| Posted with permission of author
(long note alert)
<<< CAPNET::CAPVAX$PAGE:[NOTES$LIBRARY]PARTICIPATIVE_MANAGEMENT.NOTE;1 >>>
-< PARTICIPATIVE_MANAGEMENT >-
================================================================================
Note 13.0 MADE IN AMERICA - MIT Press No replies
HDLITE::SCOTT 328 lines 17-AUG-1990 10:06
--------------------------------------------------------------------------------
Please note reference to teamwork, employee involvement, and
skills development and nurturing.
Dated May 1989 by Harris Sussman
Last week, I read a new book that deserves our attention.
It is MADE IN AMERICA: Regaining the Productive Edge, by the MIT
Commission on Industrial Productivity (MIT Press, $17.95), 344 pp.
The jacket copy says, "This long-awaited study by a team of leading
MIT scientists, engineers, and economists takes a hard look at the
recurring weaknesses of American industry that are threatening the
country's standard of living and its competitiveness in the world
economy. Unlike most other studies that look at the U.S. economy
from the top down and mainly prescribe macroeconomic cures, MADE IN
AMERICA focuses on the reorganization and effective integration of
human resources and changing technologies within companies as the
principal driving force for productivity growth.
"...MADE IN AMERICA condenses the myriad of causes of the productivity
problem that are typically cited into a handful of key recurring
weaknesses. These include short time horizons and a preoccupation
with short-term returns, outdated strategies that focus excessively
on mass production and the domestic market, failures of cooperation
within and among U.S. firms, neglect of human resources, technological
failures in translating discoveries into products, and a public-policy
environment that is often at cross-purposes with industry.
"Looking ahead, MADE IN AMERICA describes strategies for industry, labor,
government, and education that will lead to a substantial improvement
in American industrial performance. It concludes that without major
changes in the ways Americans learn, produce, work with one another,
compete internationally, and provide for the future, no amount of
macroeconomic fine-tuning will be able to produce a rising standard of
living in the long run."
Here is a selection of direct quotes from the book, to give you a sample:
It is no mere truism that the ultimate resource of an industrial economy
is its people. One of the most disturbing ways in which the United States
has lately fallen behind other nations is in developing and nurturing
the skills of its people.
The problem has been well defined in recent years. American elementary
and secondary students tend to fall near the bottom of any comparative
international test. American universities turn out too few scientifically
and technically trained people: 6 percent of American baccalaureates are
in engineering versus 20 percent in Japan and 37 percent in Germany. The
American system of on-the-job training is called "following Joe around,"
and it does not work.
Although everyone sees the need for a better-skilled work force, no one
is willing to act alone to improve education. The individual does not know
where he will be employed and does not want to invest time and money in
acquiring skills that could become worthless. Firms feel that they cannot
educate their workers, because they would go off to other employers who
could pay higher wages because they did not have to incur training costs.
Local governments are reluctant to raise taxes to pay for good schools,
because firms could locate next door and get a well-educated work force free.
The postwar American economic advantage rested on five pillars.
First, the American market was eight times larger than the next-largest
market. Second, when it came to technology Americans were superior.
Third, American workers were more skilled on average than those in other
countries. Fourth, the United States was far richer than other nations.
Finally, American managers were the best in the world.
But both inside and outside America changes were in progress that would
vitiate those advantages.
In view of all the turmoil over the apparently declining stature of
American industry, it may come as a surprise that the United States still
leads the world in productivity. Averaged over the economy as a whole,
for each unit of input the United States produces more output than any
other nation. With this evidence of economic efficiency, is there any
reason for concern? There are at least two reasons. First, American
productivity is not growing as fast as it is elsewhere, most notably in
Japan. Second, other indicators of industrial performance that are less
easily quantified than productivity but no less important tell a disquieting
story. In such areas as product quality, service to customers, and speed
of product development, American companies are no longer perceived as world
leaders, even by American consumers. There is also evidence that
technological innovations are being incorporated into practice more quickly
abroad, and the pace of invention and discovery in the United States may be
slowing.
To sum up, the U.S. economy faces two serious productivity-related problems.
One is the general productivity slowdown and the need to restore the
economywide growth rate to something approaching the long-term historical
average. This is a problem that every industrial nation shares to some
degree. Second, America's longstanding productivity advantage over other
nations is being eroded. Part of this equalization results from the
growing economic strength of the other countries and is not unwelcome, but
part too stems from weaknesses in U.S. industrial performance. It is
primarily this latter issue that we address in this book.
