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Publ|!h.tFelipe B. Alfonso

EdhorlFohlrtMichael A. Hamlin

Man dl.€ EdltorKin Gatbonton

Edltor€t{argolbana C. Gutierrez

Art DhlctorAlexander Bowie

Producthn AldrtrntAmy G. Espiritu

Co.*dbutor!Josie C. AliwalasBelinda Singson

Acco0t Maiaggrrr\ate. M. DiazElena R. Duran

Alv.rd.lrE Coordl.EtorEden A. Baysic

Clrcolatlon A!.|.t!ntGygie Nuiez

Covd lusadion: @ Javi6r Fom.ro D€3lgn lnc.

4 Get Rld of AntQualltyPolicles8y Prof. Rene T. DomingoSime Daby Professor in ManagemertAsian Institute of Management

Poor quality comes from badmanagement, not bad employeesRene Domingo elaborates on the majorobstacles to achieving customersatisfaction,

rl Q&AonTotalQualltyBy the Editors

Asia's leading TQM practitionersdiscuss business continuing emphasison quality and constant improvement.

21 The Phlllpdnes and AFIA8v Felioe AlfonsoPresidentAsian Institute of Management

3 Frcm th€ Edltof5!. Ihlnk Abod ltSl EntrepreneuB' Comet3t Fenc6ltter

25 HRM and Yonr Companygy Jacinto C. Gavino, DPADean, Master in Management ProgfamAsian Institute of Management

s MaklrE Strate$f HapponBy Roben DaviesProfessor of Strategic ManagementLondon Eusiness School

41 The Modom TradltlonalEntends6By Prof. Leonardo R. SilosPLDT Professor in Eusiness lvana€ementAsian Institute of Management

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FEBRUMY 1994 . THE ASIATI MAMGER

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- THE ASIAN MAMGER . FEBRUARY 1994

Mlc-hacl A. Hamlln

Decisions, decisions

anila - We are re-minded by RobertHeller of a processfirst described by

RobertWaterman: Group Think.Waterman is one halfof the (half)famous duo which gave us hSearch of Excellmce a decade ago.Waterman discusses CroupThink in a subsequent and lessrenowned b<rck called The Refieroal Factor.

"No individual" involved incollective decision-making - it-self an illusory concept, thesetwo gentlemen suggest - "ex-

presses his own opinion; insteadhe mouths his understanding orversion of what he believes thegroup view to be." Indeed, inThe Decision Makers, Heller ar-gues, "ln

Japanese corporationafter corporation, president af-ter president has shown a capac-ity for adventurous, realistic de-cision (making) thathas gone farbeyond the prowess of all butthe very best Westem manage-ments."

This demonstrates how dan-gerous stereotypes can really be.Manyof ushavebeen convincedthat the Japanese take an inordi-nate period to make a decisiondue to the extreme degree ofconsultation that tradihonallypreceeds a maior decision. Therearc also those of us who havegone so far as to suggest thatdecision-making in Japan is notreally decision-making at all.Rather, it is an elaborate plan-nint process which can be cutshort at any point it becomesclear the plan is not feasible.

And Heller does note that,"Other people's arguments arcenormously valuable, provided(a) that they are bas€d on factand (b) that they are expressedvigorously, clearly and frankly;(c) thatsomeMy has thepower,after listening to all the fact-based

Credibiliw andQualtty Management

opinions, to take the final deci-sion; and (d) that everybody elseaccepts that power and the deci-sion to which it gives birth."

For instance, a decision mightbe to cut short the planning pr(rc-ess or to keep it going. AkioMorita kept it going for both theWalkman and Sony's originalBefa videe cassette recorder. Hispower continued to be accepted.

F. Ross Johnson created aUS$16 billion food and tobaccobehemoth by "embark(ing) ontwo grand mergers." And thenlo6t US$500 million and muchprestige developing a smokelesscigarette; soon after, he lost hisjob when his managementledbuyoutwasoutbid by the formi-dable KKK buy-out specialists- to the delight of most of hisboard.

Perhaps more than decision-making, credibility - or lack ofit - determined Morita andRoss' fates following two majorblunders.Credibility "walk-

the-talk" -asDel Monte Philip-pines president Ceorge A. Errorputs it, has much to do withimplementing quality manage-ment practices, our cover focusfor this issue. To provide real-timeupdates on how quality man-agement was implemend in sixof the region's topcorDoratlons, weasked keyexecutive

"Pefiaps more

than declslonmaking; crcdiulity-o r lacko fh-

detemlned Moritaand Roes' iatesfullowing twomajol blunde6."

ing quality management won'tmake it come true. lt is hard workinvolving fundamental changesin work routines, relationshipsand corporate culture. Success-f ully accomplishing such radicalchange is reliant on company-wide includingextra-com-pany suppliers and customers- trainint. Extensive training.

Asian Institute of Manage-ment professor Rene T. Domingoprovides ourplincipal cover ar-ticle, addrcssing the reasons fora growing number of reportedfailures by corporations seekingto absorb quality managementinto their culturc and routine.AIM associate Dean Jacinto C.Cavino and professor LeonardoA. Silos suggest ways for regionalbusiness and mana8ementschools to enhance their rel-evance to and impact on theprachcrng management commu-nity in providint much of thekaining critical to successful im-plementationof quality manage-mmt, aswell asothermaiorman-agement programs. StrateSicalliances and less bureaucracy aremajor emponents of their ownsuccess strateSy.

Robert Davies concludes hisimportant analysis of strategicplanning in dynamic organiza-

tions begun in ourprevious issue. Weround out our fea-tures for this firstissue of 194 bymoving over for alook at marketinginnovations in di-rect mail with klisWadia. Author ofthe Asiafl DirectMorketing Hand-Dook, Wadia pro-vides crit icalinsights into DMpractices in Asia*rat are so distin€t

from westem managem€nt prac-tice Olat multinational ortaniza-tions can fail miserably by doingeverything right - acconding toNorth fun€rican standards.

Colectivelyourfeatur€smightsugtest that while the PacficCenhry may be the era of thehorizontal organization, as Hellerasserts, ultimately someone stillhas to be in charee and still has tomake decisions. In fact, when hisfour conditions for consensus-baseddecisionmaLrngarenotmet,"effective decision-making is viti-ad. kEtead, managemmb ofterichoo6e, unwittingly, to be har,gedtotether, mth€( than to risk beinghanged separately - all of any ofthem."

Amouncomnt3Wth this issue, managinS edi-

tor Ibarra C. Gutierrez assumest€ pct of editor-at-large. One of*re region's most respected seniorbusiness managers, The AsionMtrueer ttas been forhrnate tohave the benefit of his gacticedeye and proiessional expertise. Aseditor-atlarge, Bombing will con-tinue to prcvide overall editoriddirection, and we - and outreaders - will continue to bm-efit from his regular, in-depthreviews of emerging Asian en-terprises and managementtrends.

Kin Catbonton will move upto the position of managing edi-tor Kin has been oDerationallv' responsible for coordinatingeditorial functions wi& the de-mands of publishing a rapidly-trowint management publica-tion. Her appointment comes at atime when the demands for prc-fessionalism have never beengeater in both manaSement edu-cation and publishing for man-agement practitioners. We takea great deal of comfort havingKi"n in charee. I

what they did rightand what they didwrong that helped orhindeied the intrGduction of qualitvpractices.

Top manage-ment's role insuccessful im-plementation is ap-parent in every firmrepresented: keyex-ecutives are thechampions. Wish-

C O V E R S T O R Y

GetRid of

AIM's quallty gurutalks about the maiorstumbllng blocks to

achievlng TQM and totalcustomer satlsfaction.

BY PRoF. RE E T. Do IItIGo

"ln manycountries,the biggestand mostprofitablecompaniesale knownfor poor, slowand costlycustomelse1vice."

