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August, 2004（No.9）
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CSR Management
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For JMA, CSR is an older, but newly reemerging theme. Since the late JMA chairman Akira Totoki first advocated "citizen-focused management" back in June of 1991, JMA has continued to examin ways that management can live up to the expectations of citizens and society. JMA's proposal for an "Eco-Management Initiative" in 2000, which now forms the foundation for CSR, sprung forth from this necessity. JMA stressed to industrialists the need to target both "ecology" and "economy". There had always been a belief in the "eco" trade off, trading economy for ecology. JMA argued that management should include a fusion of these two necessary aspects of business. Japan's corporate environmental policies and technologies set the global standard because Japanese companies have taken a consistently positive approach to the environment, making it a central issue for management. Instead of thinking of environmental issues as obstacles that impede management efficiency, Japanese companies have been looking at them as opportunities to build competitive advantage. The fact that Japan boasts more ISO14001-certified companies than any other country in the world and that there are more companies that publish environmental reports in Japan than anywhere else is solid evidence in support of this. CSR management earns the continuous support of stakeholders by reinforcing a company's primary business capabilities from three different angles: economic value, environmental value, and social value. . These three aspects are often referred to as the "triple bottom line," though a recent movement in Japan has pushed to add a forth consideration: employee value. Be it a three or fourpronged approach, however, the difficulty with CSR management remains the same; value related standards shift constantly as society develops. In August 1998 a U.S. rating agency suddenly lowered its long-term credit rating on a Japanese automobile manufacturer one notch to Aa1. The agency said it made the move because the company's commitment to lifetime employment would reduce its competitiveness, thus damaging its value to shareholders. The manufacturer countered by asking how one could call the Japanese management principle of not firing employees wrong. Despite the protest, the ratings cut remained. In fact, some critics opined that Japanese management was archaic, while others pushed for focusing exclusively on shareholder profits. Just five years later, however, the same rating agency boosted the company back to its highest rating, Aaa (triple A). Behind the upgrade were dramatic changes in the value criteria that define "good companies;" changes that had resulted from the Enron debacle in the United States and a series of Japanese corporate scandals that took place over the five year period. In today's post-Enron era companies that apply a long-term perspective and have the needs of all their stakeholders close to heart tend to be recognized as carrying lower social risk and more likely to maintain sustainable development. Consequently, they are evaluated higher than companies that give first priority to short-term shareholder interests. As this example shows, social standards are constantly changing, which means that companies passively engaged in CSR will likely face increased CSR risk. Corporate leaders must constantly stay abreast of social and stakeholder opinion as well as anticipate the future needs and expectations of society. The Japanese Association of Corporate Executives stepped forward with a proactive CSR approach in its 2003 CSR report, in which it emphasized that "CSR is a core business investment business and not simply an additional expense." In reality, CSR issues are dealt with piecemeal by many companies: shareholders (the economic aspect) are handled by PR and IR divisions, environmental issues by environmental divisions, employees by personnel divisions, and social issues by human rights committees, etc. It has been pointed out that one weakness of Japanese companies is this lack of a uniform approach to the problem, though they have had success with CSR. If companies can actively integrate economic, environmental, and societal considerations into management they will "gain the power to meet the expectations of society." This will strengthen the competitive edge of Japanese companies in the global market and will also guarantee sustainable development. With this background in mind JMA established the CSR Management Promotion Council (chaired by Professor Tanimoto of Hitotsubashi University's Graduate School) earlier this year. Discussions about the ideal form of CSR management are already generating great enthusiasm and I think we can all expect to witness some truly impressive achievements by this council. |
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MOT
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Taking knowledge to new levels with industry-government-university cooperation
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MOT trends in Japan, U.S., and Europe
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| Globalization and a flood of technological innovation have generated an expectation that a uniform marketplace encompassing every corner of the globe would develop. However, even as the strategic importance of linking technology with management increases, actual management styles and techniques are refusing to converge on unified global standards. In fact, they remain quite divergent. Building on insights by Professor Hugo Tschirky of Eidgenossische Technische Hochschule, this paper presents some of the international trends in technical knowledgebased management being seen in Japan, Europe, and the US. It also explores some idealized avenues of international cooperation. |
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| Knowledge that contributes | ||||||
