Productivity—the Japanese Way

Economists are forever telling us that we need to increase productivity in order to improve our standard of living. Productivity is one of those concepts that are so loaded with meaning and implications that is very difficult to define, much less explain. Not surprisingly then, improving “it” is one of the most difficult tasks facing business. More to the point, the time for improvement is quickly running out. Industrial performance is being outstripped at a frightening pace by the Japanese. In fact, it has reached the point where their productivity performance is so superior that they can literally pick any product and any market and quickly come to dominate it.

The idea that Japanese are uniquely gifted in only a few related areas has been debunked by their proven successes in industries as diverse as automobiles and semi-conductors. As well, the facile suggestion that the Japanese are somehow culturally inclined to be productive doesn’t wash. Japanese managers have taken over factories in Europe and the US and greatly improved productivity records. Productivity has also been high in their North American plants.

If corporate managers believe that their workers can be as competitive as anyone else in the world, and technically, there’s no valid reason why they can’t be, then they must find better ways to help their employees realize their potential. In that sense, study of Japanese methods is a jumping-off point that can lead to adaptations that will produce unique ways of improving productivity.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Factors of Production

Each business has its own mix of the four factors of production, vis-à-vis, natural resources, labor, capital, and entrepreneurship.

Natural resources refers to everything useful in its natural state as a productive input including agricultural land, building sites, forests, mineral deposits, and so on. Natural resources are basic resources required in any economic system.

Labor is critically important. It refers to everyone who works for a business, from the company president to the production manager, the sales representative, and the assembly line worker.

Capital is defined as the funds necessary to finance the operation of a business. These funds can be provided in the form of investments, profits, or loans. They are used to build factories, buy raw materials, hire workers, and so on.

Entrepreneurship is the taking of risks to set up and run a business. The entrepreneur is the risk taker in private enterprise system. In some situations the entrepreneur actively manages the business; in others this duty is handed over to a salaried manager.

All four factors of production must receive a financial return if they are to be used in a private enterprise system. These payments are in the form of rent, wages, interest, and profit. The specific factor payment received varies among industries, but all factors of production are required in some degree for all businesses.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Workable Change

For years social scientists have said that humans resist change—and so they do. But they resist only those changes they do not understand, are suspicious of, or consider to be against their interests. Humans embrace change that seems good for them or good for the world they live in and care about.

A new idea or new expectation, in itself, will seldom bring about change. On the other hand, change can be very attractive if it is the product of a new idea or expectation that appears to be in the best interests of the people who are expected to adopt it, if it is accompanied by the means for its fulfillment, and if it results in recognition and approval. To improve an organization, we must introduce good ideas, establish the means for making them work, and provide a visible payoff for the effort involved.

No organization can reach its full potential unless it promotes and enjoys the coordination of productive activities among its members. The more complex the activities of the organization, the more need there is for coordination if the organization is to flourish. No one knows it all anymore. Teamwork is an increasingly critical element in organizational success; fortunately, it is not difficult to achieve. But teamwork must be managed into existence through experiences that are capable of producing teamwork.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Managerial Know-how

People who bring capital, labor, and resources together to fashion them into a productive organization that must face the risks of an uncertain world, occupy strategic positions. Thus, given the same inputs, presumably a country with superior management will do better than one with weak management. The importance of managerial know-how can be illustrated by the airlines industry.

Obviously an explanation of world business involves many elements. But with a basic understanding of the few elements, comparative advantage and specialization.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Needs of 21st Century Organization

No one in his right mind wants to go back to the days of hunting and gathering. But it would be tremendously valuable if we could recapture that ability to work together with even a fraction of that efficiency to deal better with modern problem situations. Now, through contrivance and planning, we can recapture that ability and channel it to meet the needs of 21^st century organization.

This is not to say that the organizational team will somehow represent a 21^st century hunting group around with ballpoint pens instead of bows and arrows. Hunters’ ways of thinking were totally aligned, and their lives were totally aligned. What is required today is not total teamwork in all aspects of life; rather, it is selective, functional teamwork that can be turned on when needed, limited to those activities where it will be most productive. What is required is teamwork that can be summoned to handle organizational problems yet leave team members free to act as individuals in all other respects.

An approach is needed that can be invoked and shared when we need answers to specific questions, regardless of content that applies orderliness to complexity and confusion.

This kinds of accurate communication and common understanding is needed that prevail in the hunting bands. These must be modernized, selectively adapted to current conditions, and directed towards the critical functions of organizational activity where teamwork is most essential. All of this can be done.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Circular Flow

In a simplified world with only two types of economic agents, individuals and business firms, the relations between them can be pictured. Individuals and firms have dual aspects, and thus transact with one another in two distinct ways. Individuals are in one aspect consumers of goods, while firms are producers of goods. Thus, a real flow of consumption goods occurs from firms to individuals. But the goods must be produced. To permit this there must be a “real” flow of productive services, from the individuals in their second aspect as owners of resources to the firms as employers of resource services.

