Japan's Competitive Edge

© Laurence B. Winn

Aug 1, 2000

The Wall Street Journal reported recently that Ford, DaimlerChrysler and General Motors are losing the quality wars in spite of decades of effort. Or, to quote Tom Williams, editor of the Cahners trade journal Quality, they "are still being clobbered by the Japanese". This should not be a surprise. The Orient has had longer to adapt to enclosure than has the New World. Americans will have to suffer through some painful and uncharacteristic introspection before arriving at the same place, culturally, as Japan. Nothing in this author's twenty-three years of manufacturing experience suggests that they will succeed any time soon.

To beat Japan in the quality arena, top American management would have to stop believing in its own invulnerabilty. It would have to look in the mirror and see the deeply flawed and arrogant character that destroyed the U.S. space shuttle Challenger in 1986. It would need to recognize its kinship with the designers and operators of the Titanic. If it could do that, and not flinch, it might be able to follow the Japanese path, but it would still be tough.

Japanese manufacturing recognizes the concept of a loss to society when a product's quality does not meet expectations. American manufacturing sees only the loss to the bottom line, so it is partially blind.

In the U.S., top managers bully design engineers into meeting their quality objectives by expanding tolerances until the product teeters on the brink of unreliability, but, hey, it's got a high Cpk (or whatever other metric is currently fashionable). The correct approach, of course, is to make the investment necessary to clearly identify a product's functional limits, and to set the tolerances accordingly. A less effective, but more affordable, equivalent may be to improve the manufacturing process so that the as-built parameters stay close to the design, where the product was, presumably, tested. Japan does this. We do not.

In Kaizen: The Key to Japan's Competitive Success, author and consultant Masaaki Imai informs us that the American way of fast growth, high profit margins, rapidly expanding markets, abundant resources, belief in innovation as a formula for success, free enterprise -- "Those days are gone." Imai, then Chairman of the Japanese consulting and executive recruiting firm Cambridge Coporation, favors the oriental system of drift, small steps, collectivism and conventional wisdom.

"Can we meet the Japanese quality challenge?," asks Quality editor Williams. Not likely. An even more fundamental question, which Williams ignores, is this one: Does quality matter? The answer provided by frontier theory is that quality matters a great deal in mature technologies. On the cutting edge, where risk is inherent, quality matters less, and raw functionality, regardless of how inconsistent, matters more. The first American railroads, steamboats and airplanes were pretty low-quality, dangerous items. (See "Once Upon America"). It didn't matter. Those who created the means and used them boldly took the prize. My own opinion is that Americans don't do quality well, that they're too impatient, and that they should move on. Where to? I think we can do some interesting and profitable things in space, and leave the older technologies to those who do them better.

It will be interesting to see, in the coming years, whether American manufacturing can do this. If the former frontier cannot recognize its strengths and use them, then perhaps it would be accurate to say that American manufacturing's negligible leadership skill, not Kaizen, is the key to Japan's competitive edge.