I maibr cause of failure in implement-ing Total Quality Management (TQM) is top management's refusal to drop anddismantle anti-quality_ corporate policies, procedures and practices. Uduallyhme-honored and taken for granted, they serve to hinder employees andmanagers in demonstratint quality in theirj6bsand inservingcust6mers. Thesepoliciesand theworkenvironmenttheycreatesodictateemployeebehavior thatin spite ofhis good intention "todo thingsrightthe first timeT,and management,sexhotation to that effect, he commits mistakes, defects, errors and c-ustomerdisservice. The employee is punished, deinoralized and worse, sentby manage-menttoa "values" or "corporate culture" seminar to chang€ hisbehavior Sincethe policies - the root causes - stay, the problem is not solved and recurs.- , Why do many companies profesling TQtu fail to rcview and change policies?Mainly because of ignorance. Ignorance that such policies affec[ employeebehavior lgnorance that such policies exist at all. An'other reason is thit tireythink they can mix conventional management with TQM.

Managemmt may define TQM as a ritual of slogans, speeches, QC circles andemployee kaining - and not about policy changes. Anothir possible reason is thatchangrnt polcies rs rcgarded as painful and a loss of political power

this artide win diTuss common policies of traditionally managdC companie thatarepobtial obstades to TQM implem€ntation. It is not meant io be an o(haGtive list butit wil serve to €nlight€n and guide thce who wish to review and evaluae policies as amaior step in TQM implernentatiorl

Corporate PerformanceThe most subtle computry policy that could affect quality is tlut of gauging

corporabe perforrnance. Typical meisures are financial'in .titure, "bottoLt-litteTprcfits, "top [ine" sales and market sharc and "middle line" budgets and costs. Notethat none of these sacred indices directly ind ica te qua li ty perforriance and custiomer

T \ T O O

roflcres

THE ASlAll MANAGER . FEBRUAFY 1994

service. ln fact, they are very effective in hiding quhlity problems and deceivingmanagement into believing that everything is well.

A profitable company exceeding sales targets and meetinS budgets can actuallybe providing poor customer service - high warranty claims, long queues, delayeddeliveries. Profit is a composite of sales and costs. Quality prcblems can be hiddmin either item - lost customers and bad s€rvice in sales, and defects and wastes incosts - and be offset bv imDrovement in the other item.

Declinine sales due io lo;t customers frustrad with bad service could be offuetby cost cutting. A high rework and scrap rate - which drive costs up - could beoffset by an increase in sales, thtrs showing a healthy profit pictuIe. High sales couldalso be achieved by replacing lost and disappointed customers with new and biggercustome$; salesmen may employ this trick to i€ach their quota. Budgets do not takeservice quality into the picture. Wo6e, budgets, being historical in nahre, incorpo-rate and hide ever increasing allowances for waste and defects.

By meeting or exceeding profit, sales ard cost targets, a conventional companydoes not suspect does not thoroughly investigate customer s€rvice problems andwaste in operations. Management is mole concemed with how to distribute profitsas bonuses. lts attitude is "we are making money and selling a lot, therefore allcustomers arc satisfied; they have no right tocomplain. " The management paradigmis CAWS or Can't Arsue With Success.

It is not surprising and very ironic indeed, that in many countries, the biggest andmost prcfitable companies are known for poor, slow and costly customer service:banks, utility companies, airlines, hospitalt supermarkets, insurance companies,drugstorcs, peholeum companies, to name a few Vy'hen was the last time you everprais€d these institutions for their fast and friendly service? Customers keep comingback - gmdghgly - not because of quality service, but because therc is no otherplace to go to. They have been used and desensitized to the dismal and chronic levelof service and are willine to live with it-until and unless a competitor comes up with

"TQM

companiesale selvants

ot theitcustomers

and all theilpolicies

leflect thisphilosophy."

THE ASIAN MANAGER . FEBRUAFY 1994

C O V E R S T O R Y

betler ard fasFr sewic€,TQM is not against

plofits and market domi-iration, lt adriwetreseq,iEusng on Proc€ss h€ebratertunsimplisticfrwr-cid irdicabrs.- nEy hackprodrt quality, cuskmers€n ice, quality csb (dEcst ofnot doing it right d€first time), productivity,safety, inventory levels,Ptocess times, etc. TQMcompanre gauge fun per..formance by monitiorhsdrcse irt dtors continu:onsly witr rcal-tirlE data

"Under TQM,suppllels arelong-termpartneF, not

to be plttedagalnst eachother.n

6prn both o$tsnqs ard slrqfloo$, ard cqtinuouslv raisearrC implwe tpir levels.

Cu3tomol SorYlce- TQM companie live by the following commandments

ot customer s€rvice:1. The customer is king (or god, as in Japan).2. The ostomer is always right.3. Never atgue with a customer (You may win thearyunent but 106€ theAntiquality servic€ polici€s essentially violate these

If thele arc theories X and Y to describe howflunagement tleats employees, we can also think of similartheories to describe how it heab custromers. Theory Xassumes all employees arc lazy, incompetientand inconid-ble; theory Y aisuines 0rcy aire all haid-working capali'leand ftrll of Dotential.

Similarly, theory X in customer service assum€s that allcustomers arc bad unless ptoven othetwise. ComDanieswith this busines philosophy have sophisticated ;d ob-.noxious conEol systems and policies that monitor andcheck clstjomers wherr they enter, roam around and exitcompany pr€mises and storcs. They also have bureaucratcprcced ur€s to check customer background and credentialsbefore they can avail of the company's goods and serv ices.'

Forirstance,atheorvXbank'assrim*thatallborrowecarc potential bad debhon, and depositors as taunderers ofillegally-gotten wealth. Theory X supermarkes and de-parhnenl stores tr€at all clstome$ as nuisance whdowshoppers or worse, potential shoplifters. To heat custiomerswith indiffercnce or sloppiness is bad enough, but to sus-pect them of evil intent is worse and conhary to all businesss€nse.

FronFline employees who maltr€at customers may iustbecomplyrng with thecompany's theory X sewicepolicies.A company which mistreab its employees usually mis-beab its own custiomers, employrng theory X poticies inboth cases. To aggravate *re situitid, the ehpliryees takerevenge on orstomers.

TheotherextremeistheoryYwhichassumesallcustom-ers are good. Theory Y companies arc known for absence ofor minimal customerconEol systems and polici€5. Custom-ers are treated as kings. They can go in and out of companypremis€s without conbols and appoinhnenb. They canavail of and pay for prcducls and services without hasslesand with a minimum of paperwork and other requirc-mealts. They can r€hrm purchased merchandise any timefor any reason and tlre cohpany staff will cheerhrlly riplactit or r€tum his morrey - without question or investigation.

6

For some theory Y companies, custome$ need not Davanything if they ari not completely sadsfied with the serv-rce.

Theory Y companies definitely delight customers whoeventually become Epeat and loyal ones. TheoryYcompa-nies are genuine TQM companies, and they are rare. Inreality, companies serve clstomeE within the range ofth€orie6 X & Y with the maiority clusteringnearcr to theory

Why do companies knowintly control rather than servecustomers? The $'pe I and type tr errors of statistics wills€rve as a usefu.l analogy. Ty'pe I is eiecting a hy'pothesiswhen it shodd be accepted. while type ll"is aciepting itwhm it shou.ld be rciecird. Similali'; tne tvpe I ;rror-incustomer seryice is rqecting a good custoirier when heshould have been accepd - served or sold to. The ty?e trerror is accepting a bad customer service wtrm he shouldhave been rciec'ted--disqualified for a loan, etc.

Antiauality servic€ polcies try to avoid t'?e n eflors;fgU Ues toarioia type i er.ors.lpUcompunii"do not trytobalanc€ theco6tsofthe two type oferrors. The anti{ualitycompany is more concerned about avoiding the cost anida{uge due to one bad custiomer to the extdnt of comprumising the convmierce of good, paying customers whichform the vast maioriw of clients in anv business.

It is indeed v&y rire for a company to go bankrupt orlose huge sums ticause of bad i.-,-puyr.g cusromes.B€side6, some custorners do not pay on time because theyreceived bad products and bad'se;vice in the first placr-i.Much more common arc companies going under becausethey have been milked by their management or ownerE.

