DRUCKER AND MANAGEMENT IN JAPAN

“Management in Japan has been greatly influenced by Peter Drucker. In recognition of his efforts and of his remarkable contribution to the improvement of the practice of management in Japan, he was invested with the Third Order of Merit by the Japanese government in 1966. Reasons for this investiture enumerated on the Merit Certificate were as follows:

1.    Contribution to the development of management in Japan

(1)  Resulting from the rapid growth of the Japanese economy after 1955, there were greater needs for the modernization of management. While solutions had to be found for problems related directly to managers themselves, such as the establishment of the professional management ethic and of the well-defined social responsibility, ways and means for the modernization of management practices also had to be sought, such as the establishment of managerial policies, of strategic planning and methods of decision-making, of the decentralized divisional system, and of adaptation to a new competitive environment following the liberalization of trade.

(2)  To help management in Japan solve these problems mentioned above, Professor Drucker was invited by Japanese industry, and lectures were given by him at top management seminars held in Tokyo and Osaka in July, 1959. Since then, he has visited Japan three times, in 1960, 1962, and 1964 for the purpose of conducting sessions on management development.

(3)  Industrial managers from all over Japan, including not only Tokyo and Osaka, but also from such cities as Nagoya, Fukuoka, and Hiroshima, participated in the seminars, and more than 600 individuals were in attendance.

(4)  Professor Drucker played a prominent part in the establishing of a management philosophy within the industry of our country and in the modernizing of management itself.

2.    Contribution in introducing Japanese industry overseas and in promoting friendly relations between the United States and Japan. . . .

3.    Contribution to management education in business and industry.

(1)  In modernizing management in Japan, Professor Drucker's guidance was given not only to managers, but also to businessmen in general by means of public speeches and to students through academic lectures at various places all over Japan. More than 10,000 have listened to his speeches and lectures. . . .

(2)  Almost all of his works have been translated into Japanese. Some of his books have gone through seventy printings, and several hundred thousand volumes have already been published. These have been well received and widely read by the general public in various fields as well as by students and businessmen. His books have played an important role in building a modern industrial society and in promoting a better understanding of modern management.

4.    Contribution in improving the operation of governmental organization. . . .

In the pages that follow I shall add my observations on the sources of Drucker's influence in Japan, the extent of his influence, its focus, and the probable direction management in Japan will take as a result of his thinking. Drucker, with his deep insight into modern management, is providing ideological and practical approaches to management problems and is trying to define real problems in modern management and to find solutions to them. He has visited Japan five times and has taught us many things about current management problems that American management and management elsewhere in the world faces and about the ideologies and methods useful in finding solutions.

On Drucker's first visit in 1959, he led us to consider such questions as: What should enterprises be, and what should the responsibility of top management be at a time of rapid worldwide industrial revolution? How should the managerial abilities of management be cultivated, especially potential managerial abilities? With the mounting criticism of human-relations methods, how ought labor-management relations be handled in modern enterprises? When he visited Japan again in 1960, problems such as innovative management and long-range planning and decision-making were discussed. He made his third visit to Japan in 1962, when the program of liberalization of trade had just begun. Such topics as the challenge to the competitive world and the new world economy were raised. On his fourth visit in 1964, the ideal development of an entrepreneurial spirit and its practical consequences were discussed by taking up problems such as the achievement of high economic results and the roles of managers, cultivation of potential abilities of enterprises, and the development of an entrepreneurial spirit and decision-making to create future prosperity of enterprises. On his visit in 1966, his lectures were focused on effective management, competent executives, and the impact of computers on business and industrial managers.

Drucker made a strong impression and had considerable influence on Japanese top management, and, based on his grasp of the issues raised and of their analyses, Japanese top-management groups have been able to find clues to solving problems that have arisen from rapid growth.

One example can be given here to illustrate the great influence of Drucker. The president of a well-known rayon company who attended a seminar conducted by Drucker had been involved in a long discussion as to whether or not his company should curtail rayon production, but no steps in that direction had been taken. Inspired by Drucker's emphasis on the principle of innovative management-that the production of any obsolete product must be drastically cut back and replaced by new products-he was able to make an effective decision to stop producing rayon fiber immediately.

As mentioned above, almost all of Drucker's works have been translated into Japanese and have been well received by a great number of people in various fields. His management philosophy has been assimilated more completely and more systematically into the management thinking in Japan through these books, which have supplemented his seminars. I personally have been greatly influenced by him.