The United States thus has no choice but to continue competing in the world
market for manufactures. The ultimate scale of American manufacturing
industry is not known, but it will not be trivial. The important question
is not whether the United States will have a manufacturing industry but
whether it will compete as a low-wage manufacturer or as a high-productivity
producer.
The Department of Defense has estimated that it purchases about 21 percent
of the gross product of U.S. manufacturing industries and over a third of
the output of high-technology manufacturing industries; it depends on virtually
every sector of the manufacturing base for its materiel. For the nation to
become heavily dependent on foreign technology for its defense would be
politically and militarily untenable.
As we began to compare our observations across teams and in more detail,
however, recurring patterns of weakness in productivity performance began
to emerge. Eventually, by working together and sifting the evidence from
the team reports, the Commissioners discerned six interrelated patterns
of behavior that best characterize the evidence. These patterns, which are
central to the arguments developed in this book, are discussed in the next
six chapters under the following headings:
* Outdated Strategies
* Short Time Horizons
* Technological Weaknesses in Development and Production
* Neglect of Human Resources
* Failures of Cooperation
* Government and Industry at Cross-Purposes
The organizational patterns and attitudes that we believe are at the root
of the productivity problem are notoriously hard to change, even once the
need for change is recognized. For example, we have found many circumstances
where greater teamwork and cooperation would be to the benefit of all, but
employees have no incentive to form teams when their firms base promotion,
pay, and other rewards entirely on individual performance.
We have concluded that without major changes in the ways schools and firms
train workers over the course of a lifetime, no amount of macroeconomic
fine-tuning or technological innovation will be able to produce significantly
improved economic performance and a rising standard of living.
There seems to be a systematic undervaluation in this country of how much
difference it can make when people are well educated and when their skills
are continuously developed and challenged. This underestimation of human
resources becomes a self-fulfilling prophecy, for it translates into a
pattern of training for work that turns out barely educated workers with
skills that are narrow and hence vulnerable to rapid obsolescence.
Moreover, workplace training makes it more likely that workers will come
to understand the big picture: how context shapes the task and how contingent
factors must be integrated into performance. Broader skills enable workers
to make larger contributions to the productivity of the firm and also to go
on through life acquiring new skills. Streeck argues, "What firms need
today is not just skills but broad and unspecific skills; not just
'functional' skills dedicated to a specific purpose, as they can be created
by instant 'refresher courses' or the replacement of one subject in a
curriculum by another, but skills as a GENERALIZED, POLYVALENT RESOURCE
that can be put to many different and, most importantly, AS YET UNKNOWN
future uses."
There are a number of American firms that see maintaining and upgrading
skills as central to their competitive strategy. The human-resource
policies of companies like IBM, Digital Equipment, and Chaparral Steel
go far toward overcoming the limitations we have identified. The problem
is that the best practices of these leading firms are not diffusing widely
or rapidly through the economy.
Within firms, coordination has often been blocked by excessive specialization
and compartmentalization of functions and by multiple layers of bureaucracy.
...Chaparral Steel...has eliminated sales as a separate function altogether
and routinely sends its production personnel on sales calls. The company
believes that this increases its responsiveness to changes in the market
as well as its customers' confidence that their needs will be met.
We call attention here to six key similarities among the best-practice firms:
(1) a focus on simultaneous improvement in cost, quality, and delivery; (2)
closer links to customers; (3) closer relationships with suppliers (4) the
effective use of technology for strategic advantage; (5) less hierarchy and
less compartmentalized organizations for greater flexibility; and (6) human-
resource policies that promote continuous learning, teamwork, participation,
and flexibility. The six responses are mutually reinforcing. Indeed, they
form a single, integrated strategy. The specific changes in business aims
and methods, internal organization, and supplier relations that characterize
best industrial practices cannot be treated as individual items on a list
from which firms can pick and choose at will.
The best-practice firms discussed in the last chapter demonstrate clearly
that some American companies still have what it takes to be the best in the
world. But many more still do not seem to have recognized that to achieve
this status they will have to make far-reaching changes in the way they do
business. They will have to adopt new ways of thinking about human resources,
new ways of organizing their systems of production, and new approaches to the
management of technology.
Yet even without a detailed vision of the future, the Commission did identify
three major and pervasive long-term trends with broad implications for the
productive performance of tomorrow's firms.
First, it seems overwhelmingly likely that economic activity will continue to
become more international. The ownership, location, work force, purchases,
and sales of firms will all spread out beyond the boundaries of the nation
in which the company originated.
Second,...markets for consumer goods and intermediate goods are becoming more
sophisticated....Markets are also becoming more segmented and specialized....
Third, we expect the rapid pace of technological change to continue.