IHE ASIAN MAMGER . FEBRUARY 1S4

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C O V E R S T O R Y

Success in any bruincscomes from delighting fievast majodty of customeG,evm to the exklt of acr€pFingsomebadc'neandcom-mittint tlpe n €nors. Thevrofi, yruict was derivedftom &re latin word senzawhichmearsssnnrlorslrrcy.TQM compenies are serv-anb of their custornels, andall their policie reflect thisphllosophy

"Bad qualitycomesfrom badmanagement,not bademployees."

Employee EvaluationAnother area which

ant i -qua l i t y po l i c iesabound is employee per-formance evaluation and conhol systems. These systemsare used to compensate, promote, motivate, monitor, checkand discipline employees.

The h.,,o most common performance targets used forevajuation are sales and production output. duotas are setto determine comperuation. Sales commissions are paidbased on achieving or exceeding sales quotas. Worl.ers'rncenh ve pay and even take.home pay---as in the piece-ratesystem-may be determined by production output. Thedarger w ith these targets is that they a re purc n um-bers andcompletely hide the level of product qualig and/or cus-tomer service. They aJe t,?ically set as obiectives under theresult-oriented MBO system. The MBO manager does notcare about how the rcsult is achieved by his subordinaties aslong as it is achieved. He could not care less about processimprovement dnd development, customer feelin-gs andsuggeshons.

If customers or sales are lost because of product defects,bad service or late delivery, tlle salesman can get new andblgger custome$ to cover up the shorffall. He may actuallyhcreas€ sales and e\ceed his quota. The sa-e ci:Ua ubi>happen if the remaining customers order much more thanbefore. The evaluator or sales manager and the salesman

. will not bother with the prcduct iid service problems' because the quota has been sadsfied. Product deiects maynot be fed back to the production people for imrnediatecorrection. Ofcourse, the lost cnstiomer will bad mouth thecompany to ten other orstomers - currmt or potenhal.

Similarly, production quotas rnay be achieved even withhigher intemal rciect ra tes by the Quality Assurance depa rt-mmt or high ertemal reiect rates thanks to by customers.The prcduction worker is iust interested in incr€asing out-put to inclease his pay. The system allows and mcourageshim to behave this way even if quality, cost, yield ;dcustomers are sacrificed. Even when defects arc produced,the tine is not stopped since output will decline and so willhis pay. Defects ale not investigated, and to make mattersworse, they are re routed to rework operators, whose incen-hve pay is tied to the amourt of defective they have re-Daired.-

The budget system is also notorious for hiding qualityand service problems. ln theory and in practice, the coitbudget can be achieved even when providing bad service tocustomers leadint to lost sales or high wastage defecb, andrework in the shop-floor. Again, budgeting is a numbersgame and encowages managers and employees to forgetabout qualiry lt does not reflect and tecog"i-re pro.;ssimprovements contributed by employees. Zero budget

8

variance can be achieved even with zero customer service.Finally, a pervasive antinuality policy is designating the

superior or direct boss as the evaluator of the performalceof hjs subordinates. At first gldnce, *ris poljcy soundsreasonable since the boss is supposed to be waiching hisstaff and know everything they do or don't do. The failacyhere is that with theexceptionof a secretary which servesher boss, employees usually do not directly serve their bossbu t other em ployees, managers, departmen ts and custom -ersof the company. The superior has no idea of the servicequalitv and efficiency of his staff, and is therefor€ the leastqualified to pass judgment. Only the intemal customers -or other employees and deparhnents served by his staff cantruly evaluate the performance of the staff. It is common tobe higNy evaluated by one's boss, and to get promotedaccordingly, while being rebuked by one's intemal custom-ers for bad service.

The only correct performance evaluation must be madeby one's customers - intemal or extemal. The marketingdepartment should evaluate the performance of the pro-duction department which in tuIn should evaluatq theperformance of the maintenance, mtineering and purchas-ing departments. Of course, the besi evaluator of perform-ance and quality is none other than the ertemal or payingostomet the ultimate recipient and judge of the company'sproducts and services. American Express makes it a policylo tie the manager's bonus to the'number of cusiomercomplaints his dipartment receives.

TQlr4 compani-es still use quotas and budgets, but verycarefully and intelligently. Thev are tempered and vali-dated bjr quallty data"and iustorirer feedbaik b{ore they are

THE ASIAI\ MANAGER . FEBRUARY 1994

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C O V E R S T O R Y

,,A DelVaSiVe used to evaluate and moti- 4. Selling seconds or downgrades to thepubJic.

_j _--^.,^ vate people. lt may not be possible to dismantle these policies rightantl{Uallty away foit}roselust starting TQM. But to recognize these as

poricvis_ t'o,3ll1"t"it'#|,:l.., ili.*-ff1i,",#:ffi.:itf*lfll;Tluq1'"'^'""0

deSlgnating alsobe identifi'ed in the way "

. These polrcies d;-finitely elicit an'tiq"'atity employee

Ine SUpenOf 01 evaluates' suppliers. Under 1. Why will I do my work righrihe tust time when thedifgCt bOSS aS TQM, suppliers are long- company pays somebody else to check and rcpair rny

the evaluatof ties tt.r be pitted against each 2. Why will Ipreventdefects when thecompanycansell

of the i**fiH,ffT$l,H; yffi;",^,Ti;$i$,t?f.whenrcanbuythesemyserrpelfolmance policy h this relard

-is the later it a blg discourt?

br nr ilI.Ji:iiJffi:i;'"Tl *TJ*rff,#i#H*on'ffffitr1i163Suboldinates.tt Eugl the highly educated plastic, rubbel, metal , where materials arc easily rc-

and hiShly paid purchasing melted and mixed with virgin supplies. But such policiesmanagers of major corpora- also exist in manufactured and assembled pro<lucts liketions have been reduced to semiconductors and home appliances. Downgrades maytheclericaltaskof comparing come in two forms: 1) Downgrades are sold with the same

bids and selectint the suPPlier with the lowest bid price. brand name as first-class products but at a discount; and, 2)ThesuPplier will natually play by thebuyer'srules,bid Downgrades are rcld with a different brand name, but

as low as possible and sacrifice the other vital elements of cheaper than first-class.quality, de_livery, commitment s€rvice, and reliability. He Customers may shift to the downgrades since they arecan tactfully hide these trade-of6 in his bid, since the cheaper, and an artificial demand iscieated. Thus a defectevaluator or putchasing maruger is often too reshicted or becomes a new productline withits own production andincomPetent to check these comPlicad, often technical sales plan-even rts own budgetl Of courie, product andand lonS-termissues. The lowestbidder tumsout tobe the company image eventually deteriorates as the markethighest bidder in the long run because of the pnrduction becomei confused with the company's products-first-delays and lost customers its poor quality and rcliability class and downgrades, bearing the sarire 169o and brandcause. name, sold at different prices for no apparent reason.