| The Global Advanced Technology Innovation Consortium (GATIC), created to research and practice management of technology (MOT) innovation, convened for the third time in October 2003. GATIC's founding harkens back to a visit Professor Tschirky made to Japan in 2002. At that time, MOT strategy roadmapping was conducted for five Japanese companies, and during the exercise, large gaps were observed between the management theory championed by Professor Tschirky and the Japanese companies' MOT realities. This inspired the formation of GATIC, which was created to evaluate global models of MOT innovation through case studies in Japan, Europe, and the U.S. The consortium first convened in Switzerland, with the second meeting being held in the U.S. and a third meeting in Japan. GATIC has now grown into a global industry-university collaborative body of knowledge. GATIC's objective is not to debate the "correct" fundamental interpretation of the MOT concept. Rather, the consortium seeks to evaluate the general usefulness of MOT concepts. In other words it seeks to facilitate their contribution to corporate management. Towards that end, GATIC works to identify how useful knowledge and information residing in academia can be best transferred to the corporate world. |
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| Finding clear distinctions among Japan, Europe, and the U.S. | ||||||
| Japan's Ministry of Economy, Trade and Industry is providing great impetus for MOT with its strong enthusiasm for reinforcing a national tendency towards technological innovation. One characteristic of Japanese companies is that competitiveness forms the foundation of their MOT. That is, a company's technological innovation is driven by an intense sense of rivalry. In Europe, on the other hand, competitiveness is less cutthroat and innovation is viewed less competition and more as creation. The largest difference between the two outlooks is the sense of rivalry that drives Japanese companies to innovate, making them the world's corporate samurai. It is likely that such large differences reflect differences in the cultural and geopolitical environment of the two areas. In Japan, people are used to constantly adjusting to an unstable environment that is terrorized by earthquakes and typhoons. In Europe, however, people are used to a stable environment and not so inclined to embrace a life of change. Furthermore, Japanese corporate culture is strong and distinct without being systematic, whereas European companies tend to operate in a weaker corporate culture and rarely face the need to respond to dramatic economic shifts. The United States suffers from a somewhat dysfunctional human network as a result of the country's internal cultural differences. Other U.S. characteristics are extreme competitiveness, global competitiveness, and open markets. In addition, it has active stock markets, venture capital, and avenues of development for venture businesses. In the U.S. different regions tend to promote unique programs, and large amounts of funding are available to the smaller businesses that support the nation's industry. GATIC provides opportunities for companies from these three regions to better understand each other's viewpoints.Global corporate partnerships have yielded some big wins as the partners became motivated to learn about the business environments of other regions. Future cooperative relationships among companies are also likely to benefit from forums such as GATIC and function more effectively. |
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| Advice for a resurgent Japanese economy | ||||||
| The U.S. is dynamic, whereas Japan is responsive and Europe is heavy and traditional. From a macro point of view, the U.S. is top-to-bottom and individualistic, whereas Japan is bottom-to-top and group-oriented. Europe sits somewhere in the middle. However, as globalization progresses shifts in these paradigms are definitely occurring. Japan is under increasing pressure to shift from a catch-up management model to one that leads in creating markets. However, it has not been able to embrace the idea of forcing change as quickly as might have been hoped and this is an important issue that is gaining attention. Once Japan firmly stakes out its own goals, there is no question about it having the power to move forward. Japan must overcome adversity and demonstrate global leadership, not only economically, but also politically. What is required for Japan's future is that it refocus on its inherent strengths and reinforce its basic competitive strengths. Basically, Japan must reexamine what the concept of "manufacturing" really embodies. The secret to bolstering its competitive strength and demonstrating its global leadership is for Japan to focus on basic research and develop new markets. |
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The Manufacturing Report
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Handing down artistic skills while producing
high-quality automobiles
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Daihatsu Motor Expert Center
By Masanori Yamamoto, Journalist |
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| Flagship model brings together all the best advanced technologies | |||||
| Daihatsu Motor's Copen hit the market in June 2002. The convertible sports car was the first compact ever to win the Gold Award for Design (2002-2003) and with its electrically operated folding roof - another first for a compact - it turned the traditional image of "compact" on its head. For Daihatsu Motor, which declares "We do COMPACT," the Copen has turned out to be a flagship car into which the company has melded the best compact car technologies available. At the Ikeda plant where the Copen is produced employees used to be polarized by age, with an experienced veteran group facing off against the plant's young guns. In fact, when the plant began gearing up for the Copen, it faced two real sets of issues: the technical challenge of the car's production and the need to transfer skills amongst its workers. Fortunately, Daihatsu found a perfect solution to these intractably intertwined problems and was able to fully utilize the artistic skills of its most talented experts in the Copen's production. The Copen's production line was also named the "Expert Center," giving the plant itself an indelible association with the car. Until the plant assumed this position of responsibility with the Copen, antagonism flourished between the experienced veteran workers whose mentoring efforts typically amounted to saying "watch and then do what I do" and the younger workers who complained that the "experienced workers refused to teach." This friction inhibited any systematic structure designed to encourage a smooth transfer of technical skills. To bring out the skills and techniques required of an Expert Center experienced workers who had perfected their jobs were selected for each production process through on-site recommendations and promoted to "leader" positions. Motivated, talented young workers were also selected and given a chance to elevate their skills to the levels required by the Copen. This involved clearly defining the required skills and establishing a technical skills certification program. The complete program proved to be a huge success. Originally, only 26% of the workforce was considered to possess expert skills, but this number had jumped to 76% by the time the Copen went into full production. Today the number stands at 92%. |
