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TNANAOETNENT Gettingeveryone to dothejobrightthefint time;everytime,isjustthefirststepin - a movement theQualityRevolution. Non-stop improvement isnextlKAIZEN thatstarts butdoesnotstop leadingto ZeroManagement.
I TowardsWorldClassManagement:Ihe5-SSystem fu Etsulrnha
I The12%Solution: Teaching Robert Kaplnn S. Qluality fu
Non-stop I QualityRedefined: Improvement Domhqo Bew fu
Iteaxning QualiffontheJob I Quaiities ofkcellent Management Culturein Malaysia I Buildinga Corporate us$s.cio 8S6.50 HK$3O.OO
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Tho&lar ma|agat A Publicatoiof thoAsian lmtitute of Managomont aM the Fod*ationof lhe AeianIn*itrrtool Md|.gementAlumniA6€ociatiq|s.
PuUld|ol FelipeB. Alfonso
2:t Develogments ln Bt|slness atd Businese Educathn: The Epedenccof fre &lan Instltrte of Managenront
Edltor{DChld MichaelA. Hamlin M aglng Edltor lbanaC. Gutierrez
ByProf.HoraciolV.Bonomeo. Jr. Associate Dean Enterprise Management Programs
DclSn Ursctor Alexander Bowie AlEoclrto Edlto|3 AnnieE. Pundol SalomeFloregAldaba Kin Gatbonton FederlcoS. Esguena AletaA. Tabalba
2e teamilETotalQuallty Manqgemont or theJob
Cofltdbn|4 Edltorr Bangladesh: MilonBikash '88. HongKong:StephenPaul,MM TangWing '76. On,MBM India:Juzar '75. Khorakiwala, MBM Indonesia; RobbyDjohan,ABMP'79; ChristinaF. '82. Feneros,AMMP Korea:HongSoo Lee,MM '79. i,lalaysia:KhooBoo '9O. Boon,MOM Pakistan:lshtiao AhmadQureshi,BMP'77. Philippines: JesliLapus,MBM'73. Singapore: GanCheongEng,MBM'82. Taiwan: Hslehtai Fa,TMP'82.Thailand; SomnukJetjlravat,BMP'81. Edltorlrl 3o6d GabinoA. Mendoza HoracloM. Boromeo,Jr. Sonny8. Coloma
NoFStoplmprcvoment: QualityRedeflned 8y Prof.ReneT. Domingo Sime Darby Professor for tvanufacturing
5S: TheFirst StepTowad WoddClre Man€emcnt By Prof.Etsu Inaba Don ManuelElizalde Professorof Business Management
ByKinGatbonton Associate Editor
3:l MalayshIntheYoar2020 BylbanaC. Gutienez Managing Editor
35 Quallthsof Excollent
Man4emcntIn OpanMafiet Economles
8y DatukSeri RafidahAziz Ministerof Trade& Industry Malaysia
37 Edann0tomobllNaslonalBedrad:
1z lheTodcof QualityIn BuslneesSchool Educatlonand Research
Aloodstc Puulthor & ArrvonHng tXFstor Tre\,/or A. Roberts
By Dr. RobertS. Kaplan Dickenson Professor of AccountingGraduate Schoolof Business Administration,Harvard University
Uat*6drE Dhrc"tor DelisC. Gutienez Dlrostor ior Op.rauona Pinkyl. Gallegos
BuiHltg a Co4orateCulhrrcbr
m20
By lvohd. NadzmiBin Mohd.Salleh EdaranOtomobilNasionalBhd.
so MalaFla'sBest:Wnnersd the 1991Man€emofltAwafds Prcgnm ByKinGatbonton Associate Editor
Cov€r[rhoto6:R€n€T, Oqn|rtgoend EtsuInsb€by PeldCkUy/EmllOat/ocolPhotoq[€piyand C|€sign; Robdl Ke students ing for it, as vou will seein this had just completed an integrat- . $sue. ing exerciseon total quality manQuality management guru agement.Welooked at what they Rene Domingo continues his had found in the factories they regular column, "A Better Way", visited and decided their fustwith this fust bimontNy issueof hand experiencesshould roundThe Asian Matuger. Rene notes out our TQM focus nevertheless: that "Zero Management," like practicing manage$ are aheady Ktizm, is a critical quality man- benefiting from their observaagement paradigm. In fact, it is tions. the ultimate goal of total quality Complementing this central management: zero defects, TQM focus, associateeditor Kin which leadsto zeroostomer dis- Gatbonton examines the seven
excellent Malaysian organizations recendy recognized in the 1991Management Awards Pro. gram presented by Japan Airlines, AM and Wo d Executite's Drgesf.Malaysia minister for international trade and industry Datuk Seri Rafidal Aziz writes on the importance of excellent managementh achieving development tartets for the Malaysian economy and society. Mohd. Nadzmi Bin Mohd. Salleb chief executive officer of Edaran Otomobil Nasional (EON), talks on building corporate oltrue, a requisite to achieving a total quality management "mindset." EON, incidentally, was recognized in the 1990 Manaeement Awards Program. Finaly, RobertKaplan reports on the resDonsibilitv of business and manigemenf schools in "teaching" total quality manage. ment. Associatedean Horacio M. Borromeo discusses how the TQM principle has evolved at AIM to form the underpinning of its MBM and Master in Manage ment orricula. Our intent has been to prq. vide a reDres€ntationof how-"to tar ToM is. while it most freouentlv is associatedwith the proiucti6n lhe, it quickly hanscends these confines. And because talking about concepts rarely provides the peEpective of "living" them, we have relied on the exDeriencesof excellent managers and organizations to convey the feel of the TQM rounne.
Wewiu keeptrying to do that.
fh^o,*lA. illt.'-,,,I
1992THEASIAN MANAGER JULY/AUGUST
The cocy bccoocc comt thc old-Irchkncd ercrnal The mundane bccornes magical, the ordinary exlraordinary. ia darrf ao hsppcn ahc morncna you ctcp on boatd your Thai Inrcrtrational flight. It heppenc oly in Thettud.trd
THAI INTERNATIONALCoLrntrvSpaceI Blds, Sen GilJ PuvatAve Makati'M M Tel 8l5-843| to 40 . Airport Office, Crd. Flr. DepartureLevel,Ninov AquinoIntl' Airport, Pasav'M M Tel 8340368 . Forreservations. callTel. s l5-s4-2lto 27 ' CSACebuTel. T3ol 4 ' CSACarcoTel 8Sl'2686to 87
people... Pleasing
AJobWellDone GEeting3 from Gr€oce! As an AIM alumnus, I look forward to receiving my copiesof TheAsian Manoperand NMLink regular$ as it brings back happy memories of my student days at the lnstitute over 15yeals back.It is, thereforc, with pleasur€that I rcad about your plans to publish the. nagazine on a bi-montNy Dasls. I would liketo compliment the organizersof the SecondManagement Awards and the 3rd AIM ConJerencefor sponsoring both events.No douh'ttheplaNfng and
implementationof projectsof such magnitude entailed long hours and frayed nerves. I am sure the satisfactionat the end resultscertainlv cheeredvour spirits. Congratulations on a job well done. Your coverage of both these events was commendable althoughlamsomewhatpuzzled to note that the 3rd AIM Conference was "An Asian Institute of Management-APEC-HRD-BMN Activitr/'. It would havebeenhelpfirl ilyou had informed the r€adersas to what theacron\,TrsAPEC,HRD and BMN represented.
No statementcould be truer. Innovativepackagingbasedonthe premisethat all packagingcould standa bit of improvement.The very thinking which guidesus at SanMiguelP,ackaging hoducts.
The inucduction of a "People on the Movd' column (p.52)is a good idea although I would have prefened if you had restrictedthe column to simply announcing alumni careermovesand that too in a few s€ntences,in a sirnilar mamer asis doneby theFinancial Times.If you wer€ to devote s€veral paragraphs on each of ow "notableachievements',Ifearthat eachtimeyouwouldneed tocome out with a bumper issue! lulu Islam,MBM'76 Athens, Greece
It is a commitrnentonly a leader can keep. A commitment suppofiedby over fifty yea$ of exp€rience conshntlyupgraded by strategic alliances with intemationalpackagingexpefis.
And so we make it our So if you've beenhavinga dry rcsponsibilitytoadapttochanging spellin packagingideasyoulnow industry needs, matching who !o tum to. opportunitiesandchallengeswith fresher,brighterpekaging ideas.
PackagingInnovation- Our Link to theFutue.
pnoDucrs f$ slx nrucrnrnAcKAGING
BZ, niifflo"ro" r,o" 1Sg2THEASIAN MAMGER JULY/AUGLIST
STABILITY...
THATGROWS FROM CONFIDENCE ANDDEDICATION In Balidoingthebestthatonecanis nurtured bydeepconviction of the valueof confidence anddedication. At BankBali,a majorIndonesian bankwith73branches, wecherish these values in serving yourbanking need.In thestrongfluctuation of today's economy werealize yourneedof security. Andso,is stability. BankBali\ JointVenture Affiliates : PTSanwa Indonesia Bank(Sanwa Bank,Japan) PTUnitedOverseas BankBali(UnitedOverseas Bank,Singapore) PTBaliNipponInsurance (Nippon FireInsurance, Japan) HeadOfiice: 84- 85Jl. Hayam Wuruk,Jakarta, Indonesia Phone * (062- 2l) 649-8006, 649-6050; Facsimile # (062. 21)&9-4581,629-6412, 629-0565 Domestic Branches : Jakaa, Bogor,Tangerang, Bekasi,Surabaya, Tulungagung, Malang, Jember, Samarinda, UjungPandang, Balikpapan, Denpasar, Gresik,Bandung, Tasikmalaya, Cirebon,Cimahi,MedAn, Bandar Lampung, Palembang, Pontianak, PulauBatam, Semarang, Solo, Puruokerto. International Branches i Cayman kland& LosAngeles, USA. Consolideted trinmcid Highlights (rudited) l9l
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A THERE'S COUNTRYSIDE WHOLE OFPROMISE OUTTHERE...
AXUWE'Rr OXIr BnxxING Out there - in the vast, open regionsbeyond Manila is a whole counrrysideof promise.
And alongside our agrarian operations, offering full commercial banking services.
A promise of growth. Of a chance to gain self.relianceand, hopefully, a better life.
Deposits.lmport-export services. Loans to small and medium entrepreneurs.Trust services.
LANDBANK promlse.
Foreign exchange.Overseas workers' remittances.Wholesaling of spccial financing programs. And more.
believesin thar
That's why we're thcrc. Banking on the promiseof growth in the countryside.
ITithour help, all that promise of growth in the countrysidecan just slip through our fingers.
lnvesting our resourcesin those little communitics and their people.
'!7e're not about to let that happen. Becausethis nation is to grorv.
We'rcbanking on thecounql$ide, LANDBAl{K TheCountrvside Unibank 319 Sen.Gil J. PuyatAve. Ext., Makati,Merro Manila T e l .N o . 8 1 8 . 9 4 1 1
ireobd:
Philippi@ Dopsit ltuurarce Corporaron (kilmum
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lnsuâ‚Źn@ tor oach deFsild?4O,OO.m)
Doing it betterandbetter...
Non-stop Impovement:
AuanryRedefined By Prof. Rem T. Domlngo Sime DarbyProfessorfor Manufacturing "quauty" asthe battlecry of I fweare to use the revolu tion, then it must beredefined so I I that it becomesa powerful guide to action I for everybodv - from the chairman of the board to the reciptionist. Fi$t, lef s rid 6urselves of some common paradigms about qualiry A paradigm is a mindset, a fixed state of mind, that screens information and ideas that reach our rninds by accepting those that conform with it and rejectingthosewhich don't. Paradigms,right or wrong, are powerful in that they dictate, oftm subconsciously,how we look at things and communicate with othe$. Paradisms are not permanent, they are replaceablebut only if you know that you have them. There are three erroneous paradigms on quality to purge: a 1. Quality is conlormanc€ to specifica.. uolts; . 2. Quality is satisfying the custome4 ano, o 3. Quality is what the inspector checks. The first one is seriously limited in that it is understood only by people in production who deal dtuectlywith th€ product and try to meet ploduct specifications. It does not ap peal to the vast majority of ernployees and managers whose main output or work is providing service, information, reports and qeosrons. The second mindset is also defective in that, savefor the salespeople,not everybody deals directly with the paying or external customet unless we rcdefhe "custome/' to indude "intemal" customers, or users of one s output inside the company - other employees,managers or deparhnents. The third paradigm is obviously selfdefeatin& sinceit puts the quality burden on the policemanattheendoftheprcductionline.lt vioLates the premis€ that quality is everybody's r€sponsibility. It also misleads employees into thinking that quality is a mere checkingor controlling activity which is none of their business. All three paradigms suffur frcm the underlying assumption ihat quality is static tl|at once quality is attained, it will stay foreveq,and there is nothing else to do. Once specifications are met, once customeE are
]HE ASIANMAMGER JULY/AUGUST 1992
not give yourself a secondchance to rcdo whatever you intend to do. What arc the costsard consequencesif everybody does their job o! task wrcng the ftst time in t'?ical nonquality companies? If you have 500 employees making mistakes everyday,you need at least another 500 - tlre same people or another batch - to correct and redo theseerrors, if they arecorectable at all. Therewill be a lot of repair, rework, rccyclin& rechecking,ret'?ing and redoing of operations that will compromisethe ultirnate Foduct qual ity, fray customerrelationsand waste management's time in endless neetings and problem-solvhg. The sad part is that the havoc is well hidden from view and analysis, since the errors are corrected the second time atound, and have bloated operating costs - materials, labor and overhead - without leaving a trace. If it was a manager who made the mistake, by making the wrong decision, the adverse consesatisfied,oncethe product passesinspection, quencesto the company are multiplied sevthen there is nothing elseto worry about. We ela-ltimes sinceits effectsmay extend several can freezethe statusquo and simply repeat years into the future. If evervbodv will do the rihral.ThesecommonqUatityparadigms iheir lobs rlght tne first time ei,ery time, then deter anv further irnprovement and iinovathey will contribute a large part in achieving tion. The point is not io satisfy customers,but the oualitv revolution. "Doini it right the first time" implies perto keep them satisfiedbetter than beforc, and better than othe6. Quality means continu- fection and the belief that an obiectivecan be ously delighting the customer.The goal is not achieved.Thereare two comrnon paradigms tobeNo. 1,but to stayNo. 1,a far No. 1 from or attitudes that mav block this ouest for the No.2. excellencein our jobs: 41, To err ie human: and, We now shift paradigms. Quality is rcdeo 2. There is alwaye a next time. fined and reduced to a simple two-step processfor evervbodv: 'To Enb Humn' o 1. Doiirg th; riSht things right the fi$t time; and, While this theme may have good literary o 2. Doing it better and better. value, it has no place in modem business.To err is human, but to forgive is what customers Rlght lhe FlBt Tlme won't do. Whenever we, as customeE, pay Everybody has a job to do, and by doing for any product or sereice,we naturally exthat job right the first time, every time, then pect it to be 100%defect-frce or 100%errorthe company reachesthe halfway point in the fr€e-not 9070.not 97o. but 1007o.Custorners quality ioumey. Doing it right the fi$t time demand perfection, and accordingly the "inrcquircs hemendous selfdiscipline: you do humanness" of sellersand producers to pro
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INSEARCH CFTHE /SIAN IUANAGER FORTHEYEAR 2O2O
What are the skills, knowledgeand attitdes that the Asian Manager will need to meet the challengesof the Year2O2O?How does he re$y himself, what doclshe have to know - not only - to to suNive, but to master his enviromr?P"int ricle the whlrlwind? Recqnized aN res@ted HRD practitionercwinners af the P&ple Develoryrcnt Milqement in the 799o and 7997 Manqement Awatdsshare their expertise and insights on how to maintain the region's comryUtlve edge throw human resourcedewlopment.
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vide this. But no customer would acceDt"humanness" as an excuse for bad quatity, or anything less than perfect. Zero dafect'may demand superhuman feats,but not inhuman efforts. The idea of nawlessnessis not something new nor unnatural. Perfection was the obsessionand expectation of skilled qaftsmen, Renaissanci painters and space missions. lt is just a hatter of adapting this obiectivein high-volume manufaciurin"gand service operations and making zero defect the duty and desir of atl employees. Wedo in factpracticeperfectionism in our personal lives especially when ow personal assetsareinvolved. Every time we encashour personal checks,receiveour salaries or payments in cash,or get our change,the tell;r or cashiercourts the money at leasttwice beforc ow very eyes,and yet we recount it after it s handedto us. If onlv we can have this same meticulousness when it comes to handling assetsof the company - showing concemai if they were our own. We also bring to the conpany a bad habit we acquircd in schoolthat runs counter to job '"Io passis excellence: the goal." For the vast maiority of employeesand managers,gefting a passing mark or 7590or C in school might have been the target, the obsession.Getting an above-average mark, say an 85%, was optional and not worth aim.ingfor unlessyou wanted to cover up failures in other subjects. Getting a 9% or 100%,the perfect mark, was a dream, a mafter of lucl and resewed only for the deviants and insomniacsin class. Anyway.wereasoned,with 757o,you gsl1hs samediploma d uring graduationas the one who got a lMEo gad,e-The problem starts when this attitude shows up after school- in our jobs, in _whichthe pasiing mark may be close to DiertectronNo company can survive and continue in business with a 75qa quakv level or 25To defect rate. In many ind:ustri-es,an 85%-90q, level would iust make you break even. In the semiconductor business, where quality is measuredin defets per million pais, 99%is a failure and the pasling mark is 99.9% and this hurdle rate is fast rising. Every percentagepoint away frcm I 0070qualitv means millio-nsof dolla rsiost in profis, unnecessary costs,and lost salesand customers.And the higher the volume of businessand the higher the value of the product, the hieher tf,ese loseswill be. Unl*s everybodv i-i the company castsaway his rhiiolboy disposition, colnplnfs pr.oSr.ess toward quality will lhe oe senou$v unDarrcdffre S Ps of QuafEy Ina ttTrical compant we canconveniently find threelevels of qualitv which I call the 3 Pi of quality: 1. perfeci; 2. pissable; and, 3. poor. A perfect product is one done ritht the first Eme;once it leavesthe production or assembly line, it is sold to the customerasis, without
THEASIANMANAGER JULY/AUGUSTlg92
the slightest modfication or adjustyou if it was your first mistake, that ment. Apoor prcduct is one that is of you can always rccover or n-ooouD indisputably bad quality - to be ihe lossesin the secona t v, pt aiiT I' scrapped,rejectedand unsold. There poses one to rnake first-tinie misis no recognition problem betwem takes- all the time - and get away the poo! and perfect prcducts. Thev with them, While it rnay be-truetlu't are lhe black ind white of oualirv. you may havea secondopportunity The problem is the vast grav jrea to try again, you have done darnage - the pissables which -u v"-u k" ,rp to the company its customersand to @7" t6 8OE"of production. Havinl yourrecord. Tirebestway to achieve been pncduced'incorrecttv the firsi job excellmce is to have the selftime, ihese are corrected the second discipline of not giving yourself a tim€ by rework or rcpair. Somecom- Kahen: secondchanceto corect your own panies zuphemistically refer to this clntlnuous mistakes, and to burn the bridges "finishing operation as or final lmpmwment behind you so there is no tumi.ng touches" to hide the problem. These back. retouched passablesare then sold to the cusIn our private lives, we have made importomers as perfectly "good " qua_litvmerchan- tant personal decisions with rneticulous care dise. Wonse,they ira! be even soli as is, with and prepantion becausethere is no second the hope that the customerswon't mind, chance,or correction would be very difficult notice, or discover the imperfection, Tolerat- or exorbitant. Cetting married. Moving to a ing passablesthrough management policies new house. Finding a iob. Gettinq a new car. createsthe ill usion that everv thins is fine and Choosing your drild;s school. i{e seldom male grave mistakes in thesedecisions simply b€causewe did not give ourselves a second chance. If we sinilarly do and decide things right the first time in our jobs, then quality excellence is not impossible to acrueve.
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"...ifsomefilngffi is donedght,therc musth a wayofdoingit better- maybe hste4 maybecheapel,
maybesimdet, maybe safeL"
,h&rn - Dolnglt BqtterArd Better Achieving fob excellmce in which everybody in the company does his work right the tirst time, every time is iust the first, though impodant, stage of the quality revolution. This ta-kestime and maybe even vears. It
takestis(ets csNK(c eieryhndythatt\ry
there is no qualty problem. A quatity company will aim to produce only perfed prcducts, elirnina te the passable category and rcclassify inccirrectly produced items as reiects.This change will be painfuJ, and the quality level *itl d-.opto its'.ealistically low level when perfect products are the only ones.classified is of good qualiry But sucha pohry is necessaryto expos€problems and solve them, so that the-companycan reach quality excellencein the reai sense1007"qiraliry Perfectionwill be the minirnum and only allowablelevelof quality.The same policies should be applied-to services pro!'rded to customersor to other employees, servlng asour intemal customers.In the end there should only be three levels of quality: 1. quality,2. quality; and,3. quality. 'Ther ls Ahvays a ]{ext Tltno' Another common attitude to droD is, 'There is always a next time." The beiief that the company or the customer will give you a second chance, that your boss will forgive
are not doing the rigtrt thing or tliat they ar! doing the ritht thin:gswroig. It takes some morc time to convince everybodv how to do things right. Once these tasks are accomplished, and everybody has achieved irb excellence,then the inevitable happens: nobody complains Your -about anything oi anyotte anyrol.orc.boss,your customers,and your stockholders seemto be exfrr€ssingsatisfaction with their silence.Everybody is thm lulled into cornplacmcy and beginsto be content with the status quo, the way things are and will be. Nobody wants to rcck the boat or male waves. The time is then ripe for the next stage of the qualitv revolution - iGr'z"ri. ' t<aizrr is ttre processof non-stop improvement of everything we do. Xaizi X i lapanese term consisting of two characteE "kai" meaning "change" and "ztn" neanng "good", thus t%ethir meaning "improvement-" KsiTln keeps werybody awake, dynamic and fired-up. Everybody becomes preocorpied with findins ht€r and much irtter wiys of doing thiigs - selling, producrn& conunurucating, managin& typin& sweepin& etc. Th€re is no acceptable best way Once a better way is developed or discov-
YAZAKI ercd,itisemployed or implemented and then the cycle repeats- a much better way is searchedfor It is a movement that starts but doesnot stop. It involves everybody from the CEO to the lowest rank-and-file employee.It is what rnakesquality compdnies,their employees and managers beam with life and achvity, and proiect their senseof mission and DurDosâ&#x201A;Ź to the outside world. Knizen separatesthem ftom mediocre and self-contented comDetitors. A Kaizei motto, iconoclastic as it seems but effective nevertheless,is: "If it works, it's obsolete." In other words, if something right is done right, there must be a way of doing it better- maybe faster,maybecheaper,maybe simplet maybe safer.The fact that something works doesnot meanit canbesafelyleft alone and perrnanendy incorporated into the systemsand proceduresmanual. Rememberthat a competitor dolng Knizenmay render any method you employ obsolete,uneconomical, ineffective or inadequate. What is important in kaizen is not the destination, for there is none,but the direction - forward and uphill. It is a racethat hasa starting line but no finish line; the aim is to be always aheadof othels or be in the lead pack and stay there always. Icizer is the driving force that enabledJapanese companies to increaseproductivity by orders of magnitude, and beat their competitors in cost competitiveness. Wfth f'^izen, there is never a dull moment in the comDanv for anybody - everybody is expectedto work aird think at the sametime all the time. All are expectedto be in a continuous stateof dissatisfaction with how they do their work - e.venwhen nobody's complaining. Ktizcn also dives the quality company to constantly develop newer and better products.Its marketing motto is "If a product sâ&#x201A;Źlls, it's time to change it for a better one." A quality company has a constant stream of new products and ideas to reDlaceits current lne ;hich mav have been iopied and improved by its competitors or rendered obsolete by the customer or stateof technology.ln consumer electronics, the product life cycle can be as short as six months, such that if a company does not hdve rGizex power in marketing and R&D, it will be driven out of businessbv its compehtors or customers.n Rone L Domlngo An engineer by training, Professor Domingo holds a Bachelorof Sciencedegree in Industrial Engineering (magnacum laude) from the University of the Philippines and a Master of Science degree in Management Engineering ftom the Nagoya Institute of Technology,Japan.ProfessorDomingo is the Sime Darby Professor of Manufacturing Management and teachesoperations managemenl business statistics, japanese rnanagement and inf ormation systems techrology at AM.
t0
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1992 MANAGERJULY/AUGUST THEASIAN
Replicating success...
SS:TheFtstStepTb\lrard World Class Management By Prof.Etsulmba DonManuelElizalde Professor of Business lVanagement apaneseindusFy has been very successfulin tranrforminq high.lv sophis"knbwlldge ticated and specializ-"ed into pEctical techniquesfor dai.ly use by ordinary people. One such example is statisticalquabty control, which was briginally a domain of industrial engineeis. Thanks to its tsanslation into the simDle terminology of The Qualiry Control Sroiy (eC Story), it is now widely used by workers without an engineeringbackground. The Japanes€ are alsogood at elevatinga simple practice into a science.We can seean examplein computer software technology,or "tuzzy'' technology. This is the assignmmt of numencalvaluesto conceptssuchas "soft," "wa|r "qu\et," etc. Human feelings and ," sensesare "translated"into numerals;o that a computer can understand "feelings" and "touches" previously considered neit to impossible foi machines to learn. The so-called 5-S pro$am devised by Japaneseindwtry, is jno[rer exampleof i simple practlce of human life translated into a.scientific apprcach to accomplishing speclnc oDEctlves.
