Japanese management took a hundred years to develop. I don't think I can adequately discuss this subject matter in 40 minutes. But I will try my best. Of course, you have heard of the book "In Search of Excellence." After reading the book, I had mixed feelings. The first feeling is admiration because it describes very well the best-managed companies in America. The other feeling is pity--pity for the authors because they had to search for excellence in America. Had they written that book in Japan, they would not have to search anymore because most companies there are, in my opinion, excellent. They would have tumbled and tripped upon them in any direction they fall. As you are well aware of, any Japanese company that we hear about is most probably quite successful and a world leader--Sony, Toyota, Hitachi, etc. In fact many things we have or use are made by the Japanese - the watches we wear, the cars we drive, the TV we watch. So why are we interested in Japanese management? This seems to be the common theme, the common denominator among the Japanese companies. As you may have read, Japanese-managed companies in America tend to be more successful than American companies managed by Americans. Good examples are the transplants, the car manufacturers in America managed by the Japanese. The Americans themselves admit this fact. They can operate well without unions. The Americans are quite surprised how the Japanese can manage Americans without unions and come out with quality cars. I tend to disagree that it is the Japanese which is the common success factor. I would rather think that it is the Japanese style of management. When you say it is the Japanese, then there is nothing to talk about. We cannot imitate the Japanese, because we will never be Japanese. So let us talk about management. Unfortunately, in spite of the many articles and books on Japanese management, it is still very little understood. People are curious about this because it seems to be the secret of the Japanese. You already know about the traits of the Japanese--they are hardworking, they are loyal, they love their employees, they have teamwork, they tend to decide by groups. With my forty minutes, I have decided instead to share with you some of my personal experiences and observations on Japanese management when I was in Japan for four years, studying in a Japanese university and working in a Japanese company. I thought that the best place to study their secret is their home base. Of course, I experienced a lot of culture shock. Some people do not like to experience culture shock but I do, because I believe that the stronger the shock, the more learning takes place. Here are some of those enlightening shocks.

The Japanese are hardworking. But it does not mean that if you work hard, you would be as successful as the Japanese. In fact, many people who work hard still fail. What does it mean to be hardworking in the Japanese context? Let me give you one personal experience. When I was training with a subsidiary of Toyota in Japan, I joined a group of manufacturing managers who were trying to conduct a study of the production line. Late in the afternoon, about four o'clock, they told me, "Ah, Rene, we are going to study the third shift. We will observe the third shift and find out its problems in quality, efficiency and compare it with the second shift." Of course you know that the third shift is during the wee hours in the morning. But I decided to take the challenge and join the group. At 5:00 p.m., I asked the team leader if I can go home and rest first. But the team leader said, "No, no, we will not go home. We will proceed right away to observe the second and third shift, and check the changeover. That was my first shock. So we went on to study the third shift, the transition from the second to the third, eating just a few pieces of biscuit to last us until the morning. Finally, we finished our observation. By the way, when I say "observation" I do not mean sitting down on a chair or staying in the office. I mean standing up for eight hours watching the third shift, taking notes. And this was done by all of us, the members and the leader of the team, without exception. If they were not that excited, I would have fallen asleep. But I seemed to get the energy from them. At 7:00 a.m. we finished the observation. So I told my Boss, "You see Sir, we have been working 24 hours, can I go home and take a rest?" He said, "No, no, I ordered breakfast. We will prepare the report now." So we had breakfast which sort of woke me up a little. We prepared the report in one hour. Then I told my leader, "Ah, sir, we ate breakfast and finished the report, can I go home now?" I already felt very weak. But he was still excited, as if nothing has happened, "No, you cannot go home because we will present this report at 9:00 a.m. to the Directors." We had to give the impression that we were not sleepy, that we were excited about it! After the successful presentation at 10:00 a.m., I asked the leader, "Can I go home now?" And he said. "Okay, you can go home now. You can sleep, take your lunch, but please come back at 1:00 p.m. When I came back that afternoon I asked the secretary, "Hey, where are my team mates?" She answered, "Oh they are working." I again asked, "What time did they come back?" She said, "What do you mean come back? They did not go home. They are still working." Now, that gives you a real perspective of what is 'hardworking' to the Japanese. Do you think many Filipinos, even a highly-paid executive would do that? And these Japanese are ordinary managers in an ordinary company. This is what we call productivity SWAT team. And this happens every day, every week in any Japanese company. No complaints, no "buts". Pure work! So you want to be as hardworking as the Japanese? Think first of what it takes to be hardworking in their sense of the word.