In the remainder of this chapter we set forth our vision of a more productive
America in terms of five imperatives, each of which must be adopted by
industry, labor, government, and the educational community. They are not
detailed prescriptions but general goals; the next two chapters present our
recommendations for how the goals might be achieved. The imperatives are these:
* Focus on the new fundamentals of manufacturing.
* Cultivate a new economic citizenship in the work force.
* Blend cooperation and individualism.
* Learn to live in the world economy.
* Provide for the future.
Put products and manufacturing processes ahead of finance.
Establish new measures of productive performance.
Focus on the effective use of technology in manufacturing.
Embrace product customization and production flexibility.
Innovate in production processes.
Education for technological competence is crucial for raising the productivity
of American firms....We see an unprecedented opportunity in the new technologies
for enabling workers at all levels of the firm to master their own work
environment. This marks a major change from even the recent past.
Today and in the future, effective use of new technology will require people to
develop their capabilities for planningt, judgment, collaboration, and the
analysis of complex systems. In exercising these skills, workers will come to
have a larger responsibility for organizing the production process. If American
industry can seize this opportunity, individuals may experience a new measure
of mastery and independence on the job that could go well beyond maximizing
productivity and extend to personal and professional satisfaction and well-
being.
Under the new economic citizenship that we envision, workers, managers, and
engineers will be continually and broadly trained, masters of their technology,
in control of their work environment, and involved in shaping their firms'
objectives. No longer will an employee be treated like a cog in a big and
impersonal machine. From the company's point of view, the work force will be
transformed from a cost factor to be minimized into a precious asset to be
conserved and cultivated.
The new economic citizenship will entail new relationships among companies,
employees, and technology. Learning, especially on the job, will acquire
new importance. Greater employee breadth and responsibility are needed to
facilitate the absorption of new and rapidly changing manufacturing
technologies that span different processes. On the employer's side, greater
caring for employees is essential, since under the rules of their new
citizenship, employees will be expected to give so much more of themselves
to their work.
Learn for work and at work.
Increase employee breadth, responsibility, and involvement.
Provide greater employment stability and new rewards.
Organize for both cooperation and individualism.
Promote better intra- and interfirm relations.
Expand partnerships.
Strengthen cooperation between labor and management.
Understand foreign languages, cultures, and practices.
Shop internationally.
Enhance distribution and service.
Develop internationally conscious policies.
Invest in basic education and technical literacy.
Develop long-term business strategies.
Establish policies that stimulate productive investment
Invest in infrastructure for productive performance.
MIT should broaden its educational approach in the sciences, in technology,
and in the humanities and should educate students to be more sensitive to
productivity, to practical problems, to teamwork, and to the cultures,
institutions and business practices of other countries.
Create a new cadre of students and faculty characterized by (1) interest
in, and knowledge of, real problems and their societal, economic, and political
context; (2) an ability to function effectively as members of a team creating
new products, processes and systems; (3) an ability to operate effectively
beyond the confines of a single discipline; and (4) an integration of a deep
understanding of science and technology with practical knowledge, a hands-on
orientation, and experimental skills and insight.
Where possible, revise subjects to include team projects, practical problems,
and exposure to international cultures. Encourage student teaching to instill
a stronger appreciation of lifelong learningt and the teaching of others.
Reinstitute a foreign-language requirement in the undergraduate admissions
process.
Managing internationally. Because of the increased dispersion of technological
and managerial innovation among countries and the need for firms to match
GLOBAL best practices, management training must embody deeper exposure to
international issues. We believe that future managers must be skilled in all
of the following: (1) operating in an international economic, political, legal,
social, and information era; (2) operating in a number of national environments
and social structures; (3) managing international flows of goods, people,
technology, information, and financial resources and the institutions that
facilitate or regulate these flows; and (4) learning across borders, by which
we mean identifying, analyzing, and adapting the world's best management
practices wherever they happen to be found.
Now, with our two-year study behind us, we feel able to draw four major
conclusions.
First, relative to other nations and relative to its own history, America does
indeed have a serious productivity problem....Left unattended, the problem will
impoverish America relative to other nations that have adapted more quickly and
effectively to pervasive changes in technology and markets.
Second, the causes of this problem go well beyond macroeconomic explanations
of high capital costs and inadquate savings to the attitudinal and
organizational weaknesses that pervade America's production system.
Third, some American firms have adapted well to the new environment and are
capable of holding their own in highly competitive international markets. But
there is little cause for complacency.
Fourth, just as there is no reason for premature celebration, so there is no
cause for despair. The American production system is enormously resilient and
has many great strengths, the most important of which are the creativity,
entrepreneurship, and energy of individual Americans.
--Harris Sussman
|