Whatbths$ptwram? FS stands for five Japanesewords; Seiri, Seiton, Seiso,Seiketsuond Strrhuft". Various Engl.ishtranstations have bem prcpos€d, but I will offer a set of tmnslations]s follows: Seii Sortingout Seiton SystematicArrargement Seiso Spic and Span Seit"tfl Standardzinq Sftitslke SelfDsciptine I can almost hear some of you say, "Ah, this is something for the lowly work6rs and not for me." Or, someof you may say,"Oh, we have that in our factorjr We have'designed beautifuJ tandscapedg;ounds pattemed after aJapaneseqard-moi our factilrv premrses. The grbunds Jre always kept cleair lnd spotless.;To thoseI would hav; to saythat tlie 5S program is neither for the lowly workers nor for a "speciall' areaof the comliany. It is a
work for ' contributiontoeffective,productiie everyone,everywhere. Let us reflecton our daily lives.Do you
IHEASIANMANAGER JULY/AUGUST19S2
office or factory there is a costassociatedwith it. The time spent looking for a pieceof in{ormahon is costingyou and vour company. The secondi.riportant pfinosophy is tliat i t is necessary to attack the root cause of a problem,not iust the symptoms.Once you start the 5-Sprogram, you will feel the urge to keep the workplacecleanand neat because the time and effort to clean it is going to increaseif you don't take careof it regulirly. The third philosophy calls for the partidpation of everyone.lfyou leavethe cleaning to a specialist,a ianitor for erample, you will miss the importa nt task of checking the process.Or, if you make erceptions for"top management or someone special, the rules and regulations you will sa fbr otherswill soonbe ignored.It is important, thercforc, thateveryone's participation is solicited for the tS program. The fourth underlying philosophy is to have to spend time looking for jigs and tools? ackrowledge that the h;;n beins u nor Have you encountercdstock outs for very infatlible. Piople for.getthings. Peopiesomeimportan t spareparts?Have you experiencei times imprcvise. People often neglect rules rEcnme breakclownswhen you go to use and regulahons. A cdrtain structire, therethem? fore, is needed to maintain a !5 program. Or for office workers and managers, an- And constantremindersandtraininq aIe rmothers€tof questionsapplv How much time Dortant. do you spendlocatingi pieceof inlormation Let us now take a look at each compoor an important document? Have you expe"- nentofthe 5-5 program. rienced lc,singa file becausesomdne tooi<it and did not retum it? Or, becauseyou keep sone files in your desk drawel, has a simpie inquiry from a customer been kept waiting--I-.E- ' ---r- tory, therc arc a number of for your retum from an out-of-towr trip? things you seldom use that lie around taking All these occurencestranslate into ineffi- up space.On the other hand,thereare some ciency and sacrifice customer satisfaction. files and tools you use very ofterl but which And asyou are well awarc, customersatisfac- are shared with some other members of the tion is the ultimate goal of world<lass man- worKorce, causingdelaysbecauseof waiting agement.The goal of the 5-S program l5 ro time or trips you have to take to fetch them. make the work area the mosf efficient and Sein means sorting things into differcnt catprcductive possibleto ensule ostomer satis- egories, from most fiequentlv used rrems racuon. thich you want to ke€p close/to your work areato le6sfrequently used items which you The 5S Phllosophy may want to keep in a distant storagearea, Befor€ going into the implementation of atrd fina Uy thoseyou wil never use,ihich of the !S prograri, it is always best to establish course,you want to disposeof. tt is surprising 'by a co_mmonunderstanding of the philosophy how much space you can produce yusi ot the program. undertaking the San prccess. As in most other programs developed in Japan,there are a nurnbei of underlpig phi- EEt- +.F Sonor- Slstomatlc losophies inherent in the 5-S programi The fust is that prcductivitv comes-from the elimination oi waste.Whitever you do in the the 5-S prcgram is the systematii arrange-
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ment of things: office supplies, iigs and tools, documents, sparc parts, books, etc. for the most efficient and effective retrieval. This rcquLes a thorcugh analysisof cuirent usage - how the things you want to organize are used and who usesthem. Depending on the usagepattern, a method of arrangement can be devised for the most effective storageand retrieval. Thke for example, a first aid medical box. You have most of the items you will require in an emergency in that box. A similar "emergenq/' kit can be prepared for other than medical purposes. For emergencyrepair following the brcakdown of a machine, a set of tools canbe arranged near equipment so that you donlt have to look for any specific tool elsewherewhen the need arises. Think of your own office. What arrange ment is best suited for your informahon retrieval system? Which sets of information will you always need together?Can you retrieve them together?The list can go on and on.
with them h desiSning a pieceof equipment for easy cleaning and maintenance. At someeateriesyou seewaiterscleaning the tables and dropping the leftovers on the floor Someonewill dean the floor later,but in the meantime, the floor gets sticky and dangerous. Cleaning becomes more time consuming and expensive. This is typical inefficiency. Regular cleaning can eliminate several steps. The ultimate goal of the Serso processis to eliminate (or at least minimize) ihe need to clean the work area through the development of innovative ideas.I wonder iI anvone can come up with an air suction deviie to elirninate smoke from urder the n<rse of a smoker?
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I F lrl\ meantmaintaininea clean environment all the time. This requires some standardization of procedure. Without standardization, tlie situation will derenorate right back to old habits. Once you sort things out, systematicauy arranging and sebo- sdc andsPan cleaning an area,it is necessaryto establisha -\* 13 The next thing is clean- standard for everyone to follow to maintain ;ft ll5i r fl J rlr ing.Cleaningherenotonly cleanliness.Again" it is important to have an means cleaning per se but also indudes the easy-to-follow standard and to develop a analvsis of the causeof dirt build-up. When shucture to support it. A few examples will clarifv what this the;@chine is dhiy with gease and leaking water, vou cannot seewhere the dirt is com- means. Most of us do follow some sort of a ing froh. Once you take time to dean the standard. For example, how often do you machine, you will want to keep it dirt-free. change your oil and oil filter on your car? The harder the deaning procest the more When do you fill up with gas? Those are importance you should placeon maintaining standardsyou follow without thinkin8 about its cleanliness.And it is always better to con- them. But there are some indicators which tain the dirt before it spreads into an open you can useto trigger your activity, such asa low gasoline hdicator lamp or a standard atea. In Japanesbindushy today, very few ma- cnecKevery morung. Similar efforts should be made to mainchines give off sparks over the factory floor The sparks are contained with some simple tain the work area - to keep it dean and device. "It is alrnost a shamenow if you show oreanized for efficient work. SuchstandardizaEon is achieved usinq a number of "visual a (training) filrn showhg sparks flying a[ ovel,thoughitwasonlyafewyearcagowhen conbol" systems. In most Japanesefactories,there are clear it was considereda sign of prosperiry" said a marks on the floor indicatine the number of Japaresefactory manager rccently. Sincemaintainine deanliness in the work boxesof spareparts to be kept in that location. area is part of the issignment, devisrng an If rnore boxesare lying on the floor outside of easy-tcclear procedure becomes very im- the designatedarea,it is immediately noticed portant. People will not clean if they thinl< it by the managers as a deviation ftom t]le is not important. Morcover, even if they ac- standard. Another standardization examDlein a facknowledge its importance, they do not clean well. The reasonfor not cleaning properly is tory in the Philippines. I would tike to share often because it is difficult to do so. You with youisa workerdesigned work ca.lendar cannotleach a spot for thorough deanin& for indicating the date to changea setof consumable items. If vou establisha cvclewith which examDte. Much modern machinery and equipment you need to changea set of parts, a calendar indicathg the next date for change can be used in Iapanese industry is desiSned with this in mind. For example, unnecessarycov- placed on the machine.It is quickly noticed if ers have been removed for easy cleaning. the changeis due. This is a strength of the Japanesemanufactur9t tsuka - Solt ing system; many companies have the inJ- jz J.:3 house design and development capability to incorporate their cleaning needs. Or they have machine shops which will cooperate ard, the needfor training and educatingevery
member of the orsanization must continue. It is necessaryto upgrade the skills and techniques of all the membersof the worKorce so thai improvement and higher Foductivity canbe constantly sought after.Sensitizing the workforce on the importdnce of maintaining standards is critical. At the sametime, in the Asian context top and middle manaeement - morc than the lower echelon of the oreanization - should be constantlv reminded of the imDortance of selfdiscipline. The elite managerial classoften places itself outside or above mles and regulations. The social system does not discourage this, either. [n fact, this is reinJorced by the social system (The rich can get away withmanythingsbecauseoftheir:moneyand power, for example). lf the social system is such,you need to take exha carein disciplining yourselves and to s€t a good example, before you expect your subordinates to follow standards.And if you camot follow the standards you set, it will be difficult to persuade your subordinates to follow them. What b sclentlic about S? You may wonder why sorting out deanin& etc.canbescientific.Is it a specialformula? Or, is it becausebehavioralscientistsinvented It is scimtific becausethe effect is rneasurable. In fact, as in the caseof quality control activities, the program should be designedto make its effect measurable. It is, thercfor€, imDortant for vou to document the orrent staiusof your *ork and work areabeforeyou startthe pogram. This is alsoto ruke sruethat any changesyou make will not be a causeof deterioration. It is again scientific becauseit can be replicated with a similar degree of success.The examples of successful implementation of the 5--Sprogram and its con-tribution to pI(> ductivity abound. lmplementatlon Howweq, the gogram should not be takql lightly,asrnanycompanieshavenot be€nablebo practiceF$ wm though they want to. Initial sweepingand deaningcanbeacomplishedjust about an)'wh€re.But continuing implsn€ltationandupgndingof theprwrammaynotbeas Top mhnagemqfs udestandin& commitm€ntandpGitive involv€rn€ntin tl|eprqram is requted. Wthout th€se,thetnre sci€ntificnahre of [he prognm will not be rcalized.And ad hoc deaningand det€riorationwill altonate making you lessproductiveand lesscompetitive.I Et3u lnaba Cunsdythelnstitute'sDonManuelElizalde frrcfessorof BusinessManagernent,tlof€ssor Inaba teachesJapanesemanagem€ntpa'actic€s and hascarducEd €rdsrsivercsqudl on crc6. cultural rnanagernentin Asian ilint-v€nnr€s.
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12
,I992 THEASIANfuIAMGER JULY/AUGUST
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Looking north...
TnrcManagement he classicalWestemmanagementphilosophy tells us that in every business decision, there is always an optimum solution that lies betweentwo extremes.It is just a matter of finding where this happy middle lies scientifically or by trial and enor Thus to get an '?cceptable" ROI, one should sell at the "right" price, produce at "reasonable" cost and quality levelg carry a "safe" amount of inventory and deliver the goods to the customer at some "satisfactory" time. The Japanesediscovered early in the game that it was not only difficult to determine and implâ&#x201A;Źment the optimum solution; it was making them uncompetitive, inflexible, and unprofitable. In short, it didn't work. So they decided to reinvent businessby casting away all the time-honored rules taught by their Western mentors. They changed the game from one of OPTIMIZATION to one of MINIMZANON. In brief, the ultimate, though theoretical,winner would be tle company that could sell at an infinitesimalprice (short of giving it away for free),with zero cost zerodefects,zero inventory, and zerolead time. Therewardi? Boundlessprofis, infinite sales, overflowing cash and 100% market share forever. Maior manufacturing companies in Japan, ranging from automobiles to electric products, have enjoyed world-wide success by employing this bold business concept which I call Zero Management (ZM). Though none has actually achieved zero levels, the zero targets have effectively guided their decision-making and strategy development. Moieover, the fixed zero targets are clearer ob-
THEASIANMANAGER JULY/AUGUST1992
vague, often ariectives than the bitrarily set "optimum" levels that change with management andrnanagement style.It is easier to hit a fixed than a movins target. The zero is like "north';on a compass;you rnay not reach the North Pole,but the compasswill tell you iJyou'relostor movingin the risht direction. Th; important zero targets of
"We do in hc,t practicepeftctionism in our pelsoml lives especiallywhenoul
pers{naldtsetsarc involved.,. lf orly wecanhavetfis samemeticulousness whenit comesto handllng.assots of the - showing company concemas ff theywercourown.' world classcompanies are: ZEROPRICE- generally,in the long run, the lower the price the doser vou are to the customer (and his tocket), the more competitive you become, the larger your market share becomesand the longer you can hold on to it. ZEROCOST- the lower the cost,the lower vou can price and get the benefitsabove;frofits are increased with constant prices -price and maintained during wals, thus ensuring the firm's surviva| lower cost enablesthe firm to lower prices when entering new markets or increasing market share. ZERODEFECTS- the fewer the defects, the more loyal and more repeat ostomers there arc;
the lower the cost,the more competitive your prcducts and servlces Decome. ZERO INVE TORY - the lower the level of invmtory the lower the costs, the higher the qualitv, the lesserthe risk ofobsolescenie, and the easier to manage the production flow. ZEROLOTSIZE-thesmaller the lot size, the lower the invmtory, the easier to manage production flow and oualitv-Ttui
zeno setlp
- the
shorter the set-uD time. the smaller the lot sizea;d the lower the inventory of any product, the more varietv of products can be made, the easiei and more flexible prcduction schedulins will be, the lesser the risk of ob-solescmce due to over-prcduction. ZERO LEAD TIME _ thE shorter the lead time, the shorter the order time and responsetime to customeE' needsand changes in these needs, the more timelv delivery performance w l b6, thus beating the competition and the lower the inventory levels will be. ZERO DOWIITIME - the shorter the downtime, the lower the inventory to cover the risk the shorter the lead time and the more reliable the defivery rhedules will be. I
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The!2o/osolution...
TheTbpic 0fAuanry inBusiness School Education andResearch By Dr. Robert S. Kaplan DickensonProfessorof Accounting GraduateSchoolof Business Administration, HarvardUniversity (This article has beenadapted from a speech oigtnally presmtedat theannual meetingot'the AmericanAssemblyof CollegiateSchools of Business, 22April, 1992,i n St. Lnu is,M issou ri - Eds.) o begrn the researchon my title topic, I asked a business analyst at Harvard Business School's Baker Library to search for literafure on the teaching of
qualifyrin in business business schools. schools.She Shesent sent back backaa few undistinguished papers from a lournal for practitioners,with the corrunentthat shewas surprisedat how little material hasbeenpublished on the subject.This was thefirst sign that my task was not going to be easy. Next, I went to ]ack Evans./ack is a former dean of the University of North Carolina,s businessschool and a past president of the American Assembly of Collegiate Schoolsof Business,and he currently servesas an examiner for the Malcolm BaldridgeNational Quality ,{war{. Fortunately, Jack had recently performed a survey on the topic. He had re. ceived responsesfrom 89 accreditedor nearaccreditedbusinessschools.Of these,60%had Todgratg to heary coverageof quality, and 40Vahad light to no coverage.Quality was being presentedn75% of the undergraduate qrograms and 65Voof the graduateprograms. One's view of thesefigures depends on how essentia-l onebelievesthe teachingof quality to be. From a total quality managehent (TQM) viewpoint, any school not teaching quality nuuugement could be considered to have a defect,and defectratesof 407oarewell above acceptablelevels. When]ack looked deepeq,the performance seemedevenlessimpressive.Most of the coverageof quality focused on narrow technical issuesand included topics suchasacceptance sampling,which areconsideredby businesses practicing TQM to be either incorrector of low priority. There was virtually no coverageof how TQM changesthe way organizationsare managd. TeachingQuality in BusinessSchools Ithendecidedto do alittlecasestudyonthe subiect.I contacted schools that had been THEASIANMANAGER JULY/AUGUST 1992
rankedamongthe leadng2}, askingthem to send me session-by-session outlines of their introductory operationsmanagementcourses and of any elective coursesin which quality played a prominent role. All but one school responded. I choseto survey the top20 schoolsbecause myown researchofthepastdecadehasfocused on what is done by leading, innovative organizations,not by those that are averageor randomly selected.The schoolsI suweyed are generally rggarded as having outstanding faculty, studentsand resources.They attempi to be the most innovative in their researih programs, and they pride themselveson disseminating researchinto their curricula rapidly. Seventy percent of these institutions are private, havesubstantialendowments,charge tuition of more than $15,000per yea4,earn substantialrevenuesfromexecutiveprograrns, enjoy generous Fving from alumni, and in general have significant amounts of discretionary resources.The faculty usually have light teaching loads, leaving ihem considerabletime forresearchand educationalirurova-
tion. Even the public institutions among this group are generally well fundedand supportedand haveexcellent faculty.In aggregate,the20schools graduate'l1%o to 15Voof all MBAs annually. Courceson Quallty at Top 20 Schools Of the 19schoolsthat respondedto my survey/ one has no introductory operations maragement course, and severalother schoolsdo not require all students to take this course.The following surunary thus overstatesthe exposureof MBA students to quality concepts. Fifteen of the schoolshad three or fewer sessionson qualiW in their introductory operations management course.Thelengthof thecourseranged from l3to28sessions.Onavera ge,fZn of the avai-lableclasstime was spenton quality. Thus, with apologies to Sherlock Holmes, we cln describe these business schools as having adopted the "727osolution" to quality. Of the remaining three schools, I Harvard devoted six of 42 sessionsto qualiry (this is still only 15%,but ifs on a base that is 50% to TWVolarger than those of the other schools). r Virginia used five of 20 sessionsto cover qualify issues. rMostimpressivewasChicago'scourse, in whichabout35%of coursetime-threetofour weeksof a ten-weekcourse-was devoted to quality. Beyondtheinhoductory courses,i2 schools had at leastone electivefocrrsingon quality management(Figure1).Becausethesewere,of course,electivecourses,we dor(t know what percentageof students in each school were taking them. Only Chicagohad multiple elective offeringson the topig withfouradvanced courses/severalof which had lalge enrolments. The record for both required and elective courses will certainly get better. Several schools,such as tVharion, are making major restruchrringsof their offerings.Northwestern hasembarkedon a collaborativearrangement with Motorola. And the one school that reported not having an introductory operations managementcoursehasnow designedsucha 17
t eading courseand is offering 1t n 1991'-92. businessschoolsarefinally beginning to adapt theirprogramstoa trend thatwasaPParentto leading businesses10 or more yearsago. PrcgFms at Other Schools Severalschoolsnot typically ranked in the top 20 have innovative programs in quality management.For example,the University of Tennesseedeveloped a quality management teaching program that included the production of an extensivebook. The school mobilized a cross-functionalfaculty teamto suPPort its activeteachingprogramswith leadingcompanies. Fordham University has embedded TQM throughout its MBAcurriculum and has even begun to use TQM concePtsto design course offerings. Portland State's business school is working with the university president to apply TQM principles throughout the university. The above schools are notable by their uniqueness.If we assumethat the population of businessschoolsis somewhat in excessof 600, it is probably true that as of early 1997, fewerthan5%-and perhapsonly7%or2%had tmly beenaffectedby theTQM revolution that hasbeencreatingradical changein many US and worldwide businesses. TWoof the responsesI receivedto my sur'nve vey were notable.One respondentwrote, used to have an elective on quality management, but the faculty member who taught it left." Can one imagine this everbeing the case for investments,or corporatefinanceor intermediate accounting? Another respondent, a highly resPectd researcherand the editor of a major operations numagementjoumaf described the teaching '"VVedo not of quality at his school this way: spend a lot of time on the subject, and it is spreadout over the curriculum." BusinessSchool Researchon Quality Thereis somebad news to rePort,and that is that I havejust reported the good news.The story gets worse as we tum to academicresearchon quality. My review of the courses reveald that what is taught in the quality segmentis not material that hasemergedfrom academicresearch.tnstead,the classesgenerally useone or more Harvard BusinessSchool cases(someof them quite old), severalarticles from the Harvard BusinessReview articles from business and professional magazines, and material from quality Practitioners not associatedwith businessschools. Again at Baker Library I made a searchof recent operations managementjoumals. The results, summarized in Figure 2, are remarkable:35journalissues,2TSpaperspublishedand none on quality. A of artides published from 1980to '1989survey Manngunmt in the lournal of Operations showed that only four papers on quality had beenpublished, all before 1985.A survey arti18
Rniew - not the typical journal outlet for (quality forManulacturability Camegie-Mellon Design reprerolein6of/ academicresearch had the greatest wasgiven aprominent It was followed by with six articles. sentation" sessions) three-hour the lnternationallournal of ProductionResearch g Transfocusing 0n and lhe Instituteot'IndustrinlEngineerin coursss 4-5substantial Ghicago quality, including: actions,with four each. Basis of QC(Harry Statistical If business school professorsweren't Roberts) quality,what werethey writing about studying 25students 1section, 1989: 128students in operationsmanagement?Inventory control 1990: 3 sections, (enrolment un- wasthesubjectof257oof thepublishedartides, 4 sections 1991: 150) over known, butlikely schedulingthe subjectof76Vo,and aggregate planning the subjectof 10%. Productivily, case U.S. andJapanese And what research methods were they (Zangwill), 40 3 sections, studies Modeling and simulation was used by using? students each "concep 69Voof atthors, and theoreticaland in Business Policy: fial" by74Va. Topics Special Innovation, andCompeti- I wondered whether the lack of attention to Oualily, (Roberts cov- quality in academicjournals could be attribandZangwill) tiveness Baldridge eredbenchmarking, utable to the prejudicesof journal editors and development, Aw?rd, newproduct refereesagainst researchon qualify. To deterandservice excellence mine whether people were actually w.iting experts and presenting papers on quality, I reviewed byoutside Seveml courses (onBaldridge Award andDeming the two 1990 meetings of the TIMS/ORSA principles management) ofbusines association(the primary professional affilia(Pe- tion of people in the operationsfiranagement Management 1elective, Quality areaof businessschools). terKolesar) TheMaylgg0meetinghad33paralleltracks Production Management 1elective, with Cornell atwhichresearchpaPerswerepresented, (of28sessions, onquality) eachtrack containing 10sessions.Threeto five 8were paperswere to bepresentedat eachof quality con- research 1eleciive onstatistical Not one of the tracks or sesthe 330 sessions. nnntrol;some exposure toservice sionswas devoted to papers on quality. agement andmarketing Perhaps,I thought, people who had done ofservicts researchon quality were simply storing their Managing lorQuality papersup for the next conference.This theory 1elective, llorthGarclina the theme (new), wilh looked promising when I saw that"Productivdeveloped 1 elective tlodhwestern was meeting 1990 for the October 110 Motorola, onTOM:2 sections, rty and Global Competition." At that conferstudenls ence, papers were presented in 43 different proles- parallel tracks. With 11 sessionsper track of1elective, taught byadjunct sor(Deming) iered over threedays,there were 473different to five pa(1 quality 7 (Whanon) 1course management sessionsavailable,eachwith three on Penn pers. were statistical); ex0f27sessi0ns inanintetdiscipli- Oneof the 43trackswas devoted to quality, coverage tensive ag n d yielding 11sessionson the subject.In addition, n a r yc o u r s eM, a r k e t i n "ProcessControl Management Operations two sessionsinanothertrack, "Statistical ProcessConand Reliability'' and Excellence 0rganization and0uality of Univenity on quality. In sessions identified as were trol," (Bob Be*Bley Cole) Califomia, nine of these 13 quality sessions,the papers had been written by mathematicians, engi1 elective, OualityManagementneers,or statisticiansonly, with none by busiVirginia (RoMrt Landel) nessschoolProfessors. One of the remaining four sessionswas a (Art Management 1elective, Ouality Yale "Quality in Curricula: panel discussion on Swersey) Responseto BusinessNeeds." The panel conFigure 1. sisted entirely of business and government people asking for graduates knowledgeable cle in another iournal reviewed all articles aUoutfQU. t lo academicswereon the Panel. publishedduringthelg80sinsevenoperations The two special sessionson Processcontrol managementand operationsresearchioumals containedpaperson statisticalissuesonly.TWo "management" joumals (Haruard papers,one in eachsession,were authored by and four BusinessReuiew,SloanManagementReaieu), businessschoolprofessors;both Paperswere Californin Mamgunent Rniew, and Strategic about control charts.ln the remaining session, ManagemmtlournaD.A the362 articlespub- on quality measurement,two of thefourpapers 18(fewer werb presentedby businessschoolprofessors, lishedduringthe10-yearperiod,only than 5%)were on quality.TheHaruardBusinus with the papers again focusing on ncurow 1992 THEASIANMANAGER JULY/AUGUST
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statistical or mathematical models. That was his companv Resutbol a Searcnbr Ailicleson Oualityin tookTQM in a systemthe evidence. Journals opemtiorsillanagemenl Of the more than 1,500possiblepapers on atic fashion and made it ilumber llumber productivity and global competition,far fewer a condition of emplovllumber ol ailicles ofArlicles Art tha|rllVa were produced by business school m e n t . " Yaar of buos published onOuali$ Putlicalion researchon quality, and theseconcentratedon Schneiderman, vice 12 95 ManagementScience 19S mathematicaland statisticalissuesrather than president in charge of on organizational, managerial or behavioral quality at Analog, has 1990 110 6 0perations ffesâ&#x201A;Źarch concerrrs.Apparently, according to business published more impor7 3 7 198S90 Journal of0palions school professors quality is not part of the tant work on quality Management agendafor productivity and global competi- than all but a handful of , 10 36 Journal olManutucturing1988-90 tiveness. I cotrld now understand the com- businessschoolprofes-' and0p8rations "the sors. I wrote a caseon ment I had read in one article that 278 Manaqement 35 academic community is behind the federal the quality manageFigurâ&#x201A;Ź2. mentand measurement government in the application of TQM." Alternative hypothesesare that we know system that Schneidall there is to know about quality, or that it erman helped install atAnalog,3and he comes revolution in management. Their teaching might be a fad. How do we know that quality to my class each time I teach the case. He prograrns are adjusting to contemporary deis an important enough subject to warrant recentlytold me,'"Wdrejustbegiruringto study velopmentswith lagsthat arelong (10yearsor taking up the valuable researchtime of busi- the Japanesehoshin ran process,a quality- more) and variable, and there is no evidence planning processthat pervadesthe entire or- that an adiustment has vet been made in facnessschoolProfessors? ganization.Relativetothecompanieslobserve ulty reseaichprograms.Is this an isolated case?Probably not. It is inJapan,I feel asthough I'm in kindergarten.I How Businessleadep View Quality likelv that a similar studv on time-basedcom|ohnPeppeapresidentofProcterandGampetition, technology management, product ble said this in 190: 'Total quality has createdthe most lasting and processdevelopment, and the impact of information technology on business would change in our culture and our approach to yield similar findings. Leading businesspracbusinessthat I've seenin 27 yearswith Procter tice in these fields is well ahead of current and Gamble...Quality is seenby 98Voof ow academicresearchand teaching. peopleasabsolutelyessentialto our success...l Unfortunately, corrunon responsesto the During thepast threeyears,Procterand Gamsituationareadenialoftheproblemanddefenble's...retum on equityincreasedby 50%-to - and profits have doubled. There are sive behavior toward chargesthat a problem 21.Vo developments. In exists.Academicswho attended the Summer many reasonsfor theseresults,but I would list business 190 Xerox Quality Forum offered the followtotal quality managementas among the three hct, business schtnls ing explanationsfor thesereactions:a most important factors." r There is no hard evidence that TQM missedthe. ]ohnAkers completely changedthe struc- completely works. transforming tureof IBMduringthelate 1980s, qualityrevolutionin I Therehasbeennoclearmessage tofaculit into a market- and customerdriven organities that TQM is a useful researcharea. zation.2His statedgoal was to placeIBM at the management." r It is difficult to get academicsinterested forefront of quality and customerservice.New h new issuesand methods, sincethey genermeasurement systems were introduced to ally resistchange. emphasizequality at all levels, including reI Most professorsare functional specialsearch laboratories. The company adopted ists, not generalists. Motorola'ssix "sigmaqualityobjectives" (with I Tenureandthepromotionprocessthwart a 3.4part per million defectrate) for any proc- sometimesfeelwe barelyknow how to walk or the implementation of TQM in business essor activity. At the 1990annual meeting for crawl." How many of our businessschool profes- schools,becausethesesystemspromote funcIBM top management,Akers stated,'Marketdrivenqualitybeginswitheducationandends sors are studyrng the hoshin ran planning tional silosand individual versusteamefforts. r TQM is notviewed asa premier research with education.It is everyone'sjob to teachit process or integrating it into their teaching programs?How many have even heard of it? topicin theUnitedStates,sothetenuresystem and coachit incessantly." will be a barrier to academicresearchin this I wonder whether any of thesecompanies area. would tell me that they used to teachquality, Bringing BusinessSchools in Line with I Academianeedsdetailedinformationon but that the person who taught it has left the Business This casestudy on the subjectof quality in companies'experienceswith TQM and on the company and a replacementhas not yet been businessschooleducation and researchis not results they have obtained. found. Respondingto the lastpoint, industry rep David Kearns, retired CEO of Xerox and a pretty picture. The questionsarethese:How currently a deputy secretaryat the US Depart- shou-ldwe write the teachingnotefor the case? resentativessaidthat while businessesarewillment of Education, stated that "to be com- \,l/hat strategy or plan of action might we ing to share their data, there has been only a minimal responsefrom the academiccommupetitive as a natiorL we must do two things: formulate? We should start with a diagnosis. Does a nity. improve quality and improve education." It's How can we follow a TQM approach to interestingto note thatKeams did not saythat problem exist? Businessschools allege that their enormous commitment to research is understanding the resistanceof business tobe competitive,we must improve ducation and inventory control, or aggregateplanning necessaryin order for them to keep abreastor schoolfaculty to important contemporary deaheadof businessdevelopments.In fact,busi- velopments in business?Can we do a rootor scheduling. that ness schools complete$ missed the quality causeanalysisof whybusiness schoolresearch t{aystata,CEOofAnalogDevices,said
"Business allege schools thd theirenormous is commitment to research in orderforthem necessary to keepabreastor aheadof
n
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hasbeenconsistentlymissingemeqginghends, will be rewarded by promotion committees. and why it takes more than a decadeto get We must seriously question and examine the rhetoric that businessschool researchof the relevant materialsinto our curricula? past 25 years has made important contribuis much of that explanation possible One our researchoutput is non-value'added.sA tions to our understanding of business. Am I optimistic that thesefundamentaland major problem likely exists today in the re' searchandeducationalinnovationactivitiesof difficult ihanges will be made?Frankly,no. So businessschools.In somefields,Perhapsmany, fat mostbusiness schoolshave suffered little 20 to 25 years of academic business school painasa resultof laggingbehind in contemporesearchhaveyielded little to no fundamental rary managementtechnology.However,there knowledge relevant to the management of aredisfurbing trends on the horizon that prescontemporary or future business organiza- agefuturedfficulties.Forexample,inthemidtions. Approachesthat fail to addressthe root 1980s Westinghouse ceased sending its causesfor this will lead to patchwork, not executivesto businessschool programs that did not prominently feature quality nvmagefundamental, solutions. Tom Murrin is the new dean of Duquesne ment concepts.Other major corPorations,such Universib/s businessschool. In 1981,when I as General Electricand Motorola, have opted was deanat Carnegie-Mellonand Tomwas an to educate their executivesinternally rather executive vice president at Westinghouse,I than send them to programs mn by business askedhimtoiointheschoollsbusinessadvisory schools.One can be sure that the internal excouncil. He agreed,but under one condition: ecutive education Programs at GE and Motorola contain materials on quality, rydethat I talk with him about the need forAmerican businessesand business schools to get time management and technology manage' theiract togetheron quality. Tomwas responsibleforstartingme onthe researchandteaching activitiesthat I havepursued for thepast 10 years. Thosefamiliar withTomknow thathe is a andthe rest of the wodd particularly eloquent and Persuasivespeaker on this subject,but there are Tom Murrins in havemobilized theirentite businessesnear every businessschool. They arewaiting for faculty to leavetheL officesand work with them to understand and document TQM in organizations and to develop new instructional materialsforbusinessschoolstudents. While businesses throughout this country/and the rest of the world have mobilized their entire organizations on quality, businessschoolprofessorsarestill wondering whether qualily improvement createsvalue to organizations,whether researchon quality is legitimateforthemtodoandwhethertheywill get recognition and be rewarded for performing such research. Solving this problem will not be easy.Understanding the impact of TQM on organizat i o n s r e q u i r e s s k i l l s f a r b e y o n d t h e ment that aremuch more iontemporary than mathematicalandstatisticalskillswecurrently those in typical MBA curricula or school-run use to selectfaculty to teachoperationsman- executiveducation programs. At some point, companies with excellent agement.For decades,faculty have been recmited, promoted and rewarded for narrow internal education programs may realize that technicalskills. Weshould not expectthat they they can teach not only their own managers/ will suddenly becomemobilized to perform but also studentswho want to acquireknowlresearchand instructionthat alsorequtes skills edgeandskillsmorerelevantto contemporary in organizational behavior, sociology, meas- and future businessesthan those offered by urement, leadership and motivation. These university-based business schools. Because skills arenot part of the repertoireof more than these private teaching organizations would 95Voof faculty members in operations man- not have to grant instructors releasetime to agementgroups.Justasin business,the study perform researchuruelatedto educationaland of quality in businessschoolswill require indi- teachingprograms,they would be ableto offer viduals iUtn mulUdisciplinary skills. Schools more effective instruction, at a much lower must thus break the tight disciplinary con- cost. And, of course,ascompaniesfind that they straints of their faculties.Changeswill be re' quired in journals and in their editors and must educate their own employeesin TQM rbferees,in doctoral programsand in the kinds concepts,they may balk at paymg the pre of researchand educational irurovation that mium for MBA graduates.They will find it
"Whilebusinesses thiscountry througlrout
onquality, organizations schoolptobssots business whether arestillwondedng qualityimprcvement cleatesvalueto organizations."
