Cultural Convergence: Western Me Eastern We

October 14, 1998

Donald Cyr

Simon Fraser University Vancouver (at Harbour Centre)

Summary

There are three components to business success: marketing, corporate structure and leadership. Any business that focuses on one component at the expense of the others will pay the price. While management concerns may focus on cost control, customers demand value. Success in business balances the interrelationship between customer demand, corporate strategy, and leadership style. An optimal strategy needs to motivate employees to meet customer needs at a reasonable price. An integrated approach calls for a new leadership style that combines both elements of Western and Eastern practices.

Marketing
To gain a competitive edge in a global environment, you need to fit your core competencies with market demand. Customers will buy from you only when you give them value-added.

New Products
There are a number of reasons why new products fail. Poor timing, competitor strength, technical problems, lack of financing, higher costs than anticipated, poor logistics. But, the number one reason is the company's inability to determine the needs of the market. A number of surveys indicate that more than 80% of new products will fail unless you provide a unique product, consistent with market demand. Having a unique product that provides value-added is a good start.

Existing Products
Having an established product does not guarantee survival. A study by Jones and Sasser (HBR, Nov.-Dec., 1995) at Xerox demonstrated that customers who claimed to be "totally satisfied" were 6 times more likely to repurchase Xerox products than customers who claimed to be only "satisfied". In a competitive environment, total satisfaction is expected or else customers will defect to your competitor. This is why a great number of companies claim "Our customers are our number one priority."

Despite the claim, a whopping 68% of your customers leave your company because they feel they are being treated with indifference. This is very serious when you consider that the cost of attracting a new customer is 5 times that of keeping an existing one. Mistakes happen but the good news is that if you rectify your mistakes quickly, most customers will return. Whether you compete in a leading edge product, personalized service, or cost efficiency, you need first to understand what the customer wants. Equally important to 'what' you offer is the need to pay attention to 'how' it is offered.

Corporate Structure
In a great number of companies what is offered and how will be determined by the same people. In larger companies one division may be responsible for what is offered, while a different one is responsible for how it is offered. Although the company may divide these different functions, from a customer's point of view, they are one and the same.

Structure
The question may be asked what is the best corporate system to bring about results? What is the optimal structure, how much attention should we pay to policies, rules and procedures, should we be centralized or decentralized? Should your company be big or small? What is the right mix of size or rules? These are all important questions but too much attention on the structure misses the point. The structure and its' related system are not the problem. The problem comes when the structure dictates what the people do instead of having what people do dictate the structure.

Peter Drucker contends that more than 90% of our time is spent looking inside the organizational system for information rather than outside. This is akin to spending 90% of your driving time looking at the dials inside the car instead of looking at the road. Undue attention to the structure, means you look inside for answers, when the answer actually lies outside. The structure can be compared to the bones in our body, which allow us to walk, but do not determine where we walk.

Integration
Customers buy products and services that fit their needs. Having a strong sales force, efficient production, and a motivated Accounting or R&D department is not sufficient to succeed. Your R&D may design a unique product. But this will not lead to profits if your customers feel they are treated with indifference. You need a total company effort that integrates all functions that serve the customer. The structure that works is the one that transfers ownership to employees and gives them the ability to solve the problem for customers. Employees need to be involved in both what is to be provided and how it is provided. The system is not to control but to support.

Leadership
How do you get employees committed to solving customer problems? Many great new programs have been suggested, but when you ask managers how successful their new programs are, 75% of them report failuresi. One problem is looking for the one structure, the one system, that fits all. Choosing the program that is right for your industry and circumstances is as important as management involvement and communication. But more important is the recognition of how your own leadership style may impede performance.

Two stone cutters were asked what they were doing.
The first said, "I'm cutting this stone into blocks."
The second replied, "I'm on a team that's building a cathedral."
Old Saying

A Two Way Street
In today's global environment, your competitive edge comes from integrated knowledge and group effort. As Peter Drucker contends, in knowledge work, the task is not given, it has to be determined. There are no answers only better choices. Chrysler's profit per vehicle jumped from $250 in the 1980's to a record $2,110 in 1994. By borrowing elements from the Japanese Keiretsu system, Chrysler cut production and component costs dramatically by integrating suppliers, manufacturing, and design at the conception stage, which was an unusual practice at the timeii. It became the responsibility of all to reduce costs in a partnership system, rather than the previous bid system.

Although more than 60% of managers believe they treat their employees as business partners, only 27% of employees believe they are treated as business partnersiii. In such an environment, how can you gain commitment and motivate employees to meet customers' demands? To feel like partners, employees must have a sense of ownership. Systems by themselves that transfer responsibility to employees are not about ownership. Often the major factor that curtails the sense of ownership is leadership style.