Whatisironicrs thatacompany mayclaim to Productionplanningoffirst-classprod-be practicing TQM and urge its supplier to im- |- ucts becomes chaotic since seconds un-

Sffiftt?frf.i:ffi'ffiiffi'JlHt | "Bad quaritv ffi$[':ly"SilN,ii:SJ:.;;i]*'suppliers based on bid price. Sinceprice is the I COmeS The main reason tor downgradesandrocal Pomt, the suppler w l not heed any exhor' I . rework 15 firuncial in natuJe. The com-tation to imprcve lualiry_TQM comp;es not I fl0m bad pany thinks that rather tlur rrap and

changhg the policy of awarding and selectingsuppliers based on bid price. Since price is thefocal point, the supplier will not he€d any exhor-

H*il*ffi*:'ffi'J*\i'il;ffi* l"ifi | management, il:Hifi:;1i,i"S:3ffilhTglanddivelopthemsothattheycanbecomeworld-

- nOt bad a discorurt. Management also tlijr*s itis"T ?fitr #i*?,fli"i,"J' ieJr,aui,,g oe emptoyees. " ii#;:, "fi :i'iT ;,f#,il #H€

Sfril:t?#ff.i:'L1ffi1ff,J,ffi |,,Bad quatity

Sales and P?oductlon ManagementNo employee is by nature bad; his work is his livelihood,

and he knows he must do his job right and follow the nrles

puchasrng departrnent rcport to the finance they themselves produced. These poli-departmen! thisset-up sends a the strongsignal cies bacKire and the company incursb the ol8anization that pwchasing is about cost{utting morecostssincedefectsarcnotinvestigatedandprevented.and finding the cheapest source. T)?ically, the finance Worse, defects are encouiaged and rewarded - with em-department - beinS control and audit oriented - is the ployee discounts. The biggest toll is the detenoration ofleastconcemed or knowledgeable about product and serv- company image and employee behaviorice quality. TQM companies would rather have the pur-chasingdapartmentFiortdirectlytothecEoortoiemain Bad Mana€lement = Bad Qualltyintemal customer - the manufacturing depafiment. The The late quality guru, Dr. W Edwards Deming, said thatfilst set-uP would make purchasing more concemed with 80% of quality problems is caused by management, andtotal cor?orate needs and profitability, while the second 20% by employees. Bad quality comes hom bad manage-would make it more sensitive to the requircments of its ment not bad employees. Bad management means badmain intemal client. leadership and bad policies.

The mostblatant and repu.lsive anti-quality policiescan to keep it. Essentially, it is the environment, the rules, thebe f<lwrd in sales and production management. Thes€ are, tools, the training and thesupportmanagementprovidesorin incrcasing order of gravity: does not pruvide that make him commit mistakes. This

1. Maintaining rework operations. belief is fundamental to the understanding of TQM. Com-,. Downgradint defects, minor or rnaior, into s€cond- panieswhich are notrcady and willing to 6ke fullmanage-class products. ment responsibility for a// quality problems should not go3. Selling seconds or downtrades to employees. into lQM. I

THE ASIAN MAIIAGER . FEBRUARY 1994

Cover Story. The Nian Manager presents more than a maiorstory lt presents a dialogue representing often widely divergentviews on a specific, ma jor management concern - in every issue- by respected experts, executives, and academics. In our issueon Shaping the Future." Sime Darby group chief executiveTunku Tan Sri Ahmad Yahaya said the Asian Manager is not yetprepared for global, free-market competition - and suggestedthat he or she must learn to compete.Focus. Following the cover story, original articles on a variety oftopical management issues are presented by major authors,academics, and practitioners Topics include marketing researchand strategy, leadership, kaizen, total quality management,management consu lting. and thewinners of Asia s most respectedacknowledgement of excellence in management The AsianManagement Awards.Departments. Shakers and movers in Asian business andgovern ment, new technologies and applications, the latest gu ru saccounts of his or her observations of excellent management inachieving organizations, and what to do with that ra re commoditya nd scarce resou rce: leisu re. These are th e concern s of Tne Asia IMonaqer's regular departments, compiled and written by theeollors.Columns. From "Money Matters" to A Better Way"; from"Entrepreneurs Corner" to "Think About l t , AIM consul tants,a lumni , and f r iends prov ide ins ights to Asian equi ty markets,quality management, the risksof entrepreneurship. managements t y l e s , t h e , e n v i r o n m e n t a n d s u s t a i n a b l e d e v e l o p m e n t ,in format ion technology, the Asian Manager; and, l i fe .

INr I -UENcING /oUR MnnKET

Tf teAs lan Mdnag€r i s theon lyp ro fess iona l l ypub l i shed , ,a lue -added . L i ke the i ns t i t u te i t s ma .x im i s re levanceo f f i c i a l m a g a z i n e o f a n y m a n a g e m e n t i n s t i t u t e i n A s i a o t h e p r a c t i t i o n e r i i t s c o n c e r n , c o n t e m p o r a r yA s i a s l e a d i n g m a n a g e m e n t t e c h n o l o g y m a g a z i n e . T t q n a n a g e m e n t t r e n d s a n d t h e i r a n a l y s i s , r e a l - l i f e' As ian Manager cons i s ten t l y p resen ts a h igh -qua l i t i nanagemen t i ssues , and the op in ions o f As ia s keyed i to r i a l p roduc t t ha t i s l i ve l y , i n fo rma t i ve , and h ig l " i l ec i s ion -makers .

Associate Publlsher E Advertlslng DlrectorDelia C. Gutierrez

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tu SocieTtnorrcw

C O V E R S T O R Y

TotalQuality

Asla's leadlng totalquallty pEctitioneF dbcusshow TQM has affested theil

companies' everydayoperatlons

BY lHE EDITORS

{ ,rairy e"*ap" no other single wordappears morc frequendy in a businessman's vocabulary -since the Japanese started r6ing it to aclueve comp€titiveadvdntage. ln tie past, quality generally meant's€ttingstandards and winnowing out qecs from the productionline. Ii:day, quality encompasses something much morecomplex. No longer does it mean "defect detection," itirnplies rigrd process control and a system by which defuctsare not so much det€cted as prevented.

Irr this month's issue of The Asian Maruger,we feature keyofficers from some of Asia's most d)narnic o€anizations,companies for whom quality is centerpiece of their overallstratjegy for meeting competitive challmges and for whomquality is critical to tlleir long-term success.

Among those who have taken the qua.tity initidtive: JessSan Mateo, total quality manager, Johruon & JohJrson, ihn-ippines; C,eorge A. Error, president and general manager,Del Monte Philippines, Inc.; Danny.lavelosa, assistant gen-eral managec Motorola Phils., Inc; R.L. Hawthome, piesi-dent, Dole Thailand; Menelao T. Mercado, combratepldnning mdnatet Mabushita Electric Philippines; and,H.K. Ieung, director, Reliability & Quality Assurance,

1 2

Motorola Semiconductor Products Sector, Asia-PacificGroup.

Stathg dE d?€lr€ tot qltfrtl hp'!{/enq', b ea6iy, ,f,,l€,v*g ttb.trtuttltl Ertdrytffi rrl|| yu$ cutrfl/y Mrdrcn*t,ts werw g,€|,�tlotE'

J€ss San Mats Johnson & Johnson has a long heritage ofquality based on the purity, efficacy and safety of its prud-ucts. Manatement tluough the years has also been guidedby OUR CREDO, whicharticu.laties the compary's responsi-bilities to its various publics and embodies out corporatevalues. Thes€ two factors - concem with prcduct quatityand our corporate values - have helped w focus - andkeep us focused - on quality improvement.

As early as 1981, our company conductred what we call"quality imprcvement interventions." These are regr.rlarmeetings with our workers that focus on supplier qualitymanagement initia.lly as a means of rcducing the then highrates of packatnt material rcjects - a problem which besetJ & J at that particu.lar time.

In 1982 a more compreheruive approach to quality was

developed. The Quality Improvement Process(QIP) - as it was known then - involved edu-cating, through workshops and seminars, all J &J employees in the concept ofquality according toPhilip Cro6by's Fo!/ / bsolutes of Quolity.We alsoestablished quality teams operating along thelines of the fourteen-stE QIP approach. Suppli-ers were given the same courses on quality be-cause their awarcness and cooperation werenecessary to effect quality impro;ement.

By 1989, we were already being rcco6nized asa leader in quality managemmt, and we wonnumercus awards. These awards rcinforced ouremployees' enthusiasm and accelerated owqual-itv imDrovement initiatives.'

190 marked our transition ftom QIP toTQM. Manage-ment !€cognized the importance of focusing the entireolgani"ation on delivering superior custiomer satisfactionand initiated steps to align the entir€ company to thjs newmission. This included the reorganization of J & J's saleorganization as well as upgradhg our information technol-ogy; the upgrading of personnel through more stringent

rHE ASIAN fuIANAGER . FEBRUARY.1994

recruitment policies as well as more througheducation and haining the adoptionofworld-class manufachrring techniques; the ration-alization and re-€ngineering of businessupcesses and rwitalization of our productdevelopmelt effort.

