EVOLUTION OF MANAGEMENT THOUGHT

Ancient civilizations, throughout history, had methods by which they managed

themselves. The first known business transaction and organized management practice
took place circa 2000BC where King Hammurabis code talks of transactions and social
responsibility.

The Great Pyramid at Khifu in Egypt was built with some two million blocks of stones,
each weighing 2.3 metric tons. According to Herodotus, the Greek historian, the
Egyptians used farm workers from the Nile Valley, during off-farming seasons to build
the pyramids. He estimated that about 100,000 workers were employed at any one
time, working for a period of four months continuously. The Great Pyramid in Giza is
almost a perfect square. It covers an area of about six hectares and is 147 metres in
height (approximately the same height as a 45-storey modern office building). The
Egyptians used mathematics and organized labour, sourced the blocks of stones and
supervised the structures to be built within the specified design and time.

The Greeks practiced standardization methods. They knew that repetitive work,
performed over a period of time, would result in higher productivity. Plato, in his
Republic, talks of specialization. He also spoke about soothing music being an
enhancement to productivity. Today, studies are proving them right. The Japanese talk
of a ten per cent increase in productivity as a result of maintaining cleanliness and
having soothing music in their places of work.

China has a long history of culture and civilization. In terms of management, the most
cited work in recent years is that of Sun Tzu. It was written in 500 BC touching on
strategy, planning and leadership. Sun Tzus examples have been widely used by
military strategists. Mao Zedong was supposed to have used Sun Tzus teachings in his
victory over the Kuomintang.

Generally, management of many is the same as management of a few. It is a matter of

organization.

A number of writers have translated this work by Sun Tzu (Griffith, 1963) and at times
have oversimplified it to relate to modern management practice.

Managers must manage well. Are we encouraging our managers to win at all costs, and
does the end always justify the means? Sun Tzu has written on strategy, planning and
leadership that were applicable during his time. Such writings were applicable under
extraordinary war situations. However, the tendency to overstress Sun Tzus doctrines
and their usage in modern management raises the question, What type of values are
we instilling in our managers?

The Formation of Management Practices

Management thought can be said to have started with the Industrial Revolution around
1850. The period saw the invention and use of machinery, the setting up of factories
and the creation of entrepreneurial capital that financed the industries. In spite of
conditions in the factories being deplorable, with smoke, dust and dirt, it still attracted
the drift of the agrarian population to the towns in search of better-paying jobs.

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It was during this time that people began to think about ways to improve efficiency and
effectiveness. One such person was Professor Charles Babbage, a professor of
mathematics who said that industrial development would demand scientific principles
and standardization to improve efficiency. His book, On the Economy of Machinery and
Manufactures, spoke of the transfer of skills. Frederick Winslow Taylor developed his
thinking on the hypothesis made by Professor Babbage. We must bear in mind that
Babbage was writing at a time when people thought that managers were born, that it
was the landlords and nobility that could lead and that the ordinary people were to
follow. Leadership came through heredity.

CLASSICAL SCHOOL OF MANAGEMEN THEORY

Scientific Management

Frederick W Taylor (1856 1915)

The need to improve or increase output by workers occupied the time of many
engineers and scientists. The most well-known figure was probably Frederick Winslow
Taylor (1856 1915), an engineer by profession who later became a consultant. He
began to look at the most efficient way of doing a job. He made use of time and
motion study to substantiate his theories and increase productivity. He broke work
down into different tasks, studied them in detail and called it job fractionation. He
compiled his time and motion studies from his place of work, the Bethlehem Steel
Company, where he observed individual workers perform their tasks. At the Bethlehem
Steel Company, he conducted what is known as the pig-iron experiment, where he
redesigned the work of individuals loading pig iron into boxcars. Specially selected
people, following his method of performing the tasks, increased productivity from 12.5
tons output per worker to 47.5 tons output per worker, a fantastic 380 per cent
improvement.

In another experiment, he adjusted the size of shovels used to scoop iron-ore. Here, he
improved productivity by 360 per cent and reduced costs. At the Simonds Rolling
Machinery Company, where 122 workers were making ball-bearings for bicycles, he
studied the movement and motion of the best. He redesigned the work so that all
workers could emulate the better workers. In so doing, he improved productivity by 340
per cent, accuracy by 66 per cent and managed to get 35 workers to do the amount of
work previously done by 122 persons.