2,
bothmoreeffectiveandmoreefficienttochoose the "best and brightesf' students who have graduated with solid undeqgraduatedegrees (engineering, science, and liberal arts, but probably not business)and to provide them with the relevant managerial training. USbusinessschoolsshould alsobe wary of the growth of European schools.Recentartides and editorials in The Economist have shown how relatively new businessschoolsin Europe are targeting Programs for managers of multinational and global organizations.The European business schools, which in some casesare free-standing,independent organizations, are also not constrained by faculty wed to outdated researchagendasand methods. Not only will the growth of theseinstitutionsreducethedemandby Europeanstudents for American businesseducation,but the European schoolsmay also athact US students who seekan education more athrned to contemporary times. Reinforcing these trends are continuing radical changes in information technology, telecommunications, and video, which will enableinstructional materials to be delivered to students through a much wider array of enterprises. Perhapsonly asbusinessschoolslosemarket share to company-sponsoredMBA and executive programs, to European business schools,and to new organizations with new information technologieswill the pain of irrelevancebecomesufficiently greatfor change to occur.But by the time the pain reachesthis level, businessschools- like other declining USindustries that have adjustedtoo slowly to environmentaf technologicaland competitive changes- will find it difficult to survive at the samescaleof industry shareand margins. The need and the opporhrnities are great. Schoolsthat adapt successfullyto thedemands of contemporaryand future global businesses will be able to enjoy a substantialcompetitive advantage over schools that remain locked into yesterday's research and teaching agenda.I themagazine ofSelections, Repintedwith permission ManngemefiAdmissionCouncil,Auof theGraduate tumn1991. Fatnotes 1. Perhapsthe problem is that businessschool professors are talking to the other 2 percent of people.Ivi'ill refrain from speculatingthatbusiness school graduates are the other 2 percent of the PeoPre. 'The Transformation of IBM," HBS Case 2. See #9-397-073. HBS 3. "AnalogDevices:TheHalf-LifeSystem," Case#9-190{61. 4. Note that thesefaculty self-selectedto attend a threedayforumonqualityand soareboundtobe more sympathetic on the subject than are average businessschool faculty. 5. This is the polite word the fapanese use to describewaste in production processes.
1992 THEASIANMANAGER JULY/AUGUST
I
Therushto change...
Developments inBusiness andBusiness Education TheExperience of theAsianInstitute of Management
By Prof. HoracioM. Borromeo,Jr. AssociateDeanfor EnterpriseManagement DegreePrograms ast yea4,theAmericanAssembly of Collegiate Schools of Business (AACSB) agreed to revamp its accreditation standards. This landmark event was an ad-
These new directions and leamingmodes would seem to directly address the key deficiencies that most sfudies and critics have identified. Other schools are not far behind Wharton. Among these are the University of Chicago, Case Western Reserve, Columbia, University of Denveri the Weatherhead School of Management and the University of Virginia's Darden School.
mission that, as Fortunemagazine recently guggestedand many otherslong suspected, (American) "business education ftas) becomelargelyirrelevantto businesspractice.', The key "real world" trends that ultimately brought about all this re-thinking were thL escalatingglobalization of businessand internationalcompetition.Setbacksin Americanindustry asa resultof foreigncompetition lmplications for the Asian hasprobablycontributedsubstantiallyto the MBA re-examination of the MBA curriculumand Asia's premier businessschool: AIM Do these criticisms and campus in Makati. this hasmade "MBA bashing" quite fashionmarket-mandated changes able. alliances with multinationals in designing apply as well to management education in AACSB'sdirectorof accreditation,Milton cooperative degree programs. And in Eastern Asia? "It's Blood, has said, foolish to think thereis turope/ new management institutes are Critics maintain that the MBA produces only one best way to prepare people to be looking for management education models thinkers,not doers;analystsinsteadof manmanagers."He implied that too many busi, practical for their new market'economies. agers.Stanford'sHarold Leavitt believes,for nessprogramshad beenemulating "the top- Neither has INTERMAN ignored the situa- example,that the MBA barely teachesthose status business schools." Fortine noted tion in d,eveloping counfriei, where manage- skills that contribute to getting things done. further that these top schoolshad only re- ment schools "are contributing new insights Leadership,imagination,determinationand "undertaken cently seriousmarket research for haining managers in politically-charled senseof duty are not qualities historicallv to determine what their customerswant settings." valued by acidemics,universitiesand large and whether they are delivering it." businessorganizations. Of those schoolsthat surveyed the mar- Curriculumand Other Changes Asian MBA curriculagenerallyfollow the "leist ket, Wharton found MBAs skilled in AACSB has recentlybegun supporting American model. In conducting their MBA dealing with people,leadership,teamwork, "major changes in what business schooli programs,themethodologythatmostschools negotiating,communicating,and creativity." teach and (allowing) for more flexibiliF in inAsia are trying hard to adopt is Harvard's This study also"detected'enormousdissatis- the compositionand activitiesof business casemethod. This adoption of curriculum faction'with MBAs who haveto work outside faculties." and methodology seemsto be preciselythe their fu nctional specialties." Among the early innovators is Wharton. kind of "emulation of the top-status (US) Katz BusinessSchool (University of Pitts- Last August, one-sixth of the entering MBA businessschools"that AACSBnow suggests burgh) surveyedrecruitersand found "com- classenrolled in an experimental curriiulum. is unnecessaryand probably even undesirmunication skills their number one criterion Among other changesand additions, the new able. in choosingMBAs. The key abilities MBAs design highlights skills outside traditional Thepreponderanceof theso-called"hard,, nee_do1 the job... (are) working effectively business disciplines, including information coursesand the analytical demands of the with others,making written and oral presen- technology, risk & crisis management, innocasemethod combine to favor the logical over tations,thinking and acting entrepreneurially v,ation, change and entrepreneurship. Other the intuitive, the rational over the judgmenand managingpeople." skills areas deal with leadership, teamwork, tal,coldercalculationsoversoftersentiments. Other similar studies confirm that the interpersonal techniques, communication Leavitt suggeststhat the B-schools"overMBA product doesnot sufficientlysatisfythe and negotiation. There will be greater cross- teach" analytical methods and descriptive corporatecustomer.The International Man- functional integration, linking perspectives businesssubjects.The universal (and tradia g e m e n t D e v e l o p m e n t N e t w o r k from different disciplines. Finallv allcourses tional) MBA curriculum; therefore, probably 0NTERMAN) cites innovations in Europe will have a global perspective and students cannot help but produce thinkers and anawhere businessschoolshave begun to form will be trained in cioss-cultural settings. lysts insteadof managersand doers. THEASIANMANAGER JULY/AUGUST 1992
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Studies tend to suggest that the recent superior performanceof some Asian countries rnightbe significantlyattributableto the right-brain bias of their managers.As Asian B-schoolscontinue to ape the American and other Westernmodels,they may alsobe overemphasizingthe developmentof their Asian students' left brain and undervaluing the role of the right brain. One study of managers from different countries("CorporateCulture and Competitive Edge" The EconomistPublications,February1990),notedthat "theUSA,whichmore than any other nation has influenced the teaching of business administration and theories of management practice, is quite untypical of the rest of the world" (in its leftbrain dominance). This contrasts dramatically with, say, Singaporean managers (significantly more right-brain dominant), whose country's economic growth has oufpacedthat of the US. Another study concluded that the rightbrain orientationamong managersmay be a necessarythough not sufficient, condltion for economic growth and development. So while there is definitely a need to continue training managers in analytical methods, thereshould be a betterbalance.Incidentally, finance managers, which many MBA students in all parts of the world aspire to be, manifest "strong left-hemispherebiases"according to the samestudy. American employersaredeiltanding that MBAs should have more skillg "in dealing with people,leadership,tearnwdd<,negotiating, communicating, and crtittivity." Companies are looking for MBAs Who cdtl "work outside their functional specialties." The right-brain plays an important role in the acquisitionand application of theseskills. Another sought-for competence is managing in a global environment.Itrst dsMBAs should learnhow production,marketingand financeareinterrelated in reallife, they should also appreciatethat any enterpriseis sooner or later affected by the global businessenvironment; therefore, the importance of a global perspective in all courses. This also increasesthe importance of cross-cultural skills and understanding.Manv USbusiness schoolsare now attempitingto recruit more non-Americansinto their programs and requiring a second-languageproficiency to provide cross-culfuralambiance. In Aprif 1989,more than 200 deansand directors of business and management schools,and managementexpertsfrom various sectors,gatheredin Montreal. The occasion was a global search conference, "ManagementEducationand Development: Mapping the Future," organized by INTERMAN and theCanadianFederationof Deans of Management and Administrative Sttrdies.ProfessorHenry Mintzberg of McGill University, one of the presentors,reiterated THEASIANMANAGER JULY/AUGUST 1992
his thesisthat "businessschooleducationhas beenvirtually consecrated to the worshipof the brain's left hemisphere...the balance... has been totally lost in most of our business schools."(TheSearch t'or GIobaIManagement: MappingtheFutureof Management Education andDeaelopment,Max v on Zur-Muehlen,ed.) Mintzberg alsoreminded his audienceof the award-winning article by Harvard's Hayes and Abernathy, who in 1980 argued that "overlv analvtical business schools were partly iesponsiblefor a misguided obsession with techniqueand analysisin practice."
"ln hisowncountrythe AsianManagerlivesin a cultulewith many subcultures.Hehearc a babelof dialects.He seesethnicdivercities.
pulse Hebels theprayerful of the world'sgleatest
reli$ons."
As Asian business schools succeed in "emulating" thetop American schools,Asian recmitersand employersmay soonbesaying the sameof Asian MBAs. Indeed,not a few have alreadyioined the critics' voices.
TheAsianManagerfor the Ninetiesand Beyond In its 25 years' of existence, the faculty of the Asian Institute of Management have leamed much aboutAsia and theAsian Manager. In addition to the inbtitute's long and pioneering experience in program design for public and private offerings and its leadership role in the Asian management-education community, AIM has been in constant dialogue with its social investors, recruiters, executives and alumni, as well as the general Asian business community. Since 1987, AIM has organized conferences and workshops for human resource practitioners and top executives in Singapore, Kuala Lumpu4, Jakarta and Bangkok. These discussions concentrated on the competencies required of the Asian Manager in '90s. the AIM's quarterly publication (The Asian Manager launched in 1988 and distributed to all of AIM's 18.000 alumni and sold publicly in seven countries) has encouraged and solicited numerous commentaries on Asian management. In 1990,AIM and World Executizte'sDigest
organized the ManagementAwards Program which seeks to identify and acknowledge Asia's best-managed companies. In evaluating hundreds of nominee-companies for the awards, the institute has discerned even more about the Asian Manager of the '90s. AIM alumni associations in South Korea, India, Thiwan, Korea, the Philippines and Malaysia have held their own annual management conferences. These gatherings have contributed many insights into management concerns of the future. AIM continues to play leadership or participative roles in international fora on management education. These include the Association of Deans of Southeast Asian Schools of Graduate Management (ADSGM), the International Management Development Network 0NTERMAN), the education committee of the Asia-Pacific Economic Cooperation Council (APEC) and the Pacific-Asia Conference on International Business Education and Research (PACIBER). These and other associations with whichAIM has been affiliated have shown great interest in the skills of the manager of the furure, and the methodologies for developing those competencies. In February, 1992, All.ll will publish the results of a maior research effort in Asia in the Year 2020, and the implications for management development. Initial results confirm many of the ionclusions that AIM's faculty have arrived at as a result of the Instifute's extensive experience in the region. From all these experiences and exchanges, AIM has, like many schools in the West, concluded that the Asian Manager of the 1990s will also need greater cross-cultural skills and intemational business perspectives as a result of continuing and increasing globalization. He will also have to be an "entrepreneur" in the broadest sense - an innoviting manager who gets things done. He must be a wealth-creatoq, a producer; not a paper-shuffler. He will need to be not only a competent communicator, but a committed advocate. In his own country, the Asian manager lives in a culhrre with many sub-cultures. He hears a babel of dialects. He seesethnic diversities. He feels the prayerful pulse of the world's greatest religions. All around him are urban and rural dichotomies and dissonance. Markets segmented into haves and have-nots. Historv. rradition and oolitics shaoe the business cuiture. Modern industry proceeds side by side with centuries-old handicrafts. Machines complementmassed manual labor. Businessmen conduct their trade from computerized condominiums and kampo,ngshophouses. Thev flv to the world's financial capitals in corporate jets, and inspect plantations and mining sites in dilapidated, war-vintage jeeps. Managers and supervisors come from
25
AIM or the best Westem schools but also the most unscrupulous diploma mills. Top executives rely on the mathematical models of Wharton whiz kids and the geomancy of /erg sftui. Distinct conrpetence competes nrith crony capitalism. TheAsian Manap;eris all too aware of the region and its global economic importance. It is a vast storehouseof every resourceimaginable and a populous market of millions for Japan, the European Community and the North American alliance. Regional groupings have emerged, starting with Asean. There are the growth-triangle collaborations of Malaysia, Indonesia and Singapore. Malaysia's Mahathir has sounded the call for an East Asian Economic Group, while Asean as a whole has come to terms on an Asian Free Tiade Agreement. Meanwhile, Japan's powerful Ministry of Industry pushes for theAsia Pacific Economic Cooperation Council. This is the world of the Asian Manager. It is at once rural and cosmopolitan, traditional and modern, agricultural and industrial, parochial and global. The Asian Manager must harmonize all this diversity to produce profit for his enterprise. This single-minded pursuit can also create dissonance in his own mind. FIe realizes only too well that the richness of Asia's diversity can also contribute to social and economic disharmony. TheAsianManager must fully understand thesocieties, cultures, religions, governments and politics of Asia. These are the foundation stones of the business cultures that prevail throughout the countries of the region and influence the life and death of an enterprise. Hemust know how toorchestratemanagers of differenf nationalities and cultures. He must communicate through modern electronic technologv through the written and spoken (and oftentimes unspoken) word, through networks of power and influence. The Asian Manager must also master the technical languages of business. The global environment looms large for the Tigers, the NICs and the developing countries of Asia. It is not enough to know and understand the region. The Asian Manager must understand the region's economic relationships with the rest of the world.
ciency to get his first managerial job. There are three components in managing the total enterprise: managing the business systems, managing people and managing the environmental irrterface. 2. There are fclur broad categories of skills that the MBM student should master: intellectual, technical, behavioral and conceptual. Each category probably demands a particular learning methodology. 3. The most important category but often neither taught nor learned well enough, are the behavioral skills. This conclusion was based on the often-heard criticism that the typical MBA graduate is a thinker and analyst and n-ota doer or a manager. The faculty realized that they would need "market" to study the more closely, and that the results of these sfudies would determine changes in curriculum content, methodologies and approaches.Nevertheless, they belierved they needed to put themselves in an innovative mode and mood. The faculty took some tentative steps in revising the first-year curriculum, notably in Environmental Analysis (EA), Management of People in Organizations (MI'O), Manage-
ment Communications (MC), and Written Analysis of Cases(WAC). EAsought to provide a deeperglobal perspectiveamong students.while MPO, MC and WAC coordinated among themselves and with EA to deliver cross-culturalskills and awareness. But they were still a long way from defining clearly the focal point of integrating the MBM program into a coherent and effective package.Marketing,Financeand Operations attempted to find comrnon ground but traditional walls separatingthe "subjects" were difficult to break down. Finally it was decidedto adopta themeto help the faculty coordinate their efforts. The overall theme for the program would be "Managing the Total Asian Enterprise." To formalize the coordination among faculty, their subjectswere grouped together under two sub-themes:"Managing the Business Systems"and "Managing in Asian Business Cultures." A New Paradigln Around this time, Prof. Gabino Mendoza -AIM's first Asian president- submitteda management papersuggestingthat Japanese
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TheMBMProgramfor the NinetiesandBeyond On March 18, 1992, the faculties of the Master in Business Management (MBM -AIM's two-year MBA-type program) and Master in Management (MM - a one-year degree program for middle managers) conducted a one-day workshop to discuss the redesign of the MBM curriculum. From that workshop, the faculty concluded that: "managing the total 1. The MBM is about enterprise," not just discrete parts in which the MBM graduate achieves enough profi-
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technology was already being practiced by many successful, highly competitive, worldclass companies in Asia and would be the management technology of the fufure. Even American companies, Mendoza claimed, had forsaken the so-called Western; i.e., American/ management technology and had adopted the Japanese approach - without, ot course, saying so outright. Prof. Rene Domingo, AIM's own guru of Total Quality Management (TQM) echoed Prof. Mendoza's position. And he proposed that AIM's curricula be designed aiound World Class Management (WCM) - the evolving management model that integrates the philosophies and practicesproven by the Japanese and their adherents as absolutely essentialfor competitiveness and survival in an increasingly global business environment. Prof. Mendoza challenged the faculty, in the meantime, to begin teaching the new paradigm of World Class Management. So immediately after the conference, the MBM and MM faculties met to plan: 1) how they could themselves learn and better undeistand World ClassManagement; 2) whatthey neededtodo to immediately introduceWCM in the forthcoming MBM 2nd semester and MM 3rd module; and,3) what materials and methodologies they could use.
tems (MACS) would need to focus more on such WCM practices as activity-based costing. Marketing had to instill attitudes and values of customer-orientation among the students. QuantitativeAnalysis (QA) needed to hone the shrdents in the tools and techniques that ordinary workers use in their Quality Control and Kaizen circles.
The MM faculty would ask students to reconsiderthe strategiesthey recommended in iheir Management ResearchReports (MR& which is AIM's thesisequivalen$ in light of what they would learn ibout WCM
"TheAsianManager mustknowhowto orchestrate manageF of ditfurentnationalities andcultures. Hemust communicate through modemelectronictechnologr, througlrthe writtenand spoken(andoftentimes unspoken) wotd."
