TEXT A Since the late 1970s, in
the face of a severe loss of market share in dozens of industries, manufacturers
in the United States have been trying to improve productivity and therefore
enhance their international competitiveness through costcuttig programs.
(Cost-cutting here is defining the amount of labor constant.) However, from 1978
through 1982, productivity -- the value of goods manufactured divided by the
amount of labor input -- did not improve; and while the results were better in
the business upturn of the three years following, they ran 25 percent lower than
productivity improvements during earlier, post-1945 upturns. At the sametime, it
became clear the harder manufactures worked to implement cost-cutting, the more
they lost their competitive edge. With this paradox in mind, I
recently visited 25 companies; it became clear to me that the cost-cutting
approach to increasing productivity is fundamentally flawed. Manufacturing
regularly observes a "40, 40, 20" rule. Roughly 40 percent of any
manufacturing-based competitive advantage derives from long-term changes in
manufacturing structure (decisions about the number, size, location, and
capacity of facilities) and in approaches to materials. Another 40 percent comes
from major changes in equipment and process technology. The final 20 percent
rests on implementing conventional cost-cutting. This rule does not be tried.
The well-known tools of this approach -- including simplifying jobs and
retraining employees to work smarter, not harder -- do produce results. But the
tools quickly reach the limits of what they can contribute.
Another problem is that the cost-cutting approach hinders innovation and
discourages creative people. As Abernathy’s study of automobile manufacturers
has shown, an industry can easily be come prisoner of its own investment in
cost-cutting techniques, reducing its ability to develop new products. And
managers under pressure to maximize cost-cutting will resist innovation because
they know that more fundamental changes in processes or systems will wreak havoc
with the results on which they are measured. Production managers have always
seen their job as one of minimizing costs and maximizing output. This dimension
of performance has until recently sufficed as a basis of evaluation, but it has
created a penny-pinching, mechanistic culture in most factories that has kept
away creative managers. Every company I know that has freed
itself from the paradox has done so, in part, by developing and implementing a
manufacturing strategy. Such a strategy facturing and implementing a
manufacturing strategy. Such a strategy focuses on the manufacturing structure
and on equipment and process technology. In one company a manufacturing strategy
that allowed different areas of the factory to specialize in different markets
replaced the conventional cost-cutting approach; within three years the company
regained its competitive advantage. Together with such strategies, successful
companies are also encouraging managers to focus on a wider set of objectives
besides cutting costs. There is hope for manufacturing, but it clearly rests on
a different way of managing. The author’s attitude toward the culture in most factories is best described as ______.