Taylors basic philosophy was that management should develop a science for each task
to be performed. Management should scientifically select, train and develop each
worker. Management should endeavour to co-operate with the worker and ensure that
work is performed in accordance with the principles of scientific management. Work
should be divided between management and workers; the management would study
the best way to do it and the workers would implement it. Taylor also spoke of harmony,
better wages for more productive workers and improved working conditions. Taylor,
unfortunately, was misunderstood.

The misunderstanding arose firstly because the managers who followed his teachings
and methods did not follow his philosophy, and secondly because his efficient methods
resulted in a smaller number of people performing a job than had previously been
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required. Taylor has been credited as the forerunner of todays assembly lines
management.

Henry K Gantt (1861 1919)

Henry Gantt was a colleague of Taylors at the Bethlehem Steel Company and had
seen Taylors work. He had his own ideas on how to improve efficiency and productivity.
He is well-known for his Grantt Chart, a management tool that helps managers to
schedule their work. This management tool is still being used today. Gantt also
reviewed the incentive system introduced by Taylor and came up with a method where
workers were given a bonus for finishing work assigned for the day. Gantt went a step
further and proposed that supervisors get a bonus for every worker who accomplished
the days work assigned and workers be further rewarded if the whole team
accomplished it. He also emphasized that managers need data obtained scientifically in
order to enhance productivity.

Frank and Lillian M Gilbreth (1868 1924 and 1878 1916)

The Gilbreths were husband and wife team. Frank Gilbreth started his career as a
bricklayer. He had observed workers and also experimented on the efficient way of
laying bricks. He modified the process of laying bricks into the three steps through his
motion studies. His methods led to an increased productivity of 250 per cent. Both
husband and wife worked on motion and fatigue studies. By using a microchronometer
(a small watch), they eliminated wasteful movements. Fatigue was taken into account
with the aim to improve efficiency and simplify the job.

Lillian Gilbreth continued her writing, having done her doctoral thesis on the psychology
of management. In her later years, she become very concerned with workers welfare
and argued that management must assist workers in reaching their full potential. She
wrote two books titled Cheaper by the Dozen and Chicken every Sunday.

Mary Parker Follet (1868 1933)

Mary Parker Follet is well-known for her emphasis on people. She spoke of the need to
treat workers well, that managers should advocate a collaborative approach when
working with the workers, rather than taking the old confrontational approach to solve a
conflict or problem. Her studies have contributed in the area of solving staff problems.

Classical Organization

Henri Fayol

Around 1910 in France, an engineer named Henri Fayol was making waves in the
management community. He had been working as a geologist, and later as a mining
engineer with a company called Commanbault. He rose very rapidly in the
organization. By the age of 46, he was its president, and within a span of three years,
he had turned the ailing company around and declared dividends for the first time in
years. In 1929, he wrote the book General and Industrial Management, which was only
translated into English in 1949. From his observations, he formed his views and
principles on management and firmly believed that management skills were not in-born
but were skills that could be taught.

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Looking at business operations as a whole, Fayol saw that there were some key
activities that were performed in all organizations. He mentioned six inter-related
activities, namely, technical, commercial, financial, security, accounting and managerial.

He paid more attention to the last, which he elaborated in terms of management

functions and principles. He clearly differentiated between the duties and functions of
supervisors and managers, and proposed that management could be studied and that
one need not be born to the upper class of society to be a manager.

Fayols Functions of Management

Henri Fayol said that managers were called such not because of titles and positions
given in an organization but because they performed the managerial functions of
planning, organizing, commanding, co-ordinating and controlling. Fayols concept
can be encapsulated as follows:

Planning : The selection of objectives and goals deciding on

the future of the enterprise.

Organizing : Mobilizing of man and material, through an

organizational structure and clarifies tasks, authority
and responsibility.

Commanding : Giving of direction to employees; making sure they

are working towards organizational goals where rewards and
punishment are inherent.

Co-ordinating : The harmonizing of resources and the work of

employees to be in line with organization goals. There is a
congruence of interests.

Controlling : Monitoring of the progress of a plan. Evaluating to

ensure that all are working towards organizational goals, and
instituting corrective measures where necessary.

When Fayol expounded his concept on management, it was revolutionary, Today,

management students will look at the above as something obvious. For more than six
decades now, many chief executive officers and managers have been using the ideas
of Fayol to manage efficiently.