ProgramFacultyInitiatives Like their counterparts in the MBM, the MM faculty had been seeking relevance and innovation in their program's curriculum. Given the inherent flexibility of the MM design and philosophy (unlike the MBM, the MM was not patterned after the classical Harvard MBA model), each schoolyear had seen shifting emphasis based on perceived trends in the business management environment. The ideas of Professors Mendoza and Domingo provided the MM and MBM faculties a "handle" on curriculum design (MM) and re-design (MBM). The theme for both curricula would now be World Class Management for Asian Enterprises. The ultimate relevance for such a thrust might be summarized as follows: In an increasingly global environment, only a world-class company can survive intense, international competi-
tion. Curriculum revisions As they learned more about WCM, the MBMfaculty concludedthatindeed not only the contentbut even the approachesto their courses would need drastic re-thinking. The Managing People in Organizations (MpO) professoq, for example, realized that where traditionally this course began at the level of individual motivation, WCM required that the manager look at the entire organization ' first and then move his focus downwards. Management Accounting and Control Sys-
THEASIANMANAGER JULY/AUGUST 1992
during the third module. The third module foc_us on planning implementing,and controlling skills wouJdalsoadopt thi contextof WCM. Newlearningstructuresand processes The faculty agreed that WCM goes beyond concepts,philosophies,tools and techniques. World Class Management is an attitude. It becameapparentthat the case method was inadequatefor attitudeformation and reformation.Stridentswould have to actually experienceWCM. The faculty thereforebeganto explorelearning methodi more experientialthan casestudies. To allow students to work in a group committed to quality, MBM can groups (discussiongroups)werereconstifutedasquality circles.Thesegroups then undertookminiprojects with local companies already practicingorplanning to implementWCM or TQM concepts.These companiesincluded PhilippsSemiconductors, Anscol,Coca-Cola, San Miguel Corporationand Johnsonand Johnson.Simpler projectswere started oncampus, where students studied how to eliminate waste in AIM's own operations. Facultymemberssupervisingtheseprojects focusedon thestudents'analvticalpiocesses and, like true QC Circle leiders, acted as coaches,not judges. This made it increasinglyevident that the
rolesof the faculty and the individual professor will also evolve as new strucfures and processes/more appropriate to new directions, skills and learning objectives, are adopted.
lmplications for the MBMSecondYear Gurriculum Thesedevelopmentswill impacttheMBM 2 curriculum. Certainly the challengeto the faculty is to fit logicai and effecti'y*e extensions of the first-year curriculum into the secondyear.Already the faculty seepossible changesin BusinessPoliry (BP)and Development of Enterprise (DE), the two required coursesin MBM 2. BPwill play a key role in not only integratingthe functional areasbut alsoin providing higher-level perspectives to TQM. DE may needto adopt more "hands-on"modes,and focuson export-orientedventures.This year sawa pilot projectbetweenAlM and Wharton where groups of AIM students studied indepth the supply side, while Wharton studentsexploredthedemandside,of Philippine products with potential markets in the US. AIM studentslooked at strategiesfor making a localfirm internationallycompetitive.Nec-essarily,TQM was an important factor to consider. TheManagementResearchReport(MRR) may focus more on strategiesfor fransforming thesubjectfirms into World Classcompanies. This will give the students a stronger action or implementation perspective and orientation.They will learn to be doers. AdministrationInitiatives To sustain this impetus, the administration is providing a constantflow of relevant materialson TQM to faculty members.This is in addition to the sharing of books and articlesthat the faculty themselveshave undertaken.Thereis a program to institutionalize this activity, whereby different publications areassignedto faculty membersfor the identification of relevantmaterialsand the writing of synopses. Periodically, the faculty also conduct workshops to update one anotheron developments in managementtechnology.These workshops serveas a vehicle for lectureson TQM and feedbackon the differentinitiatives and innbvations taking place within AIM. Suchfeedbacksessionsarealreadystandard practiceamongtheMBM 1andMM faculties. During these bi-weekly workshops, films concemedwith TQM are also shown. It has been observed that of the thousands of nominees totheManagementAwards program/ many are already practicing TQM in whole or in parts. While not all companies use the same labels to describe their practices, they obviously attribute their successes to these new technologies of management. The faculty feel that, with the permission of the
27
comPanres concerneo/ many cases can De quickly and easily written based entirely on the data already contained in the nomination forms. Such caseswill be necessary to illustrate success stories and to highlight the fact that the new technology of Total Quality Management is upon us. As the faculty use these new cases and begin to familiarize themselves with the new paradigm, they will betI tr ter discern the kinds of problems and issues in- AIM's DeanHoracioBorromeo volved in implementing
TQM. At that point, they can then go backto the companiesand do further casesfudieson thoseproblemsand issues. New Missionfor AIM? Thesedevelopmentsare leading the faculty to review AIM's mission. That mission
"to has always been develop competent, socially responsible managers for Asia." Now, some faculty members are asking if that is enough. The inequities in Asian societies will persist over the coming dlcades. The onlv wav to overcome these ineouities is the creation of weaith and providing the less-privileged segments of society accessto that wealth. It has been said often, and I have said it myself in this paper, that managers should concern themselves
more with wealth-creation and less with paper-shuffling. Unfortunately,too many MBA graduates have advanced their careersthrough proficiencyin the latter activity. The faculty are beginning to see that wealth-creationcan only come from increasedproduction and productivity. Manufacturing is more important now than ever
before. But to succeed in manufacturing, companiesmust adopt the new technologies of Total Quality Management,and become internationally competitive, world-class IfAlMcanproducemanagersnot companies. only competent in these new technologies but, indeed, who are crusaders for Total Quality Management,then they, and AIM, will havemuch to contributeto the development of Asia and its peoples. As the faculty pursuethis new movement (somealreadycallit a revolution),it is becoming clear that the MBM and MM graduates will no longer be merely people who are different(by virtue of their managementeducation),but peoplewho can and will make a differencein Asia. I HoracioM. Borromeo,Jr. DeanBorromeois the associatedeanfor the EnterpriseMarngement DegreeProgramsand holds the USIPHIL ProfessorialChair for BusinessManagement.His major areaof spe' cialization is organizationalbehavior.He also teachesmarketing managementand business policy in the Master in BusinessManagement Program.
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Learning Tbtal Management Auanff ontheJob not yet available, XYZ appears to be doing Other problems were far more serious and well. The company exports garments to the required slightly more creative solutions. Although Morris had initially assumed that hirUnited Statesand the United Kingdom. The Morris' are confident that the com- ing subcontractors would be more time and The Asian Institute of Management(AIM) of US$1.5mil- cost-efficient, subcontractin g XY Z' s machinefaculty initinted changesin the MBM first-year pany will meet their objective '1,992. cuniculumin lateL99L.Amongthemnjorchanges lion in salesby the end of So much so sewn job orders caused considerable probwastheintroductionof theIntegratedApplication that they've setan evenmore ambitiousgoal lems. Orders often arrived days late and were Proiect (IAP). The yoject is designedto teach forthemselvesin1994.Intwoyearstime,says clearly of inferior quality. Patterns were of andtotalquality Morris, XYZ's saleswill have climbed to $5 uneven sizes and shapes and overall stitching studentsworlil classmnnagemmt was poor$ done. Forty per cent of the total concepts. Closeto themd of theirfirst yeaf,groups orders were eventually sent back to the subof fiae to seoenstudentsare assignedone-tneek "Halfway betweena with participating companies. Their contractors and redone. consultancics Hard-pressed to meet deadlines, Morris is objecthnis to studyopuationsandpropoxa series sometimes forced to askhis ownemployees to of recommmdations designedto improaethecom" machine stitch certain job orders. This obvimessandresponsioeness toconWny's comrytitfu ously disrupts normal operations and results sumerneeds." h decreased productivity. Girls who usually In thismonth'sissueweareyesentinga sumpdmary sew by hand are pu-lled out and asked to man mnry of an IAP reportsubmittedby a group of company's the sewing machines instead. Because they are AIM's first-yearMBM students.Thestudy was problemis that it has less proficient than those whose job it is to byDaoidlames,laneRuiz,lun Palanca, conducted machine-stitch dayinand dayout, thenumber Mil Molira, RoshnnRni and loel Capiral. The yet to defineitself." andthosewho appenrin the of rejects increases. Morris has had to hire namesofthecompany additional sewing girls on a temporary basis casehaoebeenchanxed. By Kin Gatbonton AssociateEditor
cottageindustry andfulFfledged export manufactudng business, the
YZ Children's Garment Manufacturers is barely six months old. Established in November 1991,the company is owned by John and Tina Morris, a personablemiddle-aged American couple who have lived in the Philippines since1983. While the company is the proverbial new kid on the block, John Morris, with over 20 yearc' experiencein garmentsmanufachrring, is an industry veteran. KYZ was originally '1997, conceived as a partnership. L after a series of differences regarding management style, the Morris'and their Filipino associates parted company. XYZ with its 193employees,operatesout of a smallfactoryinMuntinlupa. Thecompany produceschildren s dothes and specializesin intricatelv embroidered, hand-stitched ramre dresses.i,lntlte other industry workers who are usually hired on a contrachralbasis,Morris' employeesenjoy permanent status. Salaries are higher than the industry averageand their jobsrangefrom cutting fabric to stitching, sewing and finishing. The company alsohires subcontractorsto machjne-stitchseveralpnrd'uct lines. Although salesfigures and profit levelsare THEASIN'I MAI,IAGER IULYIAUGUST1992
just to meet delivery schedules. To solve this problem, the students recommended preventive action. Management, they said,shouldregularlycoordinatewithsubconThe Operation tractors by assigning their own persormel to After just a few days of observing factory visit and monitor subcontracting factories. The operations, the students noted several prob- responsibilities of the coordinator should inlems.\A/hilea number were easily identifiable clude more than liasing with the subcontracand required relatively simple solutions,other tors and should extend to qualitv control. The problems were much more deepseated and monitor should act as a cbns,ritut t, offering thereforemore difficult to remedy. suggestions on how to improveon-Iine operaAn example of a relatively mino4, easily tions. A study conducted by the students also identifiable problem was factory working conditions. Workspacewas overly-crowded and discovered that efficiency levels for machine cluttered. Ventilation was poor and the aver- and hand sewn operations were well below agefactoryfloor temperaturewas 450celsius. between 1,0-58%- Morris' reouired 80%. During the entire eight-hour workday, em- Standard.levels did not allow for buch factors ployeessatin groups of six on narrow wooden as fatigue, nor trips to the toilet. Inefficienry benches.Bymid-aftemoon, a majorityofthem resulting from the shuffling around of employees from one iob to another was overlooked. complained of backachesand headaches. The students suggested that the standard The obvious solution was to provide the workers with more comfortableworking con- time for each operation consider the employditions. Overheadfansmight be installed and ees' decreasing marginal productivity resultbroader cushioned chairs used instead of ing from such factors as fatigue and overwork. The students also designed a revised Daily benches.The studentsnoticed that whenever the supervisorsweren t looking, a number of Production Report which would reflect actual workers would use the ends of the dressesto productivity levels and production line capaciwipe sweatoff their palms. Their prescription: ties. Such a record would allow production provide eachgirl down the line with a towel. supervisors to plan work and delivery schedmillion and the firm will have entered European and Japanese markets.
29
ules more realistically and accurately.Agatn, the studentsrecommendedthat more conducive factory conditions would most likely.esult in higherproductivity and efficienrylevels. lmproving Responsiveness Lowinefficiencylevelshavemadeitalmost impossible for XYZ to acceptorders at short notice.Its workforce,although highly capable, isunable toadapt to shifting job requirements without suffering a lossin productivity. Unfortunately,a significant number of profitable job orders - often requestedby large Japanese firms - are drawn up at short notice. The company's failure to keep up with such demands means that Morris has had to forego potentially lucrative projects. Studentsidentified another nagging problem.Inthelast year,XYZhadafinishedgoods For somereason inventory valued at P700,000. - probably oversight - these goods were never shipped to buyers and were left as unrecovered capital investment. Inventory gobblesup valuable spaceand capital tied up in idle inventory increasesexpenses. The students recommendedthat management coordinate both production and shipping schedulesso that deliveries are made as soon as the finished clothesare rolled off the Iine. They also recommendedthat Morris use batch cards,tracking sheetsand other visual controls so that completed orders are then easily identified and not left languishing on warehouseshelves. Slightly more complex were the problems resulting from John Morris' leadership style. Vl/hilemost of the workers aregenuinely fond "Faof Morris (they refer to him as Thtayor "Mom"), they are thet" and to Mrs. Morris as alsoanxiousthat much of the firm's prosperity is entirely dependent on him. No Thestudentsexpressdthesameworry. one in the company has the samebreadth of experienceasMorris and soleproprietorships are not necessarilyideal for second-stage "the widgrowth. "He has," saysone student, est contactsin marketing and the most exposure in negotiations.All of this expertiserests withhim aloneand may notbe easilytransferable." Like manv family-nrn businesses,most of the decision-makingpower is confined to a single person.Alarge measureof responsibility for day-to-day operationsrestswith Morris himself. Although there are few indications that Morris is distilling his knowledge and expertiseamong his subordinates,his employeesdo not seem to resent his authority. As the stu'The questionof how they themdents noted, selveswould run the company if they were handedthercinswasmetwithadumbfounded stare.The Morris' are doing a marvelousjob' they said,'and it's not our position to question whether or not operations can or should be 'improved."' Employees did however complain that
30
therewere no clearexpectationsfor employee performance. The absenceof formal iob deicrlptions, they said causedendlessproblems. A sewing girl would sometimesfind herself being askedto help out in the under-manned "Resentpattern-making or finishing section. "may set in ment" observed the students when rewards do not take into consideration this sort of assistancein various other tasks." Without a measurableset of standardsor job descriptions,performancewasalmostentirely dependent on a monitor's subjective assessment of an employee'swork. '"VVorkmethods becauseofthe arecontinuouslybeingadjusted absenceof set standards,"the studentssaid. Areward systemexists,but this too is relatively informal. Although Morris has set an 80%efficienry level of the sampleproduction run, the target is not imposed on the workers. Yet at certain acceptableoutput percentages, "This the employees are entitled to a bonus. "apart from the basic is," said the students, salary they receive.On top of this they have a piece rate renumeration system. Employees candefine how much they want to take home on top of the basic salary by targeting how many piecesthey want to produce in a day." the Thesystemsoundsarbitraryatbestand studentsrecommendedthat a more thorough schemebe substituted instead. Like several large, more establishedmanufacturing companies, XYZ could choose to measure efficiencyand output in terms of the total number of minutes employeeswork in a day.Eachtask - cutting patterns out of severalyards of felt, for instance- would be given a corresponding number of minutes. To keep hack of the joborder Iengthoftime spentonaspecifictask, tagscould be attachedto the differentbundles assignedto particular worker. Upon completingthedesignated task,employeeswould collect the tags. At the end of the day, the total number of minutes could be calculatedfrom the number of tagsan employeeholds. ldentity Gdsis Halfway between a cottage industry and fril-fledged export manufacturing business, the company's primary problem is that it has yet to define itself. Although they would clearly like the company to be profitable, the Morris' claim they are not in the businessto make monev.Savsa student who knows the couple well."It would be too corny to saythat the Morris' set up XYZ for alkuistic reasons/ butina waythat'spreciselywhythecompany exists.Mr. and Mrs. Morris aretalking of retiringsoonand he'stold us thathe'd liketo leave the company to his employees when he retums to America." John's assistant is Nina Corpuz, a quick-leamer and astutebusinesswoman whom he calls 'tris right hand." Nina stands to take over the company once the "is Morris' retire. Her problem that shehasno back-up team. When John stands down she mightnotbeabletomanageonherownunless
shestartshainingsomeonetobecomeherright hand this early on." "XYZwotld rxobablv be better off if the Morris' and people like Nina stopped seeing the companvin termsof abequest.If s admirable of J6hnio want to leave'hisemployeesa legary, but a legary is worthless if it can't be sustained,"sav the students. Although kYZ evolved from - and to a largeextentstill is - a family business,Morris' ambitions for his firm cannot be met using informal, more traditional (i.e.,lessrigid) work methods.Thkefor exampleMorris' having set an efficiency level of 80%.Although workers are encouraged to meet this level and there appearssomesortof looseagreementbetween Morris and nroduction heads that 807oefficiencv wouli be ideal, workers are still not obligi:d to meet this level. Indeed, efficienry hoversbetween7G58%. Large overseasorders would require a certain amount of efficienry in operationswhich, for the most part, Morris concedesis lacking in XYZ. His "seat of the pants" management style,saythe students,is typical of most proprietors of thriving ventures. Although a semblanceof somesort of systemdoesetst, work assignmentsaregenerallyrandom.Operations have yet to be "professionalized." XYZ's oy erationsmanageaSylviaQue,actsmore like an inspector,pacing the factory floor pointing out 'This," said the mistakesas shemoves along. "will only guaranteequality after lots students of rework." Reachinghigher levels of quality requires isolating sources of defects.Again, '"Why not they recommendpreventive action. trainSylvia in formal operationsmanagement techniquesincorporating procedureslike the 'S-S?"'(An accompanying articleon the5-S aV - Eds.) in this issue owrs ' The students discoveredthat although the maiority of their employeesaredeeply loyal to the company and to Morris, most of them appear unmotivated. When interviewed, a rrumber of sewing girls indicated that they were happy working at XYZ. Howeve4 quite a few said that they would like to migrate to the US and Australia. Morris could, the students suggestd, try to motivate his employeesfurther. The harum-scnrumnature of operations obviously doesvery little to inspire employees to work harder and find fulfillmmt in what they do. The prescription here, although perhaPs the most basic, may yet have the most farreaching effects:Develop a vision of success and translatethis into a senseof purpose with specificgoalsfor everyonein the organLation. Take the medicine and the cure becomes possible.I Xln Gatbonton KinGatbonton is a researctrassistantatAlM and associateeditor of The,AsianMnnnger.She holds degreesfiom the University of the Philip pinesand Oxfod. 1992 THEASIANMANAGER JULY/AUGUST
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Malalnia 2020 intheYear By lbarra C. Gultlerrez ManagingEditor alaysia is one of the pillars that will makeEastAsiathelargestand most attractive market in the world bY the year 2020.The country itself, pulation projectedto reach31 milwith a population Iion, will be a large and lucrative market, accordingto a scenariobasedon the vision of Prime Minister Mahathir Mohamad laid downin Malaysin:TheWaYForward. This scenariowas incorporated in a papet' "Asia 2020:A Scenarioof EastAsia in theYear 2020," which was presented by Asian Institute of Management professor Victor A. Lim "In Search of the Asian in the conference Manager for the \ear 2020" (see The Asian Manager, Aprll/May /Iune 1992issue). The conference,held in the Philippines/ was sponsoredbyAIM and theAsia PacificEconbmic Cooperation Human ResourceDevelopment-BuiinessManagementNetwork. Focus on Economic l}evelopment Economic.developmentwill be the main concernof Malaysia in the year 2020.Policies will be gearedtoward promoting further econarnic development and enhancing Malaysia's competitiveness in international markets. In its relationships with the outside world, the country will seekgreater liberalization of trade. The pnominencethat will be given to economir developmentwill prompt a changein govemfient structure. Although the federal iysteor of government will remain in place, much nrori powef and control will be put in the handeof ihe cenhal government. Toallow better coordinated management of the economy, a stable, very lean and efficient central government administration will emerSe. As can be expected,economic issueswill overshadow all other issues in the political field. While communal-style politics will continue, the rlsc od issue-based(e.g. economic nationalisnr, environmental conservation) and function-based (e.8. labor vs. conservatives)political parties will give the political scenea niore pluralistic character. A higher stanilarrd of living will be the
1992 THEASIANMANAGERJULY/AUGUST
natutal result of the focus on economicdevelopment. By the yeat 2020,Malaysians are expectedto be substanciallybettei off with a pei capita income of M$28 (US$10)at 1992 ialue. However,thebiggerpopulation(based fot ona2.3vogrowth rate fot 1991'-1'99,2-0Vo '17%for 201'0-2020) may usher 2000-2009and in such problems as over-crowding, traffic congestion and higher crime rates.
"Ascanbeexpected, issues economic all other willoveshadow issuesin the political field.Whilecommunal'style politicswill continue,the
dseof issuebased politicalpartieswill $ve the politicalsoene a molepluralistic chatactet"
Education will be broid-based and will emphasize science and technology. Whilg Maiay will remain the principal medium of instruction, there will be more liberal use of English, particularly on the tertiary level. Otf,er foieign languages will be taught at both the secondaryand tertiary levels. AII these will result in a uniquelY Malaysian culture that will be a blend of Westernsecularismand the integration of the diverseethnic and ethno-religious cultures of the three major communities: Malay,Chinese and Indian.
EconomY A StrcngDomestic
By the year 2020,the Malaysian economy is expectedto be broad-basedand well diversifiei. Relations with foreign markets will continue to be strong, particularly with the expansion of international trade through the
market liberalization moves of the General Agreementon Thriff and Trade (GATD and th-e establishment of the Association of SoutheastAsian Nations (Asean) FreeTrade Area (AFIA). The govemmentwill continue to pursue export-leddevelopmentstrategies which are eipected to lead to a substantial increasein incoming foreign investments as well asin outgoing Malaysian investmentsin neighboring counkies. However, despite its strong links to international markets, the Malaysian economy is not expectedto becomeoverly dependenton them frimarily due to the presenceof a domestii market that is relatively large and affluent. And Malaysia exports lessthan 20% of its total exports to any single market.-, , On the loCalfront, manufacturing will be the premier sector, accounting for aPPryImately30%of grossdomesticproduct (GDP)' Bv thb vear 2020,this sector will be dominited by a number of large,high-technology plants producing upscale consumer goods lnd soihisticated inlermediateand finished capital goods.Among thesehightechnology vmtures, electrical and electroniccompanies will be thebiggestand most important' These large manufic"turing plants, m-eanwhile,will beiupported by small and medium industries (SMIs) engaged in the subcontract manufacturing of component parts and precision instruments. These SMIs will also be the sectols top generators of employment. Overall, manufacturing is expected to Provide3}Vo of Malaysia's total jobs by the year 2020. Forecastto grow at'10% yearly - much fasterthan the overall GDP growth of 7Vofrom 190 to20'19,the servicessector,on the other hand, is expectedto contribute around 55VooI total GDP in 2020. Its major sub' sectors will be electricity, gas and water, transportation, storageand communication. The iinpetus for the-phenomenal growth of thesesub-sectorswill come from the privatization of utilities started in the 190s' The other key sub-sectorswillbe financg real estate and business services,as well as the wholesale, retail, hotel and restaurant services.In terms of job generation, the servicessectoris expectedto providell% of totaf employment *itn tne wholesale and retail
EI
trade, hotels and restaurants, finance and insurance, electricity, gas and water subsectorshaving the most employment oPPortunities. Theindustries that will pay premium saLariesare the financial, office automation, inlormation technology and specializedconsultancies. Agdculturâ&#x201A;Ź will continue to be a vital sector, although its contribution to GDP by the year 2020is expectedto drop to approximately 107o.Rice farming will remain an important strategic activity. Hectarage devoted to agriculture will be smallel, butfarm lands will be well consolidated to keepyields high. A relatively large migrant labor force, plus research and development in biotechnology applications, will help sustain the agricultural sector.Togetherwith mining, agriculture will provide 10%of total employment. Construction, meanwhile, will accountfor around 57oof total GDP. This sector will be influenced mainly by investrnents in the manufacturing and services sectors and its growth will be tueled by the build-up in infrastructure. Construction will employ 5% of the country's labor force.
Envlrcnment A HlghlyCompetltlve By the year 2020,Malaysia's financial sector will be higNy competitive, with both foreign and localbanking aswell asnon-banking finandd institutions offering various financial products and services. Labuan, Malaysia's offshore financial outpost, is expectedto become one of Southeast Asia's leading financial centers from where |apanese, Thiwaneseand Koreancompanieswill tap funds to finance the relocation of their manufacturingplants inthe region.TheMalaysiansecurities market is foreseen to emerge as the predominant regional market for Southeast Asia withan estimated total capitalization in exces of US$ trillion. In general, Malaysia's businessclimate is expectedto be keenly competitiveby the year 2020.Businessfirms will be very customerdrivm. Efficiency and competitive costswill be the key considerations. The businessscenewillbe dominated by joint ventures and small and medium enterprises. ln many sectorsof the economy,there will be fairly large numbers of migrant workerE. Englishwill continue to be the languageof business,especially in communications with Malaysia's trade parbnersinAsia. The use of other foreign languages,however,is expected to rise.I
REtIABItITY child knows When he awakens in the middle of the night . . . afraid of the dark. But darknesswill be gone. With pure simple faith he knows With a flick of a finger Darkness will turn to ligltt. He knows. He has faith. Reliability in the faith of a child.
o
/uEMTCO
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lbana C. Gutlenez Apart ftom managing TheAsian Mnnngu, Ibarra Gutierrez publishes PC Digest,a computer magazine.He is also the assistantmanaging editor of Neundoy.
u
1992 THEASIANMANAGERJULY/AUGUST
Thewellon-time manager...
0fkcellentManagement in Qualities Market Economies Open By Datuk Seil RafidahAziz Ministerof Trade& lndustrv Malaysia
begin to compete without the benefits of tariff protection within the Aseanmarket. Howevel, such competition (This article utasoriginally deliztered as a neednot necessarilymeanoperspeech on February25,1992at theManagement ating in isolation.Aseanmanag,kaardsProgramin KualaLumpur,Malaysiaersof industry and trade would Edd. do well to collaborate and to synergize their efforts and reongratulations to AIM and World Exsources,suchthat,throughjoint ecutiae's Digestfor onceagainsuccessefforts, they can mutually benfully undertaking the Management efit. Awards Program to recognize,honor More so, in the case where and promote outstanding achievements in Aseanproducts facethe highly various areas of management by companies competitiveEuropeanCommuin Southeast Asia. nity market and other regional RaffdahAziz: Managers of both the public and private Congratulations are also due to the winmarkets where ioint effort can sector must appreciatetheir complementaryroles ners of the 1991 Awards and I am sure they enhance their ability to meet and with a higher degree of certainty and fully deserve the awards accorded to them. prescribedstandardsand take advantageof predictability. Trading communities and Certainly, it is expected that when winners economiesof scale. managers of the trade sectors can then expect receive due recognition of their outstanding I am sure that given the opportunity, our refurns commensurate with levels of effimanagerial talents and abilities, they will award winners and membersof the academe ciency and productivity, undistorted by ele- present,can provide us with excellentprescontinue to aspire for greater heights of ments of subsidy and un{air advantage that achievement and become sources of inspiraentations of what makes a good manager. tion and models to emulate for others in their acfually conceal inefficiencies and inability to They have the benefit of both theory and compete in an open market environment. organizationsr In fact, it is the demonstrated practice. effect upon others that such awards have that makes ihese awards valuable. Striving for excellence is of course a noble and laudable objective. But inspiring and motivating others around us, particularly those within our owrr circles of influence, to strive for that ever-moving target of excellence, is even more commendable. Thus the good manager is one who not only ensures that his or her performance is of peak quality, but manages those around him or herin such a manner that the entire team makes excellence their collective obiective and pursuit. Today, the world is iacing probiems and issues of newand diverse dimensions. Countries, both developed and developing, have to manage in a world where economic uncertainties prevail, and where cross-flows of frade and investments often meet with market accessconstraints and impediments. The ongoing GATT negotiations are attempting to set out the ground rules for trade in both goods and services, so that with fair and equitable ground rules and a level play'ing field, production and trade in economic goods and services can be better managed,
THEASIANMANAGER JULY/AUGUST 1992
Malaysia, Iike all other lrading countries, would like to see the negotiations come to a successful and satisfact6rv conclusion. and we will continue to be proactive in pushing the negotiations forward. Being an export-led cotrntry it is important to Malaysia that international trade is kept free of distortive trade constraints. and that multilateralism continues to be the pivotal element of that trade. Malaysia believes that there is no substitute for open and fair competition, and thus, while requesting market openings from her trading partners, will continue to open up her own markets to worldwide imports.