The work which has had the greatest influence upon management in Japan is Practice of Management, in which he indicated the management ideologies, policies, and methods that are needed in a highly industrialized society where technological innovation is progressing rapidly. This kind of guidance was what was eagerly sought by Japanese management, which found itself in the process of rapid industrialization based on technological innovation and of the formation of a highly industrialized society. Struggling in the unfamiliar world of modern industrial management, Japanese firms have succeeded, through his teaching, in finding guiding principles and means for solving problems.

Drucker's theories deal with an ideal type of management in industrial society. This is one of the important points in his theories to which the strongest emphasis must be given, for it provides modern industries with guiding principles. These principles are systematically developed in one of his books, The New Society. This book has not yet received the attention it deserves in Japan, but I am confident that our management will soon come to realize the superficiality of expounding his modern management theories without understanding his theories on industrial society.

His theories on industrial society extend into the future. While The Landmarks of Tomorrow deals with highly industrialized society, which causes rapid change, his newest volume, The Age of Discontinuity, deals with the society that will develop out of the present industrial society. Thus, management in Japan will be considerably influenced both by his theories on the present industrial society and by those on the future society. Although there are some special features of Japanese management that must be considered, the objective force for bringing about change in Japanese society can only be that which results from the further development of industrialization. Various issues proposed by Drucker in The Landmarks of Tomorrow and The Age of Discontinuity should be earnestly considered in Japan as well as in the United States.

As stated above, Drucker's theories of management are intended to establish what management ought to be in a highly industrialized society; and they are devised to formalize fundamental ideologies, ways of thinking, and frameworks needed by modern management. He is, furthermore, making efforts to establish management theories concerning top management. He has pointed out important problems which had not been hypothesized previously. One is the problem of entrepreneurship. His research findings were well-developed and systematically theorized in his Managing for Results, which presents the theory and practice of top management. Therefore, I believe that this book must be read by as many people in business and industry as Practice of Management has been.

THE EXTENT OF DRUCKER’S INFLUENCE

ON JAPANESE MANAGEMENT

Some would argue that his influence has been minor in that although, American management theories and managerial techniques have been introduced in steady succession, there has not been much change in the basic characteristics of Japanese management practice. This argument rests on the belief that American management theories and practices are not applicable in the management environment peculiar to Japan. Some of the features peculiar to Japanese management are a highly flexible adaptability to new circumstances, emphasis on group behavior, lifetime employment, wages and promotions based on the seniority system, and paternalism. Japanese management cannot, even now, be discussed without making reference to those characteristics, and it is in this sense that Japanese management is held to be unique.

Needless to say, Drucker's management theories must be adjusted to the management environment peculiar to Japan, for theories and practices came out of Drucker's experiences in and reflections on, American management. However, it cannot be concluded that these theories have no relevance for Japanese management. Nor can it be said that Japanese management has not been influenced by Drucker's theories because the management climate in Japan has remained unchanged. At the same time, it cannot be said that his books were well read or that his teachings were widely heard by a great number of Japanese people simply because they enjoyed the novelty of his way of thinking, nor can it be said that his books represent merely an episode in management journalism.

I believe this, because there has been a change in Japanese management. This change can be seen as a result of the major change in the environment of management following the end of World War II. Old traditions were abolished, and new freedoms were established. The economy was further weakened by inflation. However, in the period of inflation, a period of stabilizing and planning the economy began.

In 1949 and 1950 management in Japan was faced with the task of reconstructing the nation's economy with low capital funds. The greatest efforts were directed toward stabilizing the nation's economy and promoting greater industrial planning. This period can thus be characterized as one in which organizations for reconstruction were established.

The old commercial law was amended in 1950, and a board of directors based on American corporate laws was made the legal organ of top management. After that, the establishment of a firm started with the formation of the top-management organization based on the new commercial laws, and the guiding principles for establishing the organization were patterned after the formal organization of American management. Various principles of American management were introduced in Japan during this period and were employed by management in Japan as the means for establishing the organization formally. It was also during this period that the controller system was introduced into our country.

Not much real change was brought about in Japanese management by the change in terms of the organization; it was done without affecting the climate of Japanese management. Therefore, it may be said that the formal organization alone, based on the modern management theories, was introduced formally into traditional Japanese management. Many of the contradictions within Japanese management were pointed out at this stage, and these were criticized and analyzed from the viewpoint of the modern administrative organization or management based on rational and democratic principles. Management in Japan became aware of the contradictions between Japanese management and modern American management theory, and it was believed that they should be adjusted to each other. Although the need for this adjustment was well recognized, effective action could not be taken easily.

The Japanese economy made great strides after 1955, and so-called forward-looking management was advocated based on technological innovation with the further development of industrialization. Management in Japan thus became highly developed. Drucker visited Japan five times during this period of rapid progress, and management was thus provided with management ideologies, guiding principles, and methods and procedures needed during this period of high growth.