Fayols Principles of Management

Henri Fayol also developed his famous fourteen principles of management. It should
be noted that Fayol did not use the term rule or law but principles, pointing out that
they were fundamental truths. Fayols aim was to emphasize skills and abilities that
were needed to manage, and these skills can be taught to practicing and aspiring
managers.

1. Division of labour : Work is broken down into parts, with people

specializing in specific tasks.

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2. Authority : Authority should be commensurate with
responsibility. Authority is the power given by
the organization to the manager.

3. Discipline : It requires obedience and hard work on the

part of employees (they should be punished
or rewarded accordingly), and leadership
on the part of management.

4. Unity of command : Each employee should be answerable to

only one superior. Only one superior gives
orders on a particular operation. If workers
were to receive instructions from a number of
superiors, it could lead to confusion and
misunderstanding.

5. Unity of directions : An organizations or departments goals

must be clear. Assigned managers will lead
towards accomplishing organizational goals.

6. Subordination of
individual interests : The interests of the organization come first.
They take precedence over the interests of
Individuals and/or groups.

7. Remuneration : Compensation should be fair and equitable,

taking into account the economic conditions,
and the workers performance and qualification

8. Centralization : Managers should give just enough authority to

their subordinates to perform their tasks.
Managers should have the final say.

9. Scalar chain : There should be a clear line of authority in the

organizations hierarchical structure. The
power, authority and responsibility are reduced
progressively as one goes down the
organizational hierarchy.

10. Order : Suitability man and material must be in the

right place at the right time. This means that
supplies will come on time and that there will
be a good fit between people and their jobs.

11. Equity : The rules and regulations are fair to all workers.

12. Stability of staff : Good managers are important to the organization.

The organization should endeavour to keep these
managers as long as possible. A high turnover of staff
is not good for the organization.

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13. Initiative : Employees should be given room to take their
own initiative regarding their work and plans.

14. Esprit de corps : Management should encourage a sense of pride

of place it helps to build harmony and unity in an
organization. There must be good communication to
encourage this.

In conclusion, Fayol says Be it a case of commerce, industry, politics, religion, war or

philanthropy, in every concern there is a management function to be performed.

Max Wever (1864 1920)

Max Weber was a German intellectual and sociologist. He introduced the concept of
bureaucracy (much misunderstood now). What he meant by bureaucracy was an ideal
organization whose activities and division of labour were clear, had formal rules and
impartial procedures, and where people were promoted on merit. The term bureaucracy
carries negative implications today because of the disadvantages of large
organizations, especially the government. People associate bureaucracy with red tape,
meetings delays and paper work.
_____________________________________________________________________

BEHAVIOURAL SCHOOL OF MANAGEMENT THEORY

The behavioural school originated because classical management thinkers did not pay
sufficient attention to the people within organizations. The behavioural school therefore
wrote on the importance of people. Some claimed that organizations were nothing than
groups of people working together.

Elton Mayo and the Hawthorne Studies

At the Western Electric Company at Hawthorne, Illinois, a group of scientists had been
studying the effect of lighting on workers. The controlled groups lighting was varied to
make it brighter and dimmer to see if it had any effect on productivity. Surprisingly, for
the controlled group, productivity kept going up. This puzzled the researchers.

Around the same time, Elton Mayo, an Australian, was doing a study at the Philadelphia
Textile plant which had complained that, despite the introduction of efficiency methods,
productivity kept going down and turnover kept rising, reaching 250 per cent each year.
Mayo interviewed the workers. Realizing that the workers had been working long hours,
he introduced rest periods and cots in the common rooms. Mayos changes improved
productivity and reduced turnover.

Mayo, by now with Harvard University, joined his colleagues at Hawthorne. This time,
the researchers varied the working hours, break times and work week, but they still
found productivity increasing. They interviewed the women in the controlled group
following a set questionnaire and derived no conclusion. Subsequently, some of them
began to act as supervisors and conducted interviews, (unspecified), covering a wide
area at the workplace. They conducted some 21,126 interviews with employees to find
out what they liked and disliked about their working environment. While the controlled

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groups productivity increased, the non-controlled groups productivity remained the
same.

The researchers finally came to the conclusion that what contributed to an increase in
productivity was the groups working atmosphere (how they felt about each other), and
the tremendous team spirit present. Also, in the participative supervision, they were
made to feel important, having been consulted often and been provided with a lot of
information. With that, the Hawthorne Effect (people responding positively to a project
in which they were interested and involved) was born.