Excellent Managerc Permit me to givemy own perceptionof what makesa good manger,in the contextof the rapidly changingdomesticand external environments. I would say that a good manageris one with vision - and by that, I mean without blinkersthat make the managerimpervious to what ishappeningaroundhim.Amanager with vision is one that can seeclearly what's happening,and what shouldbedoneto adapt and adjust to what's happening in the quickesttime possible. Often, we talk of just-in-time production
In this context, the managers of the Malaysianindustrial and trading sectorswill find themselvesexposedto a highly competitive openmarket environmentasthe government phasesout tariff protection and fiscal support. In fact, the Asean FreeTradeArea conceptalreadyagreedupon byAsean,is the first major test of the ability of the managers of the Malavsian private sectorto comDete acrossthe board with their Asean .o,r.rt".parts.Similarly,other Aseanmanagersmust
and orocesses.I would not want to subscribe to the just-in-time manager, because that would indicate a lack of time and schedule management and cutting things far too thin. I would certainly subscribe to the well-ontime manager - the one who can see what is coming and when and is able to manage all available resources to respond profitably to the expected changes and the circumstances. In short, the well-on-time manager would know exactly when to undertake just-in-time
production and exactly when to keep adequateinventoryon hand to avoid problems of sourcing as a '- lt of changing circumstances. The well-on-t.. manager would also know when and how to undertakethe necessary investrnentsin R&D and innovation and when to make particular movesto strengthen industry and market positions and niches. Very oftery managers risk high opportunity costs as a result of lagging behind in critical decision-makingand being slow on the uptake to respond to rapidly changing situations. Malaysian industry and trade managerscannot afford to allow themselves the expensiveluxury of corporatebureaucracies that do not make for quick and effective decision-making, for this eventually determines our market competitiveness. Neither canMalaysianmanagersbecontentwiththeir present achievements,and not give due regard to the need to continuously innovate and improve and keep abreastwith the competition. On a slightly profound note, the manager with vision is one who can seeinto the future
- one who can grasp the trends that will evolve and the scenariosof the marketplace that will most likely emerge.In fact,the better manageris one who is proactivein shaping the future vision, who actually does what needsto be done to realizethat vision. A casein point is the vision of the market economiesevolving in the former socialist and communist regionsof the world . Managersof industry and trademust seethemselves participating in the reform process and, through trade and investments,help evolve that new marketplacethe world envisions. The manager with vision will be able to see the opportunities, while the one with blinkers, will only bemoan the difficulties and problemshe faces.Themark of the good manageris the speedat which he or sheacts to benefit from opportunities that present themselves. That manageris right therewell-on-time, while othersare still wondering what's happening. Bringing the question of vision nearer home,Malaysiahasalreadybeensteeredon a course toward achieving Vision 2020,
namely an industrialized and developed countrv statusin Malavsia'sown mold. Thus, Malaysian managers in both the public and private sectorsmust synchronize their sight and vision toward the path of 2020.Theymustseethesamegoalsand objectives,and they must seetheir respectiveroles and responsibilitiesin attaining thosetargets for the country. It cannot be denied that the long-term growth and developmentof thecountrymust be fosteredby the partnership of the public and private sectors. Thus, the managersof both sectorsmust appreciatetheir complementaryand mutually reinforcing roles in ensuring the country's continued growth with stability. Todav the private sectorhas contributed significantlyto thedynamismof theeconomy and the levels of economicgrowth that far surpass that of many countries. The challenge facing them in the future is to help sustainthe momentum of growth and to help forge Malaysia's niche in the international marketplace.I
saki EXPORTSTURN THE WHEELS OF PROGRESS
KAWASAKT MOTORS(pHtLS.)CORPORATTON Km.23 EastServiceRoad,Bo.Cupang Muntinlupa, MetroManila1702 P.O.BoxNo.843MCCMakati,M.M. Cabfe: DELSACORMAN|LA Tetex:26423Fax: 842-27-80 Tel.Nos.;842-3140to 43: 842-0590to g4
36
1992 THEASIANMANAGER 'I ILY/AUGUST
Bringing outthebest...
Edaran Otomobil Nasional Berhad: Buildrng aCorporate Culture for 2020 By Mohd. NadzmiBln Mohd. Salleh ExecutiveDirector EdaranOtomobilNasionalBhd.
relatively la4ge'scalqthey re quire laqgeinvestrnentoutlays and have long gestationperiods. The ratesof return on in(Thispapu zaas originallyyesentedduing the vestnent alsoaregenerallynot " AIM annwl maragunmtconfermce,ln Search of consideredattractive if meastheAsianMnnagu in theYwr 2020," in February ured solelv bv commercial 1992-Eds.) s t a n d a r d s . B e c a u s et h e Malaysian private sector was alaysia'sEdnranOtomobilNasianal hesitant to invest in heaw inBh.d.isthesoledistributorot'theProton dustries, the govemmenl esSaga,thefirst Asean-made car.ln a tablishedtheHeavy Industries marketdominatedbyI apanuebrands Corporation of Malaysia suchas Toyota,Mitsubishiand Nissan,EON has BerhadfiICOM). haditsworkcutoutsincethefirst ProtonSagarolled HICOM was incolporated off theproductionline.AlthoughEON'sfinancing in November 1980and ib obscherne hnscomeundu fire - citics chargethat BestsellerProtonSaga:the first jectiveswere to identify, initiASEAN-madecar. interestratesareexorbitant- thecompany's agate, implement and manage gressiae,high-profile marketingprogramhas prund NasionalBerhadnecessaryto successfi rllv f ace heavy industrial development projects.It was immenselysuccessfulFor instance,to quash the challengesof the futuie. intended to spearheadMalaysia's enby into rumorsthat theProtonutasa less-thnn-superiorheavy industries. product,unnbleto handlesteepinclinestuithout The NationalCar Prciect One of the projects it undertook was the oaerheating, EONstagedwell-pybticized runsup Sinceembarking on an ambitious industri- National Car Proiect.This project was envistheGmtingandCameronhighlands. As a result, alization program following independencein aged to propelMalaysian industrial develop salesclimbedoirtually ooernight.Tbdate,thecom- 1957,Malaysia has - within a fairly short ment into a high technology era and was to pany hasnld nearly3N,m0 units anil secured period of time - achieved considerable create substantial ancillary and component morethnn60%of thelocalmarlcetandis easilythe progressin the development of its manufac- manufacturers. mostin-demand carsbelow16d0cc. turing sectot transforming the nation from a for passenger But the announcementof the National Car In recognitionof its management excellence, country mainly dependent on raw commod- Prcjectbrought forth a barrage of opposition EONu:onthe1990Managemmt,4u,vr dsProgram ity exports to a nation which has successfirlly and criticism from many quarters. (MAP ) awardfor MnrketingMnnagunent. aiversifiea and becomea t6aaitrg exporter df Lr spite of the effectsof the recessionyears quality manufachrredgoods. when it was first launched;and, in spite of the What is colporate culturc? Malaysia'sindustrialization hasits roots in malicious rumors about its technicalperformMost managerswould respondthat corpo- import substitution. Howeveq,in the late'20s, ance and quality, the Proton Sagabecamea rate culture consistsof the beliefs,philosophy, industrialization policy shifted toward the national successstory.The ProtonSagaisnow attitudes, sharedvalues,history and tradition development of export-orientedindustries. the best selling automobile in Malaysia with around which an organizationoperates.Every This representedan important crossroad over 60%of the Malaysian passengerciu nurorgan2ation hasits own unique culture. It has for the nation. It becamenecessaryto formu- ket. Since1985we havesold more than 300,000 its own special history of evolutiory of man- latenewstrategiesand adjustprio.ities.Andas Pnrton 9igas. Salesincreased fncm US$2.6 agement its own way of doing things and its a result,it was decidedthat we should initiallv million in 1985to US$926million in 191. own managerialpersonalitiesand styles. concentrateon heavy industries. Whatever corporate culture is to you, one The establishmentof heavy industries in Malaysia's Vision 2020 thing is certain:the CEO,asthe chief strategist, the country was expectedto havetremendous During the inaugural meeting of the must introduce and nurture a culture that is spin-off effectsfor Malaysia. They would up Malaysian BusinessCouncil ltime Minister supportive of his corporatestrategy- and on grade the standard of our supporting and Dr. Mahathir bin Mohamad presentedVision a broader Asian perspective - of national ancillary industries and generatenew oppor- 2020.This program callsfor the development objectivesand aspirations, if he is to be suc- tunities for developmentandexpansion.These of Malaysia intoan industrialized nation over cessful. catalyticeffectswere expectedto further accel- a 3Gyear time frame. This is a rntional "misI've beenaskedto sharewith you my expe. erate and strengthenthe development of our sion." lnherent in this mission,is development 'rience in developing and molding the i:ni{ue manufacturing sector. not only in the economicsenae,but along all corporate culture for Edaran Otomobil Howeve4 because heavy industries are dimensions:economically,politically, socially, THEASIANMANAGER JULY/AUGUST 1992
gl
spiritually, psychologically and culturally. The prime minister suggestedthat there can be no fully developed Malaysia until we have overcomethe nine central strategicchallengesthat have confronted us from ourbirth as an independent nation: . Establishinga united Malaysian nation. . Creating a psychologically [berated, secure and developed Malaysian society. . Developing a mature democraticsociety. . Establishing a {ully moral and ethical society. o Assuring the freedom to practice individual customs,cultures and religious beliefs. o Establishinga scientific,progressivesociety that is innovative and forwardJooking. e Establishinga caring societyand a caring cultue. . Ensuring an economicallyjust society. . Establishinga prosperoussociety. Among the goalsto beachievedby the year 2020are doubling Malaysia's real GDP every 10yearsand bringing about balancedgrowth in all sectors- industry, agro-forestry,energy, transportation,tourism, communicationsand banking. The doubling of Malaysia'sGDP basedon an average growth of seven percent will ex1990 pandourrealGDPfromUS$42.6billionin toUSfr340billionin2020.Theengineof growth will be the manufacturing sectorwhich is expectedto contribute 80%of GDP by 2020. Similarly, per capitaincome is expectedto grow from US$2,200to US$6,300by the year 2020.Poverty will be reduced to four percent. Vision 2020,as propounded by the prime ministet has been adopted by the nation and aligned thereforeallavailableresourceswillbe toward achieving the objectivesof this vision. What part doesEdaranOtomobil Nasional (EON) play in achieving vision2020? It has been said that General Motors was oncesocritical to the USeconomythat when it sneezed,America caughtcold. Though not yet industrially that significant, EON supplies six carssoldinMalaysia out of every10passenger and, being a responsible corporate citizen, seeksto make a substantialcontribution to the achievementof Vision 2020.Building a corporate culture around the obiectives of Vision 2020is thereforecritical to the companv's future. EON'SColporate Culture EON was incorporated in 1984 as the sole distributor of the Proton Saga in Malaysia. The short lead time between incorporation and the market launch ofthe Proton Saganecessitated a rapid build-up of personnel, particularly in sales and service. This meant that managementhad torecruitexperienced personnel and the onlv wav to do this was to pinch from the industry. Therefore, thepioneeibatch of EON .employees came from diverse educational and corporate backgrounds, from careers as Professional accountants to street-wise sales and
38
service personnel. Oncb assembled, the task at hand was to mold this disparate group into a cohesive "Malaysian team, ready to deliver the Achievement." The threads that held this crew together were the values imbued upon their entry into the organization.
lnnovation
"go," innovation has been From the word the keyword in everything we do. It is our belief that for us to succeed, we have to develop a competitive edge over our entrenched, well-established comnetitors. This irurovative
Everycompany desiresto havea strongcohesivecorporate culturewith sharedvalues that areinstilledas a wayof lih. Most
companies successful withstrong arecompanies corporate cultures.
helped maintain the economic viability of the dealership nefwork and ultimately enhanced customer service.
PeopleOdentation We are in the process of developing our own indigenous management style by adapting and assimilating the best that is suitable for our local environment. We do not blindly emulate other companies' or foreign management technioues which are not suitable or cannotbe adapted to local customs and culture. Presently, we have the task of blending street-wise management personnel with the professionally qualified new breed, and out of this to evolve our own brand of management. This home grown management style instills greater confidence among employees becausethey are the architects of our development. And this p;ivesthem greater control over the system and their roles in it. This people-centered emphasis has also resulted in the creation of unique solutions to management problems. Some examples are the development of our incentive scheme for sales branches and dealers, promotional programs, packaging and financing of accessories and the limousine conversion programs. The EON management style reflects the values and features which we collectively-as an organization - value.
OpenManagement
spirit can be seen in our pre-launch promotion - the "Sagarama" tour of the nation - which culminated with the official launch broadcast live on television. The pre-launch campaign was so successful that customers started to place bookings for the car before the price had been established and prior to test-driving the automobile. The early successof the Proton Saga also provoked some unscmpulous dealers of other makes to spread malicious rumors about the car's technical performance and quality. To dispel these rumors, we organized a series of "Sagathons" to promotional programs called prove thatthe Proton Sagaisjustas good i{not better than other cars in the market. We were also thefirst in the motorindustry to inlroduce standard pricing among dealers throughout the country. The effect of standard pricing is orderly marketing as well as the elimination of discounts, which enhances our profitability and our image of quality. Another area in which we have left our mark is in dealer management. Through carefully designed dealership incentive schemes and controls, we have eliminated unhealthy price under-cutting and the price wars which were once prevalent in the industry. This has
In our effort to encourage greater employee participation in the management of the organization, we have adopted an open form of management. Decisions are made at the point of action whenever possible and decision-making is encouraged at all levels of management. At a higher level, decisions are reviewed at the monthly management committee meeting. Every division head is free to commenton theoperations of the company and is not restricted to his own area. In EON, the CEO is the last to state his views. And normallv the final decision is reached by consensus. Through open participation in decision making, it is hoped that the best decisions will surrace. To further enhance emplovee involvement in the management funciion, we have introduced Total Quality Management (TQM) concepts and Quality Control Circles (QCC). These programs foster greater efficienry and productivity as a result of high levels of emplovee involvement in sales, service and development decision making. Our open management style enhanced with TQM also raises our competitiveness while contributing to better overall decision making. Open management reinforces such objectives of Vision 2020 as the attainment of a democratic society (where everyone has a say), and a caring and secure society.
1992 THEASIANMANAGER JULY/AUGUST
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That's right. In fact, if our steel keepsgoing inro shipping, this industry will be kept a{loat by steel. This meansmore ships can be reoaired. More bargescan be built. And more conrainer vans - and more business- can travel the high seas.
You see,shipping can do so much for the country. That's why we're preparint to pur so much steel behind it.Ve want [o help it grow - and our nation arongwltn lt. So we can all expect smooth sailing from here on.
\TE'RE BUILDING A COUNTRY. (D
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steel corporation
People0dented would have None of our current successes beenpossiblewithout the contribution of our human resoulces.In EON we believeour employeesareour most valuableassetand we are and training them to continually becomeeven better.Improving workers'productivity will continue to be a primary activity forEON. "Productivity After designating 1991 as YeaI," EON undertook various productivity enhancementprograms and in the very fust competition we participated in - the HICOM QCC competition - our QCC team emelged as the overall champion. While we have on-going traintng and de' velopment programs for managerilent and non-rumagement staff, basically to lnoease efficienry, performance and techilcal know how we are also trying to createAh eiltftpreneurial spirit among our employeEs. Forexample,in ow AkademiSaga,a tralnhg schoolfor automobilemechanics,we areilaining people notonly to be qualified rnechanics but also to be entrepreneurs.We hope these mechanicswill onedaybetheownefsof service workshopo which we are developing in the
country to complement our own network of serviceoutlets. Result{dented Another facet of our value system being inculcated in the organization is an emphasis on results. This result-oriented emphasishas resulted in making the Proton Sagathe leader in the Malaysianpassengercarmarket.At the outset,we identified salesas the cenhdl function of the organization. Salesis the reasonfor EON's existence.All otheractivitiesaremeasuredin tefnls of ctlntribution to the salesfunction. Racial Integation In consonancewith the county's Vision 2020challenges,we at the corporatelevel are alsoattempting to addresssocialissuessuchas racial integration, especially with regard to identification of iob functions and race. Traditionallv, the motor trade has been dotninated by the Chinese;in particulaq,the sale!, service and parts functions. It is our obFrtive to create and develop a balanced fâ&#x201A;Źp[Usentationof the various racesin all departtrents and divisions of the company.We
are plaruring in the future for more qualified Bumirytrato assumefunctions in areaswhere they are not representedor where their numbersare small. We have developed special programs to train Bumiputras wlth qualified academic backgrounds as part of our management trainee schemes.Howeve4, this schemewill not emulateother Bumiputratraining schemes where, after completing a short training progr am,Bumiputrasareplacedin executivepositionswithoutthebenefitof a solid foundation and experience.Inevitably, they fail. In contrast,our approachis to have these traineesundergo training in all aspectsof the operation of the company. They work from the ground up, picking up the tricks of the trade. And thesetraining programs are not just a familiarization tour. tainees are given sufficient time to enablethem to fully understand the fundamentalsof the businessand how eachoperation relatesto the goals and objectivesof the company. In the process,they may have to train in the sales division as salesmenand subsequently in other departmentssuch as parts and service,etc. College graduatesalso go
DETO PLANNING, OFFEHSA TOTAUSItsTEMSAPPROACH UCTIONAND UCTrc)N SIGN,CONSTR IIANAGEMENT,CONSTR ANDMAINTE}{ATCE OPERATION
FIELDS PRINCIPAL OFA6fiUMES . . . . O O O
. POWERGENERATION ELECTRICAL ' WORKS ELECTRO.MECHANICAL O RUML ELECTRIFICATION ' ENGINEERING WATERRESOURCES & CONTROLSYSTEMS O INSTRUMENTATION SYSTEMS O & ENVIRONMENTAL INDUSTRIAL ' & SAFEry LOSSPREVENTION
& DISTRIBUTION I'6WERTMNSMISSION WORKS & ARCHITECTURAL CfYILSTRUCTURAL O(STICION MANAGEMENT 3n.f,Dt|G DESIGNSERVICES SYSTEM & COMMUNICATION TTITSTTORTATION BUII.DINGS CONfiNCNL & INDUSTRIAL INDUSTRIALPLAI{T PE ROCHEMICAL&
SEHVICES SPECIALIZED o O O .
OA/OCSERVICES (TIT,PT,UT,RT) TESTING NON.DESTRUCTIVE ANDQUALIFICATION TESTING WELDING/WELDER REPAIRANDREWINDING POWERTMNSFORMER
MERALCOINDUSTRIALENGINEERING SERVICESCORPORATION CONSULTANTS. ENGTNEERS. CONSTBUCTORS Nh FLOOR. LOPEZ BUILDING.MERALCOCENTER ORTIC.ASAVENUE. PASIG,METRO MANILA, PHILIPPINES
TEL.tlOS.: DIRECT LINES.esl-558;-.?1;ff . 631-22. (L&5. ?23a, U$, ?alOl TRUNK LINE FAX NOS. 631-5647(MARKETING) 631-382s (ENGINEERING) 9S541 7 (CONSTRUCTIOII) P.O. BOX 451 MANILA.PHILIPPINES. CABLE: MERAL@
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1992 THEASIANMANAGER JULY/AUGUST
through thesametraining process.Our objective is to createcompetentemployeesand not just to fill quotas. Sucheffortsat racialintegrationreflectthe reality of Malaysian demographics. This policy is expected to contribute to racial harmony and benefit the company through healthy competition among the staff. RewardSystem If achievementof company objectivesis the top priority, then the reward structure must belinked explicitly and closelyto actual performance. In EON, the linkage between rewards and performance has been carried a step further with the inclusion of the entire front line salessupport staffat salesoutletsas a unit in the incentive scheme. Tiaditionally, only salesmen were conscious of their sales targets. Howeveq,the inclusion of non-salespersonnel in the incentive schemehas resultedin a cohesivecloseknit unit, all working towards a common objective. MinimumManagementLevelsFor Quick Response To enablequick response,we have maintained minimum levels of reporting in our management structure. It is important, especially in marketing, for management to react quickly to any problem and to come up with the correct solution before the problem changesits complexion.Lateresponseinevitably results in application of inappropriate solutionsmeant for "old" problems. Planning Havingachievedthe primary objectiveof establishingthe Proton Sagaas the leaderin the passengercar market, we have now focusedour attention on the processof planning - both short-run and long-range.We feelthat obiectivesthat arenot possiblein the immediate fuhrre should not 6e discounted in the long term. The planning processfocusesattention on goalsand objectivesbasedon observationof trends and alternatives. This "openmindedness"helps avoid pitfalls, anticipate problemsand ultimately may help the company in terms of cost savings. Planning at EON, therefore,is a dynamic function. And when every employee understands that businessitself is dynamic and is conscious of changesin the environment, the organization becomesproactive rather than reactive. While the "Management Committee" tacklesshort-term plans, the "BusinessDevelopment and Planning Committee" takes careof longer rangeplans.Only very senior managementpersonnelare on the planning committee.This givesauthority and credence to the committeeand ensuresthat decisions .are carried out with the full support of the staff. Becauseof the longer time frame, this THEASIANMANAGER JULY/AUGUST 1992
committeealsohasthe opportunity to evaluate the existing value system and assessits adequary in meeting the requirements of the company.It has to decide whether new or additional valuesarerequired and then how bestto instill them among employees.
This program has reduced waiting time for customersin relation to checkingin of cars for service, billings and quotations for repairs. Due to time savings,front line employees are in a position to provide better and more personalalizedattention to customers.
Customer Odented Beinga marketingand salesorganization, the importance of the customer cannot be over-emphasized.We promote the importance of customersat all levels of the company,and especiallythe front line. In terms of the product it is our motto to
Conclusion Every company desires to have a strong cohesive corporate culture with shared values that are instilled as a way of life. Most successful companies are companies with strong corporatecultures. As I havestated.the chiefexecutiveof the organizatiory as the prime mover, must identifu necessarvvaluesand decidehow io promotethem.And successin nurturing the company culture is heavily dependent on the CEO. Once values are assimilated and sharedby the majority of employees, they become the corporate culture of the organization. Inconclusion,the valueswhich are being instilled as part of our corporate culture, both in the past as well as those we intend to develop in the future to meet the challengesto the company and the nation, are: .Innovation Mohd. Nadzmireceivlngthe 199O MAP Award for o People Orientation Marketing Management. o Customer Orientation provide our customers with the best value for Mav I say that for Asia to successfullv their money. Front Iine salesmen are trained develop,we-mustfirst develop systemsthat to take pride in their product and product bring out the best in our society.There is no knowledge courses are continually held. short cut to success,only hard work sup At present, salesmen are treated as "mini ported by high ethical values will enable an dealerships," where they have to optimize organizationto achieveits potentials. their returns from a fixed allocation. Their I am confident that we can achieve our viability in the future will depend on how potentials if we address our challenges as they optimize and manage their sales through Asiansand lookto our ownbackground and better customer service and building of their heritagefor answers.All the valuesrequisite customer base. to developmentare intrinsically woven into We will soon introduce the "customer data the fabric of our society.All we have to do is management system" for salesmen to ensure to look deeper and highlight these desired better service to all customers. Through this values and try to assimilatethem into our system we hope to create a new brand of working environment. professional salesmen who are in fune with Culture is not something which can be market conditions and who sell on the basis purchased, while technology, at the right of better customer service and customer reprice, canbe.Asia's prospectsin the future lie tention programs/ rather than through price in developingorganizationswith strongculdiscounts. tures based on values that will help them To give more value to the ownership of the achievebusinesscompetitiveness.l Proton Saga, we are developing the Fraternity Ownership concept. Under this promotional program, Proton Saga owners enjoy special privileges and special events are organized for their participation. It has always been our poliry to provide the best after-sales support to our customers. This policy will be further enhanced with the expansion and improvement of our parts and service network together with the implementation of the Servicom computerization program.
Mohd. Nadzmi Bin Mohd. Salleh Mohd. Nadzmi is executive director of Edaran Otomobil Nasional. Prior to joining EON, Nadzmi was assistant manager to the Projects Dvision of Healy Industries Corporation of Malaysia Berhad and was a member of the National Car Proiect Team. He obtained his Bachelor of Arts degree in Chemistry and Mathematics from Ohio University. He holds a Master in Economics and Statistics degree from Miami University.
41
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To handle andNewCaledonia' Indonesia the t'ii Philippines, Malaysia in offices has it also lines, product ditttiito andSingapore. inits PAMCO' business, pursuit of itsfenonickel -t,fiiri*iy, lnthe ic Pacif its to closer Japan brougnt fras o*n his in trails new blaze to its coniinues as lnd' ntiohUoit. Further intheregion' ii;id,ittreatesmorelriends herneighJapan.and between OonOs str.ngihtninglne t0 more friendship of hand theJapanese Uors.txtenOTng Pacific' the across bridges hickel more p.opf".Buildin-g
CO.,LTD. METALS PACIFIC 'eIfi., HEADOFFICE: Tokvo lchome,Ciivuda-ku' e't ohtemachi biffiictli ' no.:222-2248 Telex l;i;ph#orre*.iog-gzol'ooo1 OFFICE: LIAISON PHIUPPINE MetroManila Village'lvlakati' St.,Legaspi corner -i.t.' Adelantado 5ttrFloor,SolidMitlsBldS.,b;-d Ros-a . Faxno.:I 1e-00-23 .