In a socialist command economy these flows of goods and resources might be directly ordered by a dictator. But in a private enterprise economy the relations are based on exchange and so must be mutual and voluntary. Hence, offsetting the “real” flows are reverse “financial” flows of claims that in a modern economy normally take the form of money payments. The consumers’ financial expenditures on goods become the receipts or revenues of the firms. The exchange of consumption goods between individuals and producing firms in return for financial payments take place in what economists call “the product market.”

The revenues received from sales to consumers provide firms with the wherewithal to buy productive services from resource-owners. This closes the circle; the firms’ payments for productive services become income to the individuals, available once more for spending on consumer goods. Purchase and sale of productive services take place in what economists call “the factor market,” again really a number of distinct markets for the various types of productive services.

Looking within the box representing the firms as economic agents, what takes place there is the process of production, the physical transformation of resources into products. Within the box representing individuals, consumption of the produced goods takes place. Here again the circle is closed by the fact that consumption is necessary to reiterate the main productive resource—labor power—for the next cycle.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Good Maintenance

Good maintenance is fundamental to productive manufacturing system; try running a production line with faulty equipment. Total productive maintenance is keeping the current plant and equipment at its highest productive level through cooperation of all areas of the organization. Generally, the first task is to break down the traditional barriers between maintenance and production personnel so they are working together. Individuals working together without regard to organizational structure, using their skills and ingenuity, have common objective—peak performance or total productivity.

This approach does not mean that such basic techniques as predictive and preventive maintenance are not used; they are essential to building a foundation for successful total productive maintenance environment. Productive maintenance is the process of using data and statistical tools to determine when a piece of equipment will fail, and preventive maintenance is the process of periodically performing activities such as lubrication on the equipment to keep it running.

The total maintenance function should be directed towards the elimination of unplanned equipment and plant maintenance. The objective is to create a system in which all maintenance activities can be planned and not interfere with the production process. Surprise equipment breakdowns should not occur. Before the advent of computer-aided manufacturing, operators in some organizations were responsible for their machines and took a certain pride of ownership. With the help of maintenance technicians, operators spent part of their work time keeping their equipment in good running order. Recent technical advances have given us more tools to perform the maintenance function.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Defining Norms

A norm is a standard against which the appropriateness of a behavior is judged. Thus, a norm is the expected behavior or behavioral pattern in a certain situation. Group norms usually are established during the second stage of group development (communication and decision making) and carried forward into the maturity stage. People often have expectations about the behavior of others. By providing a basis for predicting others’ behaviors, norms enable people to formulate response behaviors. Without norms, the activities within a group would be chaotic. Norms serve four purposes:

1. Norms help the group survive. Groups tend to reject deviant behavior that does not contribute to accomplishing group goals or to the survival of the group if it is threatened. Accordingly, a successful group that is not under threat may be more tolerant or deviant behavior.
2. Norms simplify and make more predictable the behaviors expected of group members. Norms mean that members do not have to analyze each behavior and decide on a response. Members can anticipate the actions of others on the basis of group norms. When members do what is expected of them, the group is more likely to be productive and to reach its goals.
3. Norms help the group avoid embarrassing situations. Group members often want to avoid damaging other members’ self-images and are likely to avoid certain subjects that might hurt a member’s feelings.
4. Norms express the central values of the group and identify the group to others. Certain clothes, mannerisms, or behaviors in particular situations may be a rallying point for members and may signify to others the nature of the group.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Unique Superior Product

It is not enough to have good strategy, good management preparation, and a good organization. These will permit good new products management, but too often it just doesn’t happen. Why? If there is one reason above all others, if there is one concept that should be the last one violated, it is the commitment to producing a unique, superior product. Obviously, if things are well organized, if there are capable people doing the work, and if good process is used it probably will happen. But research shows that more products are lost to this factor than any other.

Note the two words—unique and superior. That means no me-too products, unless there is important uniqueness in the augmentation circle, such as service or warranty. But the more critical term is superior, and that means superior in benefit to the end user. Some phrases used by managers on this point are: “meets customer needs better,” “solves problems customers have with competitive productive,” and “has better value-in-use.”

Products are thought to fall when end users lack the problem the product solves, or the product doesn’t solve it, or the marketing (communication) fails to get the message across. These are all measurable, in advance, by three key tests in the recommended process. We can learn, for sure, whether our new item is unique, and whether it offers a superior solution to a problem the end user has.  Whether we know the product is superior is not as important as whether the customer knows. Superior products can fail if communication fails, even when the item is a piece of medical equipment.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Divulging on Resources

The level of want satisfaction that an economy can achieve is limited partly by the quantities and qualities of its known resources. Resources are the means available for producing goods that are used to satisfy wants. Hundreds of different kinds of resources exist in the economy. Among these are labor of all kinds, raw materials of all kinds, machinery, buildings, semi-finished materials, fuel, power, transportation, and the like.

Resources can be classified conveniently into two categories: a) labor or human resources, and b) capital or nonhuman resources. Labor resources consist of labor power or the capacity for human effort, both of mind and of muscle, used in producing goods. The term capital can be misleading since it is used in several different ways not only by non-economists as well. But here it is used to include all non-human resources that can contribute toward placing goods in the hands of the ultimate consumer. Specific examples are buildings, machinery, land, available mineral resources, raw materials, semi-finished materials, business inventories, and any other non-human tangible items used in the productive process.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.