Mayo and his colleagues conducted their final Hawthorne study at the bank wiring room
where workers were soldering terminals. The researchers aim was to look into team
dynamics. Here they arrived at some surprising conclusions: that workers stopped work
before break-time; they decided how many (units) should be produced in a days work;
more efficient workers slowed down to allow the slower workers to keep pace (despite
the fact that they would end up earning less); and lastly, that there was a tremendous
amount of team spirit.

The experiment found that groups could have a negative or positive influence on
productivity that people liked to work in small groups, they cared for each other, they
liked participative supervision and felt good about their contribution. Although
researchers have criticized the research methodology and over-generalizations, these
studies certainly contributed to a better understanding of human nature, especially
within a group. This gave rise to a movement call Human Relations Movement.

Chester Barnard (1886 1961)

Chester Barnard was a thinker and writer and was president of a company. He said
people joined an organization because they could achieve things, which they could not
if they were to work alone. He proposed that managers seek congruence between the
interest of the organization and that of the group. He was the first person to speak of
the informal organization and the importance of understanding it. Figure 1 is an
illustration of this idea.

Figure 1: The Informal Organization

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Barnard is also well known for his Acceptance Theory of Authority, which says that
workers will only obey your command (directive) if the following conditions prevail:

That the worker can and does understand the command.

That at the time the command is given, it is not inconsistent with the
objectives of the organization.

That it is compatible with the interests of the worker.

That he mentally and physically is able to obey.

Barnard argued that the managers real power came from the degree of acceptance of
his workers.

Abraham Maslow

Maslows work spoke of a hierarchy of needs and how one has to satisfy basic needs
(food, drink) before other needs can be taken care of. These needs, ranging from
physiological needs to safety needs, social needs, esteem needs and self-actualization
needs, were what dictated peoples motivation to perform a task.

Douglas M McGregor

Douglas M McGregor spoke of Theory X and Theory Y. He believed that basically

managers tended to view their workers in one of the two categories. According to
Theory X, workers are lazy; they need to be closely supervised; they dislike work; and
few people are creative. In Theory Y, workers like to do a good days work; they are
self-motivated, like to accept responsibility, and have good capacity for work and
creativity.

Behavioural scientists have made significant contributions to management in areas of

people-work, interpersonal relationships, group behaviour and motivation. Managers
have benefited from this and are more aware of how to handle employees

QUANTITATIVE MANAGEMENT THEORY

Germany conquered France in 1940. Britain was very concerned about German air
attacks, especially from the dreaded Luftwaffe bombers. Britains air power was weak
and so was its air defence. To make the best use of its available resources, Professor
PMS Blackett from the University of Manchester was approached and asked to study
the most efficient use of the available arms. Blacketts circus, as his group came to be
called, did a thorough study that helped Britain win air battles and submarine warfare in
the Far East. Blackett used linear programming, queuing theories and mathematical
models to maximize the use of fuel and supply lines and work out road maps. The aim
was to make man and material movement efficient with speed, frequency, size and
distance. Operations Research started around the same time when United States
began to study the optimal use of resources. With the aid of powerful computers, this
concept was further exploited and put to effect during the Gulf War in 1991.

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After World War II, Operations Research methods were used for civilian purposes,
especially in large organizations, the military and in the government. Specifically, it was
used for budgeting, cash flow management, production scheduling, inventory
management and logistics. It is a useful tool for Planning and Controlling.

SYSTEMS MANAGEMENT THEORY

The systems approach looks at the organization as a system with interrelated parts and
believes that if any one part of the system is affected, the other parts are also affected
in varying degrees. One could picture a mahjong game with tiles arranged. A decision
made about one tile affects the others.

This approach says that organizations are socio-technical systems. They have an input,
throughout and output. Previously, managers saw a problem in isolation but with the
systems approach they will have to look at it in totality, especially the overall
perspective of the organization and its relationship with the environment. Figure 2
shows a simplified Systems Model.

Figure 2: A Simplified Systems Model

Most systems are said to be open systems, that is, a system interacts with the
environment. The environment acts as a source of resources and it also provides
information to the organization. An organization could be a system and its various
departments its subsystem. Systems approach exponents introduced concepts like
synergy, feedback, flows, open system and boundary-spanners to emphasize the
impact the environment has vis--vis the organization.

