America's Two Minute Warning. - book reviews

Washington Monthly, Feb, 1988 by Thomas J. Peters

America's Two Minute Warning. Jack Grayson and Carla O'Dell. Free Press, $24.95.

THE FOURTH QUARTER

How Pittsburgh can beat Osaka by Tom Peters

Fortune magazine's November 9, 1987 issue featured a contro9versial cover story on the Harvard Business School. But probably few of America's corporate leaders noticed a small item on page 88, a box that summarized an interview with Honda's new president, Todashi Kume.

Honda is already, by some measures, the most productive automotive company in the world. It's product development cycle, the time it takes to design and manufacture a new modes (such as the Acura), is estimated to be one-third or one-fourth as long as that of its U.S. counterparts. Yet in the interview, Kume declared that his near-term objective, not a 20-year plan, was to triple the company's productivity. Moreover, he said, Honda already has the tools in place to do it.

Words like "double" and "triple" must be talked about the American management, too. Triple the training budget, double productivitiy, cut defeats by 90 percent, reduce inventory by 90 percent, slash product development cycle times by 75 percent.

There isn't a candidate running for president who hasn't talked about competitiveness, and what America must do to remain the world's foremost economic power. Jack Grayson and Carla O'Dell suggest that we face a more sobering question -- what do we have to do, not to lead, but to survive a major economic power int the twenty-first century?*

It's a question that both have spent a great deal fo time considering. In 1977 Grayson founded a think-tank called the American Productivity Center where his co-author Carla O'Dell was a senior consultant and vice-president before starting her own consulting company.

They believe that America can compete but warn that we can only do so when American businesses sense the competitive danger and act. So far most haven't. "(Only) a relatively small number of firms are making the kind of changes required," they warn. "The majority of American firms are not responding at all, doing very little, or engaging in a flurry of activity, much of it short-term cost-reductions, layoffs, slam-bang automation, and closings of inefficient operations...Such efforts give the appearance of adjustment but have not changed the core way firms do business."

Unlike a lot of critics of American business, Grayson and O'Dell have given us something truly useful -- a 130-page agenda of actions management can take to bolster American productivity.

They propose, for instance, a complete rethinking of the last nine decades of conventional managerial wisdom. Their agenda calls for "small operating units...fewer management levels, team structure...customer-driven schedules and procedures...flexible product mix...flexible equipment." To be sure, few of the ideas for spanking new. But the conciseness of their presentation and the authors' unique depth and breadth of experience at the American Productivity Center and elsewhere makes the book important. No one, to my knowledge, has had the audacity to combine such a profound analysis with a practical agenda.

The authors begin with the usual litany of statistics chronicling the American decline, from plummeting real wages to stagnant productivity to staggering debt to the trade fiasco and problematic SAT scores. The compactness of their list sends one reeling with bad news. After all, these are the experts on the nuances of such statistics, and they find no good news at all. they even write off the recent up-tick in manufacturing productivity as a flash in the pan, the result of "onetime cost reduction and clearing out of inefficientcies...not indicators of a fundamental turn for the better."

Mahogany walls, economic decay

In one particularly eerie passage they remaind us just how other contries have fallen off the pedestal of economic greatness. That's a familiar idea, of course, but they have a knack for making it truly frightening. The parallels between their declin and ours are chastening in their exactitude. For instance, the authors quote E.E. Williams, the British author of Made in Germany, the Victorian version of our books on everefficient Japanese management. Williams warned his nation in 1896 of industry's failure to heed the threat of German competitiveness: "(British managers) rely too much upon the superiority of England already acquired...Their methods of conducting business in many English houses is as rigid as their own cast iron....It is mainly the of scientific skills that Germany excels....They do not know as many languages and they do not take the trouble to study the needs of their foreign customers....The Germans have come to England to learn our method on the spot. (They) have been following the English step-by step, importing their machinery and tools, engaging, when they could, the best men from the best shops, copying their methods of work and the organization of their industries."