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facilities... An updateon Asean'stelecommunication
Meetirg theChallerge ofGrowth By BienvenidoM. Perez he telecommunications markets of Southeast Asia are expanding at a fast clio as member-countries ofthe Association of Southeast Asian Nations (Asean) push forward with ambitious infrastructure developmentplans to prop up their growing economies. This decade, the Philippines, Indonesia, Malaysia, Indonesia and Thailald have become the world's hottest markets for telecommunications equipment and a vast array oftechnological wonders. With the burst of digital applications in telecommunications, facilitated by the use of fiber optics, the dividing lines between voice, data and image transmissions have forever been blurred, affording Asean membercountries a quick-fix solution for upgrading their crumbling telecommunications systems. The governments of these nations have also been challenged by the breathtaking prospects of expanding their respective economies using the same advanced technologies being used by the industrialized countries in the West and their neighbors in Asia. These governments are increasingly trying to balance the needs of their business sectors with the imperative to extend more basic telecommunications services in their rural areas. Information competition has also spuned a rise in intra-Asean trade, the booming growth of which is steadily reinforcing the group's potential as the next important economic force in the world. A focused vision of increased efEciency and adoption ofstate-ofthe-art innovations in telecomunications have allowed more private entrepreneurs to easethe capital burden of their governments and cash in on the growing action, be it in communications services or equipment production. Cooperation has also been a highlight of the davrn of the so-called Pacific century as economic planners and enterpreneurs of Asean recently moved to create a massive $320-million Asean fiber optic cable network. This is being undertaken even while private and public telecomunications administrations in the region continue with their respective cable linkages. Riding the crest of atechnologyboom, the
THEASIANMANAGER JULY/AUGUST 1992
With the long-term goal of transformingtheisland-stateinto a major global information and knowledge hub, the Singapore governmenthas firmly committed itself to developing a highquality, supportive telecommunications infr astructure,which it considersessential to national economicprogress. SingaporeTelecoms,a stateand operatedmonopoly or,rryred is responsiblefor developingthe republic's communications system. Through its aggressive policies, the organization has Hair-thinfiber optic cables are the backboneof ISDN. succeededin installing and operatinga highly-sophisticatedtelecommuniestablishment of integrated services digital cations network. It has invested over $1.7 networks [SDN) across the Asean countries billion in the past five years and has aphas increasingly become one of the chief provedanotherg2.lbillionthrough1992.As goals of telecommunications orgalizations a result, Singaporebecamethe 33rd largest in the region to remain competitive in the communicationsmarketinthe world in 1.990, unfettered international trading regime now with an estimated market value of 5427.7 emerging. The digitalization of networks is million. This will increaseto$625millionby making it possible to effectively integrate all sorts of tranmissions in a single line or sys- 1995. The goals set by SingaporeTelecoms for the '90s principally include complete rem. "Towards the Teldigitalization of the national telephonenetA recent seminar on work and the introduction of a widescale ecommunications of the Year 2000" recently intelligent network and broadbandISDN. held in Bangkok, Thailand provided a reThe existing telephone network estabvealing look at the state of telecommunicalished recently is characterizedby four tions in Asean. Unfortunately, Brunei, the hierarchallevelsofexchanges.Atthehighest sixth Asean member, is not included due to level is the gatewayfollowed by the trunks, insufficient information. The highlights of tandemsand local exchanges.To date,there country papers presented by representatives are 26 local exchanges,six digital tandems, of the five other Asean countries follow. two digital trunks and two digital gateways. A third gateway exchangewill shortly be Bedrockof High SINGAPORE: commissioned.About a\o/o of Singapore's Technology As oneof theworld'slargestmanufactur- existing telecommunicationsnetwork is digitalized in line with plans to phaseout all ers of computers, peripherals and a wide analogswitchesby 1994. array of electronic sub-assemblies, Singapore With all thesedevelopments,Singapore's is undisputably Southeast Asia's economic telephone density of roughly 45 per 100 and technological leader. Singapore's inforAsean, populationhasbecomethehighestin mation technology expenditure has already matchingthat of Hongkong,and in the whole reached $96 per 100 population, comparing of Asia, is bestedonly by that of fapan.More favorably with Japan's $72.40. In the last severalyears,a seriesof tariff importantly, Singaporehasbeenoperatinga reductions has made Singapore'stelecom- nationwide ISDN since 1989, providing munications rates among the world's various voice and data services. such as cheapest.This hasspurredgreaterutilization video,teletexandfacsimilewiththeuse ofan of international telecommunicationsfacili- integrated exchangeand transmission systies.by both business and residential sub- tem. The future trend for ISDN in Singapore scrloers. 'l(|
willbe more enhancedcommunicationsfeatures and supplementary services. At present,SingaporeTelecomhasinternational ISDNconnectionswith fapanand the United States,to be followed by similar linkages with Great Britain, Australia, France, and Hongkong. A pilot trial systemforbroadbandISDNis cunently in the works. The purpose of the pilot project is to gain operationaland technical experiencein this field and to identifu with the useof possibleproblemsassociated optical fiber to carry high-speeddata.Tentative applicationsforbroadbandISDN willbe in medical image transmissions,education and in the island-state'spublishing and advertising industries. Last year,three intelligent network services were introduced, including: Advanced Freephone,UniversalNumber and Citl'wide Centrex for analog subscribers.Credii card ca-llingand ISDN Centrexare scheduledfor introduction in the first quarter of 1993. Subsequentsewices that would be considered for introduction include Personal Number, Private Virtual Network and Televoting. SingaporeTelecomhasidentified two areasof grou'th:businesscommunicationsand mobile communicationsto globalizeits telecommunications operations. Business communications servicesinclude a public office automation system,teleview diginet, telebox service, international videoconferencefacilities,intemational tollfreeservice,telepacand faxnetinternational. On the other hand, servicesidentified under mobile communicationsare skyphone,mobile telex service,mobile phonesand wristwatch display pager. Despitethe heavy focus on businessand mobile comrnunications services,residen' tial communicationshasnotbeen neglected. Value-addedservicessuch as call-waiting, call transfer,auto-redialand three-waycalling were launched in 1985. Singapore Telecom future plans focus on continued introduction of morevalue-addedservicesto its domesticusers. Tomeettheeverchallengingrequirements of a new eraof communicationstechnology, plans areinthepipelineto more aggressively modernizethe network. THAILAND: New Age Development The successof the Thai economy is due primarily to the strong showing by a very active private sector, This remarkable development, however, has resulted in infrastructure bottlenecks, particularly in telecommunicationsserviceswhich support all vital social and economicactivities. Public outcry againstthe deplorablestate of telecomunications,however,is not aimed againstany private operator.To date, it is the state-owned Telephone Organization of 4
Thailand (TOT) and the Communications Authority of Thailand (CAT),both under the Ministry of Tiansportand Communications, which handle all telecommunicationsservices. These enterpriseswere set up by the TelephoneOrganizationof Thailand Acts of 1954 and Communications Authority of Thailand Acts of 1974,respectively. TOT servicesaremainly concentratedon telephoneand datatransmissionswhile CAT runs the postal services,data and interna-
SPCpenetration,comparing favorablywith the remaining 136 outdated crossbar exchangesthat served494,020lines. With pressure mounting to establish Thailand asAsia'snext newly-industrialized economy,the Thai telephonenetworkis currently undergoing rapid development through severalfive-yearnational economics and social development proiects. At present,TOT is implementing its so-called fifth and sixth economic development projects (EDPs) concurrently. The objectives and goals of a seventhexpansionproject have recently been approved for implementation during the period 1992-1996.
hffi ephonedensity per 100 inhabitantswas increasedto about 2.09 tional services.They compete,nonetheless, - with 10.39 and 0.76 for the Bangkok in cellular mobile telephone operations, Metropolitan Area and provincial areas,rewhere both have over 40,000 subscribers spectively - as of the end of September Cellularphones:qulck-f,xfor old systems systems.
altogether.
1989.
In mid-1s8g, the Ministry of Tiansport and Communicationsissueda national plan for an ISDN-basedinfrastructure,which is scheduledto start commercialtrial services beginning in 1992. Under this. proposed setup, the scope of services provided by I thosetwostateenterpriseswillbeadjustedto I better serve the public and mark another I significant event in the telecommunications I servicehistoryofThailand. I Thailand's public switched telephone ] network is the largesttelecommunications ] system in the country, posting steady in- ] creasesin both the number of telephone exchangesand subscriberlines. Taking advantageofmoderntechnologybackinlg8l, the Digital Stored ProgramConhol (SPC) system-was adoptedastLe standardforThailand's telephone exchanges.In September 1989, Thailand accomplisheda 298-digital I
By the time the fifth EDP is completed, there will be roughly 2.2 million subscriber lines and Thailand's telephone density per 100 population should jump to around 3.86 telephonesper 100 inhabitants.Digital penetrationof Thailand'stransmissionnetwork at the completion of the fifth project is expectedtoexceed85%. seryUnder the fifth project,several_new ices were tested and eventually implemented,including:acomputerizeddirectory assistancesystem(December1986),cellular mobile telephone service (July 1986), card phone (1900), nationwide paging service (1990),nationaldataservice(tggz),videotex service(1992)and computerizedlocal networkrecordcolornet(1s91). Withtherapideconomicgrou'thachieved byThailandinrecentyearsboostingdemand for more basictelecommunicationsservices to support industries,housing estates,busi-
"By utti ffih iltut Etlr EDpIDis II hadtolaunchanUrgentTelephoneExpanEy the utct time uilni the il:r;'n*x'#$lJ?l;HilJil*"'*ff (1e8e-1ee2), knownasthe
also sionProiect I| sixthEDP,tomeetcommunicationsrequireaddroi,eoo rhe sixthproject_will toughly 2.2 milliOn SUbSCfibef ] ments. complgted, therc will bet:--^
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an<i+s,s00morelinesintheprovinciaiareas. alocatedto to alsobeen beenallocated llneshave havealso Additronallines Additional supportthe needsat varioustouristcenters throughout the country. Half of the telephone lines expansion were ordered from the previous EDP sup1992 THEASIANMANAGER JULY/AUGUST
Why more than 3,000 multinational companies chose us gateway astheir tosuccess,r, "Citibank choseSingapore as itstelecommunications hubfortheAsia-Pacific regionbecause of its goodtelecom extremely munications infrastructu re." Mr MalcolmHamer, VicePresident, AsiaPacific Telecommunications, Citibank, N,A.
"Havingour Operational Headquarters in Singapore requiresus to keepin touchwithour global operations around-the-clock. Singapore Telecomoffersus cost-effective, reliableand most moderntelecommunications services." Mr NoriyukiHiramoto,Director,lnformationCommunicationSystemCenter, Asia.Hatsushita
Etechic (St p|le Ltd
"ln manyparts of Asia,foreigncompaniescannotget the servicesthey are usedto gettingback home But Singapore's workforceis well trained,well motivatedand English-speaiing. As the leadingworld news and informationproviderour demandsare high, but SingaporeTelecom worksto provideus withwhatwe needas a criticalpartof Reuters'international network." Mr Phillip Melchior,ManagingDirector,Beuters Singaporc
For enqurries, pleasecontact:DivisionManager(Business sales Divrsron), orchardPointPostofiice, p o Bor gg, singapore9123 Fax:(65)733 3008,Tetex:RS3g555
Si ngapore Telecom S e r !a e 1 r s t A w a y s
pliers so that the required telephone lines could be supplied to the public in the shortlines to est time possible.Another 1.1,0,592 serve60 iervice areasby installing nine new exchangeswith 58 remote subscriberunits were bid out in May 1990. The contractor will be responsible for the turnkey implementation, interworking testing of ail elements of the network, and other related matters such as civil works and commissioning this into public service.ISDN services are also supposed to be provided for selectedbusinessareasin 1992for commercial trial. In 1989,the seventhEDPwasdraftedwith the aim to satisfy all telephonedemandsby 1994.As a first for the Thai telecommunications sector, a decentralized management schemewill be adopted during the seventh EDP'simplementationto give local administratorsmore autonomyand allow closerparticipation in the planning of services in designatedareas. This new TOT project will add three millionmoretelephone lines tothe country's existing telecommunicationsnetwork. Earlier, however,TOT was requestedto extend five million more telephonelines within the next five yearsbeginningin 1991.After careful analysesof the demandforecastsand the waiting lists on hand, TOT proposedto add only three million more lines although the targetof satis$ringall conceivabletelephone demand by 1.994remained. Basedon previous experience,TOT apparently is capableonly of adding 200,000 moretelephonelines annually,evenwith the participation of severalcontractorsin installing outside plant networks throughout the country,which necessitateda new approach to tackle the setgoals. According to the seventhEDR TOT will start to introduce the build-transfer-operate principle in installing Thailand'snew age telecommunicationnetwork.TOT will invite tendersto allow private companiesto invest in the ourchase and installation of new equipment,on the condition thatthewinning companywill hansferornmershipto the staterun TOT after installation is implemented. TOT, in tum, will grant the miintenance contract to the investing company. In this manner, the Thai government expects to be able to expand service efficiently without having to borrow money from foreign financial institutions. After introducing ISDN field-trials for commercial puryoses in a limited number this year,TOT plans to commercially open ISDN in both metropolitan and provincial areasbeginning 1993up to 1997. From 1998to 2002,TOT plans to expand more ISDN narrowband facilities in areas identified to havehigh demand.In addition, TOT will introduce broadband ISDN in metropolitan areasand achieve100 percent 6
role in the country's developmentalefforts. To attract much-needed foreign investments, businessesmust be assuredof efficient telecommunicationsfacilities. But while developing telecommunications facilities is amongthe priorities of the Philippine government'seconomicprogram, the local telecommunicationsindusbry has alwaysbeenbesetwith regulationproblems and political interference,which affect its performanceand attractivenessto potential investors.Privateinvestmentsin the industry have alsobeen limited by the sizeof themarket.The huge infrastructure requirements of the industry call for a Iargemarket to optimize operating capacity and to maximize returns on investments. The Philippines is unique in Aseanin terms of telecommunications operationssince oltmership ofthe existinginfrastructure is almost all private. with the Philippine Long Distance Telephone Company (PLDT) controlling roughly 9a% of all installedtelephonesnationwide. Antiquated systems slow down economic growth. Even with 60 other private optant provincial areas would have already erators handling the rest of the country's beensetup by TOT basedon rising demand. telephone system, government estimates Although TOT hasput much attentionto show that there remainsa backlogof around steadily overcoming its existing telephone 700,000telephoneapplicationsin the counshortaget}rough a series of development tfy. Telecommunications services in the projects,it hasrun into difficulty realistically meetingits setgoalsin the nearfuture due to country aresegmentedbytypeof serviceand funding problems. As a result,. TOT has by market. The types range from satellite, adopteda new approachthat now allows the telephone and various data and record carorivate sectorto directlv lend a hand - and rier services, for either the domestic and not just supply equipment - in the large- international market. At the intemational end. the telecommuscaleinstallation of three more million lines nications infrastructure network is comfor the near term. Develooments in the field of satellite posedof satellitefacilities, submarinecable communiCationshave also been a force in systemsand switching facilities. These are attractingmore private sectorinvestmentsin linked to the local network, tlnough the Thailand's telecommunicationsindustry. domestictelephone,telegraphand telex exThe recentlaunching ofAsiaSatI is one such cnanges. The Philippines is linked to almost all opportunity.It was launchedby China Great Wall Industries Corp., a private consortium parts of the world with the three antennaeof comoosed of Great Britain's Cable and Philippine Communication SatelliteCorpoWirelessPLC,HutchisonWhampoaof Hong ration (Philcomsat)earth stations.The fust Kong, and China Intemational Tiust and antenna,Pinugay 1, started commercial inlnvestment Corp., which reports directly to ternational services in 1967, linking the country to Hawaii initially, and laterto North the China StateCouncil.While AsiaSatIwill mainiy provide television transmissionca- America, ]apan, Thailand, Korea, Guam, pacity to China, one of the satellite's two Australia, Taiwan and Brunei. At oresent. there are six commercial additional spot beams is focused on ThaiIand and its immediateneighbors.This high- submarine cable systems landing in the powered C-bandsatellitewill give Thailand Philippines: Transpacific-1(TPC-1)connectcost-effectivetelevisiontransmissionand re- ing the Philippines to Guam, Asean P-S "thin route" connectingthe Philippines to the Singapore ception as well as rural and cable (Philsin), OLU cable systembetween tel-ephonyand data exchangeservices. the Philippines and Okinawa, the LLIHO cable system between the Philippines and PHILIPPINES:In Search of More Hongkong,TAILU cablesystembetweenthe lnvestors Telecommunicationsplays an important Philippines and Taiwan,and the Guam-Phil-
digital penetrationfor Thailand byreplacing all its analogfacilities. Confident that Thailand will have become a newly-industrialized country to reckon with by the turn of the century,TOT alsoplansto expandnarrowbandISDN from 2003 to 2OO7in all of Thailand and then, introduce Universal Information Services (UIS) in metropolitan areas. Bevond 2007. commercial services for UIS in metropolitan areasand some impor-
1992 THEASIANMANAGER JULY/AUGUST
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lntornationalTglox. Telex World Lsttof . Internatidlal Tsl€gram (Cablogtam). Phonogtam . Tol€phono. TV Tol€cast. Press Bull€tin. Intornatbnal Maritire Satallit€. Mailgtam
ippines-Taiwan (GPT) cable, the country's the use of its transoonderfor TV transmission.ABS-CBN,however,recentlybrokethis first fiber optic cable connection. TPC-1is operatedby PLDT while the rest exclusiveright to linkup with the satelliteas a r e a l l o p e r a t e d b y E a s t e r n it was granted approval by the National TelecommnicationsPhilippines Inc. (ETPI) TelecomunicationsCommission(NTC)to go and the indifeasible rights of users (IRUs) directly to Palapa. Cellular radio telephone service is curovvnedby other international communications carriers such as Globe Mackay Cable rently being provided by PLDT from Baguio and Radio Corp. (GMCR) and Philippine to Cavite.In 1989,the NTC granteda proviGlobal Communications Inc. (Philcom). A sional authority to ExpressTelecommunicaconsortiumofmaioroutfits ledbythe Ameri- tions Companv Inc. to operate mobile can Telephoneand TelegraphCompanyand PLDT operatesthe GPT svstem. Currentdevelomentpiansincludethe set up of severalother cablesvstemswhich will uie the latestin digital and fiber optic technology.Theseinclude: the Aseanfiber optic cablesystemwhich will link the Philippines to all other Asean countries,notably Singapore,Malaysia,Thailand and Brunei; a GPT: 2 cable, which will interconnect with the TPC-3 (Transpacific3, Guam-US,Guam-Japan) cable systemand with the Hawaii-US Mainland 4 systemto constitutethe Pacific fiber optic cable system; and a fiber optic Hongkong-Philippines-Guamconnection. All internationalswitching facilitiesneed to be operatedby the PLDT through its control of the soleinternationalgateway.By late 1989, however, two more international gateways were approved by govemment. These are operatedby ETPI and Philcom, PLDThas over 1,0OOtelephone opetatorc. which now aggressivelycompetein the inteleohoneunits in Metro Manila. ternationalvoice transmissionmarket. Various telecommunications developThe two maior domesticcommunications carriersin the country,Philippine Telegraph ment and expansionprogr€Imsare expected and TelephoneCompanyInc. (PT&T)andthe to stimulate economicactivities in the areas Radio Communications Philippines Inc. servedand, in the long mn, incieasepoten(RCPD,operaledomestictelex switching ex- tial markets for other telecommunications changes.RCPI operatesa Stored Program facility operatorsand equipment suppliers. NotableamongtheseprogramsarePLDT's Control Eltex II telex exchangeswith line capacitiesfor about 1,500telex subscribers. X-5,X-5 Complementary,and X-6 expansion PT&T also has an integrateddigital net- progr€rms,PLDT's proposed digital secondwork, which makes available high-speed ary backbonein eastemMindanao, PT&T's digital data communications in Metro Ma- digital backboneexpansion,and the govemnila. In 1987,PT&T establishedthe country's ment's National TelephoneProgram (NTP); and, lately, the Municipal TelephoneProfirst public packet-switcheddatanetwork. Domestic telegraph facilities include gr€rm. But government efforts to attract more more than 2,500 telegram stations nationwide, with the government'sTelecommuni- investors in the domestic telephone sector cations Office (Telof) maintaining an appear to have been stalled following the additional 1,500 stationsin the rural areas, Departmentof Tiansportationand Commuwhere private carriers do not operate for nications (DOTC)rejection of a P4O-billion bid from Digital TelecommunicationsPhilreasons'ofmarginalfi nancialviability. Domestic satellite facilities are owned ippines Inc., a 4O%-orvnedsubsidiary of and operatedby Domestic Satellite Philip- London-basedCableandWireless,to acquire pines Inc. (Domsat).However, this equip- the govemment-runRegionalTelecommuniment is outdated and has been poorly cationsDevelopmentProjectphasesA and B maintained.As aresult,thecostofoperations aswell asthe NTP tranche1-1 systemon the main island of Luzon. has steadily risen. Another focus of controversyis a DOTCBecause of its high operating costs, Domsat'suseof the Palapa,Indonesia'scom- Capitol WirelessInc. project to setup a very munications satellitesystem,was drasticaly small aperture-basedPhilippine Satellite . cut in 1985, when Domsat failed to pay its network, which raisesthe prospectof existannual leaseobligations.Burdenedby high ing VSAT operatorscompetingwith the govoperatingcosts,Domsatchargeshigh feesfor emment. tA
The Philippine Electronics and Telecommunications Federation, the private telecommunicationsindustry's umbrella organization, has urged govemment and the next administration to push forward with consistentpolicieson liberalizationand deregulationthat will allow for increasedcompetition and will get government out of the telecommunicationsbusinessfor good. MALAYSIA: Making the Right Moves In 1987,Malaysiaundertook the restructuring of the TelecommmunicationsDepartment of Malaysia,locally knor,rrnas Jabatan Telekom Malaysia (l-tM) and transferred its operatingfunctions to a corporatebody, the SyarikatTelekomMalaysia.Meanwhile,J-IM itselfwasreshucturedinto aregulatorybody. Whether this was the right thing to do or simply one bold stepthat had to be taken at the time, the governmentsaysonly time will tell. But the immediate effecton Malaysian industry is the transfer of a total worKorce of 2,800personnelfrom the governmentsector to the private sector.STM becamethe first majorpublic sectororganizationin Malaysia to be privatized. As for the worKorce of the newly-formed STM, the Malaysiangovemmentcalculated that the change directed t}le workers to becomemore efficient and business-mindedin their approach to telecommunications development projects. Basedon the latest available data, STM profits in 1.990exceededover $500 million comparedwith only $4.9million in 1987,a featthatboostedeffortsto havethe organizadon listed on the Kuala Lumpur stock exchange. Although this new setuphas led customersto expectbetterservice.The resultshave not beentoo encouragingso far.However,in theCustomerPremisesEquipment(CPE)area - telephone, telex and data terminals which havebeen liberalized,customerscan now purchasea wide variety of equipment. Liberalization, according to the government, is a natural consequenceof privatization. Market liberalization is seen as an interesting arena, especially with the tremendouspotentials it opensup to entrepreneurs who are closely watching the Malaysiantelecommunicationsmarket. The Malaysian govemment has divided the telecommunicationsservice sector into four segments.The fust sectorcoversbasic services which include telephone, telex, telegrams,ISDNand the like. Forthe moment this segmentremainsthe monopoly of STM, a public regulatedmonopoly. Beyond this, the governmenthas further divided the sec"limited competitor into what are called tion" and "open competition" types. The open sector is the area of CPE providers where only registration with and type approval of equipment by l-IM are necessary. 1992 THEASIANMANAGER JULY/AUGUST
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This is a fully-liberalized areanow As the industry regulator,l-IM is divided into six main divisions: licensing and enforcement, frequency and management, technical compliance and standard, rates and tariff, international affairs and regulations, administration. It seeksto promote heathv comoetition. Already.licenseshavebeengrantedto private entrepreneurswho plan to establish and operate various telecommunications systems. l-IM is also collaboratingwith other govemment agenciesto overseethe implementation of the Malaysian national telecommunicationspolicy which aims: o To make available efficient basic telecommunications services to everyone at affordable rates; r To provide an efficient telecommunications supporting the National industrialization program while keeping step with changingtechnology; o To encouragethe growth of industry in the field of telecommunicationstechnology in the country and encouragedevelopment of human resourcesin the samefield with a view to attain local production of high technologytelecommunicationsequipment; and, o To encourage the growth of a valueadded network service. At present,basicservicesareprovided by STM.Telephoneservicegrew 11.3%in 1989, with customerstotaling 1.338 million. Telephone penetration is at eight per 100 population, which is considered low. Of these telephones, about L30/oor close to 185,000are locatedin nrral areas. By 1995,SlXM'stargetedphone penetration is 13 per 100 population which it plans to bring up to 25 per 100 population by the year 2000. Over the next five years, STM plans to spend$1.39billion to developrural telecommunications,with thebulk spenton accompanyingmicrowave, switching, and cable network. About $275 million will be spent to install 11,150rural payphones. On the digital front, the role of digitalization in information technology is beingconcentratedin fourmajor areas.These are digital leasedlines, video conferencing, ISDN and fiber ootics. For the ISDlri project, a trial run was conducted, where three suppliers Ericsson, PernasNEC and Fuiitsu - have alreadydeliveredtheir respeciiveISDNexchanges. These suppliers were tasked to demonstratethe functions and capabilities of their respective ISDN systems. STM is next expected to decide on the best ISDN standard for Malaysia by mid-1992, after the completion of the trial run. Malaysia now has two serviceproviders forcellulartelephones.Oneis STMwiththe 4S0-megahertzNMT mobile phone service
50
with subscribersnow exceeding40,000. For its expansion program, STM will be spendingabout$52million, which will add 1,600 radio channels to the existing 300 channels. The expected growth for this serviceis about 1,000new usersa month. Competingwith STM is the secondcelIular provider Celcom. It operatesthe ART 900 mobile phone service.Celcom is the first company in the Asean region to implement the 900-megahertzcellular tel-
establishing the needed basic telephone serviceswithin easyreachof the public. This means the installation of more public telephone booths and allied telecommunications facilities in strategicareasacrossthe Indonesianarchipelago. Under its fifth Fiscal Year Develooment Programto be undertakenfrom April i, rgag to March 3'1,'Lgg4,Indonesia is targetingthe following: r Constructionof 1.4 million additional lines to suoolementthe existins
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ffiM***i**,.,-m C-generationsatellite, and carrying out of a feasibility study on regionalsatellitesystemsto coverAseanand neighboringcountries; r Expasionofthepacketswitchedpublic datanetworktohavel,l00portscovering2T provincialcities; r Expansionof microwave links, optical fibersysttms,radiopagingsystem,andbther advancedtelecommunicationssystems; Introduction of new international communications services.such as IBS. Lrtelnet. IOIC,service"B00",electronicmailservice, and forward facility. To play major roles in these large-scale
New networks alc brldgingcommunlcatlongaps.
ephonesystembasedon the ExtendedTotal ] AccessCommunications System (ETACS), I an extended version of the TACs of the I United Kingdom. As of March this year, Celcom already has about S,000 susbscribersand has embarked on a 9145- j millionexpansionprogram. | The paging system service industry is rather quite well-developed with a total susbscriberbase of about 33.000. Besides I these services,Malaysiaalso has licensed I other servicessuch as a trunked radio sys- | tem.