Sinie then, J & J has continued evolving,reflecting the changing rcquircments of themarketplace. All these efforts have rcquiredtrainin& training and more training as part ofthe overall quality improvement pr(rcess.Trainine is also the best means for our work-force to acquire new skills; and for manage-ment, it provides the most efficient vehicle for

attitude formation and values clarification.George A. Elllr This is how Del Monte introduced TQMinto its everyday operations. It was rcally a stepby-stepFocess that involved inqemental changes each month.

Beginnin8 in 191, Del Monte's senior staff were re-qufted to aftend seminars conducted by Tennessee Associ-ates Intemational (TAI) on Continuow Improvement. InApril, 199, the TQM Senior Steering Team, composed of

't3

"At MotorclaSemlconductoqthe incentheto cuftlvate aqualfty cultureis supportedby vadous .iocognitionschem€ andtoob targetedbr lndividualsa6 well asteams."

THE ASIAN MANAGER . FEBRUARY'1994

C O V E R S T O R Y

myself and Del Monte's genemlrEnaser as well as those di-rectly-under our sup€reisio&was oryanizd. Soon after, DelMonte's corporate print media,- Tidbits, Danag, ManagenentDiSest and Pir,;tit - featur€dTQM-Continuous Improve-mentinformatiory activities andprocesses. The followingmonth, 130 senior staff, manag-ers and distributor owners at-tended a fourdav courge onTQM-Cohtinuous Improve-ment given by Del Monte,U.S.A. consultants.

In September, a TQM seniormanager-coordinator was ap-

"A tJ&J,

quallty goaba]e embedddwlttln theoompany'sst?atelc plansand ale anintegral part of€ach dlvblon'soperationalplans."

hourly workforce on the Plan-tationand in the Cannery com-pleted a one-day TQM-CIcorrls€.

Del Monte's structure fol-lowinS implementation ofTQM is the same as the edst-ing organizational structure.The vice presidenb /dir€ctorsand their iorresponding directrcports makeup the area/di-vision steering tbams. The sen-ror managers, managers anosupervisors with their dircctrcports ar€ each o€anized asnatural management teams(NMT). The supervisors andtheir direct rcports make up

and administrative services. Second, comrnu-nication systems werc deigned to provide alllevels in the organization rclevant and r€altime information. Third. education and train-ing programs werie focusd on providingquality improvement skills at all levels.Fourth, individual and team efforts were or-ganized,withemphasisonintemalcustoner-supp l ie r re la t ionsh ips - be tweenrnanu-facturingsFp6andorganizatimalfunc-tions. And mo6t importandy, the leadershipteam had to live "live oualitv"R.L, Harrvthome I'm n6t suie any cornpanyever achieves "Total

Quality Management."We approached this in a somewhat differentmamer. Ir'\b first confirmed that each of our3J00 employe€s was definitely interesd inbeing a part of an organization that consid-ered qua.lity in everything it did. To get therewe had to make significant improvements-and using thepremise thatanyone can alwaysdo better, we initiad a verv active continu-ous improvementp(Bram.?riecfs were de-vised, goalssetand tEining undertaken. Thiswas all to encourage us to always look forways to continuously improve in all areas.M€nolaoT. luqla(bTheintroductionof TQMis not a specific proc€ss which can easily bedefined; rather, it is alrcady inher€nt in ourday-teday activities and as such, is deeplyiood inour colporateculture. So, your ques-tion mishtbe rcinstad asi. " Htu) are ue able todewlopT corporate culturc ol quality and di*i-pline?"

The formdation of our corDorate culturearc the "Basic Business Priniiple" of Mr.Konosuke Matsushita which state - amongother thines - that the final aim of an earter-prise is to allow people to live more ricNy andhappily and thus help make society mor€peaceful and prosperous. This meansprcduc-ing an abundant supply of high quality andhigh performance products that meet everycustomer's needs and wants at rcasonableprices; and, providing excellent after salesservice. But more in pufting our heart into theprcducts and services that we provide. This is"Human Electtonics" - elechonics for thebenefit of Mankind.

We sharc this missionwith all ouremolov-ees by introducing the Basic Business Prh6-ples to new employees during a one.weekorientation. And we begin every day with amomingmeetingwhercwe rcciteour generalprinciples and creed. Our employees knowour principles by hearq they idmtify with ourmission and our goals and make them theirowTl.

Diripline has become a way of life in ourcompany, and this has rcquired shon& con-sistent commiknentby top managemealt Because we opente on a divisionalized slstemof management, each deparknent is consid-ercd a separate prcfit c€nter or a "company

within a company." We promote healthycompetition among these departments

THE ASIAN MANAGER . FEBRUARY 1994

pointed, r€porting to the president and gen-eral rnanager, and he was made a member ofthe senior steering team. ln November, 45selected tream leade$ attended a three-week,non<onsecutive seminar on managing forcontinuous improvement (MFCI) conductedby TAI to prepale them to act as TQMfacilitatjors in their organizational aras.

ln February 193, 22 graduates of MCIunderwent a three-day, train-tie-trainercourse tio support in-house education in TQM- Continuous Improvement (TQM{D.later that year, a TQM poster design contestfor those who attended the TQM{I classeswaslaunched.And inAugust1993,500seniormanaSers, manageE ano supervrsoF com-pleted the fourday TQM{I couse. ln Octo-ber 193, 1300 lead-persons and montNynon6upervisory personnel compleH a two-day TQM{I course. This brings us up to thepresent. Recently, 3,100 members of the

'14

nahual work teams (NWT).As the natural manabement teams finish

analyzing specific projects, prccess imprcve.ment teams (PIT) areclErtercd to improve theprgcess. And these teams meet regularly todiruss and manage their issues, conc€msand processes. Eventually, every employeebecomes a member of a team.Danny ,ayolo8a The introduction of TQM inMotorola stard with a factory-wide aware.ness campaitn headed by the company'sleaders. The awareness campaign elaboratedon the need for total customer satisfaction andhow each Motorolan could contribute toachieving this toal. The greatest difficultywas swtainins this awareness level until itbecame part

-of the company culturc. To

achieve this, the followint systems were in-hoduced or redefined.

Firsl objective measur€ment systemswere develop€d covering quality, delivery

C O V E R S T O R Y

through our quality pmgrams.Customer satisfaction appli€s to every as"

pect ofour operations. liy'e view evm the leastof ow clworkeE asa customer whce needsand wanb have to be sahsfied. So everyone ismotivated to continuouslv irnprove - /raizan- our prod uctivity, prodircf qiratity ana pruduction efficiencv.H.K. Lau4lWe wholeheartedly believe pee.ple are the Company's biggest asset in mak-ing the fundamental cultural changesrequir€d to succesofirlly implement TQM.Training both philoeophical and technical -is requircd for each and wery anrployee,Management is hained more in conc?ts andskills involved in leading dunge. Workinglevel employees are trained in techniqtresrcquired for implemmting change.

To continuously cultivate a qudity cul-ture, the Reliability and Quality AssurarceDepaiEnmt and the Human Resoures De.parhnerlt team up as the prirrcipal drivingforces for continuow improvement and renewar.

The incentive to build this monentum issuppord by various recognition rhernesand tools taryed for individuals as well asteams; e.9., celebrating small wins perform-ance appraisal and carcerplarufn& MotorclaTeam of the Year, the Sha*'s Fin Soup Prc-8ram, erc.

Aparticipativernanagem€ntenvironm€fitis encouraged by cross frmctional work im-pmvement teams (WfD, task forces, prciectt€amsand service imDmvementteams. Man-agers - from time

-to time - act as role

models by penonally drampioning some ofthe improvemmt activiti€s.

ht you l/cny M d, yo,r cllpty'ttt'ffalon d 4dty dd ydr # A*.

S Mris Wlren we stared the Quality Im-provement Ptocess, our definition of qualitywas conformitv to requirements. Over tirne- and with thLe focus on the exemal cus-tromer - our definition evolved: Quality isunderstanding, accepting meeting and ex-ceeding customer expectations. In short,custorner satisfaction.

