Off and running; The Reagan team and American business, too
Why is it that most new jobs -- and much of the genuine innovation -- that occurred within the US business community the past decade took place among smaller firms instead of the nation's largest corporations? And what lessons from these twin factors are there for the Reagan administration as it works to boost American productivity in the face of tough challenges from such major overseas competitors as the Japanese auto industry and European and Japanese steel firms?
The answers are as varied as American industry itself. But when one talks with business experts, it becomes increasingly clear that US industry must be as bold in pruning away its own cumbersome management practices that inhibit productivity as is the new administration in going after outmoded regulations within the federal establishment. As one very astute observer of the giant multibillion dollar US steel industry reminds us, "bureaucracy is not just to be found in government."
Steel is a case in point. Very few top leaders of that industry, our management friend reminds us, come "from outside the industry." There is little mobility within firms, and the "path to the top is very slow." The most aggressive young MBA graduates that enter steel firms all too often eventually give up and seek their challenges in more likely corporate environments.
More "productivity" is as much needed in "front offices" as on the "production line."
The US auto industry offers both some good -- and some unpleasant -- insights into management innovativeness. The Detroit firms, it must be noted, are truly huge enterprises, with assets larger than the gross national product of most nations. Given the very size of these concerns, "turnabout" time -- the time it takes management to switch direction from one product line to another -- has become very slow, usually five years or more. Economies of scale, (producing as many units of one product as possible to hold down costs) work as an incentive for retention of specific model lines over long periods of time and, in part, past their usefulness.
The US auto industry, more than the steel industy, has welcomed and rewarded bright young business school graduates.
On the other hand, if you saw the CBS documentary "The Toyota Invasion" last week, it quickly becomes apparent that the US auto industry has some catching up to do in management practices. Toyota is now the world's third largest automaker, and its Corolla the world's best selling car. Beyond modernized plants and a dedicated, zealous work force, Toyota's operational structure is as sleek and no-nonsense as its cars. Toyota executives, from the chairman of the board and chief operating officer down, share offices to encourage greater communication. The corporate emphasis is geared to long-range development and market research. Quality of product remains paramount. If a product fails to sell, it -- and the market in question -- are analyzed again and again and again with a patient doggedness until success is achieved.
While obviously US auto firms cannot -- and should not -- be carbons of their very hierarchical Japanese counterparts (which, after all, to a great extent based their techniques in the past several decades on Detroit), it can be argued that US corporate officials need to be far more zealous and enterprising than is currently the case.
That is true for US industry as a whole, not just autos. Like the administration in Washington, many a corporation and business firm needs to "hit the ground running." This is particularly important now that the Reagan team is moving against many of those federal regulations that the business community has long pointed to as time-consuming or injurious.
We are certainly not suggesting that US firms "retire" their older officials just to favor the young. What is important is that American firms be more innovative, more insistent on streamlining, cutting irrelevant business practices, curbing the hours spent in unnecessary meetings, discarding the insularity that has often prevented the very flow of ideas that leads to inventiveness in the first place.
Americans are a pragmatic, enterprising people. The greatest geniuses of corporate America -- Andrew Carnegie, Henry Ford, Alfred Sloan, Thomas Edison, to name just a few -- have been highly motivated individuals who cut right to the central nub of an idea. US corporate industry must again welcome that type of enthusiasm and persistence -- and indi vidual.