Asias culture has always looked at things holistically; that disturbance, change or
provocation has positive or negative effects on one another. Hence, in management
terms, the organization is a microcosm of the immediate surroundings.

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CONTINGENCY MANAGEMENT THEORY

This approach argues that there is no one best way to manage at all times. There is no
singular universally applicable approach, but different circumstances need different
approaches. It depends on the situation. It is sometimes called Situational Approach.
For example, if you are opening a new factory to make electronic parts for computers,
you will need trained workers to run the factory. You will have a number of choices. We
will discuss three here:

1. Recruit your own staff and train them. (Can you wait or will you miss
opportunities if you do so?)

2. Hire trained staff from other factories. (Are you prepared to pay more how is
your financial situation? What about the workers opportunity for growth?)

3. You could hire some new staff and train them while recruiting qualified people.
(Will this approach be better for you?)

The success of the contingency approach depends on the managers knowledge of the
tools of management. There are always trade-offs when you select a particular solution
(that is, you are prepared to spend more money to recruit trained people for your
factory). Managers must be able to assess a situation properly; they must look at the
organization from different angles and choose a solution that suits the particular
situation.

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PROCESS OR OPERATIONAL MANAGEMENT THEORY

This approach says that managers get things done through the process of planning,
organizing, staffing, leading and controlling with communication and decision making
linking them. They also use the questioning technique by asking some basic questions
like what is the main objective, how is it to be accomplished, what are the theories
behind it, what are some of the possible obstacles and how is the environment affecting
it? Managers still find this useful although some writers question its current validity.
Figure 3 illustrates the process approach.

Figure 3: The Process of Operational Approach

Management theory and science as a system draw on other areas of organized

knowledge. The figure show how operational-management theory and science, here
enclosed in the circle, have a core of basic science and theory and draw from other
fields of knowledge pertinent to understanding management. Basic management is
thus, in part, an eclectic science and theory.

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OTHER THEORIES AND THINKERS OF MANAGEMENT

Theory of Bounded Rationality

Herbert Simon

Looking into previous models on decision making, Herbert Simon put forward the
argument that managers normally end up making a decision that first comes to mind.

This need not be the best decision possible because managers are not concerned with
getting the best decision but looking for a decision that satisfies. He attributes this to the
fact that managers do not get complete information about a problem. On the other
hand, they may not have the time or money to wait for such information. This, coupled
with information distortion and the limitation of ones own experience and analytical
ability, makes perfect decision making near impossible.

Comparative Studies of Management

Throughout modern history, management gurus have emerged with profound thought
and influence on management. The doyen of this group is no doubt Peter Drucker, who
has written more than twenty five books, the majority of them on management.
Management thinkers like William Ouchi, Konosuke Matsushita and others are
discussed below, emphasizing their thoughts and areas of influence.

William G Ouchi

Ouchi is a professor at the Graduate School of Management, University of California.

He did extensive research with top American companies and compare them with
leading companies in Japan, looking for similarities and differences. What made the
Japanese companies so successful? The answer lies not so much in a management
theory. His own Theory Z was more a collection of successful practices that could be
used by modern managers. He compares Japanese organizations and American
organizations as shown in Table 1 (Ouchi, 1981).

Table 1: A Comparison of Japanese and American Organizations

No. Japanese Organizations American Organisations

1. Life-long employment Short-term employee

2. Slow evaluation and promotion Rapid evaluation and promotion

3. Non-specialized career paths Specialized career paths

4. Implicit control mechanisms Explicit control mechanisms

5. Collective decision making Individual decision making

6. Collective responsibility Individual responsibility

7. Holistic concern (for people Segmented concern

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Ouchi subsequently proposed that for an organization to succeed, there should be a
mix of the practices. The structure he proposed speaks of long-term employment, slow
evaluation and promotion, semi-specialized career paths, both implicit and explicit
control, collective decision making and holistic concern for the employee as a human
being.

Generally, this theory talks of team productivity, worker interests, quality circles and
quality of work-life (QWL). More stress is placed on the team and participative type of
management than on individual and segmentized management. A number of American
companies like Dayton-Hudson (retailer), Rockwell International (automotive
operations), Eli Lilly and others have structured their companies along the lines
proposed by Ouchi.