Let me share with you another story about the Japanese working norm. This one is about Japanese salaryman or white-collar employee. In Japan, the salaryman do not go home early. They usually work overtime. That is why they have these bars where they can drink and unwind after working very late. This means they do not go home early enough to have meals with their wives most of the time. One day this salaryman decided to surprise his wife by coming home early. He decided to work harder in the morning and afternoon so he can finish his work, leave office at 5:00, have dinner with his family. When he reached his home at 5:30 p.m., his wife was shocked. She said, "I am so surprised that you came home early. You have to come inside because our neighbors might see you. They might think that the company does not need you anymore and so it sent you home early." You see, in Japan, if you are inefficient, you are not given work. You do not have overtime. The husband said, "What do you want me to do--go back to the office? I have no more work to do there." And the wife said, "You cannot stay here. Just go away, see a movie or play pachinko (pinball). I don't care what you do. Just come back later, at 9:00 p.m." Do you think our wives would treat their husbands that way? In Japan, there is a strong social pressure for the Japanese to work hard and for his family to make him work hard.

Another trait of the Japanese is loyalty. Many of us may profess loyalty to our companies, but that does not mean we understand the meaning of the Japanese type of loyalty. Let me illustrate you a few cases. Mitsui and Mitsubishi are archrivals in Japan, just as Toyota and Nissan or Sony and Matsushita are. So if two brothers are working for different companies--say one is a manager of Mitsui, one a manager of Mitsubishi--and they are staying in the same house, they will eat together, they will play together, they will talk about many things, but they will never talk about their work or about company matters. They will never exchange notes about their respective companies. Of course, there is no pressure from the company for one not to talk to one's brother about his work. How should the company know? But Japanese loyalty to their company is so strong it transcends family ties.

Here is another case. I was then training in Toyota. At the end of the day, there was nobody to take me home so I requested the guard to call a taxi to take me to my dormitory, which is about five kilometers away. I overheard the guard talking to the taxi company over the phone, "This is Toyota Corporation. We have a passenger here who wants to go to the city. Could you please send over one Toyota taxi?" You may laugh but that was what really happened. If a Nissan car was sent, it would never be allowed to enter the premises of Toyota Corporation.

Do you know that when suppliers deliver their goods to Toyota they have to use Toyota trucks? They cannot deliver using any other truck or they would not be allowed to unload or even get paid. You would imagine the expense of the supplier which must have three or four sets of trucks to transport their supplies to different companies. Of course it is usual, when you enter the house of a Sony manager, to see everything there made by Sony--radio, television, video player, etc. Having a Matsushita radio is almost a crime for which he could get fired.

Now, let us talk about a very important thing--responsibility. We say the Japanese take their responsibility very seriously. You see people committing suicide, resigning after assuming responsibility for certain deeds or disasters. Japanese Prime Ministers resign over simple loss of confidence. Now let us look at this phenomenon of responsibility at the corporate level. Do you still remember the Japanese Air Lines 747 crash in 1985 where more than 500 Japanese died? It is the worst single-plane disaster in the world. The Japanese are very safety-conscious and very nationalistic. They would never ride any plane except JAL. The only time they will ride any other airline is when JAL is fully booked. So, when their favorite plane crashed what is to be done? Management had to think fast. The first thing they did was resign--the entire management from the Chairman--before the results of the investigation were completed, or even before an investigation was called. They said, "We are accepting responsibility regardless of the investigation results." And I think it changed management three times because of that incident, but still the Japanese passengers would not want to take JAL. They still did not trust the airline. Finally, the investigation results came and it turned out that it was the fault of Boeing, the maker of 747. It was the fault of the Boeing's technicians who repaired the JAL plane. Actually, the cause of the JAL crash was a faulty repair of the fuselage. Boeing admitted the responsibility and was willing to pay damages. Then one day the newspaper reported that the JAL employee who certified the adequacy of the Boeing repair committed suicide. Every time a Boeing repairman comes, a JAL counterpart has to check his work. Even though he did not actually repair the plane, this JAL employee felt responsible for the crash so he committed suicide. Of course this was not a shock to the Japanese society. But the suicide was not enough to change the mind of the public. The management finally came out with a drastic set of policies. First, they decentralized maintenance. Previously, maintenance was centralized--anybody there in maintenance can repair any aircraft. So management got rid of this system because it cannot pinpoint responsibility. In other words, there will be a dedicated maintenance crew to look after each airline. If a plane encounters trouble, then it is the responsibility of that particular maintenance crew. The next policy is that the name of this permanent crew will be posted in the plane for the passengers to see, right upon boarding so you know whom to blame in case of trouble. The third policy was the clincher. After every major repair or overhaul of the aircraft by the maintenance crews, the entire maintenance crew will board the plane together with the passengers, regardless of destination. That is the ultimate quality assurance. With those changes, everybody regained confidence in JAL. That is responsibility, Japanese-style. In other countries, including the Philippines, many planes have crashed, yet nobody seemed to have resigned and the pilots are still flying. You find the situation disturbing.