Management in Japan, wrapped in the veils of modernity, has continued to operate on the ground of the traditional management environment peculiar to Japan; yet Japanese management has been developed further by challenging the new problems of industrialization and by overcoming difficulties. With the evolution of a highly industrialized society, management has had to decide what direction further development should take by searching for the ideal of management matched to an industrial society. This modern management, moreover, must challenge competition in technological innovation and must confront acute problems that break out as the result of a changing industrial society. Drucker's management theories, especially those concerning innovation and growth, have played an important role in finding solutions for these new problems.

The ideal ways of management in an industrial society can be applied to any industrial society, and the management principles in industrial society are common to every industrial society.

It is true that there are differences in the environment of American and Japanese management. New problems resulting from an industrial society, however, are common to both, and the solutions developed to cope with these problems can be similarly applied to them, although there are some differences between the United States and Japan in terms of management's sensitivity to new common problems, in terms of its capacity to conceptualize them, and in terms of its willingness and ability to solve them. Although it cannot be denied that the management environment has a great impact on management problems, it is not a determining factor but only a limiting factor.

Drucker's theories could provide management in Japan with ideological frameworks of the kind that had been sought to determine what management ought to be. He did not intend to explain the relationship of his theories to the Japanese management environment, and it was impossible for him to do so. This is a problem that must be elucidated by Japanese management itself. Even though a limiting factor should be made clear, a determining factor must be clearly defined. Drucker's theories helped management in Japan find the determining factor in Japanese management. He once said:

The theme of this research is common to all of the countries in the world, and it is an urgent task for any of the developed countries. However, none of the developed countries has ever succeeded in finding real answers, and we are still making efforts to discover them. Of course, systematic researches in management could not have been carried out as common subjects in every country in the world from the beginning. Therefore, it is necessary for everybody engaged in management to make efforts in integrating all the knowledge we do have and in establishing management as the common subject to all the countries in the world by transcending the national boundaries. Although I stated that it is the subject common to all the developed countries, it seems to me that it could be particularly important for Japan; to make efforts for finding solutions to this problem. Because marketing, innovation, and highly feasible managerial planning would seem to be especially needed by Japanese enterprises and her economy in order to maintain her leading position in the world economy which she has established in the past ten years. . . .

THE FOCUS OF DRUCKER’S INFLUENCE

The central theme of the management philosophy of Drucker is "innovation" and "growth." It can be stated differently as the management ideology of "forward-looking management." He states:

Innovation, as we now use the term, is based on the systematic, organized "leap into the unknown." Its aim is to give us new power for action through a new capacity to see, a new vision. Its tools are scientific; but its process is of the imagination, its method is the organization of ignorance rather than that of known facts.

The impact of this new power on our lives is already great. It changes our technology and gives us new opportunities to make technological advance to order. It is giving us an altogether new ability for non technological innovation in society and the economy.

Old basic institutions of human society-the government, the armed forces, the school-have been converted from organs of preservation into organs of innovation. And new institutions expressly designed for innovation, such as business enterprise and the research organization, have become of central importance.

But innovation is more than a new method. It is a new view of the "universe," as one of risk rather than of chance or of certainty. It is a new view of man's role in the universe; he, rather than being an assertion of human power, is an acceptance of human responsibility.

He goes on to say:

By contrast we today no longer even understand the question of whether change is bad or good. We started out with the axiom that it is the norm. We do not see change as altering the order-for better or for worse. We see change as being order in itself-indeed, the only order we can comprehend today is a dynamic, a moving, a changing one. And because change itself defines any order we can see, change can be anticipated, can be foretold to a considerable extent, and can therefore even be controlled.

His philosophical approach to management can be grasped from the following selection of his remarks: "Doing nothing is the greatest risk"; "The essential character of an enterprise exists in innovation"; "Competition at present is that of innovation"; "Change must be turned into new opportunity and better results"; and, "Growth is more important than stability." This philosophy of innovation and growth has been accepted as an inspiring ideology by management in Japan, where a record of rapid progress has been set.

The rapid growth of Japanese management has been brought about and accelerated by a number of things. The Japanese are full of vitality and of curiosity, which always lead them to look for something new while retaining their traditions. They are adaptable to change, and they act in accordance with others. They can also be characterized by their cleverness. Education has spread far and wide. And under the impetus of competition, group spirit-one of the characteristics of Japanese management-has been turned into a force for achieving rapid progress.

It seems to me that Drucker's philosophy-the management philosophy of innovation and growth-has given the impulsive vitality or the spontaneous power for growth of Japanese management its suitable theories and vision. In this sense it can be said that his theories of management have helped management in Japan accomplish rapid growth.