We have to undo a 100-year-old concept of leadership and convince our managers their role is not to control people and stay "on top" of things, but rather to guide, to energize, and to excite.
Jack Welch, CEO of General Electric (Fortune, March 26, 1990)

New Leadership Style
To survive, the captains of the 19th Century adopted a management style suited to mass production. Going from craftsmanship to mass production produced tremendous success and gave the masses affluence, education, and a standard of living once afforded only by nobility and aristocrats. But the management of knowledge is different from the management of skills predominant under the mass production era.

Do not seek to follow in the footsteps of the men of old,
seek what they sought.
Basho

To understand our leadership style it helps to compare it to other leadership styles. To do this, I will make a comparison of Western (North America) vs. Eastern (Japan) management style and show how they complement each other.

Individual Self
What we believe in has a large influence on how we think and how we do things. In the west we put a high value on individuality, action and independence. Although Nike's "Just do it" slogan is modern, it reflects a very old value. The western values were in part influenced by our ancestors, the hunters. Hunting in ancient time was a risky business, and favored the heroic individual who took charge. In hunting societies, personal achievement was rewarded and encouraged.

The squeaky wheel gets the grease
American saying


With industrialization, and modernization our inclination took on its' full flavor and became a predominate value reflected in our leadership style. As Peter Senge states "Our traditional views of leaders - as special people who set direction, make the key decisions, and energize the troops" is aligned with taking charge. One advantage of individualistic management is to bring about action, but at its extreme it negates the sense of participation and commitment by others.

System
To the western mind, science added our love for mechanical systems. Our arm's length approach with concern for the bottom line brings accountability, discipline and focus. But business based solely on systems, fosters cynicism and discourages initiative. In America, reengineering at arm's length means "firing." Restructuring based on cold logic, increased litigation, together with other social changes means an increased level of distrust toward authority and management. In the 1960's, close to 60% of the population felt they could trust "most people". In the 1990's, more than 60% of the population feel that "most people" can't be trustediv. For corporations, distrust, and cynicism will continue to erode loyalty, commitment and innovation.

Civic Self
In comparison, Japanese leadership is associated with harmony. The eastern values were in part influenced by their ancestors, the planters. In agriculture society, bound by time and place, you do not plant the seeds or pick the fruit before they are ready. Planting society favored moving with, co-operation, harmonious relations. In comparison, the role of today's Japanese executive is to watch over the harmony within the company, and maintain good relations outside the company. In Asia business is based on relationships.

The nail that protrudes gets hammered in
Japanese saying


Japanese management is well-known for integrating knowledge, group participation and a high level of productivity. But at its' extreme, business based solely on relationships lacks accountability and fosters patronage. Such ways of operating can have disastrous results. Witness the troubled banking industry. Japan's multi-leveled distribution operates like a social system that adds tremendous cost to Japanese consumers.

The West focuses on the individual; the East focuses on the relationship between individuals. Undue attention to individualism means you take charge, and leave others out of the picture. Attention to relationships means being in tune with your surroundings and moving with others. This means you look through a window to understand others. Focus on relationships offers great advantages in understanding the needs of your market and in integrating the efforts of all concerned.

It seems that the evolution of the Western values have favored being in touch with oneself while those of the East have favored being in touch with others. Goleman in talking about emotional intelligence, a key ingredient to success, gave ample evidence that both being in touch with oneself and with others are needed. An awareness of how some beliefs curtail our full complement of abilities can enhance one's leadership abilities.

Americans negotiate contracts, while Asians negotiate relationships. In the West we look at systems for mechanical answers. Systems offer direction but not answers, they offer discipline but not commitment, they offer focus but not participation. In balance, both offer advantages. Like logic and intuition, Western individualism and Eastern harmony are complementary to each other.

I never discovered anything with my rational mind
Albert Einstein


There are great advantages in taking the best each system has to offer.

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i Nitin Nohria and James Berkley "Whatever Happened to the Take-Charge Manager?," HBR (Jan-Feb, 94)

ii Jeffrey H. Dyer "How Chrysler Created an American Keiretsu," HBR (Jul.-Aug., 96)

iii Valerie Lawton Canadian Press article taken from The Vancouver Sun, May 30, 1998.

iv Francis Fukuyama Trust: The Social Virtues and the Creation of Prosperity Hamish Hamilton, 1995. Fukuyama states ... "The number answering affirmatively fell from fifty-eight percent in 1960 to only thirty-seven percent in 1993. P. 310.