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I Lrdosat,both of which provide telephone,
Likemanydevelopingcounhies,Indonetelegraph and telex, leased circuits, televisia has been struggling to upgrade its ] sion, and facsimile services. Their current
telecomunications system while trying to I jugglethe heavy capital outlays required by I its development plans. However, clear obiectivesand definite programshaverecently beensettoachieverapiddevelopmentofits] telecommunicationsinfrastruciure in the I '90s. I Financing remains a seriousproblem in launchingcapital-intensiveprojectsthatwill ] improve the country's current very low tel- ] ephone density of four per 100 inhabitants. | Pushing forward with its goals, lndonesia I has come up with a financing schemecalled I "revenue-sharingpattern" to lick this problem. The governmentis convinced that to em- | bark on its massiveinfiasEucture programs, I telephone accessibilityrather than density I will be the more appropriate measure for
plans require completedigitalization by the year 2004 and a satellite systemsbackbone consistingof 75Voterrestrialand 25% satellite links. PT INTI, the state-owned monopoly manufacturer of telecommunications equipment, also expects to figure prominentlyinsupplyingtheneededdigitalpublic exchange switches, telephone sets and payphones.Despite INTI's presence,up to 0S% of the telecommunicationsequipment in Indonesiais still obtainedfrom local contractors representing foreign manufacturers. With its funding handicap, Indonesia is now also encouraging private investors to participate in its various telecommunicationsdevelopmentprojects,providingbuildoperate-transferschemesto, mostly, foreign groups.I THEASIANMANAGER JULY/AUGUST 1992
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Malapia's Best: \Uinners ofthe 1991 Management AwadsRogam By Xln Gatbonton
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import substitution in contributing to economic development - the '80swer€ a time of political and econonic consolidation for Asia. If the spectaculargrowth of the last decadeis anyihing to go by, the '90swill most likely see Asia's coming of age.The somewhattentative entranceinto the industrial world by Asia's superachieversin the '80s has been superseded by aggressiveexploitation of hte;rational markets, Malaysia,Asia's '1ucky country," hasconsistmdy distinguisheditselfwithinAs€an with its extraordinary gowth rates.In 1986,Malaysia's GDP glowth rate stood at 1.2%,the following year,this figure iumped to 5.2%.Of the six As€an member counhies, only Singapore and Thailand, with their double-<iigirgro:wth rates.faredbetter.\{hileThailand tris flterea in the last five jrears,Malaysiahasconsistently chatkedup grbwth mtes of 8-9%.By co.rttast, the Philippines hasaverageda growth rate of 2.5E. Unlike Singapore or Hong Kong whose successwas almost entirely due to sound economic policies and the hard work of their people, Malaysia is a prosperousdeveloping nation that alsoenjols a tremendouswealth of 'including natural resources much of the world's supplies of rubber, tin and palm oil. While the-resource-rich countries ;f Latin America haveonly iust recentlvbeguncapitalize on their natural re.onrces, Uilavsii ha. eamed excellentrcturns on its endowmmts. Having dosely studied the comparative successof liberalizing regimes - Taiwan, South Korea,JapanandSingaporcwereamong the filst in Asi; to targely pface their trust in market forces and against govemmmt economic interventionism - the Mahathir sovernment hasadopted broad policies aimed at Fomotrng an operr,compditive economy.By contrast,the Philippi-nes'attempts at liberalization have beeni6w and reluitant. Lirnited bovernmentintervention in Malaysia hasconsistmdy paid off: providing law and order,
THEASIAN MANAGERJULY/AUGUST1992
stdne, the NDP provides more incentives for foreim business and ftrther relaxesethnic emplolment quotas.As a rcsult there was a signficant surge in foreign manufacturing investments in recentvea6. IruuguratedalongsidetheSixthMaldysiaPlan,the NDP callsfor ambitious infrastructurc and development prograIr|sdesignedto sustain the growih of the nation's marufacturins sector The Fat Eadm EconomicRruiio reported a total of USg6.2billion in foreim rnanu facturing investments for l-qql. The manufacturingsector,which is expected Telekom:State-of-lhe-art tele€lmmunications, to comprise one thid third of the counq/s counbr/s infrastruchle, health careand education. CDP by middecade. is erpected to grow by InIrastructurc, as any experiencedAsian I1.57oinnuallv until 1995.' hand famfiar with the p6thoiesand decayrng Surprisingly, foreign investrnent declined porLsof Manila or- until recmtly - Bangkok, in 1991.Theaggregatevalue offoreign projects will tell you, is fiEt-rate. A Britisi-stvle educa- apprcved in the manufacturing sectorfell by tional system has provided the nadon with a 9.5%.Thedeclinein for€ign investment,due to higtrly-capable,disciplined workforce. Most someextent to the slowing of Japaneseinvestdeficienciesarising from ethnic lensions are ment and the rise of newer, apparently more now being remedied. Mahathir has imple- atbactive investment sitessuchas\tetnam or mented economicand socialmeasuresairned even EastemEumpe,canbe largely attributed at elevatingthestatusof thepoorerMalaysand to intemal consbaints. estabtishin"g agreaterd egreeofequality among For example, unemplo)'rnent is down to the various races.The 2Gyear New Economrc 4.3Eaof the courltry's 6.62 million-stront Policy{NEP)which soughtto alieviatepoverty workforce In 1988,unemplovrnent stood al and ethnic anxietieshasrecentlygiveri way ro 8.17o.Malaysia'sdrawbackis that it has too the more catholic New Develofment Poiicy few workers to cope with indwtralization's NDNmormous demands. The NDP focuseslesson communal orobThailaad and the Philippines both have a lems and is largely outward-looking. F;r in- worKorce that easilyspills over the 20 million mark, while Indonesia'sworkforce is lCl Paints: ltb all in lhe mix. some 63 million strong. Cleariy, the growth of the Malaysianeconomy is npidly outpacing the available labor supply and ertant infrastructur€ to the detriment of futuIle developmmt. Nevertheless,there is profound optimism that Malaysiawill continueto prcnperin the comins millennium. Un.tikethe rtgiof smori fragile economiesstill heavily dependent on traditional markets, Malaysiahasdtivated diversemarkets. Although exports are largely concentlad in the West bilatenl trade with AseanandJapanhasgrown significantly At present,the prcportion of Malaysia's hade with Asean is the highest of any
53
lion lihes in 1987to 20 million litres in 1.991.. This inoeas€ is reflected in the company's sales.lC l's total retum on salesfgi | 9qI was up 149ofrom the previous year. By compariso4 ICI's clos€stcompetitor, Kemira SissonsPaints,registelEdan eshmated 117"increas€in return on sales during the sameyear.More importantly, saysa seniorICI official, "Our employees work attitude changed drastically as a result of CPI. They've becomemote consciousof the safety,health and environmental aspectsof their iobsand aremuch SlmeDarby:Movlngtromstr€ngthto strength more eagerto contribute and partlqpate advertisementsand brochures,SIME UEP is in company p(Brams." able to update and identify homeowner Prcfermces and market segments.Information Beftad SlmeUEPProDen|€3 Theaward for Marketing Managementwas gathercd from these coupons often includes given to SIME UEP PropertiesBerhad,a real the preferred number of rooms, room and winiow sizes,ceiling height, color schemes window "...the Mahathil and other design preferences.Such attention to consumer dictates has enabled the comlcl Pd||b (MdaFla) Sdn.Bl{. pany "to sell houses during the good times ICI Paints (Malaysia)Sdn Bhd., wimer of and the bad." Not a hollow boast.Durine the Malarsia's 1991MAP award for Operations last decade,house Dricescontinued to climb Manigement, manufactur€sand supplieshiSh while family inconies rose more slowly and quality swface coatings.The company has a inflation and interest rates reduced worKorce of 314 emDloveesand markets its affordability levels.Yetin the last three years, product lines - arioig them decorative, UEP has sold more than 3,000housing units refinishin& electocoating and packagingmaDer annum. terials - throughout the Asia-Pacificrcgion. ICI is among the growing number of compaJust as a ceEmic prcducer assignsdifferent product line names to differcnt dinner nies who recognize and acknowledge the services,thecompanyhasdevelopeddesigns problem-solving and problem-identifying for a variety of tastesand needs. The handskillsof thecompany'semployeesasitsgreaF some double-link homes Sime UEP conest asset. structs go by such names as Tudor, Bianca Managementr€centlyintroduced the Con(CPI) Picasso. and Program Prccess Improvement tinuous "inculcate quality to encourage,employeesto TelekomMalaysla consciousvaluesand attitudes." Theprogram, paidoff." The countrv's widest user of information largely a system devised to improve safety, Teiekom Malaysia won the 1991 technology, incorpc healthand the working environment, MAPaward in this category TelekomMalayratesa quality conhol systemthat beginswith the rreening of raw materials - only raw estatecompany specializingin exdusive r€si- sia is now a fu[y-privatized comPany that materialsof topmost quality go into the final dential properties in Malaysia's Klang Valley employs over 28,000people. The comPany maintains six computer centers. More than product - and ends with relentlessmonitor- regon. -The companv is well-known for its bold 4,000comDuterterminals are connectedto 11 ins- of customerservice. Following theimplementation of thesepro- building iniiiativesr Sime UEP was the first large-scalemain{rames and 14topend minigrams,production inqeased from 41lihes Per Malavsian developer to build an entie town. computers. In 1985,TelekomMalaysia initiated a state man hour in 1987to 63 litres per man hour in Locaied near Paaling Jaya,the townshiP 191. Gerall production shot up ftom 10mil- which boasts its own medical center,a fifst- of-the-art integrated customer s€rvice sysclass hotel and sprawting shopping tem known as the Custome! Automated Slme UEP: Fl]lt cla$ houslng. complex - is comprised of over 11!00 Services System (CASS). The system Provides Telekom with an advanced custome! I high costhousing units occupiedby ap poxinately 55,000residents. Another service environment comparable to outtown is curently in the wor*s. Morc standine intemational telecommunicahons compatties.It is Mataysia'slargestsoftware ambitiow than the company's initial Pro,ect, ubr 5uban8 Jaya wul nave devilopment proiect;nd the fiist of its kind 21.000housesfor over 105.000residents. in the resion. CASJ stores a database that effectively Like most industrv exp€rts, SME UEPrecognizesthat cGtomer needsand coordinates all activities involved in providefficientand prompt customerservice.As preferencesarechangingrapidly.Among ine -result, billlng'co-ftains have dropped the company'smarketing innovations is a the use of direct responseadvertising to substantiallv since 1985.The svstem also faidentify potentialhomeowner. Through cilitates inv6icin& credit conhol and the rea reply coupon induded in all company ceipt of pa).rnents.To comPlement the CASS
Asian country. The averageMalaysian's quality of life rcmains enviably high. Nowhere is this more apparent than in Kuala LumPur where sprawling shopping malls and luxury condq miniums arc rapidly replacing small convenience storcsand traditional housing proieds. Per capita income is US$2,465up from US$2.050in1990.Govemmenthasshown that it is determined to increasethe nation'soutput, productivity and intemational comPetitive ness. As one political observer noted, the courltn/s economicleadershavesucceededin "reducing poverty to small jsotatedislandsin a larger seaof prosperity and self-sufficiency." In the following pages,TheAsianMaruger takesa closerlook at excellentMalaysian corporations- winneF of the | 991Management AwardsProgram(MA P)- whichhavehelFd propel the Malaysian economyinto the ranks of the newly industrialized.
govemment hasadopted hoadpoliciesaimedat promoting anopen, competitive economy. Bycon0ast,the Phllippines' attemptsat libemlization havebeenslolvand rcluc'tant. limited govemment interventlon in hasconsistently Malaysia
g
JULY/AUGUST1992 lHEASIANMANAGER
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svstem.Telekomhas also installed PANIA9 a computerized directory assistanceProgram which provides quick and accurateresPonse to directory enquiries. In 191, STARS,a linetestingand fault adminishation management "themansystem,wasdevelopedto improve agementof faults."STARSensuresthat consumer complaints are handled prompdy and efficientlv Comfuterization is not just confined to the delivery of services, a new human resour:e management system, TEGAS, was introduced in 1989.This system assiststoP managementin administering the company's worKorce. TEGASstoresstaff profiles, aiditional information on recruitment, cornpany benefits, training and payroll. saawd{ shdl Bodrd SarawakShell Berhad (SSB)is no stranger to the Management Awards Program nor to the categoryof PeopleDeveloprnentManagement. With its second straight win, SSB is building on its rcputation as Malaysia's best eInDpver. in is90, Ssn inuoduced its Human Re. source Strategy (HRS). HRS higNights the importanceof the enthusiasticParticiPationof managersand rank-and-file emPloyeesm corporate life. Socailed HRS Dornain Managers determineSSB'Sshort- and lonS-termtEining and developmmt needs.Regular suweys are conducled in whidr ernployeesindicate their current levels of skills and expertiseaswell as the areasthey feelthey needthemost imProvement in order to carry out their pbs effectively. HRS'Sunderlying philosophy,saysonetoP manager,is that every line manager is also a personnelmaruger who should plav an active iole "in conceirtializing, developirig and implementing all personnel policie and sysienu.- ln aiaaiti<in,SSBconducs regular staff rcviews, safety performarce surveys and has also initiated a manpower plannin8 Prcgram desiiFed to coordinatethe availability of suitably;killed and competentemployeesagainst the ir:ts which the cornpany'sbusinessPlans rmule. SuchHRD methods seemto have not only imprcssedthe MAP iudges,but employeesas well. In the company-wide All Employees Sarawak Shell: Looldng atter ]t3 own.
56
Opinion Survey (AEO6) the company scoredhigtrly (ocnsistentlyover 80%)in categorieswhich dealt with employee skills and motivation. Eighty percentof thosesuweyed saidthey were "happy to work at SSB;"857"said SSBwas a higl y successfulorganization and 8l7o rcspondedtlnt they were proud tosay that they worked for SSB. G€r|UtgBedrad The 191 award for Financial Management wmt to Genting Berhad, an investmmt and manatement company Gentlng Ge Grcup:Taklnglelsures€dously. with subsidiarv operationsin hotel and rcsort-rclated iAvitles, gaming opemtions, SlmeDalty Sime Darby won the award for General plantations,propertyand investrnmtholdinS. The Genting Group s financial policy is Management.Malaysia'spremiercorporahor! simplq Toinvest in long-term openting assets the company is capitalized at over US$2bilwhich will, on thewhole, earnreasonablerates lion. In 1990,profit wasUS$251million on sales of retum on sharcholder'sequity but will also exceedineUS$2billion. Origina[y a plantation-basedentity, Sime Bmeratea$,rstainableandincreashgcasMow. While not ave6e to employing debt for financ- Darby isSoutheastAsia'slargestmultinational with widely diversified business interests ranghg from tire production to rcal estate, motor vehicle distribution to insurancein 12 different countries.A virhlal colossut the 92year old SimeDafty Group indudes over 200 subsidiaries and associate companies. The company is listed on the Kuala LumPur Stock Exchanqe and the Intemational Stock Exchangein London. Among its international businessParhers are the Frenchtirc company Micheli4 Japan's Kansai Paints, Rengo (a leading Japanese p a c k a g i n gc o m p a n y ) a n d t h e K o r e a n Hlundai. The company hasmoved frcm strength to strength,chalking up higher Srowth ratesand higher profit margiru than alrnost any other company in Malaysia. An example of Sime Darby's prodigous growthr Profits before tax erew four-fold from US$b.2 to US$226.4million between 198G90. ing pojects, the Grcup reliesheavily on equity to finance new venhles arid fund exPonsion Jolro|€Sfate Econor{cConoraton The Development Management category forexisting businesses. Gentingus€stwo typ€s was introduced in the 1991 Management of financial conhol The fi$t is an overall system, which sets Award Program. The JohoreState Economic Development Corporation (SEDC) won the annual profit and capital expendituJepla$, Malaysian award in this category at the beginwhich is discussedand approved A.lthoughits corebusinessr€stsin the Ptanning of eachfinancial year.Theseplars arc reviewed on a monthly basis.For tation business,the 2l-year old company has major rcvenue items, actual perform- diveFe intelests in real estate develoPment, anceagainstplans aswell asvariances the rnanufactureand processingof timber and are reviewed on a daily basis. With rubberand aquaculture.OperationsarcsPread among the corporation's 35 estatescovering Gentings prctax prafit growing at aF prorimately 307oper armurn, profits some65,141hectarcsof ptantationland. The corDoration is also involved in health care havegrown from a mereUS$.9million to US$U5.9 million in a litde lessthan services,towi.sm and the opetation of public two decades.Over the same period, transDort, 'lrVe're working towards transforming shareholders' furds have increased frcm US$4.1million to an impressive Johoreintoa fiEtdass indushial estate.Allour US$555million; total assetson the on pojects should contsibutedirecdy to Johore's the other hand flew ftom US$.7 mil- development and this is something we try keep in mind whm we re building the neceslion to US$88.9 million.
"Thegovemment," says onepoliticalobservel "hassucceeded ln rcducirgpovertyto smallMatedblanG in a largesea of prospedty."
1992 MANAGERJULY/AUGUST THEASIAN
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SubscrifiionRates Country HongKong lndonesia Korea Malaysia Philippines Singapore Taiwan Thailand ft@s
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l-Year(6issues) 2-Year(12issues) HK$180.00 HK$360.00 Rp36,0OO.00 Rp72,O0O.0O W480.00 W960.O0 M$ 51.00 M$ 102.00 Php48O.O0 Php960.00 S$ 39.00 S$ 78.00 NT$810.00 NT$1,620.00 8 570.00 81.140.00
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Sqtd to fHElsrlil ilAT',,CER c/o ot th6 tdlorylqE addrc|.c|: PHIUPPII{ES.Asian Instituteof Management,Eugâ&#x201A;ŹnioL6pez Foundation,JosephR. McMickingCampus,MCCP.O.8ox 898, 123 Paseode Roxas.Makati. Metro Manila. It{DOl{ESl . Suite 254, Hotel SahidJaya,JalanJendralSudirman86, Jakafta 70220. tAllYSl,A. Suite E, 20lF, BangunanArEkasa Rrya, JalanAmpang 5O45OKuala Lumprr. TffltlttllD. c/o AIM ManagementCo., Ltd., 262264l-ad.'dptap !32, Bangkapi,Bangkok10240.
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JSEDC:On€ot 35 plsntrtlons. sary infrasbrcture and designing our urban renewalprograms,"saysaJSEDCofficial.With over 11,000people in its employ,JSEDCis the statds largest single employer. Indwhial estaie6 establishedby JSEDChave also generatedFb6 for morc than 35,000factory workers. In 1990,the corporation spent a total of US$72.8million on developmentprciects.The
Americanhesident Companies
JSEDG's headthof activitiesis imprcssive. Thecompany's deputy manager attdhtes thisto fimncial autonomy. conbiner LEnsDonalion and distribution Smup openting befl€e. and within Asia and Nodh Am.rica.$& serveour olgomeq including major manufadurcs and reiiilers. thmugh a hi8hly efllci€n( int€srEl€d E51€m dar combmes o€eaA mjl atd truct u?n$onarcn.With our loerslilx qqbilties and adlmced inforrnalion t€chnologjes\t€ cln help oor c-u$ornels implo\i€ tbeir contp€titiven€ss.
bulk of this wmt towards Foperty develop ment andindustrial etates developmenLsince lts mceptDn J5tU- had developed dose to 10,000housing units and 1,000shophouses.ln additiory the four leading specialisthospitals in Malaysia are all managedby JSEDC The corporation's breadth of activities is impressive. JSEDC'Sdeputy manager attributes this to financial autonomy.'This has," he says,"enabledus to acquirc the Mom to acl fast. There are no missd oDDortunities because our firuncial and manigerial autonomv allows us to makequick decisions.We arcaheadof our competitori preciselybecause this freedom us to be and dlnamic. Proiect constrained or hindered by elaborate procedures for funding approval. Unlike a majority of development organizations, we're involved in high-capital risk ventures and other innovative investments critical to further growth."m
.THE ASIANMANAGERJULY/AUGUST 1992
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MARKETPLACE MANAGER ver.4 - Anlntegrated Systemol Inventory, Receivable Invoicing Sales, andPayable, Inventory Management andControl: O Sales analysis forallitems, customers andsalesmen O Purchase forallitems analvsis andsupoliers
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proseandfelonious Buzavords, telegraphic behavior...
TheArt Ofwritir€Memos he memo is the staple form of business wdting - the most often used, and very likely, the most abused. Typically, it presents timely information, announcements, hip reports, invitations to in-house events, summaries of meetingt proposals for changes,counterproposals,suggestionsand other rcminders to staff,colleaguesand sul)enols. A memo is basically an informal businessnote. But becaus€it is wiitten, dated and signed, it assumesa more official voiceand becomesa tangible record.When wdtten in memo form, a suggestion broached over lunch becomesa proposal. Spokenwords of disapproval become a categoricalreprimand. And a pat on the back becomesa commendation. Thus, the memo is a very potent tool of communication within the company. Properly handled, it is capableof not only conveyirg information and motivating others but also convincing subordinates,colleaguesand superiors that your ideas are sound and your positions valid. Sloppily done it can project the writer as wimpy or ieckless. There are a few things that a manager might want to consider beforeletting a memo Ieavehis or her desk: Beware of the "iust-a-memo" syndrome. The fact that the memois supposedto be an inlormal businessnote do€s not give anyone the license to massacr€ grammar, spelling, sFtax and punctuation. For whatever purDose the memo is written whether to inform, instruct, convince, motivate, reprimand or commend - the rules of good writing still apply. There is no substitute for good writing, and no excusefor bad. Be brief, Readers of your
60
rnemo do not have leisurely hours to spend deciphering vague phrases or figuring out messaeescloaked behind deadwoodjargon and kilometric sentences (If they do, something must be wrong with your organization!).Memosaresupposedto be short, preferably no longer than two pages. Keep in mind that you have a limited spaceto
" Thefactthatthe memo is supposed to bean inbmd business note doesnot$ve anyone the licenseto masgacl€ glammar, spellingsyntax andpunctuation.' makeyour point and leavea good impression. Use conciseand precisewords that best signify your intention. Avoid writing long memos. Some people feel comfortable using thememo formwhen making 10-page reports. This is be cause the connotation of informality that memos have seei,nsto easethe pressureon the writer But a lo-page memo is a contradiction in terms. Call it a rePorr. While being briet resistbeing telegraphic. Do not delete articles,prepositions and adverbs as though they are no longer in fashion. Otherwise, vou will be inviting misinterpretatiory and consequendya delay in action. Wrilewith a purpose. Memos should be written with a specific objective that guides the flow of the nrose. This will determine what data should be included and what could or should go unmentioned. Beefup your ideas with facts. Watch your language, Some managerseasily fall in love with
catchwords that circulate in executive lounges. While it is help ful to be "in" on the latest buzzwords, do not assume that thesewords are always useful or welcome when communicating with subordinates and colleagues. It also helps to make a habit of using positive language, that is to say, non-threatening words that inspie instead of provoke. Resist seist language or anv Dhraseor word that tends to e*il.de or discriminate agairst other people who will be reading your memo. Avoid scrawling. If the missive is meant for only one person, scribbling is fine - on your note pad. But hardlv on the memo iorm. If you mult give the memo a personal touch, add a handwiitten addendum. The main text of the memo itself is preferably gped. Scrawling candiminish the credibility of your messa8e. End with a call to action. Even if it is iust to file the merno as a record of information. After all the data you put in, your reader will want to know exactly what you have in mind for him or her to do. Otherwise your memo rnight land in the WC. (as in waste can) file! Decide who should be furnished copies. Sensitive memos reaching the wrong hands can result in a small office fiasco. Some messagesmight be good Ior only one group but not for another. Overlooking people who should be fumished copies canbejust asfelonious. It is thireforc important to determine who exactly should be receiving your memo. Eachmemo you write gives a peek into your style of manage ment. Do not let it leave your desk until you're sure it is making the right impr6sion and conveying the correct message.I
,1992]HE ASIANMANAGER JULY/AUGUST
SIME DARBY
A Driving Force in a Thriving Region A t t h e b e g i n n i n go f t h e T w e n t i e t h Century,AmericanPresidentTheodore Rooseveltexpressedthe view that'the Mediterranean is the oceanof the past.The Atlanticis the oceanof the present,and the Pacificwill be the oceanof the future'. Thefuturehasindeedarrived. Fourcountriesin the PacificRegion - SouthKorea,Taiwan,HongKongand - despitebeingresource-poor, Singapore h a v e b r e a t h e ds o m u c h f i r e o n r n e e c o n o m i cf r o n t t h a t t h e y w e r e n a m e d l h e F o u rL i t t i eD r a g o n os r . i n e c o n o m i c terminology, Newly lndustrialised Economies (NIEs). More recently,the three resource-rich countriesof the Associationof Southeast A s i a n N a t i o n s ( A S E A N ) ,T h a i l a n d , Indonesiaand Malaysia,havebeengaining increased momentum in their determined drive from farm to factoryand beyond.In fact,theyhavealreadybegunto be referred to asthe AseanTigers.
MalaysiaBoomswith IO%GDP Malaysia. as oneol the AseanTigers. posteda remarkablel0 per cent growth i n 1 9 9 0A . s t h e G u l fc r i s i sh a s s h o w r r , Malaysia'seconomyis probably more robustthan any other in Asia.Not only is it resource-rich, but its wide-ranging programmeof economicdiversificauon has also begunto havean impact.Commoditiestodayaccountfor lessthan29per cent of GrossDomesticProductwhile,at the sametime,manufacturing hasexpanded significantlyto morethan 27 per cent. Malaysiacontinuesto attractforeign investorsbecauseof its ample natural politicalstability,stronginfraresources, structure,quality of its workforce,and i n v e s t m e I ti n c e n t i v e si n c l u d i n gt a x h o l i d a y sT . h e n a t i o n ' sl e a d e r s h i ph a s also announceda nationalendeavourto makeMalaysiaa fully developedcountry by the year2020.
SimeDarby Reflects Region'sProgress SimeDarby is Malaysia'snumberone corporation. with widelydiversifiedbusinessesand a marketcapitalisationof over US$2billion.It is also the largestmultinationalin SoutheastAsia. Its businessactivitiesare groupedto fit the natureof its diverseoperationsand
broad geographicmarkets.The Group today comprisescompaniesin l2 countries in Europe,the UnitedStatesand Asia Pacilic.To supportits extensive trading and manufacturing interestsin Asia,the Grouphas regionaloperationsin Hong Kong,the Philippines, Australia,Indonesia, Brunei,Thailandand Singapore as well asMalaysia.
