Summary by Chris Hourigan
Master of Accountancy Program
University of South Florida, Summer 2002
Japanese Management Main Page | JIT Main Page
At the time of this article there was little understanding of the way the Japanese were able to bring a superior product to market in less time and for less money than their Western counterparts. This article was intended to explain this problem and the reason for the misconceptions held previously. The authors first set out to dispel the myth about the secrecy of Japanese production methods. They are in fact very open about their operations. It is the authors' position that the reason previous attempts to understand their methods failed was the combination of three main factors.
First, there is a large cultural gap. The visits were really controlled by the Westerners, who brought along their questions and expected full open and descriptive answers that followed their thought process. Obviously, the two cultures thought quite differently and although their questions were answered, the key issues were not revealed. This was not secretive behavior because when the right questions were posed, the answers were promptly given. The Japanese were acting in a manner consistent with their culture to avoid embarrassing the questioner by pointing out that he or she had asked the wrong question.
Second, and maybe the most obvious, is the language barrier. Even with translators, the communication process was lacking. Some words or phrases have no translation. There is no common ground or frame of reference. The Japanese language lacks the precision that the English language possesses, therefore whole conversations can be had without a mention of a subject.
The third obstacle they had to overcome was distraction. This is broken up into two areas. Questioners often were distracted by new innovations such as the "lean enterprise" and did not try to delve further into the Japanese system. They often wrote off the ability of the Japanese to create such a superior product with less cost to a single innovation. And the questioners simply asked the wrong questions. They came looking for a cost accounting system that explained all of the differences and found cost systems remarkably the same as the ones they were using back home. What they needed to understand was the Japanese cost management system. All of their questions about the cost accounting system were answered, but nobody bothered to ask about a broader dynamic.
The broader dynamic was the feedforward system, as opposed to the traditional feedback system. If you think about it, the West produces everything on a feedback method. We compile data after the product has been produced and use that to check goals, not very "kaizen-like". The Japanese use feedforward methods such as target costing, value engineering, and inter-organizational cost management systems to achieve long-term growth. All of these incorporate the goal of reducing cost overtime by increasing functionality and quality. The bigger picture is taken into consideration. The emphasis is on long-term company growth, which eventually trickles down into greater market share.
The authors also touched on another area that creates a Japanese competitive advantage over U.S. companies. It is the worker productivity created by the lean organization. The example in the article showed twice as much production from slightly fewer workers (Toyota's 1993 4.5 million vehicles with 109,000 people compared to Chrysler's 2.47 vehicles with 116,00 people).
The authors also posed several questions such as, will the Japanese cost management techniques work as well in the U.S.?; How will they affect cost accounting?; Will labor unions help or hurt?; and Would inter-organizational cost systems work or will they be considered anti-trust violations?
Although the Japanese have a different culture and a different business mentality, knowledge of the hidden aspects of the Japanese system is needed to understand the global competitive environment and to translate those secrets effectively into U.S. companies and locations.
____________________________________________
Related summaries:
Chow, C. W., Y. Kato and K. A. Merchant. 1996. The use of organizational controls and their effects on data manipulation and management myopia: A Japan vs. U.S. comparison. Accounting, Organizations and Society 21(2-3): 175-192. (Summary).
Cooke, T. E. 1993. The impact of accounting principles on profits: The US versus Japan. Accounting and Business Research (Autumn): 460-476. (Summary
Cooper, R. and C. A. Raiborn. 1995. Finding the missing pieces in Japanese cost management systems. Advances in Management Accounting (4): 87-102. (Summary).
Crawford, R. J. 1998. Reinterpreting the Japanese economic miracle. Harvard Business Review (January-February): 179-184. (Summary).
Dillon, L. 1990. Can Japanese methods be applied in the western workplace? Quality Progress (October): 27-30. (Summary).
Hayes, R. H. 1981. Why Japanese Factories Work, Harvard Business Review (July-August): 57- 66. (Summary).
Hiromoto, T. 1988. Another hidden edge: Japanese management accounting. Harvard Business Review (July-August): 22-25. (Summary).
Howell, R. and M. Sakurai. 1992. Management Accounting (and other) Lessons from the Japanese. Management Accounting (December): 28-34. (Summary).
Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. (Summary).
Ittner, C. D. and D. F. Larcker. 1997. Quality strategy, strategic control systems, and organizational performance. Accounting, Organizations and Society 22(3-4): 293-314. (Includes results for firms in the U.S., Canada, Germany, and Japan). (Note).
Johnson, H. T. and A. Broms. 2000. Profit Beyond Measure: Extraordinary Results through Attention to Work and People. New York: The Free Press. (Summary).
Lee, J. Y., R. Jacob and M. Ulinski. 1994. Activity-based costing and Japanese cost management techniques: A comparison. Advances In Management Accounting (3): 179-196. (Summary).
Martin, J. R. Not dated. Chapter 8: Just-In-Time, Theory of Constraints, and Activity Based Management Concepts and Techniques. Management Accounting: Concepts, Techniques & Controversial Issues. Management And Accounting Web. Chapter 8
Martin, J. R. Not dated. Lean concepts and terms. Management And Accounting Web. Lean Concepts and Terms Summary
Martin, J. R. Not dated. What is lean accounting? Management And Accounting Web. Lean Accounting
Martin, J. R., W. K. Schelb, R. C. Snyder, and J. C. Sparling. 1992. Comparing the practices of U.S. and Japanese companies: The implications for management accounting. Journal of Cost Management (Spring): 6-14. (Summary).
Monden, Y. and J. Y. Lee. 1993. How a Japanese auto maker reduces costs. Management Accounting (August): 22-26. (Summary).
Porter, M. E., M. Sakakibara and H. Takeuchi. 2000. Can Japan Compete? (Perseus). (Summary).
Sakurai, M. 1989. Target costing and how to use it. Journal of Cost Management (Summer): 39-50. (Summary).
Sakurai, M. 1995. Past and future of Japanese management accounting. Journal of Cost Management (Fall): 21-30. (Summary).
Spear, S. J. 2004. Learning to lead at Toyota. Harvard Business Review (May): 78-86. (Summary).
Spear, S. and H. K. Bowen. 1999. Decoding the DNA of the Toyota production system. Harvard Business Review (September-October): 97-106. (Summary).
Staats, B. R. and D. M. Upton. 2011. Lean knowledge work: The "Toyota" principles can also be effective in
operations involving judgment and expertise. Harvard Business Review
(October): 100-110. (Summary).
Swank, C. K. 2003. The lean service machine. Harvard Business Review (October): 123-129. (Summary).
Takeuchi, H. 1981. Productivity: Learning from the Japanese. California Management Review (Summer): 5-18. (Summary).
Tanaka, T. 1993. Target costing at Toyota. Journal of Cost Management (Spring): 4-11. (Summary).
Tanaka, T. 1994. Kaizen budgeting: Toyota's cost-control system under TQC. Journal of Cost Management (Fall): 56-62. (Summary).
Wheelwright, S.C. 1981. Japan - Where operations really are strategic. Harvard Business Review (July-August): 67-74. (Summary).
Yoshida, K. 1989. Deming management philosophy: Does it work in the US as well as in Japan? Columbia Journal of World Business (Fall): 10-17. (Summary).