Quality goals arc enbedded within trecompany's strategic plans and ar€ an integralpart of each division's operational plans. Ex-amples would include objectives tro imprcvedelivery lead time and order fill ratss, im-provemmts to erjstin8 products and inkpduction of new line ext€nsidrs and Droductsto satisfy identified consuner needs; assistbusiness partners in achiwing higher levelsof product and service quality; shotten ma-chine changeover tirnes and prcductpmcess-ingtimestoinceasemanufachringflexibility,shorten the cycle time for data acquisition andreportinp rfruce raw and packighg rnaterial and in-process defects and wasts; and,prcvide sulficient baining for ernployees and

THE ASIAN MAMGEF . FEBRUARY 1994

a statistical term meaning a defective rate of3.4 per million.

It is to this primary objective that all meas-uement indices r€late. Otiec{ive and dosedloop sysFms have b€€n defined to measureall key aspects of the operation ftom productquality, timeliness of deliveries and even tlrequality of adminishative services like paynrll,caletena, c6t accounting ek.,tlaw$o|t|. The ultlnaie definition of qualityis giving customers what ttrey want or need.Ourdefinitionof whothecustornerisnotor yindudes consumers ofour oroducs but otherpeople we serve intemally. Our goal is to giveall customers the quality of goods or servicesthat ttey require from us,Morcaab trye view quality as not only con-

Our quality goals arc mcompassed rmderthe Six Sigma & Beyond goals;

. 10x defect rcduction every two yea$;

.Customer driveryoSet up and achieve aggressive goals;. 1Ox total cyde time rcduction every fiveyeals.

tnJtt|'r,, ,'a€€tts�w W bt ,€'tlcu,i''lyq@f h hn,/ff'�''f'�/d,|gftl,'/: qta{tyotttp pdrct? Q,d/ay ol 'f'n'f,€? Clu.fity otdpwo'.(Weavllr,',ts?tr.?

Son tllrtoo Our TQM efforts have focused ondelivering superior customer safisfaction byunde$tanding and improving our perform-ance and capabilities in six key areas: Fi$t

businesspartrerstoensurethede- "AtDOIO.Ol|1 formingtospecficationsandlivery of superior customer satis- ___._ -:.- estabh;h€d standards butfacd@ emp lyso'3 mor€ in ensuring customerErIu Qudity rcnects the percep Ulflnat3 satisfacdon. euJitv, tnere-

Xn*:**#iffirgHg$i donnaron or 3J'f#fffJJ**''-Monte's corporate effol b b plf quallty b As ro a specific goal, we

H:ffitr"T1ffi;ffiI#$ g'hg ;;*':trHU,ffi,[nor exc€ed customer rcquiements C||stm|o|! lheproductsands;vicestEtat econonical c6ts. webrovide. Weworkhardto

Our mission is to dumpion d wnal uoy understand our cusromelscu.ltue of co-ntinuous i.rnprove Wa||t Of and frequently run surveysment locrrs€d qr customer satis- and other effective feedbackfaction through employee n€€q." systems, Butmot€irnportantempowerment and teamwork. G out goat ofobtainine first-Jav€laa'"IotalcustomerSadsfac- hand iiformation. Evir ourtion" is theftmdamentalobjective topand middlemanagementof everyMototolanandthatishowwedefine arc rcquted b vAturc out and get a feel forquality. dre mirket.

. The .Corporation's primary toal is to l.€ung olrr definition of quality is ,,hotal cus-achieve"SixSignaandBeyond."SixSigmais tomersatisfaction."

l5

These bits of plasticsay a lot about this papenBecause they're awards from

the influential International

Newspaper Marketing Association.

Each year they recognize

marketing achievements of

newspapers around the world.

And this year, for the second

time they have honoured The

Jakarta Post. Which incidentally, is

the only Indonesian newspaper to be

so recognized.

And what does this mean to

you ?

Well, quite simply it means

that in addition to a comprehensive

read everyday your advertising in

The Jakarta Post is reaching

Indonesia's most important market.

The affIuent and educated.

And that could sav a lot about

your product too.

m chlldnh

l!h6 toumllllrlrl ol Indolr..lrtodtyt. Atd tomoEol.

For further information please call (021) 649-8472,649-8480,624-4090,629-7809, 600-5444 or fax (021) 639-0112, 624-4091.

C O V E R S T O R Y

leadership fmm a proactive and supportivemanagement sharing one vision, and com-mitted to its achievement; second, cornmitdemployeesempower€d bytrainingand work-hg in coopemtion to contribute to superiorcustomer satisfaction in their own work areas.

ThLd, products of superior value and su-perior customeracceptanc€. Fourth, prccessesthat add value to the customer, managed byfact and continuously challenged bo imprcveefficiency and cost effectiveness. Fifth, an en-vironment conducive to irmovatior! continu-ous improvement and personal contribution.Sixth, businessparhuships thatare mutuallybeneficial and long-lasting, based on a sharedobsession to deliver suDerior customer satis-faction.

As you can see, this list covers virtuallyevery aspect of the organi"ntion.Eror The TQM Education Process, team ac-tivities, and the company print media andposters and bulletin boards improved com-munication, resulting in a mor€ effective or-ganization. Quality partnerships withsuppliers and customers have also been es-tablished and stengthened.

Communication of safety and good oper-ating practices enhanced prcdcutivity andthe working mvironment. The participationof every employee in an envimnm€:nt stsess-ing teamwork has improved morale, effi-ciency and productivity. We have alsosbearnlined such proceses as: planting operations, orderin& requisitionin& vacationprocessing etc. We have also improved ourcasefill requiiements.Javebaa Motorola's fundamental obiective oftotal customer satisfaction has elimiruted allboundaries in the marurer by which we pro-vide products o! services. After all, when weare in the cwtorner's role, we arc not satisfiedwith compmmises. Gefting the best of every-thing is a basic customer expectation.HatrruDrno In terms of ourproducs, Dole Thailand hasgone ftom a purely quality as-surance system where a sepa-rate group inspects thefinished product after production to what we call "on

line quality assurance." Online quality assurance isperf omed by the workers whoactually produce the product.They make the measure-ments, they change to insuestandards arc meet, they areempowered to effect thequality of the pr0duct so italways meets our high stand-ards.

In terms of service, themost difficult part of any ad-ministration is to convinceemployees di,at they are thereto support the prccess of mak-

ing goods, to sell and make aprofit. Through training andeducation we have been suc-cessful in convincing our sup-port and service troups thatthey are an equal parhEr inour production process. Theirefforts allow a better flow ofinformation and service andprovide for the purchase ofmaterials at higher quality lev-els - which allows end prod-ucb to be sold at better orices.Merca.to Quafity of people."We Make People Before WeMake Products;' is more thanjust a slogan. It is the reasonwhy we can get ordinary peo-pleto doextraordinary things.With quality people, we be-lieve that everything else fol-low: quality product, qualityservice and quality workingenvlrorunent.

lounglWe'vebeenpartio- l-larlv successful in imDlement-rng-TQM in the quaiity of our prcducts andour working environment.

WM - fr tty - tid'€ tts sAnffiE tt&r;rce toWtWrotTQlt?wM sfpr6'soryq$ @tnfaty's c|t?'nlE ,8re W M to dwBahar tubMlQm

San Matoo ln recent vears, we have enhancedeach employee's individual capacity for per-sonal contribution through training and edu-catio4 and have encouraged a;.td nurturcdinnovationand a sense ofpersonal ownershipof the business through participation in man-agement decisions and delegation of respon-sibility and accountabiliry

Access to comDany information once con-sidered confidential gives allemployees a view of the bigpicture and the company'sdirections and each em-ployee can draw up his ownaction plans defining his orher individual conhibutionin support of corporate ob-tectives. These interventions- along with the sucr-ssesof numerous other improve-ment activities - have re-sulted in an organizationOrat is unfazed by changeand employees who, in fact,expect change and drive itthemselves.Ermr Stumbling blocks toTQM implementation in-cluded intemal competitionIack of teamwork; not get-ting key people involved;and, managing employee

"At MatsGhita,rve believe thatthe final aim of anenterpds€ is toallow peode tolive morc dchlyand hafftily andthus help makesockrty mo|€peaceful andprospercus."

concem and fears. One ex-ample is the loss of author-ity or a job. Other stumblingblocks hcluded irnpatience,confusion, uruealistic ex-pec ta t ions about theamounts and timing ofmonetary rewards or re-tums.

