating. On the issue “I have an inner need to be the best I can regardless of pay,” American workers surprisingly outscored the Japanese. On the much more practical question as to “who would benefit most from an increase in [worker] productivity,” the tables were turned—some 93 percent of Japanese workers thought that they would benefit while only 9 percent of American workers felt that way. Self-interest probably rules in both countries, but our workers keenly believe that increased productivity and self-interest don’t go hand in glove. Japanese workers’ traditional 50 percent bonus after a good year doubtless helps induce the feeling that there is a direct link between contribution and outcome!

A poll reported in a recent special issue of the New York Times Magazine queried post-World War II graduates of five top business schools. About 98 percent of the respondents said that “Japanese blue-collar workers work harder than their American counterparts.” Some 69 percent of these MBA grads then had the effrontery to suggest that “the United States has more capable managers in business and industry than the Japanese.”

American managers are out of touch, and arrogant to boot. Reich of the left and H. Ross Perot of the right are among thoughtful commentators who agree that America’s productivity and competitiveness problem comes from a failure to tap the potential of the work force. The evidence demonstrates unequivocally that the potential is there—such as the many, many firms I have profiled in this column.

What America needs is a new management ethic. But as long as management pretends that “I’m OK, you’re not,” the future looms grim.