I am old enough to remember a time when U.S. business schools lionized Japanese management practices. Back in the 1980s, for example, it was hard to pick up a copy of the Harvard Business Review that didn’t have an article extolling the virtues of Japanese inventory control systems. One HBR article published in 1981 quoted a Japanese senior manager saying, “We feel that inventory is the root of all evil. You would be surprised how much you simplify problems and reduce costs when there are no inventories.”
Well, of course, the world discovered there is indeed a downside to having no inventory when tsunamis and other natural disasters decimate your supply chain. And Japanese management worship evaporated with that country’s economic collapse in the 1990s and the ensuing multi-decade recession from which it has yet to fully emerge.
Perhaps the lesson that should have been learned from Japan’s fall from the management pedestal is that a country’s economic success may have little to do with the way it runs its businesses.
With that point in mind, it is noteworthy that both HBR and the Massachusetts Institute of Technology’s Sloan Management Review recently published articles praising management practices in today’s economic powerhouse: China. “Chinese companies teach us management’s current imperatives: responsiveness, improvisation, flexibility, and speed,” gushes an HBR article. “Chinese companies….are higher in energy and much more nimble than most Western corporations are,” it claims. It goes on to say Chinese companies display a “Confucian preference for simple organizational structures with everyone reporting to the top.”
That sound you hear may be the gnashing of teeth among Western managers who read that last passage. And I suspect the average U.S. business manager is much less impressed with Chinese companies than are authors writing academic management screeds. That’s because academics who credit Chinese economic success to “Confucian-like” business practices seem to ignore a few realities. Perhaps the most obvious is that private Chinese companies are all relatively young. They generally haven’t had time to build up a lot of tribal knowledge or expertise within the ranks about making things work. No surprise, then, that there’s a bias toward management by a few key individuals at the top.
The HBR comment about Chinese “nimbleness” must by particularly galling to managers who feel as though they are trying to run through mud as they deal with U.S. regulatory issues. Their frustration was recently quantified in a report commissioned by the Manufacturers Alliance for Productivity and Innovation which found that the regulatory burden on manufacturers has more than doubled over 10 years, growing from about $80 billion in 2001 to more than $164 billion in 2011. The report probably underestimates the impact of regulations because it leaves out those for which the federal government doesn’t estimate a cost. It also ignores costs imposed by thousands of minor regulations.
Still, the HBR missive celebrating Chinese management has a few funny lines, though the humor is unintentional. “China’s business leaders also manage people very differently. They’re culturally predisposed to see the members of their organization as family but, in return, demand a lot from them,” it says. As luck would have it, this insight appeared around the same time as a Wall Street Journal article about Chinese students who had been forced to work 12-hour days at factories. “I was suddenly told I had to spend the summer making computers or I couldn’t graduate,” one said. “I feel like I’ve been tricked.”
Not exactly the way most people would treat a family member.
Leland Teschler, Executive Editor
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