The Fourth Quarter

...There's been a steady undertone to the criticism of my most recent book, Thriving on Chaos: Handbook for a Management Revolution—the ideas are too revolutionary, the goals too bold...

...There isn't a candidate running for president who hasn't talked about competitiveness, and what America must do to remain the world's foremost economic power...

...Honda is already, by some measures, the most productive automotive company in the world...

...So far most haven't...

...The Japanese spend three to four times the U.S...

...flexible product mix...minimal inventories...

...Their lists, while seemingly bland in the retelling— employment stability, training and continuous learning, accounting systems, symbols—are nothing less than a management world turned upside down, as is the call for "structural changes in decision-making and control, pay, and job organization design that violates the old managerial control model learned in business schools or from former bosses ." In their plea for "redefining the organization" the authors decry the tendency of American business to confine workers to "functional silos" where they have tightly regimented duties that allow them neither the creativity to be happy with their work nor the freedom to respond to crisis...

...Words like "double" and "triple" must be talked about by American management, too...

...The teams set their own goals for productivity, cost, waste, and most measures of business performance...

...The majority of American firms are not responding at all, doing very little, or engaging in a flurry of activity, much of it short-term cost-reductions, layoffs, slam-bang automation, and closings of inefficient opera - tions...

...Center where his co-author Carla O'Dell was a senior consultant and vice-president before starting her own consulting company...

...It's product development cycle, the time it takes to design and manufacture a new model (such as the Acura), is estimated to be one-third or one-fourth as long as that of its U.S...

...They even write off the recent up-tick in manufacturing productivity as a flash in the pan, the result of "onetime cost reduction and clearing out of inefficiencies . . . not indicators of a fundamental turn for the better...

...Only] a relatively small number of firms are making the kind of changes required," they warn...

...One major problem is that the United States is educating a bright elite at top universities, but not a high average level of citizen...

...The parallels between their decline and ours are chastening in their exactitude...

...Perhaps the most compelling item on their agenda calls for American managers to put a greater emphasis on "training and continuous learning ." At a time when the trade deficit is soaring, and U.S...

...Tom Peters's latest book is Thriving on Chaos: A Handbook for a Management Revolution...

...One fault of the book is that, with the exception of an occasional mention of Federal Express, for instance, it concentrates on big, older, mainly manufacturing firms, ignoring moderate-sized firms of the $75 million-$750 million range and the service industries...

...Consider that in 1986 less than 0.9 percent of Americans' earnings were in the form of flexible bonuses...

...faster startups...

...Mahogany walls, economic decay In one particularly eerie passage they remind us just how other countries have fallen off the pedestal of economic greatness...

...The compactness of their list sends one reeling with bad news...

...But the more important challenges are being faced in Detroit, Pittsburgh, 'Pampa, and in corporations across the country...

...in Japan, it was 28 percent . . . . Flexible compensation would give Americans a clear financial stake in productivity and quality improvement, but that is rarely the case in the United States now...

...Of course, "macroeconomic" variables like fiscal and monetary policy formulated in Washington are important...

...If it had been my book, I would have titled it: America: The Thirty-Second Warning...

...The result is a narrow pool of U.S...

...counterparts...

...After all, these are the experts on the nuances of such statistics, and they find no good news at all...

...A 1982 survey of Japanese workers found 93 percent believe they will benefit from improvement in their employers' performance...

...They] have been following the English step-by-step, importing their machinery and tools, engaging, when they could, the best men from the best shops, copying their methods of work and the organization of their industries ." How do we avoid the fate of England...

...Will their suggestions be called outrageous...

...Democrats, who are promoting some of the most protectionist legislation in two generations, should take heed of their arguments against closing markets...

...Williams warned his nation in 1896 of industry's failure to heed the threat of German competitiveness: "[British managers] rely too much upon the superiority of England already acquired .. „Their methods of conducting business in many English houses is as rigid as their own cast iron . . ..It is mainly the training of the employees and in the possession of scientific skills that Germany excels . . . .They do not know as many languages and they do not take the trouble to study the needs of their foreign customers .. . .The Germans have come to England to learn our method on the spot...

...Some of those ideas are carbon copies of those found in Grayson and O'Dell's analysis...

...In the book, they cite Goodyear's Lawton, Oklahoma plant, staffed by 164 teams of five to 27 members each called business centers, which are not only independent but have unusual responsibilities...

...No one, to my knowledge, has had the audacity to combine such a profound analysis with a practical agenda...

...In the form of agendas, Grayson and O'Dell present a series of proposals that can stem—and reverse—the slowdown in productivity...

...Goodyear's chairman, Robert E. Mercer, boasts: "The Lawton-delivered tire cost will beat the cost of comparable tires from the lowest-cost foreign producers, meaning the Koreans who think the Japanese are lazy...

...They believe that the problem is not so much antiquated equipment (although that's important) but the human factor, which is ignored by managers and government officials alike...

...In Japan, they write, the average worker can do all this because he or she has been taught, among other things, to understand graphs, charts, and statistics, and can work with some mathematical notation...

...The Reagan administration ought to take notice of their strong arguments against currency devaluation as a way of promoting U.S...