Otherobstacles mightin-clude unrealistic expecta-t i o n s o f i n i t i a l t i m ecommitments. There wasalso skepticism - somethought thatTQMwasiustanother productivity pro-gram in disguise.

The aspects ofcompanyculture we had to changeto implement TQM in-cluded:.Focw toward the satis-faction of intemal and ex-temal customersi.Decision - making byconcensus;

.Teamwork vs. individual;

. Data versus opinion;

. Quality as the solution, not the problem;

.Continuous improvemenb

. Enlightened leadership;

. EmDowermmt;e Pariicipation of all; and,. Monetary awards and other forms of rcc-omihon.

Javelca The bittct difficulty we had was indeveloping a culture that rclates everlthingwe do to a customer need. We work at amanufacturing site and we arc not regularlyin touch with the customers who use ourproducts and services. In this situatio4 cus-tomer Hback was difficult to obtah on areal time basis. And without feedback it wasdifficult to motivate people to rcspond to thequality imprcvement challenge.

To deal with this situatiory we embarkedon an effort to develoD an "iniemal customer-supplier" relationshipcllture. Thismeantthateach Motorolan within our organizationshould treat the other Motoplans who rc-ceive his/her producb or services as a cus-tomer and that total customer satisfacnonshould be keDt constandv in mind. The meas-uremmt and-communication systems I men-tioned darlier provided the "Motorolan

Supplier" with ieal time feedback from his"Motorolan Customer"Hawthome When we were starting to im-plement TQM we often heard our employ-ees say that, " We all have a full-time jobalready. How can we possibly do more?"Through persistance and the accomplish-ment of some modest proiects we demon-strated that continuous improvementactuatly made their jobs easier and more rewarding. Mo6t found that etiminating un-

"D€l Monte'gefiolts tointrcduce TQMnas t€ally a steFbyctep pocess

that lnvolvedincrcmentalchanges eehmontt."

IHE ASIAN i,ANAGER . FEBRUAFY 1994 1 7

Ar.r JNvrrnrroN ToAsu:s Mosr PnEsTrcrousrneAsian

ManagementAwbrds

MnT{AGEMENTAwnRDS...

j Txe Asnx Mrtlce*rerlr Amnos l-

Through The Asian Management Awards, theAsian lnstitute of Management wil l recognizefor the fourth conse( ulive year deserving com-panies that have distinguished themselves inseven manaSement cateEofl es.

Awards ceremonies wil l take place on February17, 1994 a tTheWest in Ph i l ipp ine P laza fo r thePhil ippine winners, and in September 1994 inHong Kong, Indonesia, Malaysia, Singapore,and Tha i land.

PNDSENTS

THE SEARcH lro Seleclox PRocEss

THE GOVETNING SOARD

DR, WASHINCTON SYCIPCroup ChairmanThe sCV Group

DR. BRIAN W. SCOTTChahmanMaf,ag€meri Frontiers Pty. ttd.

DR. OAVID K,P, II, O8T, 'PDirectof & Chief tx€culiveThe Santof E.st Asia, !d.

MR. 'ACK TANCChainnanTrisrar€ HoldinSs Lrd.

DR, 'ACDISH PARIKHMa.ati.8 Dirc€tort€e & Muirh€ad {lndia Pvl. ltd.)

MR. ADITYA V. BIRTAChairmanGrasim Industri6 Lld.

MR. RACHMAT SATIHPr6id€.1 Commilsioncr

MR. OMAR ABDALLAPre!idenl CommirsionefPTISJ Dula Eank

MR. RT'IRO HATTORIChairmanHatori Seiko Co., Ltd.

MR- YOIARO KOBAYASHI

Fuii-Xercx Co., Lld.

TUN ISMAIL 8IN MOHAMED ALIChai.manNational Equity CoDoration

Y, SH6, TAN SRICEH IK CHEONCChairmanD€\€loFnent & Comme.cial Bank 8hd.

MR. VICENTT T, PAITRNOChairman and Mana8in8 DircclorPhilippine S€ven Coporalion

MR, ANDRTS SORIANO NI

San MiSuel Coryoraiion

MR. WANC CHIEN-SHI€Ntegislato.Lee;slative Yuan ot Repoblic o{ China

MR, STAN SHIHChairman and CtO

MR, HIRMAN RONAID HOCHSTADTChakmantc:Cs Holdiitgs Ltd.

MR. ALAN C.Y. YEOChniman & Ma.ugiq Dire.torYeo Hiap S€n8 Limited

DR. DUK CHOONC KIM

Daewoo Industrial Co., tld.

MR. PYONC HWOI KOOChairma$tucky'Col&lar Inlehalional Colporation

MR, VIROI PHU]IAKUTChai.mantever Bfolh€rc Ohailard) ttd.

H.t. DR. AMNUAY VIRAVANDeputy Pdme MinisterXin8dom of Thailand

MR. DAVID K. NIWSICCINC

R€ okjlcroup PLC

MR. WTTIAM S. ANDTRSONRetned Chairna. of th€ soadNCR Corporation

ASSOCIATION IVITH

fimTIfE PNINCIPAL SPONSOBS

NoMrN^rED oRcANrzATroNS will be sent a datalormwhich requires substantial data disclosure b<-rthquantitative and qualitative regarding the com-pany and its pertormance. Data submitted is treatedwith utmost confidentiality.

A team of AIM laculty members wil l analyze theinformation submitted and wil l shortl ist the candi-dates. The information provided by the shonlistedcandidates will then be validated for veracity priorto judging by country-specific Boards oi Judges.

The decisions of the Boards of Judges are submitted tothe Coverning Board tor f inal approval. The winningorganizatjons are then informed of their selection inwrit ing by the organizers. Announcements ot thewinning organizations wil l appear in leading local andregional newspapers and magazines.

fhe Far Eastern Economic Review will feature theAwards in a special atticle. The Asian Manager andthe country merlia sponsors wil l provide additionaleditorial coverage.

Cmeeonre exo Tnetn Cnrenn Txe Nourrlrrox Fonv

Crrrner Merecrrarrr, Forsuccess in strategicallypositioning the company within the industry andtransforming it into an outstanding company.

Mmxnrrc Mnrecrr,rrNr. For outstanding and suc-cessful innovation in the use of the elernents andtools of marketing, lead ing to customer satisfaction.

Proprt DrwlopurNr llo Meucrr,rrlr. For excel-lence in the management and development ofthe people in the organization, geared towardsproductivity, professional development, and en-hancement of the quality of l i fe.

FrNANcrAr MANAGIMTNT, For outstanding manage-ment 01 the company's assets, l iabil i t ies andequities, in keeping with the owner's best long-term interests.

lrrolrnerroN TEcHNoLocy MaNActMENr. For thecreative use of information technology to en-hance the competit ive position of the company.

Opr* l r ro r . rs Ml recr ra r r r . For ou ts tand ingachievement in the quality and delivery of prod-ucts and services through high productivity,technoloSy innovation, and continuous im-provement.