Excellence in Management

Thomas J Peters and Robert H Waterman, Jr

In their best-seller In Search of Excellence, Peters and Waterman cited examples of

special ingredients that made American companies excel. They came to the conclusion
that most excellent companies are good in the basics:

1. They attended to their customers needs.

2. Working environment was conducive, management respecting workers.

3. The companies had a sense of their social responsibilities.

They further went on to elaborate that there were eight key characteristics that
successful companies had, namely:

1. A bias for action get the job done: do it, fix it, try it.

2. Unparalleled service and quality get close to the customer: give them what they
want.

3. Autonomy and entrepreneurship small groups/network: get the best out of

people.

4. Productivity through people respect for the individual.

5. Hands-on, value driven go to the field: know the essential things, know whats
happening.

6. Stick to the knitting do what you are good at or know.

7. Simple form, lean staff structure: top-level staff not too large.

8. Simultaneous loose-tight properties core things/values are strictly centralized,

others are decentralized, giving autonomy and freedom.

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Organization

Konosuke Matsushita

Konosuke Matsushita was an innovator and founder of Matsushita Electric Company in

Japan. Starting a company with about 100 yen in 1917, he built it into a company that is
established in more than 38 countries, and within a span of 75 years has total annual
sales of more than US$5 billion. Matsushita practiced numerous innovative
management concepts like divisional organizational structure and new methods in
distribution and effective control systems.

Matsushita had philosophy, which was influenced by religion: I could see many people
labouring intently among the roar of machines and the whine of huge saws. There was
something solemn about the way they worked that created an atmosphere, that
made me instinctively straighten myself in respect. What he saw was the epitome of
skilful management. He imbibed this spirit into his people. He spoke of his experience
at the temple to all of his office staff. He was among the first to state his mission so
broad and with so much social consciousness.

Peter Drucker

Drucker, a prolific writer, has written on many different aspects of management. He has
an uncanny ability to make difficult management concepts simple. He has said that
decentralization is the best way to manage a large company, giving its divisional or
subsidiary heads enough room to make their own decision, innovate and indulge in
creativity. His earlier works touched on managing by objectives, marketing concepts,
strategic planning, corporate culture and social responsibility. He says that large
corporations will have to restructure themselves along the flow of information. This
means that the organization would be relatively flat and the principle used to manage it
would be objective setting plus a good feedback mechanism.

He says, The organization of the future is rapidly becoming reality a structure in

which information serves as the axis and as the central structural support (Drucker,
1986). To emphasize his point, the term span of control has been replaced by what he
calls the span of communication. Though philosophical by nature, his thinking has had
tremendous influence on modern management thinking, from efficiency, effectiveness,
customer-relationship to managing information.

Marketing

Theodore Lewitt

Theodore Lewitt, the author of Marketing Myopia, expounded the idea of globalization
of markets, which has considerable effect on the operations of many businesses. In his
earlier work, he talks of the narrow definition of business, (that railways thought that
they were in railroad business and not in the transport business where subsequent
advances in other modes of transport led to the extinction of many). He later argues
that the marketing-mix is important and that companies with a high customer, high
company orientation (those that have the most concern for customers and at the same
time most concern for profits) have succeeded. He also emphasizes differentiation (the

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substance and the form) from pricing, packaging or the type of image given, to
distribution and servicing.

In his later work, Lewitt talks of the world markets becoming smaller, fast pace and
technologically sophisticated, spreading quickly around the globe. He noted that buyer
behaviour across nations is becoming similar in nature and that there seemed to be a
stereotype of wants. Products on the other hand are also becoming standardized. He
gives examples of Coca-Cola, Sony TV, hamburgers and Levi Jeans. He, therefore,
argues that companies must think on a global scale and not along national lines. They
should go on commonalities and not differences. They should go for economies of
scale (giving the customer competitive prices), quality and service.

Product Quality

Philip Crosby

Philip Crosby was the former vice-president of ITT. His emphasis on quality is a follow
up on Edward Demings Quality Control. Crosby said that quality is as important as
scheduling and cost of production. Quality, he says, is conformance with established
standards, and when you do not conform, there is simply an absence of quality. It
should be measured, either in percentage or numbers, (preferably as a percentage of
sales). Quality is applicable to any organization or any given situation. It is the
responsibility of every department or unit in the organization and not just the concern of
production alone. He says Quality is free. But it is not a gift (Crosby, 1979) Like
Demings, he believes that commitment to quality should come from the top, that
workers should think of the organization and not just their department or unit.
Achievement of targets should be displayed for all to see.