You have heard of hands-on management. You have heard of MBO or Management by Objective. The Japanese counterpart is MBW--management-by-walking-around. A synonym for that is hands-on management. The Japanese are bottom-up managers: they tend to be more in contact with front-line operations as opposed to the Western type managers who are hands-off managers, who just sit in the office giving orders. You might think that hands-on management for the Japanese is simply visiting the factory and then going back to their air-conditioned offices after thirty minutes. Well, let me tell you what hands-on management to the Japanese is like.

After graduation, my Japanese classmates and I parted ways. They stayed in Japan and I came back to Manila to work. After a year I was invited to visit some factories in Japan. I took the opportunity to visit my school, classmates, and my professor. He arranged for me a visit to the factory where some former classmates are working--a big manufacturing company that supplies parts to different car manufacturers. When I saw my classmates I was horribly shocked. You know what they were doing? They were wiping the machines, getting rid of the dirt, the oil, serving the workers, supplying them with parts. I could not believe my eyes. And to think these were the top students in my batch! I asked my guide to explain this scene. He said that in Japan, once you enter a company, you have to really feel the situation hands-on and should know the people in all departments. They were management trainees and were supposed to be exposed to problems not only in finance and marketing but also in production. That was why they had to know the problems of the workers, the problems of the machines. But my guide said not to worry. After twenty years, they will become directors and presidents. That eased my shock. He did not say "they would be" but "they will be" directors and presidents. That was a guarantee. Then I jokingly told him that if he promise to make me President, I would also be willing to wipe all the machines.

Another important principle of Japanese management that you read about is teamwork. We may define teamwork as working hand-in-hand to attain a common objective. But do we really know what the Japanese mean by teamwork. When I was in Japan, I worked in the office doing paperwork. One day I heard my boss talking to someone over the phone and he became very excited. It turned out he was negotiating with a manager of one factory who was borrowing workers from his factory. In Japan, it is a very fluid situation. There is no such thing as loyalty to a factory. You are loyal to the company. If one factory needs your workers, then you lend them out. No questions asked. There was this negotiation because demand suddenly picked up or there was a high rate of absenteeism. I thought the problem was over when the phone rang again. Another factory needed more people. But there were no more people to send over from our factory. All the extra workers were already lent out to other factories. But we had to help this particular factory. So my boss started calling up the marketing department, the accounting department, the personnel department borrowing people. There was no resistance, no angry remarks from the different departments. The Chief Accountant said, "Okay, I'll lend you five accountants to assemble cars, to run your milling machines." The Marketing Manager said, "I have five salesmen here who are not busy. I'll send them over to you." And for the sake of knowing what Japanese teamwork really is, I also volunteered. Of course I have no experience in running specialized machine, but I was given training to be able to do the job right away. I thought that was real teamwork. Everybody was loyal to the company. Not to their boss, not to their section. Not to their function. Not to their expertise. Now, can we do that here? It seems this type of teamwork has not yet been done here. Here we have too much politics, too much intrigues to achieve anything of this sort.

Now let us focus on another Japanese trait--consensus. This is group decision-making or being democratic in decision-making, consulting everybody regarding company decisions. Even though we say we are a democratic people, our concept of consensus does not compare with that of the Japanese. Let me give you one incident showing Japanese consensus. Maybe you can reflect on this.

