Invest in New Management Methods Not a Failing Company

Commentary to the Milwaukee Journal, 2 March 1986 and the Capital Times 25 Feb 1986 by William G. Hunter

People have talked about Wisconsin becoming a trend setter in economic development. Certainly, I would like to see that happen because this state has been Hemorrhaging.

Over the past five years, for example, we have lost approximately 100,000 jobs in manufacturing and basic industry. We need new ideas.
One idea that has been widely discussed is keeping American Motors alive and well here - with financial aid from the citizens of the state. The company does provide jobs - directly for manufacturing and indirectly through many supporting services. However, this interest in propping up American Motors makes sense only on a short-term basis.

In my opinion, the case for this rests more on wishful thinking than anything else.

American Motors is an old, weak fish with bad eyesight in a turbulent sea populated with aggressive, healthy predators. These predators are familiar - both foreign (Japanese and European) and domestic (General Motors and Ford). Some are new, unfamiliar breeds from such places as Korea.

I predict American Motors will stop making cars in Wisconsin in the near future, whether or not the state's money is used for a temporary propping-up operation.

These competitors are beginning to understand how essential it is to take a long-term view of their businesses. Toyota, for example, took its top 40 managers on a two-day retreat to ponder what their corporation will look like in the 21st century. They are studying totally new methods of management. These methods take continuous quality improvement as a central, guiding principle.

Incidentally, in these new methods, financial control functions are a peripheral activity, orbiting on the outermost circle shown on diagrams to illustrate this new method of management. Outer rings contain functions that support the more important activities on the inner rings. Our business schools flip these two functions, with finance being in the guiding center of the corporation and quality improvement being so peripheral that it cannot be found in the curricula of our business schools.

These competitors tend to use a vital untapped resource - that of the natural creativity of the employees. They tend to give them a freer hand in locating problems, searching for causes of these problems, collecting data, proposing solutions, trying them out, reporting results so that fellow workers can learn from what they have figured out.

Employees are adults, they have ideas, they want to contribute to the success of the company if they are given the chance, if they are given recognition, and if, in doing so, they keep their jobs, make their jobs better for themselves and people with whom they work. This is all impossible to do in a dying company - where the number of jobs is rapidly shrinking rather than expanding.

The technical tools of statistics is used throughout leading corporations - from line workers to presidents. It is striking that presidents understand, use and can talk intelligently and in depth about statistical methods. They can also discuss similar details concerning manufacturing and marketing. They manage their companies with data, not hunches and opinions. Consequently, it is vital that all employees collect and report data honestly. Data, however, can be used against employees, for example, data on such things as the number of defects produced each shift or the time it takes to complete a certain amount of work.

It is important that data are used positively to improve quality and productivity - not against employees. An entirely new atmosphere must be created for this to happen. What is required is nothing less than a sweeping overhaul of the American style of management.

Some leading US manufacturers of cars and trucks show signs of realizing this fact, and they are now making huge investments in educational programs at all levels in their organizations. They are developing new long-term visions and new styles of management that will make them more competitive. They are learning from W. Edwards Deming, whose book, Out of the Crisis will be published this year (Massachusetts Institute of Technology, Center for Advanced Engineering Studies), and Professor Kaouru Ishikawa, whose book, What is Total Quality Control? The Japanese Way (Prentice-Hall), was published in 1985.

One reason that leads me to believe American Motors will be devoured by its competitors is that there is no evidence visible to the citizens of this state that the management of American Motors understands the absolute necessity to improve quality and productivity on a continuous basis using new modern management methods.

Only extremely short-range thinking would lead anyone to believe that it is wise to help American Motors financially at this time. The state, in my opinion, should take a more long-term view and do things that will ensure, in the future, there will be more jobs in this state.

Investing in American Motors now, in any form, is a mistake. ***If Wisconsin is to become a trend-setter in economic development, we need some long-term thinking in forming wise, creative policies.

It is difficult, I know, for legislators and other elected officials to take a long-term view when the tangible reward is re-election and elections come around quite frequently.

Our founding fathers are remembered for their long-term vision. We need to change the way our democracy works so that long-term visions is an integral part of all importants discussions on economic development on the local, state and national level.***

*The Capital times included the text between the ***s while the Milwaukee Journal did not.