Harry and thread, Slightly OT but maybe not
I offer this review of this book for those who are interested. I'm sure AMAZON.COM will sell it for less than the price listed below.
Oops - I just checked and neither Amazon or Barnes & Noble have this book among the millions and millions available - YET!
For now, I'll have to actually leave the screen to get this one although the review is a good summary of the points the author is making (I guess).
Barry
sciam.com
..............
AMERICA'S INDUSTRIAL COMEBACK
Review by Lewis M. Branscomb
The Productive Edge: How U.S. Industries Are Pointing the Way to a New Era of
Economic Growth
BY RICHARD K. LESTER
W. W. Norton and Company, New York, 1998 ($29.95)
One decade ago the Massachusetts Institute of Technology assembled a Commission on
Industrial Productivity to examine the reasons American dominance of high-technology
industry was experiencing a serious competitive decline. The commission's 1989 book,
Made in America: Regaining the Productive Edge, documented the problems in a number
of industries--problems that were evidenced by poor product quality, noncompetitive
production costs and excessively long product cycles, as compared with best practice in
Asia. The most painful part of this realization was that the decline affected not only steel,
textiles and automobiles, but also the high-tech microelectronics, computer and
communications industries. This book was a call to arms. What were Americans doing
wrong? How could we fix it?
Now the leader of the team that wrote Made in America has come out with a sequel,
borrowing the title from the subtitle of the earlier study. But the question now being asked
is not what did we do wrong, but what are we doing right? Lester examines the easy
answers and finds some truth in all of them: Our most threatening competitor, Japan, was
struggling with the rupture of the "bubble" economy and no longer had almost unlimited
access to capital. After the profligate public borrowing of the Reagan administration,
politicians of both parties committed themselves to bringing the federal budget into
balance. Exchange rates had altered dramatically throughout the 1980s with the U.S.
dollar losing half its value against the yen. And most important--and clearly a matter of
serious concern for the future--U.S. wages had reversed their traditional course. Union
membership in manufacturing was declining; firms were reducing costs by laying off
middle managers who could find only lower-paying jobs.
But these answers, which imply that the favorable conditions industry now enjoys may
not last forever and may not be acceptable to the population at large, failed to explain the
steps managers had taken to change corporate culture. Lester looks into corporate
experience with the "marginal manifestos" offered by an explosion of business
management books. He evaluates two approaches that did attempt to address the total
performance of the enterprise: Total Quality Management (TQM) and Corporate
Reengineering. About two thirds of some 500 firms surveyed by Arthur D. Little were
disappointed in these approaches. Lester notes that many firms did not appreciate how
profound change had to be and how long it would take for the benefits to be evident.
The truth can be best understood in the strengths and weaknesses of American culture:
our tendency to complacency and hubris (my word, not Lester's) and our ability to
accept challenges when they finally get our attention and to come up with innovative
solutions. American managers seemed slow to react when high-tech trade started to go
south around 1970. But once the erosion of U.S. market shares got their attention, many
managers brought a level of flexibility and innovation to both organization and strategy
that allowed them to respond much more quickly to competitive threats.
The key elements of success are basic and easy to understand. They include loyalty,
focus, innovation and a willingness to take risks. But they must be deeply and
comprehensively embedded in corporate culture. This explains, at least in part, why it
took so long for the turnaround to produce visible results at the macroeconomic level
(although some firms, of course, were able to transform their behavior earlier). Once
American industry had broken away from the mass-production model and given up hope
that exposing everyone to a TQM class would do the trick, the rate of recovery, assisted
by financial troubles in Japan, has astonished almost everyone.
The groundwork for the recovery was in large measure already coming into place before
the 1990s. Many firms had placed their priorities where they saw the most
entrepreneurial opportunity, whereas Asian strategies aimed at commoditizing products to
leverage their superior handling of process technology, factory management and cost.
While Japan and Korea were placing their bets on commodity memory chips and were
failing to master the software business, American entrepreneurship was alive and well.
Engineers were leaving semiconductor companies and starting application-driven
businesses that could add more value to the electronic hardware.
The U.S. software industry not only grew in size but began to take from hardware the
role of defining and delivering function for the user (witness the extraordinary position
now occupied by Microsoft). Businesses paid new attention to total customer satisfaction
by delivering a complete system of hardware, software and service. Like IBM, many
discovered that offering service may bring more profit to the firm and more value to the
customer than simply selling hardware whose price continues to fall. But until companies
began to pay attention to their product quality and cost and
recognized that a high-tech product built in a low-tech factory could not compete, the
more value-added strategy of American firms could not show through in the economic
statistics.
Another important factor in the rebirth of manufacturing competitiveness is the power of
information technology, which has allowed everyone in the firm to seize the initiative from
management and permitted flatter, more flexible organizations. But the Internet, like TQM
and Reengineering, proved to be no silver bullet. Its contribution to management and to
new business innovation is real and highly significant. But the long time required to realize
the benefits of information technology simply points up the rightness of Lester's focus on
culture change. A Harvard University study of supply-chain integration in the automobile
industry revealed that the automaker and its primary suppliers had great difficulty using
well-known computer design and networking technology to integrate their product
development until they were able to create a project-driven, collaborative culture.
In short, there is no "one size fits all" solution for U.S. manufacturing. Lester notes in six
industry case studies that each industry, and often individual firms, found unique solutions
to the risks produced by more open global markets and ever more sophisticated and
determined competition. Furthermore, he is not fully satisfied that industry's problems are
all solved or that Americans would be satisfied with the solution. He leaves us with two
problems.
Lester dares to ask the hard question: Is the turnaround an illusion? He observes that
manufacturing productivity stopped growing at about 2 percent a year around 1973 and
has been stuck at less than 0.5 percent ever since. Is this a reflection of the difficulty
economists face in measuring productivity? the result of the admixture of services and
manufacturing as firms become more responsive to customer needs? or the result of a
more competitive economy in which margins continue to be pressed by the most
productive performers, and the workers laid off by one firm struggle to find productive
roles in another? The optimists among us might feel that as long as the stock market
soars, high-tech market shares are growing again and the federal budget is in balance, we
can tolerate a lagging productivity rate.
But Lester doesn't leave us much room for a rebirth of complacency. He finds that much
of our business success has been bought at the expense of an inexorable growth in
income disparity in the American workforce and a deep sense of personal vulnerability to
the uncertainties of a market-driven, global economy. He worries that the massive
research investments made by government in the past, which provided the intellectual
resources for American innovation, may be curtailed. He recognizes that the firms
exhibiting best practice are not typical. He is especially concerned about low savings
rates and rates of investment. But underlying all the threats and uncertainties about the
future is a pervasive empowerment of individuals, together with a great increase in the
demand for personal responsibility. Lester asks us to think about how this call for a "new
economic citizenship" can enable a continuation of economic success and at the same
time reduce the income disparities and sense of vulnerability that deprive many Americans
of the full fruits of that success.
LEWIS BRANSCOMB, who was former vice president and chief scientist of IBM, is
the Aetna Professor, emeritus, in Public Policy and Corporate Management at the
John F. Kennedy School of Government at Harvard University. |
