Note by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
In the introduction, "What America should learn from Japan" Porter begins with a brief discussion of the history of Japan's rise to the most competitive nation status in the 1970s and 1980s and subsequent slide to a much lower position in the rankings during the 1990s. During this period there were two explanations for Japan's rise. One explanation was based on the government's activist roll in economic development. Porter refers to this as bureaucratic capitalism. The other explanation was based on Japanese management practices such as continuous improvement, total quality and just-in-time. Porter explains that elements of the Japanese model were emulated by both republican and democratic administrations giving the National Cooperative Research Act of 1984 as an example. This act was later extended to provide antitrust exemptions for joint production ventures by the Clinton administration. But Porter says the book shows that the United States learned the wrong lessons from Japan about government policy and emulated the policies that did not work in Japan.
However, U.S. companies recognized the effectiveness of Japanese management methods and aggressively emulated these practices. Porter argues that this is one important reason U.S. companies are now so competitive. But, according to Porter, although the lessons about management practices were correct, they were dangerously incomplete. A flaw in the Japanese model produces what Porter refers to as "competitive convergence" where competitors imitate each other in a zero-sum competition that destroys profitability. The missing element is strategy, described as offering a unique mix of value. Continuous improvement is not sufficient as many U.S. companies still appear to believe (See the Porter 96 summary for more on this point).
In the last part of the introduction, Porter refers to some problems and weaknesses in both countries.
Japans problems include:
a financial crisis,
an aging population
inbred management and
But Porter says, "Make no mistake. Japan remains a formidable international competitor with many strengths." The Japanese could rebound quickly if the blind spots in strategy and government practices change.
Porter ends the introduction by saying that a renewed Japan will encourage the U.S. to deal with weaknesses including:
a poor education system,
the breakdown of organizational loyalty,
adversarial approaches to problem solving,
a declining commitment to basic research, and
short-term thinking in both business and government.
Finally, Porter points out that a revitalized Japan would be good for the United States. As Deming said many years ago, the worse thing that can happen to you is to have a poor competitor.
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