Management in Japan is now thought by the world to strongly resemble that in America. In his foreword to the Japanese edition of his newest book, The Age of Discontinuity, he says:

This book is dealing with basic discontinuities in society, economy, and in knowledge. However, in the modern history of the world, there have never been such great and meaningful discontinuities as the forceful transformations attained by Japan after the Meiji Restoration and in the past twenty years. For anybody trying to understand discontinuity in society, it is necessary to make efforts to understand what was achieved in the early Meiji period and what has been accomplished by modern Japan, because these two incidents are telling us how major change can be transformed into great opportunity. These two incidents are indicating the challenge and its problems, and are moreover telling us the reactions sought by discontinuity, which in its turn lay the foundation of growth, improved results, and social reformation. . . . I have tried to understand large change occurring in the world at present by analyzing incidents and policies in Japan in the Meiji period and in the past twenty years. And I have been looking at Japan as an example to show how to profit out of large change and how to convert large change into new opportunities and results by developing proper policies.

Drucker believes that change must be turned into new opportunities and improved results. This has occurred twice in Japanese history, once in the Meiji Restoration period, and again in the years following World War II. These events are appraised by Drucker as being outstanding examples of management growth-of the largest scale in history-based on the management philosophy of innovation.

Drucker paid attention not to Japanese management's practices of life-time employment and the seniority system but to its capacity to turn change into opportunity owing to its dynamism, vitality, adaptability to change, and enterprising spirit. These innovative qualities inherent in traditional Japanese management made postwar management in Japan receptive to Drucker's management theories of innovation and growth.

THE NEXT STEP

As for internal administrative management, the practices of lifetime employment and the seniority system in Japanese management remain unchanged. While these were fundamental factors for vitality fostering much competition in our management, they also checked the introduction and smooth operation of rational administrative methods and procedures. In discussing this point, Drucker has said:

One of the important problems in Japan concerns productivity. It exists only in Japan, and cannot be seen in other countries. Japanese workers are very industrious when compared with those of other countries in the world and are working systematically. Therefore, it seems that they should have high productivity. But, their high productivity taken all together is not as high as that of many other countries. It seems that there are some social factors to consider as an explanation of such low productivity, Although it is difficult to precisely pinpoint the problems, there may be some defects in the organization or arrangement of tasks, namely, with systems of management. . . . Judging from the experience in America and in Europe, it is never an easy task to remove these defects in management or to improve methods of operation. However, a very large effect can be attained if a little effort is made. It can be said that it is opportune for management in Japan to try to improve management practice at this time of increasing labor shortage.

Although Drucker lectured to managers in Japan on such subjects as long-range planning, the decentralized divisional organization, management by objectives, and management education, there has not yet been widespread adoption of these ideas and techniques by management in Japan.

As for the rationalization and democratization of internal administrative management, many management problems remain to be solved. Aggravated by the negative factors of lifetime employment and the seniority system of Japanese management, the unusual productivity problem to which Drucker referred above remains deep-rooted. While the rapid growth of Japanese management has been fostered not only by its flexible adaptability toward a changing environment and by the presence of an enterprising spirit which turns change into opportunity, but also by the collective power of management, the problems of irrationality and inefficiency within internal administrative management remain unsolved.

Drucker insists that now is the time to improve management systems. Management in Japan has been now placed in a new environment of labor shortage and high wages and has reached the stage where such improvement must be dynamically made in internal administrative management. Management systems, extending over both internal and external factors of management, must be firmly established. The application of the modern systems approach is the urgent problem that management in Japan must cope with from now on.

Although management in Japan was highly praised by Drucker for its adaptability and for its enterprising capacity to turn change into opportunity, it must be considered that management has been adapting itself to change that had already occurred. This is a problem expressed by such sayings as "Management in Japan is that of a clever imitator" and "Management by imitation." But it is in these activities that Drucker has found the enterprising and innovative nature of Japanese management.

It is realized, however, that we have come to the stage of requiring the development of creative management that is able to create change for further innovation. Management in Japan must bring about change for innovation by itself, and it must be creative enough to turn it into new opportunities and improved results. When that becomes possible, Japan will be able to have creative management by which further rapid innovation and growth will be achieved.

Japanese management is being practiced within its own tradition. One should remember, however, that tradition itself is not static but develops and thus changes with the passage of time. Tradition and creation! Tradition can be activated in the process of creation, and it will change along with creation. Tradition and innovation are thus invariably linked as a process. Drucker has played an influential role in welding the links in the chain of progress of management in Japan.”