One day, a certain bank overpaid a client. The client was cashing $1,000 but the teller paid him $10,000. When the client went out of the bank, he realized that he had $9,000 more. What do you think would have happened if that client just disappeared? But that was Japan and he did not disappear. He went back to the bank and tried to return the money. But my point is not about the client. It is about how the company dealt with this kind of situation. So the client went back to the bank and tried to return the money to the teller. If that incident happened here the teller would have accepted the money and thanked the client--maybe give him a souvenir or a letter of appreciation. But that was Japan, so what happened? The teller did not accept the money right away. He told the client, "Could you please wait for a couple of minutes while we discuss this matter? You hold on to your money. I'll discuss this with my boss." So right away in the backroom, the staff, the supervisors, the branch manager, computer operator, the signature verifier--everybody involved in releasing the money assembled and held a short meeting. In other words, the management, the whole bank, not just the teller, had to take action. That is why they needed a consensus on what to do. It is not as simple as returning the money to the bank. It is more than that. Releasing the $10,000 was considered a group decision and the teller just happened to be the last person to carry out that decision. Finally the Branch Manager accosted the client and told him the bank's decision - they cannot accept the money that he is returning and that it was his. Another culture shock. The Branch Manager explained that he is giving the money to the client so that there will be a problem in the bank. If the client returned the money and the bank accepted it, then there will be no problem. The books will balance, and the people will forget this incident because there is no more problem. There will be no pressure to investigate, to reprimand, to analyze. But they precisely want to investigate, they want to analyze so they want to have a problem. The Branch Manager further explained that $9,000 might be big to the client but to the bank it was small because the bank was a billion dollar concern. "We consider it an investment in experience, because if the bank does not discover the cause of mistake, the next mistake may be $1,000,000. We want to know whether it was a computer error, an error in procedures, or error in judgement. I would rather lose $9,000 now than $1,000,000 later." The client is convinced with the explanation and takes home the money. Now who will shoulder the $9,000 deficit in the bank? Here, it will be the teller. In Japan it is not the teller alone but everybody in the bank, in proportion to each one's salary. The biggest amount would be shouldered by the Branch Manager. That is group decision for you. And that is how the Japanese become very efficient. With that kind of system, you can be sure that there will be no more overpayment next time. Because nobody wants to have his salary cut, everybody will make sure it will not be repeated. Here, we tend to cover-up problems so we are never able to correct them. So they are repeated over and over and in the long run, we lose more. In Japan, you make a mistake only once and after that, no more. Even if the discrepancy is small, say the books do not balance by $1 or one cent, the Japanese will spend $100 to find the cause. They invest now for the future. This discipline is partly the reason why the ten biggest banks in the world are Japanese.

Let me wrap up by talking about what we can do to improve the way we manage our companies. As you can see, many of these Japanese practices are not really culture bound. There are many we can adapt or copy. This is what the Koreans and the Taiwanese are doing. We do not have to be Japanese to understand their objectives and logic. It may seem harder to understand and copy the Japanese than the Americans. But understanding has nothing to do with being pragmatic. Japan adapted European technology when it was starting to industrialize. The Japanese did not know how to speak French or German and they hated and feared the Europeans. But they went to Europe nevertheless and copied all its technology. They went to America to copy everything there. And they did not know how to speak English either. History has shown that there is no cultural or racial barrier in the transfer of technology. This is all in the mind. It can be done. Unfortunately, nobody realizes the potential of learning from Japan. All the technology is there and it is only four hours away by plane. Sadly, our interest in Japan is only a result of the Americans' interest in Japan. Since the Americans started suffering from Japanese competition, they decided to study and learn from the Japanese. And because we are too colonial-minded, we followed suit, when in fact we should have been interested in Japan earlier because we are both Asians and Japan is much closer to us. Look at the Koreans. They do not follow the Europeans or Americans, they just go to Japan and copy everything there. If it does not work, fine. They just retain and adopt whatever works.

Let us learn from the Japanese. All the NICs (newly industrialized countries) are copying from Japan--Korea, Singapore, Taiwan, even Thailand. Thailand is fast becoming an NIC partly because of the Japanese investments there. We do not have to beat the Japanese or copy them 100 percent if it is not practical here. But the fact that we cannot copy them 100 percent does not mean forgetting them altogether. It is not an all or nothing proposition. We can learn many things from Japan. And I guess one way to start is to focus our attention on Japanese business. Let us visit Japan more often, rather than Paris or New York. Let us visit Tokyo and see what they are doing there and learn a little Japanese. If we are willing to become a more progressive country, we have to invest in communication. That is the only way. They will not learn English for us. They are proud of their language. Why should they learn English to teach us? We should learn their language if we want to learn from them. As I did in Japan, I learned their language the hard way, adapted to their society and to their culture. And they were open to me, they taught me many secrets. I found out that the Japanese are helpful, not secretive. That they are secretive is nonsense, a misconception. If you do your homework, they will open up to you. They will share what they know just as they shared with the Koreans and the Taiwanese. The initiative to learn from the Japanese should come from us. The next move is ours.