| On
the afternoon of 21 November 1949, in Osaka, Japan, a young radio engineer from
Raytheon stood in front of a classroom full of Japanese telecommunications experts
and began to lecture them on the fundamentals of business management. The engineer's
name was Homer Sarasohn. He and a few other electronics experts had been co-opted
from their companies and assigned to the command headquarters of General Douglas
MacArthur in Japan. The victors were teaching the vanquished.
It was
not a day too soon. Immediately after the end of World War II in 1945 the big
family corporations in Japan, the so-called Zaibatsu companies, had been dissolved
by the U.S. high command, determined to prevent any reestablishment of the kind
of economic and military co-operation that had characterized the Japanese military
regime during the war....
The engineers, led by Frank Polkinghorn, a
radar and communications design expert at Bell Laboratories, the research arm
of AT&T, were attached to the headquarters' Civil Communications Section (CCS).
Their study led to a proposal for a series of seminars in Tokyo and Osaka designed
initially for the telecommunications industry. Not everyone among the occupation
authorities was supportive of the classes. Officers in the Economics and Social
Section (ESS) were worried the seminars could be too successful, giving the Japanese
a competitive edge. MacArthur heard the opposing arguments put by Homer Sarasohn,
the group's radio adviser, and an ESS official. As the meeting ended the general
turned to Sarasohn and said, "Go do it."
With Charles Protzman,
the telephone engineering adviser also seconded from Western Electric, Sarasohn
put together a textbook for the seminars. Sarasohn covered the section on management
philosophy, which he would use for the first lecture.
When Sarasohn entered
the wooden-framed lecture room to deliver his first class he was just thirty-three
years old. In front of him was the cream of Japanese telecommunications talent,
people like Masaharu Matsushita, the adopted son of Konosuke Matsushita, the charismatic
founder of Matsushita Electrical. It would not be an overestimation of the importance
of the occasion to say that when this young American radio engineer mounted the
podium, paper in hand, the hopes of Japan were assembled at his feet.
An occasion of such significance demanded something special, but management texts
cannot normally be relied upon to deliver anything out of the ordinary. The class
was expecting an outline of management processes sprinkled with technical language.
Sarasohn was an engineer and young to boot, with little experience of management.
But perhaps he felt there was a need to approach the subject from its roots. He
was, after all, working with an almost blank sheet. So Sarasohn's lecture began
with the most fundamental of questions: "Why does any company exist?"
Pursuing the theme, he continued:
"What
is the reason for being of any enterprise? Many people would probably answer these
questions by saying that the purpose of a company is to make profit. In fact,
if I were to ask you to write down right now the principal reason why your companies
are in business I suppose that most of the answers would be something of this
sort.
"But such a statement is not a complete idea, nor is it a
satisfactory answer, because it does not clearly state the objective of the company,
the principal goal that the company management is to strive for. A company's objective
should be stated in a way that will not permit of any uncertainty as to its real
fundamental purpose. For example, there are two ways of looking at that statement
about profit. One is to make the product for a cost less than the price at which
it is to be sold. The other is to sell the product for a price higher than it
costs to make.
"These two views are almost the same. But not quite.
The first implies a cost-conscious attitude on the part of the company. The second
seems to say whatever the product costs, it will be sold at a higher price.
"There is another fault I would find in such a statement. It is entirely
selfish and one-sided. It ignores entirely the sociological aspects which should
be a part of a company's thinking. A business enterprise should be based on its
responsibility to the public, upon service to its customers and upon the realization
that it can and does exert some influence on the life of the community in which
it is located. These things are just as important to consider as is the profit
motive.
"The founder of the Newport News Shipbuilding and Dry Dock
Company, when he was starting his company many years ago, wrote down his idea
of the objective—the purpose—of the enterprise. He put it this way.
'We shall build good ships here; at a profit if we can; at a loss if we must;
but always good ships.'
"This is the guiding principle of this
company and its fundamental policy. And it is a good one too because in a very
few words it tells the whole reason for existence of the enterprise. And yet inherent
in these few words there is a wealth of meaning. The determination to put quality
ahead of profit. A promise to stay in business in spite of adversity. A determination
to find the best production methods.
"Every business enterprise
should have as its very basic policy a simple clear statement, something of this
nature, which will set forth its reason for being. In fact, it is imperative that
it should have such a fundamental pronouncement because there are some very definite
and important uses to which it can be put. The most important use of basic policy
is to aim the entire resources and efforts of the company toward a well-defined
target." | Each
member of the class was asked to go away and draft a corporate philosophy for
the company, what later became known as a "mission statement." The only
member there who had no need of such homework was Masaharu Matsushita. His company
was already running to a well-defined philosophy outlined by Konosuke Matsushita
some years earlier....
[The CCS engineers were] working at the cutting
edge of management thought. They weren't sitting in the boardroom contemplating
the realities of corporate and personal competition. They were able to create
a blueprint, unrestrained by the individual foibles, bickering, politics and entrenched
attitudes residing in day-to-day company management. All of them proved capable
of synthesizing the best aspects of contemporary American management and presenting
them to the Japanese. They had the time to work out their plans and their ideas
were refreshing, described by Bunzaemon Inoue, who became technical director of
Sumitomo Electric, as "the light that illuminated everything."
The CCS lectures became famous throughout Japanese manufacturing. Those who attended
were sent out like disciples to preach the management message in other sectors.
Their names read, according to Forbes magazine, like a Who's
Who of Japan's electronics Industry; men like Takeo Kato of Mitsubishi Electric
and Hanzou Omi of Fujitsu. Akio Morita and Masaru Ibuka, the founders of Sony
Corporation, were schooled separately by Sarasohn. The word fanned out across
industry. It meant that Deming and Juran were able to enjoy the advantage of preaching
to the converted when they followed on the heels of these CCS pioneers. Sarasohn
by that time had returned from what his company would have considered a useful
learning experience in Japan. But he did not go back to his old job building radars.
He joined Booz Allen as a consultant.... ©
Richard Donkin 2001 |