Searching for a better management approach<\/p>\n
By James O'Hara<\/p>\n
JAKARTA (JP): The World Bank produced a development report in
\n1987 comparing the average levels of per capita income in
\ndeveloped industrialized countries and low-income developing
\ncountries. The report suggested that the average developing
\ncountries would take 80 years to catch up with current living
\nstandards of industrialized countries.<\/p>\n
In Indonesia, it appears that if the approach to managing both
\nprivate and state enterprises does not change, the country will
\nface an almost insurmountable problem of paying back its debts
\nand increasing its people's standard of living.<\/p>\n
The reason for searching for a newer, more appropriate
\napproach to management was and is the failure of traditional
\nWestern approaches to produce any long-term survivability of
\ncompanies.<\/p>\n
Over the last 40 years, many supposedly secure firms have
\ndisappeared; 70 percent of Fortune magazine's \"Top 100 firms\" in
\n1956 are no longer represented in the top 100. Many companies
\nidentified in Peters and Waterman's book In search of excellence
\nare no longer considered excellent.<\/p>\n
Another management expert attributes this to companies
\ncontinuing to do the things they do well without adapting to
\nchanging times.<\/p>\n
Yet another, Donald Sull, in an article in the August edition
\nof Harvard Business Review, stated that many good companies
\nsuffer from active inertia. They continue to do the same things
\nthat made them good, even when environment has changed, and this
\neventually leads to a decline in their fortunes. This paradigm is
\nvery appropriate to Indonesia, for the conditions that made many
\nIndonesian companies good no longer apply. The future will not be
\nlike the past and past experience will not guarantee future
\nsuccess.<\/p>\n
Management in many industrialized countries, and often
\ndeveloping countries, has long been based on ideas from Taylor,
\nMayo, Drucker and Peters. These countries have tried scientific,
\npsychological, professional and evangelical approaches to
\nmanagement, all of which are credited with some success. The
\nresult of this, according to Levering in his book A great place
\nto work, has been a managerial class that is set apart from the
\nworkers.<\/p>\n
The traditional concept of management is that managers plan,
\ncoordinate, lead and control the workers while the workers merely
\ndo. Following this, it can be seen that if there is one manager
\nand 50 workers, in a traditional setting only one person is
\nallowed to think and the rest follow. This provides about 2
\npercent brainpower. If all are allowed and encouraged to think,
\neven if the workers have only utility of 5 percent, the total
\nbrainpower available is 4.5 percent. This is more than two times
\nthe former level. In Indonesia, with its feudal and autocratic
\nmanagement systems, it is often the case that a senior person
\nthinks and the rest of the 1,000 or more employees are supposed
\nto do what they are told. It is an enormous waste of potential
\nbrainpower.<\/p>\n
Of course, the argument put forward by many executives is that
\nthe subordinates cannot think. However, all humanity thinks; what
\nmay be in question is the competence or level of thinking. This
\nbeing the case, two things are required; first, a clear focus on
\nwhat to think about and, second, an encouragement and stimulation
\nto develop dormant competencies.<\/p>\n
\"World Class Management\" is an approach that is claimed to be
\nbased on human values that promote environments which not only
\nimprove work satisfaction and human development, but also add
\nvalue at an increasing rate. Ebrahimpour and Schonberger listed
\nin 1984 the problems found in developing countries that they
\nbelieved could be diminished by such approaches.<\/p>\n
These were:<\/p>\n
* underutilization of both workers and equipment<\/p>\n
* inferior quality<\/p>\n
* unreliable and longer lead times<\/p>\n
* higher rate of scrap and defects<\/p>\n
* poor and inadequate maintenance<\/p>\n
* shortage of raw materials<\/p>\n
* shortage of skilled workers<\/p>\n
* lack of appropriate supervision<\/p>\n
* low productivity.<\/p>\n
After 26 years, one might argue that these problems still
\nmanifest themselves in Indonesia. While the country has excelled
\nat building glorious banks and offices, its track record of
\nmaking the things that people want to buy is not so good. Most
\nIndonesians with any spending power want to buy imported
\nproducts, perhaps because the products they want are not
\navailable locally or, if available, are of inferior quality.<\/p>\n
Local products are bought when they have a monopoly and\/or the
\nimported prices are high due to price protection. Before the
\nrecent economic crisis, foreign products were not much more
\nexpensive than domestic ones. However, this has changed, imports
\nare more expensive and credit is more costly. In this situation
\nthere is a new impetus for local products. To seize this
\nopportunity and increase the standard of living, Indonesian
\norganizations must add real value to what they do. They must
\nfocus on better products and services and less wastage of
\nresources.<\/p>\n
In the past there have been numerous comparisons between
\nJapanese products and Japanese managed companies. It's enough to
\nsay that the differences in working conditions and productivity
\nbrought about by changing the approach to managing companies has
\nbeen taken seriously by many Western companies and countries. In
\nfact one might argue that the West has taken on board Asian
\nmanagement values, whereas Indonesia has taken on board the old
\ndiscredited Western management values.<\/p>\n
It is time for Indonesia to return to Asian management values
\nand address World Class Management. It is not sufficient just to
\ncopy the ideas or techniques; this usually leads to a frustrating
\nfailure. Understanding of these approaches is necessary to fit
\nthem into the particular culture and time they are to be used in.
\nParticular care needs to be exercised in copying techniques or
\nsystems from others as most Indonesians' Weltanschauung has been
\ninfluenced by 20 years to 30 years of autocratic rule.<\/p>\n
To facilitate improvement, management must place its emphasis
\non adding value and reducing waste through a clear corporate
\nmission. Initially the issue of adding value and reducing waste
\nwill not be clear to many companies. As they become more involved
\nand more skilled in management, the concept of value and waste
\nwill change. The corporate mission should be synthesized to
\nenable the organization to respond to changes in the environment
\nand as such should relate to the organization's long-term goals.<\/p>\n
Having taken the first step it will become clear that World
\nClass Management is a continual learning process.<\/p>\n
The above concepts are not limited to small, medium or large
\norganizations; they can be applied to villages, towns, cities and
\ncountries. For example, a social organization may question what
\nit should be doing that is of value. Is it the provision of
\neducation, health care, nutrition, the building of
\ninfrastructure, banking, administration, manufacturing, policing,
\nor the development of shopping malls, etc., that are of real
\nvalue to Indonesia? Of course, some of these activities may not
\nadd value directly but they may be necessary. The question is,
\nwhat should be the focus?<\/p>\n
Simply saying, it can be considered that most people would
\nvote, in a democracy, that education, health and nutrition are
\nthe basis for any country. Without them no country is viable over
\nthe long term. How an organization's or country's limited
\nresources are best utilized for the betterment of the
\nstakeholders is a central issue. One answer is to focus on adding
\nvalue, reducing waste and continually learning.<\/p>\n
The author is an adviser to PT Johara Indah Mulia management
\nconsultant. He has been associated with the management of
\nenterprises in Indonesia since 1978.<\/p>\n
Window: In Indonesia, with its feudal and autocratic management
\nsystems, it is often the case that a senior person thinks and the
\nrest of the 1,000 or more employees are supposed to do what they
\nare told. It is an enormous waste of potential brainpower.<\/p>",
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