DiversificationStrengthens theGroup
In the pasttwo decades,the company h a s u n d e r g o n ea s t r u c t u r a lt r a n s f o r mation,havingsuccessfullydeveloped f o u r o t h e r c o r e b u s i n e s s e sb e y o n d p l a n t a t i o n sT . h e s ei n c l u d e m a n u l a c t u r i n g , h e a v y e q u i p m e n ta n d m o t o r vehicledistribution,propertydevelopm e n ta n d i n s u r a n c e . In manufacturing, Simebusinesses manufacture and marketa broad range of automolive,earthmoverand aviation tyres.This divisionis Malaysia'slargest tyre producerand the largestexporterof tyresin Southeast Asia. The distribution of healy equipmentandmotorvehicle assemblyarc handledby Sime D a r b y s u b s i d i a r yT , ractors Malaysia.The heavy equipm e n t d i v i s i o nd i s t r i b u t e s and provides productsupport for the completerange of' Caterpillarheavyequipment. T h e m o t o r d i v i s i o na s s e m b l e s a n d d i s t r i b u t e sF o r d , BMWand Land Rovervehiclesas well as Scaniatrucksand commercialvehicles. T h e c o m p a n ya l s o a s s e m b l e sM a z d a passenger carsandSuzrlki4-wheel drrve v e h i c l e su n d e rc o n t r a c t . SimeUEPprovidesthe baseof the Group'spropertydevelopmentoperation. Thesubsidiaryhasdeveloped Southeast Asia'slargesttownshipbuilt by a single developerand is in the processof building industrialestatesfor modernwarehousingand light industry. Insuranceservicesprovidedby the Groupcomprisegeneraland life insurance,healthand medicalinsurance, and both insurance andreinsurance broking. Plantationstraditionally provided the foundationof the SimeDarbyGroup, Today,the organisationhas200,000acres of primetropicalagriculturalland under
oil palm, rubber and cocoa, and has movedinto downstream activities,suchas the refiningand packaging of vegetable oils and specialtyfats, and the manufacture of dippedlatex productsincluding glovesand condoms. examination
The Group has seen significant growth in its newestarea of diversification,the oil and naturalgasindustry, through the expansionof engineering d e s i g na n d f a b r i c a t i o nc a p a b i l i t i e s . S i m eh a s m a j o r c o n t r a c t sw i t h S h e l l , Essoand Petronas,Malaysia'snational oll company.
Handson From Dunlop Tyres to BMWs TheGroup's highstandards for quality, efficiencyand integrity have led to joint venturearrangements and o t h e rb u s i n e s a s f f i l i a t i o nw s ithorganisations in Europeand North A m e r i c a I. t s s t r o n gc o n n e c t i o n s a n d p r e s e n c ei n t h e region, coupledwith a proven track record in finance, m a n a g e m e nat n d m a r k e t ing, make it attractiveas a businesspartner. A broad rangeof globallyrecognisednameshavejoined forceswith the Groupin the region.Of these,a numberhave taken advantageof Sime'sknowledge of the region and extensivenetwork. In addition to BMW Land Rover,and Ford partnershipsfor the assembly,dist r i b u t i o na n d p r o d u c ts u p p o r to f t h e i r vehicles,the Groupdesigns,manufactures, marketsand distributes Chubb s e c u r i t ye q u i p m e n tT. r a c t o r sM a l a y s i a is one of the top l0 Caterpillardealershipsin salesand customersupportin the world. I n a 5 0 - 5 0j o i n t v e n t u r ew i t h t h e MichelinAircraftTyre Corporation,the G r o u pm a n u f a c t u r ehsi g h q u a l i t y a i r craft tyres for major airlines. 0 t h e r i n t e r n a t i o n ablu s i n e s sp a r t n e r s i n c l u d e K a n s a iP a i n t so f J a p a n Rengo,Japan'sleadingpackagingcompany;and the InaxCorporationof Japan for the exportmarket.
ForenqUiriescontacl]comrn!nicalionsDepl'simeDarby8ethad.WismasimeDady,Ja|angajaLaUt.50350KUa|aL|]rnpur
@ RomuloL Nerl of Business AyalaProfessor Management
Basic flghting units...
TheCompetitive Adrarftage OfNatiors I n a meeting attended by a I number of prominent FiliI pino businessmento discuss I the imolications of the Asean FreeTradeAgreementon Philippine industry, I suggested that thev read Michael Porter's The CompetitioeAdwntage of Nations. One businessman retorted that there was no need to do so, and that all that an exDorterneededto do was compare his costs with those of other countries to be competitive. I thought to myself that here was a businessfiun who wasboundto fail in the highly competitive world of international trade. From Michael Porter's perspecuve/ we were using a rather primitive competitive weapon of factor costs. Sucha competitor would evenhrally be overwhelmed by much more advancedrivals in the international market with more sophisticatedcompetitive tools. The Competiti)eAdaantogeol Natiors is must reading for industrialists and economic planners who wish to see their respectivecountries survive and flourish in an increasingly globalizing world economy. Michael Porter'sbook is a modem ve$ion of Sun Tzu's Arl o/ IVarapplied to the world of international economic competition. MchaelPorto'sbatdegroud is manuJacturing.Nations gain or lose territories in terms of indl$hy market shale.The basicfighting unit is the firm. The firm's strength dependson its ability to createvalue for its cwtomers. The componentsof its value-oeating @
machinery lie both in its primary activities of procurement,runufacturing marketing and aftersales service and in its support activities of human and technology development finance and planning. In the classic Porter fashiorL the analysisof selectedcountries makesuseof the five competitive forces that determine industry competition, namely the bargaining power of suppliers, the threat of new enhants, the threat of substitute prcducts or services, the bargaining power of buyers and rivalry among existing competitors. It alsoalludes to the generic shategres ofcostleadership, cost focrrs,differentiation and fo cuseddifferentiation. Porter's new conceptual brcakthrough,however,straddles the fields of economicsand corpe rate stlategy and pushesinto the uncharted area of national economic shategy.He demonshates the inadequaciesof intemational econornicsushg factoranalysisin explaining the competitive successesand failures of countriesin intemational markets. He brcaks new ground in corporateand na-. tional economicstrategy through his concept of the "national diamond" the foui components of which arethe determinantsof national advantage.Thesedeterminants are a country's factor conditions(in theclassiceconomic factors of production, the country's home demand conditions, the presenceof related and sup porting industries and 6mlly the fifm s strategy,structue and the
skength of firm rivalry in the domesticmarket. Porter makes apt use of the concept and imagery of the diamond in his country analyses, demonshating that when there is shength in the four deteiminants of competitive advantage, the counbys competitive position in theseindustries is ahnostimpregnable, like a diamond (C4) composedof fowcarbon atoms,which individually are weak, but become extremely strong when bonded into a diamond. Porter suggestsa limited but supportive role for goverrunent. ln all instances,Porter hasshown that in indushies wherc govemment limits competition or creates monopolies, these are industrie where the cor.mtryis globally ucompetitive. The book is rather long (more than 800pagesof text and notes) and contains rcpetition oI statementsand givestheimprâ&#x201A;Źssionof verbosity (in conhastto Sur Tzu's short book of laconicstatements). However, its conceptsare iust as valuable as Sun Tzu's. A good exercisefor aseriow readerwould be to extractkey statementsin the book ard orgadze them into a short manual,creatinga Sun-Tzulike handbook. The book's country casesare impressive and complete; and eachcasecanstand alone ascomplete reading material. I have and they make used them in cJass, excellent casetea&ing materials. The diamond conoeFis easilyap plicableand studmb apply it with the enthusiasmof new converts. The sad part is that indushialists and economicmanage$ will probably not have the time or Patience to plod through the boo( yet theystandtobenefitmost from its rcading. Perhapsan abridged velsio4 orHberyet, afiknversion will be most effective for handson managers.I
.IHE 1992 ASIAN MANAGERJULY/AUGUST
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Thedelights ofPiazaRomano...
intheMidst AnItalianOasis Kor€ ofHong I n the midst of the hustle and I bustleof Hong Kong Central is I a hiddenoasisofgastronomical I delights,wher€ onecanerperieaEethe pleasues of an Italian piazza. Imagine lazy aftemoons sipping coffeeor eating delicious homemade gelclostogether with friends in the cool shadeof a Roman squar€.Or enpying a glassof wine at the end of a tiring day.Or partaking of a sumptuousmeal in the true ltalian tradition. All these ar€ yours at the PiazzaRomano. EnhepreneurHelm Wonghas transformed 16,000squarefeet of the basement of the Bank of America Tower into a typical ltalianpiazza.Stone,marble,red brick and tenacotta interplay to create an outdoor atmosphere.Gaily decorated outlets line two walkways paved with terrazzo and marble floors. These combined with the gmerous u,seo{ an:hes, I columns, awnings and barmers I reinforce the feeling of an open square. Piazza Romano boasts of 10 food and beverageoudets, a de light for love$ of all things Italian . Unwind after a hard day at thewine Bar.The WineBar offers a formidable selection of Italian wines,which canbeenjoyedwhile listening to a jazz pianist or while playing at the inverted coneshapedgametables. . Watch the chef prepare authentic Italian pizza at the Pizza Oven.All sortsof pizzasimagirublearebakedcontinuously:round ones, square ones, calzonesor tumovers with your favorite toF pings. . The Ristorante Romano gatheF the best dishes ftom the aifferent regions of ltaly and serves them the classic way. A hearty meal stalts with an antipasto buffet, fresh homernade pastafor the first course,a choice of entre€sfor the s€condipiatti a d' a dolcibdiet.
u
o The catchof the day is served Italian style at the Casa Romea *atood. Car4ccio (sshimi) ard Brusthetta(t<mst€dItalian br€ad topped with clams, mussels,garlic and tomato sauce)arc favorite starte$. Not to be missedis Penre ol Crostaceg, agasta dish of lobster claws and sirells dramatically IlamM at your table. . Vegetarians and weight watchers can head shaight for Grcen and Fresluwhich features an mticingly freshsaladbar and a vegetarianantipastobuffet,wherc onecansavorbakedlayer of eggplant, cheeseand fresh tornatoes; ind baked tomatoesstuffed with parsley,garlic,olive oil and grated DI€AO.
. PastaPastaoffersa vaiety of Dastacombinations-one canmix and match different pastas (spgghetti, t'usilli,iganton, Wne) uith excitingsaucesuchasblackolive, pesto, hot drili, meat and cream, bacon,onio4 and tomato. o Thearomaoffreshly-brewed uppuccinoor ayew beguilesthe coffeelover to sDendtime at Caffe Roma. Mini oizzas, sandwiches and pastriescan be enPyed with your conee. ' o For the sweettootb CakeN' Chocolate is hard to resist. Tirazrsrl, Italy's heavenly dessert of mascarpnecheese,eggs,cr€am and chocolate,is a favorite choice. o Clooeto 20 exotic flavors of homemadeseialoare avaitrableat Ice N' Crea;)a Beatthe heat with a mouth-watering cone of amaretto ice qeam. For the more adventurous, try ginger or hot chili ice <ream. a Want to trv vour hand at authenticItalian ;o6king? Shopat the Deli Market for tho6eoh-6odifficult-to-find insr€dients. The Deli Market stocks-up on Italian herbslike basil th1.rne,sage,rc6€mary and marirram; vegetables like rucola a d wmodorot tresh homemade pasia in delicious
chilli; pfoscfuffoand salami; and a varietv of o s in special flavors. Cookrlrgirstructions arelikewise available. This writer pe$ona.Uyexperienced the delights of Piazza Romano.After the last ManagementAwardsdimettheseasoned organizerstrooped tiredly to the PiazzaRomanofor a farewell dinner hosted by Dentsq Yourg & Rubicam. We enter€d the Piazza Romanovia a white rnarble staircaseandwereimmediatelyshuck by the warm, cozy ambiance. As we entered Ristorante Romano,Iimmediatelyespied the long antipostobuffei table. The pfosciultoham,anchovies,oysters, carpaccio,olives, and insslata capreselaid out wer€too inviting to passup. We then passedthe dolci buffet, where I saw my favorite firandsramid a selectionof Italiart cakesand pastries. We setuedourselvesat a long tablewe had r€s€rvedearlier.Our friend from Mediahouse, Mr. Tokui Niinuma, grilled the waiters on each dish offered on the menu and then painstakingly made his selection. As I was sipping the deliciouslv cold drv wine, I couldrr't help 6ut noticd that most of the waiten were Ffipino. This riddle was solved whin the waiters gathered aruund our table and burst into a lustv serenade of popular Italian scings.Iruly, the Filipino talent for song is rcmark'I}re abla! rich baritones of the singingwaiterssettheahnosPherc for fun altd good will. Our eveninq at Ristorante Romanowas a perfectcondusion for a very rewarding trip. Excellent for the proverbial power lunch, celebrations,or an eveadng with friends, Piazza Romano oIfels thevariety,quality and atmospherc Hong Kong is famous for Don't missit on your next Passage.I
19@ ]HE ASIANMANAGER JULY/AUGUST
@ Prct Sonny Coloma
Listening likesillyputty...
0n Leadership, Vision and Passion
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"Mr. Bennissaysthat the currentcontext of Americanlife is best definedby a lackof a commonvisionand purposewhich stems from an 'addictionto theshortterm."'
eadeF,not maragers,ar€the mainfocusof WarrenBennis' compelling book which covers the hows of leadership: how peoplebecomeleaders,how they lea4 and how olganizations mcQurageor stifle potential leaderE. "The proc€ss of becoming a leader,"saysMr. Bermis,"is much the sameasthe processofbecoming an integratid hurnan being. For the leader, as for any integFted pelson, life itsef is the carcer." True to this precept, he anchorshis study on the lives of28 outstanding individuals, among whom are musician Herb AlDert, Applds CEO John Scutley,Walt Disney Pictures' Martin Kaplan, Oscar-winnhg filrn dlector Sydney Pollack, Girl Scouts of America executive director France Hesselbein, former US Education Secretarv Shirlev HuJstedler, and femiiist leader Gloria Steinem. Mr. Bennis weaves his thoughts on leadership by citing tlue-to-life vignettesftom his "cast of characters."Lnsteadof writine snapshot biographies, he illusi tntes key principles with dramatic examples cu-lledfrom the elite 28's ictual experiences. Listenins to oni's inner
IHEASIANMAMGER SEPTEMBER/OCTOBER 1992
voic€, ior hstanc€, is a udque leadership attribute which Mr. Bennis describes extensively in a chapter on operating on instinct. He quotes Herb Alpert: "I'm a right-brain animal. fm not a businessman in the traditiorul sense. And I do alot of buckshotting and I rely on my gut reaction... I try to listen like a piece of Sillv Putty whm som6one plays me a song. I try to let my biases iust blow in the breeze,For the most part, I'm listening for the feelins." On two basic points, says Mr. Bennis, leaders agree: first, that "leaders are made, not born, and made more by themselves than by any external means;" and second, that no leader sets out to be a lead.et per se, but rather to express himself fullv and freety, .that is, leaderi have no interest in proving themselves but an abiding interest in expressing themselves."
Guldlng Vblon
tegrity which has three essential pafis: self-lnowledge, candorand maturity. Finatly, there are two more:curiosity anddarin8. W?ites Mr. Bermis:"the leader wonders about ever'''thin& wants to leam as much as he ca4 is willing to take risks, experiment, try new thin$. He does not worry about failure, but embraces errors knowinghewillleamftomthern." Mr. Bennis, howevet is prc "Where have . foundly disturbed. a.llour leadersgone?" he asksin his opening chapter. "Therc arc 2,10millionAmericans, and wdve tried for a couple of decadesto be without leaders."He is distubed by the dedine in America's economic competitivenes and,more importantli by the ercsion of the integrity of mairr Am€rican institutions asan offshoot of the scandals that have rocked Wall9tseet, government, and even the churches(im Balker and Jimmy Swaggart). What has happened? Mr. Bennissays that the curent context of American life is best de fined by the lack of a common vision and purpose which stems fum an "addiction to the short term" and a penchant for quickfix solutions that barcly skim the rcots of a deeper malaise. He sounds an alarm: "As long as we arecaught up in the context- the volatile, turbulent, ambiguous managerialzurroundingsthatwill su.ffocateus if we let them," then this basicproblem can't be solved. He echo€sthe businesscofununiq/s concEmthat thismaybe pardy athibutable to the fact that too many of today's managers iu€ trained by businessschools that give short shdft to pomoting effective leadershipskills.
The primary basic ingredient which leaders share is their "concern with a Suiding vision, an overarching vision."Such guiding vision is expressed in the leader's be lief that he or she can male a difference. The secondbasicingredient is passion. 6 as l€o Tolstoy said, 'tppes arethe dreamsof the wak-. ing man " then, saya Mr. Bennis, "the leader who corrnunicates passion gives hope and irupiration to other people."And how doesthe leaderexfxesswhat Tom Peterscalls a "passion for excellence?"Mr. Beniisagee withMr. Peters:how els€exceDtbv assiduousty "getting peopte bn your lradffihD Cap side-' by infecting them with enThis is where his postulations thwiasm and zeal. are ioined bv Haivard Prof. The next basicingr€dimt is in- Abriham Zaieznik. Zaleznik's
s
-The
Manageiial
l{ystrque Ratorino Inonptshiiin Bwirns Abralnmh)snik
tration's fiasco over the IranConha affair as being 'h dreary rcpetition of the hcomDetencein the White House"dudne the last quarter century.This runs parallel to Mr. Benfis' criticism of Mr. Reaganlspr€d€cessors:"Lyndon Johnson, Richard Nixon and jimmy Carter could be described as self made men, but they failed to win our hearts or mgage our minds, and finally failed as leaders.All three werc highly competent but their ambitions overode their talent."
W'hnrn ilennis
ttldtagpdal tt@qne I)rof. Zdezknik analyze the 'tul.!fu&r/!dtdl,tuv'! managerial mystique by probing into how manageE think, how nvlnagen are trained and eduFood iol ttouglrt ftom Amedca's leade]3hlp gurus. cated, and, as a result, how the book arnplifies the thoughts notions of rationality and effiwhich he first expounded in a ci€ncy,cooperatiorLconhol and Horuard Businesl Review ar- prcfessionalism have in fact enticle entitled, "Managers and hancedthis mvstioue - with not Leaders: Are They Differ- so pleasing consequences. The conseouences:the trient?" Uke Mr. Bemis, Zalezl:.ikbe- umph of politics, the corrup wailstheleadenhip gapintheUS: tion of power, an identity 'tsusinessin America has lost its cdsis among managers, and way, adrift in a seaof managerial the overpowering effects of mediocrity, desperately needing stress on disgraced power leadershipto faceworldwide eco- holders. nomic comDetition." Hierarchies invariably breed He pirs-the responsibility for shongpowerfi gureswho,intum, this dedine on the attitude of spawn dependency within the American managemen* "Busi- organizationin termsof blind loyness execuhves erroneously be- altie and fawning suhervience lieve that management and on the part of tho6ewho rcport to leadership are q.nonymous; that such bosses. Corgorate Dolitics to manageaccordingto theprinci- a l s o e n g e n d e r c o n s t a n t ples of its mystique is to lead. For manzuveringfor turf and this prethe past forty years managersin occupation undermines business business have put their faith in becaiEe"it diverts attmtion ftom numbers, managed by process poducts and markets, from cusand formed elaborate shuctues tomeEandcomDetitorswhercth€ to get people to do the prcdictable aftmtion really belon8s." Inthechapteron'"Thecorrupthing. The truth is that managing and leading are two vasdy differ- tion of Powel" Prof. Zaleznik entactivitiesand that,asa rcsult of Plovides aninielesting casestudy confusing the two, corponte en- on Harold Gmeen, the legendary CEOof ITT to whom heattributes terpris€ has lost its way." ButPIof.Zaleznik'sindictrnent this colorful ouote:"I''r.no laissez. covers the Dublic sector as well, /alre, let-me-know-how-thingsHe deliveri a scathing assault are-in+ix-months guy. I want to against the highest office in the know whafs going on.,. I beleve land: "A emeration of Americans in pushing and pulling and knows [Ele about the presidency kneading and whitding until you of the United States exceDt finally get those two purple adverrturism, incompetmce, dif - droos." Mr. Geneen qeated a mamfu seness,slickness,stubborruress, moth conbol slstem that requir€d and evm lawlessness,along with an obsessionwith irnageand pub- every managerof eachof the 250 lic oDinion." profit centeE in the company to He cites the Reaganadrninis- submit a monthlv mrformance
06
reportcontainingfinancialanalys€sof sales,profits, ROI and other relevant measurcs. Each reDort was voluminous, typically as many as20 - rcpeat- 20 single spaced t)?ewritten pages. He held marathon lFhour meetings at which eachprofit managerwas grilled: "Many people found Geneen's questioning technioue almost sadistic in its intansity, and many managers were crushed in each session." Rof. Zaleznik ofiers a psychoanalvtical exDlanation:'€xecutives- frcqumtly seek power in perpetuation of early childhood fantasiesabout how to gain contsol over parentssothat they may b,ecomeuedictable. Gmeen was relativelt isolad ftorn his parents,who were separatedearly in his childhood, ard he tearned to counteract feelings of loneliness and dependencv." r necue, sayst'ror. zanezurt ls leadenhip. like Ml Bennis, he emDhasizles the importance of an overarching visioni "First corpc rate leadershiDis subotantive. It involves idea6 about what to do rather than how to do things. Second, it involves visioD or what can be termed substantive imaginatio4 that proiectsa company's future. Thtud,if a vision is worth risking energies and re. source, leadership has the staying power to s€ethe vision to its condusion." I
a Lader On Becofiifig by Warren Bennis. New York: Addison-Wesley, 1991.226 pages. The Marugeriil Mystique: Restoring lzadarshipin Business by Abraham Zaleznik. New York Harper and Row, 1989. 397 pa4es
1992 THEASIANMAMGER SEPIEMBEFYOCTOBER
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@ By AntonloUchauco
A monthin NeDal...
Another Counfiy So when I landed in Kathmandu one balmy March ev€nin& I walked into what was for me rmtil that monent lar8ely a rnyth, and found a real place. The real Nepal is a foubled mysticalnation,bneofthe world's poorcstwith an incQmepercapita of about $170. Until recmdy a appafua.a seu-conreseamonarchy,Nepal has been besa urbanite accustomedto all bv intemal economicand political the creaturccomforts ofbig s6ife. spiratlitrg costs arid ramDant discontenthave followed in cities, four weeks 0 would spend my thirty-thtud birthday iemocracy's wake and while ther€)in what I initialy thought of commrmism has qumbled elseas litde rnore than a Flimalayan where in the world, it has flourhill stationwasnl my idea ofgood ished in Nepal. The local fur. And dedicated though I am communist movenent hasfound to my Fb (I am a managemmt plenty of new cadr€samongthose c o n s u l t a n t s p e c i a l i z i n g i n for whom the lastdecadehasbeen healthcare),I thought of drawing characterized by cruel disapthe line at having to spend more poinhnent. than a fortnight in IGthmandu, Despitethe povelty, pocketsof thescmeof r€cent,nther virulmt Kathmandu and the outlying demonstsations. provinces are incredibly pretty 'Drodemocacv-Fople Like most who lnow with tlrcir rather rundown lookvery litde of that part of the worl4 ing temples and housesdone in my imaginings of Nepal were the haditional Hindu style. ln Katknandu, there'sanair of swathed in the rcmanc€ of WesF em nostalgia. ln my ignorance, decaythat is morc d|arming than these romanticized visions often deprcssingly derelict. Like mo6t spilted into whatever vague Asian cities,the experimce of beknowledge I had of Nepal's ing in Kathmandu is not Fst neighbours - Tirbet,Sikkim and visual; it is a svnthesis of other Bhutan. more evocative'senses- smell, My inagination insisted on a sormd and touch. The days are snow kingdom huddled in the mild and the tate evenings a bit Himalayan peaks. I had thought nippy. The only snow I saw - eroneouslv - that Nepal was was uo h the mountains on a unhappily annexed by either half-diy fourney to the Tarai, China or India (it is Trbet that is Nepal's arid plains. Vestiges of western cultutre under Chinese subjugation) and that the Dalai lama made his have found their wav to Nepal. home there (Wong again: The After a dirurer party one evenin& Dalai lama,a Trbetan,haslived in I found mysell in the sitting room exile in hdia since1959.).ttaving watdring satellite television with read Hilton's Lost Horizon in my hoefs children. My hotel, the highrhool, I thought of a utopia SoalteeOberci was much likeany of exotic beauty peopled with 8€- fivestar hotel in Manila or Bangnii and Hish lamas. And less kok; luxurious and well-aPurbanely : having watched Dointed, with a businesscenbe, EAdieMrxphl sTheGoldmChiM, |>iped-ln muslc, and an MTV I thought of levitating mysticsand charnel. Still, Nepal rctains its sPlenglaciersof frcsty brightness. nticipation and surprise are vital elementsin anyvisitor's appreciationof a foreign country,and in Nepal , I exDerienc€dboth. When I first head that I was being sent to work briefl vinKathmandu, Iwas
"I steppedout of the hotel car onemorning andfound a bloodied goat'sheadlying alongsidethe pavement. The rlriver quickly explainedthat it was a local custom celebratingsuch-andsuchfeastandno causefor alatm."
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did isolation. Saqed cows wander fteely throughout the steets and a mairrity of the NepalesewhoareanexEemelvfriendlvand '* go ibout hospitable people theA dals &e$sed in traditional costr.me. TheNeDaleses€em to have an inordinate- number of holidays. The month I wasthere,therewere ouite a few f€stiwls and davs-off ciue to the riots in lGth*ndu over Drice increases. I actuallv stepped out of the hotel car oni moriring and fourd a bloodied goafs head lying atongside the pavement. The driver quickly explained tlnt it was a local custom celebratins such-and-such feast day and n6 causefor alarm. Office hours areslighdy different to what werc accustom€d. Emploveeswander into the office at 10.0da.m.and leaveat 4.00p.m. Sundaysarenormal workingdays while Sahnday is the haditional day of rest. When it was time to Dackmv bags and leave for Ma; a for; weeks to the day since I filst arrived in Kathmandu, I was eager to return home. Not because I hadn't mpyed my siay in Nepal, for I did - but becauseone does tire of "Living out of the bag" and one's stomach does search for something more soothing than curied chicken and vegetables.I eniryed mymonthinKathmandu and would very much like to r€turn again one day. The local customs, so differmt ftom what fmused to (Whereelsedo people eat soft-boild eggswith their aftemoon tea?) and the traciousnessof the Nepalesehave left in my memory arl indelible irnpresslon. I
Antonio Lihauco is a navgeflnt consllltant. He hods degeeslrom CoIumbia Unfuersity ana the Atefieo ale Mnfiila.
1992THEIsIANMAMGER SEMMBEF/OCTOBER
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