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| Quantifying and indexing intuition and "the knack" | |||||
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322 business managers from Japan, China, and Korea gather
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Management innovation forum held in Seoul
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| On May 21st, the JMA Group Global Seminar 2004 " Japan, Korea and China Management Innovation Forum " was held in Seoul, Korea. 322 top corporate managers and executives from three countries joined the event. This forum was formed on the premise that the future challenge is definitely to build strategies and cooperative networks based on a trilateral framework of Japan, China, and Korea. It was expected that through this forum corporate leaders from the three nations would be able to share their successful experiences in management initiatives and strengthen ties among themselves, thus leading to continued management innovation. Following opening greetings by JMA Chairman Yoshio Tomisaka, Dr. Dong Ki Kim, Professor Emeritus of Korea University, gave a lecture on the Korean company approach to structural and management innovation. In his lecture Dr. Kim stressed the importance of closer economic cooperation among Japan, Korea, and China. "Such relationships are more than important. They are indispensable for the northeast asian economic grouping." Three lecturers followed, one from each nation: Mr. Wook Sun of Korea's Samsung, Mr. Greg Tang, President of China's Shanghai International Holding Corp., and Mr. Hironori Shiramizu, Vice President of Japan's Toyota Motor Corporation. Mr. Tang shared the future strategy for further development of Shanghai's economic base. He also recognized the fact that "every nation wants to win" and stressed the importance of employing a win-win ideal. Mr. Shiramizu introduced Toyota's production techniques and concept and stated that techniques used in production are one prerequisite in the ability to challenge. He also defined what he sees as a future theme for the global age: "technologies simple enough for easy global acceptance but useful enough for the next generation." During the ensuing workshop, JMA, the Japan Institute of Plant Maintenance (JIPM), and JMA Consultants (JMAC) introduced their respective management innovation-related programs and services. After the forum, a social gathering was held and many program attendees gathered around the day's presenters, inspiring active exchanges among all parties. |
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Committee of Japanese Business Managers established in Shanghai
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Wide range of issues discussed including personnel affairs and intellectual property
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| On April 23rd JMA brought together the first meeting of the Committee of Japanese Business Managers in Shanghai.
Approximately 25,000 Japanese affiliated companies operate in China and about 3,600 of those are in Shanghai. While there are many success stories, some companies have withdrawn their Chinese operations already, proving that the road to success may be a bumpy one. The committee was established with a two-fold objective: one, to develop a more factual understanding of management-related challenges that Japanese companies in China are facing. The second is to provide a stage for information exchange between these companies and to facilitate the process to find solutions for the issues that they face. Mr. Makoto Kotani, General Manager of the China Representative Office of Fuji Electric Holdings was elected to chair the committee. The committee consists of 33 general managers and directors from manufacturing, distribution, and trading firms. The agenda for the committee's first meeting included introductions of all companies represented, presentations on their current managerial issues, and case studies of successful management initiatives. Survey results were also reviewed for a fact-finding survey that was conducted by the JMA Group prior to the meeting. The survey aimed to catalogue the various issues that Japanese companies in Shanghai are facing. All topics brought up led to active exchanges among committee members from start to finish. Discussions covered five areas: 1) HR issues (HR development, employment, compensations and benefits, technique and skill transfer, and HR management); 2) cost reduction and bolstering competitiveness; 3) protecting and securing intellectual property rights; 4) the gap between local offices and Japan head offices (e.g. discrepanies in Chinese risk evaluation); and 5) suitable organization structures for business in China (relationships between business divisions and Chinese investment agencies). A social gathering followed the meeting. It was an opportunity for formal introduction and helped deepen relationships between committee members involved in different trades and businesses. The committee will again convene in Shanghai on October 15, 2004. JMA and JMA Group companies will strive to clarify the issues raised here and launch research and other programs to offer solutions. Our new goal is to support management innovation in Japanese-affiliated companies in China. |
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Japan Management Association
3-1-22 Shiba Koen, Minato-ku, Tokyo 1058522 Tel.+81-3-3434-1601 Fax.+81-3-3434-1087 URL : http://www.jma.or.jp/indexeng.htm London Office 109 Parkshot House,5 Kew Road Richmond, Surry, TW9 2PR United Kingdom Tel. +44-20-8334-8923 Fax. +44-20-8334-8145 |