Taiichi Ohno

Taiichi Ohno has spoken of Just in Time (JIT) and Total Quality Control (TQC) in
Toyota. It was precisely this emphasis together with the Japanese abhorrence for waste
and the authority given to the individual worker to contribute and even stop a line by
pressing a button when he thought necessary, that has contributed to Toyotas success.

Corporate Strategy

Kenichi Ohmae

Kenichi Ohmae, the author of The Mind of the Strategist, is a management consultant.
He argues that many businessmen and business strategists when confronted with a
problem tackle the symptoms and not the cause. According to him, the Japanese are
successful because they can read environmental changes better. They also have what
is called the strategic triangle (3Cs) where concern for company, customers and
competition fuse and merge into the companys strength. Companies must build on
their strength in relation to their competitors. It is important to know the key factors for
success. Companies must try and improve on this so as to gain advantage over their
competitors. They should identify these factors: is it retailing, distribution, manufacturing
or servicing that they can excel in? Companies must make sure that they do not have a
strategy or emphasize a factor exactly as their competitor, for this would only maintain

15
the status quo. He believes that companies must find new ways of doing an old thing or
invent new things.

In using the 3Cs strategies, customer-based strategies should segment the market and
serve customers in this segment only. However, the company is to keep an eye on any
changes that are taking place outside the segment. Competitor-based strategies need
to look into profit, price or volume and differences that are to the companys advantage.
Corporate-based strategies would mean companies keep an eye on their functional
areas such as marketing, production or financing. Ohmae also thinks that mature
companies could reach a stalemate. To prevent such a situation from arising,
management must formulate new ideas or invent new products.

Michael Proter

Michael Porter wrote two well-known books, Competitive Strategy and Competitive
Advantage. Porter says that a company should increase its competitiveness in a chose
industry, meaning that the company should maximize that which makes it different from
its competitors. Companies must aim for long-term profitability and not just an above-
average performance in the industry.

According to Proter, the five competitive forces that companies must look for are:

1. Rivalry among firms, which could result because competitors are of equal
strength.

2. Bargaining power of suppliers. If there is a possibility of a supplier increasing the

price of his goods, he could use this position a dbecome your competitor.

3. Bargaining power of buyers. Buyers may want lower prices and high quality.
Using their position, they could become your competitor.

4. Threat of new entrants. New firms could enter and erode your share of the
market.

5. Threat of substitutes. Companies should watch out for other products that could
act as a substitute to theirs.

Proter goes on to suggest that companies should conduct a detailed study and analysis
of their competitors through the information collected on them. Having obtained this,
companies could make use of one of the three generic strategies as defence:

1. Cost leadership seize overall leadership by pricing itself lower than its
competitor.

2. Differentiation choose something that buyers look for in a product and meet
this need.

3. Focus select an industry segment and serve it only. (Also see Ohmae above).

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For companies to know if they have a sustainable competitive advantage, they can look
at the value-chain like manufacturing, sales and after-sales service. Unlike the
common belief that one should go all out to be rid of ones competitors, Porter proposes
that it is good to have good competitors while eliminating the bad ones which could give
the industry a bad name. Together, both could increase overall demand while
controlling different segments.

Gaby Mendoza

A former President of the Asian Institute of Management, he propagates a

management style that suits managers in this part of the world. Why is this so? He says
that people in this part of the world have a rich background of thinkers, from Confucius,
Musashi, to Sun Tzu. However, our early management exposure has all been Western.
For well nigh fifty years, we have squirmed and fidgeted, like little boys in new suits,
trying to fit our well-rounded souls and sensibilities into the straight lines and sharp
angles of the Western mind. It has been, pretty much, an uncomfortable fit.

Mendoza elaborates that after the great success of Japanese companies in the
seventies, with their different ways of managing, companies in Asia have followed suit,
quite successfully emulating the Japanese. It is so because Our Asian companies have
found it easy to adopt and to adapt the Japanese way because it is founded on thought
processes, patterns of feelings, value systems congruent with ours he adds.

Successful managers in Asia, according to Mendoza, have integrated the essence of

kinship and family-centredness into the culture of their organizations. They demand
loyalty and give loyalty in return. They look after their workers as a father would his
children.

Mendozas thinking, feelings and missionary zeal are that we should build on our roots,
culture and being, and modify management technology to suit our needs as the
Japanese have done. He instills in managers the need to be proud of their culture and
country, to work on their inherent strength towards the good of their company and
above all, to be professionals in their own right.

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