...While they devote most of their attention to reforming American firms, Grayson and O'Dell do have an agenda for those in Washington...

...Yet in the interview, Kume declared that his near-term ob-, jective, not a 20-year plan, was to triple the company's productivity...

...flexible equipment ." To be sure, few of the ideas are spanking new...

...Triple the training budget, double productivity, cut defects by 90 percent, reduce inventory by 90 percent, slash product development cycle times by 75 percent...

...talent, not the deep and wide base, as there is in Japan, of skilled technicians, machine operators, supervisors, and service people who can write computer programs, follow blueprints and technical manuals, build, maintain, and troubleshoot their own equipment, interpret statistics for quality control, work well in teams, and learn as they go...

...The authors begin with the usual litany of statistics chronicling the American decline, from plummeting real wages to stagnant productivity to staggering debt to the trade fiasco and problematic SAT scores...

...Likewise, their government agenda completely ignores the increasingly important and innovative role of the states...

...The aim is to select and prepare employees not for one job, but at least two or possibly three, and then to continue to provide learning experiences throughout their working lives . . .. As an order of magnitude, our estimate [is] that most firms should consider doubling or tripling allocations of time and money for training [emphasis added] . . . . [Many] managers believe that training is a cost, not an investment, that it takes people away from their 'real' work . . . accounting theory does not put human assets on the balance sheet . . .the tax code does not encourage or permit capitalization of personnel acquisition development costs . . . many managers fear that once employees are trained they will leave for higher-paying jobs with the competition . . . this narrow and traditional view must change...

...companies are scrambling to find ways to outsmart their Asian competition, American companies are devoting fewer resources to training...

...They believe that America can compete but warn that we can only do so when American businesses sense the competitive danger and act...

...Such efforts give the appearance of adjustment but have not changed the core way firms do business ." Unlike a lot of critics of American business, Grayson and O'Dell have given us something truly useful—a 130-page agenda of actions management can take to bolster American productivity...

...Grayson and O'Dell note that the number of employees trained and the number of hours of training in the United States in 1986 were down by more than 14 percent from 1985...

...That is not the result of blind loyalty...

...trade abroad...

...They're overseen by four plant coordinating teams—but their overriding agenda is teamwork and flexibility...

...Not a physical decay, certainly, but an aura of stodginesss and allegiance to standard operating procedures exudes from the heavy pile carpets, the mahogany walls, and the shelves of policy manuals ." Is anyone listening...

...Alfred A. Knopf...

...In the U.S., those skills largely belong to a few engineers who are increasingly separated from daily manufacturing operations...

...The Grayson and O'Dell analysis, in my opinion, is fundamentally correct...

...Their agenda calls for "small operating units...

...Free Press, $24.95...

...They propose, for instance, a complete rethinking of the last nine decades of conventional managerial wisdom...

...Jack Grayson and Carla O'Dell suggest that we face a more sobering question—what do we have to do, not to lead, but to survive as a major economic power into the twenty-first century?* It's a question that both have spent a great deal of time considering...

...But the conciseness of their presentation and the authors' unique depth and breadth of experience at the American Productivity Center and elsewhere makes the book important...

...For instance, the authors quote E.E...

...And to those reformers who do understand the threat of foreign competition, they make a compelling argument against any industrial policy that puts government in the awkward position of deciding how to allocate capital...

...annual amount per employee on training . . . .The Japanese company-based training system revolves around the concept of a flexible worker...

...Jack Grayson and Carla O'Dell...

...Grayson's American Productivity Center has pointed to many companies that have seen their productivity shoot up by working together, not separately...

...The authors muster the numbers with skill but they also write with an eye towards the little but telling signs of lethargy in many corporations: "We have walked into many corporate offices where we can literally feel the loss of vitality and flexibility...

...For instance, I propose a several-fold increase in training budgets...

...I will look with interest to the reception that this book receives...

...The result...

...Many of the authors and administrators of policies and laws are lawyers . . . and economists and other scholars who know little about actual business operations . . . .Government cannot plan long range and cannot stay on top of rapid and continuous adjustments called for in a dynamic marketplace...

...Moreover, he said, Honda already has the Viols in place to do it...

...My only argument is that perhaps they should have been a little less true to their football metaphor...

...Williams, the British author of Made in Germany, the Victorian version of our books on everefficient Japanese management...

...Will the authors, even in light of the Crash of '87, be tagged alarmists...

...But probably few of America's corporate leaders noticed a small item on page 88, a box that summarized an interview with Honda's new president, Todashi Kume...

...Grayson and O'Dell do see an important role for the government, especially in education...

...That's a familiar idea, of course, but they have a knack for making it truly frightening...

...fewer management levels, team structures . . .customer7driven schedules and procedures...

...O'Dell and Grayson's guiding premise is that the answer to our woeful national economic performance lies within the firm...

...I wouldn't be surprised...

...In 1977 Grayson founded a think-tank called the American Productivity 'America's Tivo Minute Warning...

...On the issue of pay, Grayson and O'Dell join the growing (but not yet successful) ranks of those urging much greater use of variable compensation: "Most American employees, bluecollar and white-collar, correctly believe there is little connection between their pay and productivity or quality...