DtvttopMtNr MANAGEMENT. For creating substan-tial and measurable positive impact on its targetbeneficiaries through innovative, sustainable,and effective management. This award is givento a development organization which is prima-ri ly notfor-profit and which has as its mainobjective the improvement of the quality of l i feof people.

rneAsianManagement

AwbrdsI nominate the lbllowing organization:

N.rme of OrSanizationAddress

TelephoneName of PresidenVCEO/MDTi t le

ln the following categories (p/ea-se check):

-l Ceneral Mana8ement

J Marketing ManaSement

J ()perationsManagement

-l Financial Management

Send to: The Progrn m D ir€clor. The Ariao ManaSenrent Awa rds,c/o Asan Insl r lute or Managemenl . k)5€ph R. McMlcki fgCnmpus, l2 l Paseo de Roxns, P.O. Box .109j , M.rknt i , MelroMani la. Phi l lppiner

Far lo: HdnS KorE( i l i2 l8;7 50)1r lndon6ial6221) 57lJ2106* Mdhys;r (60l)2 '1,+ I696 | Phi l !4t inet t6t2)a17 9240 i t t ) l 16292 * Sinqaporc 165) 2912557 * Th.lil.tnd t662) )i1ou6o

Fax

JJJ

Information Technology ManagementPeople f)evelopment and ManagementDevelopment Management

THr Asrar MANAGIMINT Awacos trophy is de-signed and executed in glass by multi-awardedinternational artist lmpy Pilapil. l t revives anemblem used by King Charles I of Spain - thetwo pil lars of Hercules and the scrolled mottoPlus Ultn.

From this emblem evolved the modern "$"

symbol-the trro pii lars and the scroll-used formany of the world's currencies. In fact, there are

three symbolisms. First is the dollar, representingprofitability evolving from the organization's per-formance. Second is the motto P/us U,ltra - thereis more beyond: more to achieve - embodying achallenge to winning organizations to continue tobe competit ive, dynamic, and successful.

Third is the globe, illustrating the new breed ofmanagers needgd for the 1 990s and beyond: glo-Dar managers.

Your NamePosition

AddressCompany

TelephoneSignature

FaxDate

L-

/\ PI.DTV th t"t ..".,tktb- 6q-t

$rw,- N€PruNE oBlENr

tlil -r.*o,"tronB€rhd

aTlmmwn nnno()Fsa^L Horets

Hong KongHong Kong Hilton

IrlaloEsialaksrta Hilton Intemational

MalalsiaShangi-La Hot€l Kuala Lumpur

PhiWiflaTle w6tin Philippine Pta"j

SingaporeH)'att Regencf Singapore

'I'l&iland

Tbe Dusit Thani

AmdAL Extn,,r ORcaNt2En�Pi€o croup

OFFrcw AwtT:oN ot 11itSElICH ,{ND S&6cnoN ProcDss

SGV/Arthur Anders€n

OEncJ L PuBuc|TrrNsHong KonB

Sing Tao DailySing Tao Ev€ning Post

The StandardlndonesiaTempo

SwA S€mbadaMalalria

Star PublicationsPhiliryines

Th€ Philippire StarThe Buriness Star

ThailandNation Publishing croup

RegionalThe Ashn Manag€r

ORGANtztRThe Events and Awards

Managerc of ,{sia (TIAMASIA)

THE AsrAN lNsrrurE oF MANAcEMTNT invites you tojoin the annual search for Asia's best-managedorgan rzatons.

Nominate a company you believe deservesrecognition for excellent business perform-ance. You can also nominate a not-for-profitorganization that has demonstrated manage-ment excellence in serving its tar8et benefici-a r ies . \ ou mav nomindte as many compdn ieqas you w ish .

IA\4 r2 I

C O V E R S T O R Y

necessary work and doing it right the firsttime was much easier than continuous re-working. There wasn't much culture changerequircd. We've alwavs been involved inprqecS and prccesser that led to improve.ment. We did have to systiematize what we aredoing and this takes significant training.Metcado Since thejoint venturc was started in1 7, Mr. Tesus Del Rosario has alwavs em-phasized discipline and the development ofpeople. So the T@ concept was easily ac-cepted in our company.

Perhaps one difficultv that we enc-olrn-ter€d is the difference in culture between Japa-nese dnd Filipinos. Because our Japaneseadvisers are changed every five years, theyhave difficultv understandhs the needs andwants of Filipino consumers"ir,itialv Ho*-ever, with thi proper feedback system, theycame to understand the needs of the Filipinoconsumers over time.l€urE The major stumbling blocks are: diffi-culty in developing a problem ownershipmentality; and, time management of workloads.

On time management of work loads, weale still strugglinS to do a better job.

C ydlnrcarcthe cc,b'fddtf'�'f/'t3dhnMEftIM? rlsp, tnw mrch ffi ftc'FfWt o lnhrrrfqi? WM.bWful * the rctmts m srch I kues�ntrlnt?

San Mateo The primary driver of cost in rm-plementin8 TQM has been the investmentmade in training employees. lmplementingTQM has required chantes in the ways thatjobs are performed, necessitating upgrad-

the quality of management andshorten access time and enhance flex-ibilitv in the manufacture of our Droducts.

The returns on these investments can besummed up quite easily: They representour ability to survive as a company in theemerging market place.E ror The costs and benefits of TQM imple-mentation can easily be measured.

ing of skills and new knowledge, aswell as preparing the individual forexpanded responsibil i ty and themanagement of chante. Over the pastfour years, employees have receivedan averageof overfifty hours of train-ingand education to prepare them fortheir new roles.

Other major investments havebeen in the areas of information tech-nology and manufacturing facilities,which have allowed us to improve

For costs, we maintained a separate ac-count. Excludingsalariesand wages,actualcosts were as follows:

In1992, our costs amounted to P901,000;in 1993, P5,165,000; a\d, in 1994,P-1,522,148.Ourbudget for 194was P4,831,000 and for1995 our budget was P3,235,000.

The rewards are improved quality, pro-ductivity, mordle and margins, through:

. Reduced cvcle time:

. Improved iommunication;o More efficient managers;o More productive workers; and,. More satisfied customers.

ple can see their accomDlishments. Fromprojects that t€nerate hundreds of thou-sands ofdollars to small proiects that don'tgenerate much but take away impedimentsto qualiry you can see the enthusiasm ofemployees who previously did notpatici-pate in improvement programs.

The real cost was in peoDle's time andeffort. We did hire consuliants to teachproblem solving, process managing andsystems analysisbut this didn't costmuch.Weput together ourown program to meetour needs and those involvedboughtoffonthe process. Jamming a camed programdown people's throats doesn't promotesupport.

As I said earlier, our TQM protram rsfocused primdrily on continuous improve-ment. What we feel is the long-term rcrumis thebelief that our employees will alwaysbe looking for better ways of doing things.Total quality management is the goal; con-tinuous improvement is the means.Mercado The cost of implementingTQM isnot a separate cost, but rather a part of ouroperational expenses. As to retums, TQM isa major factor in our continued growth.Laung The costs and benefits of TQM areobvious in manufacturing operations, inwnlcn we measute:

. electrical and visual mechanical de-fects at parts per billion level;. cost of non-conformance; and,r cumulative yield.The level ofscrap reduction in Motoron

Semiconductors wolldwide isphenomenal,and it has contdbuted to sisnificant im-provement in profitability.

-

In design operations, TQM results inhigher rates of first pass success in newdesigns, i.vhich shortens the time to marketand the break-even time of new ptoducts.

ln service and administrative areas,there is no direct simple measurement thattracks the costsand benefits of implemenr-ing TQM. We have recently restructuredservice areas to form a Customer Respon-siveness Center (CRC), which is going todefine visible metrics in this area. Mean-while, we look at the bottom lines: overallreturn onnetassets, profit margin, sales peremployee and market share. I

THE ASIAI\ MANAGER . FEBRUARY 1994

D,el Monte's funllment of casonll

m

To single out meeting casefill require-ments - which is the percentage of actualsupplied to orders received - the results are

demonstrated in our fulfillment. For rn-stan(e, in 1992, we met 72. of total or-ders. In 193, this percentage incrcased to80',,. In Canada we now supply 85"b oftotal ordeIs as opposed to 83% in 1992. Inthe Philippines, wenow supply97.5". oforders as opposed to 95.5%.Javolosa While we measure the cost ofimplementing TQM. the company'sleddershipdoesnottreatitasdco6tbutasa requirement and a worthwhile invest-ment. Today, the m.indset is, "U it willbring us closer to total satisfaction, it hasto be done."

The benefits are likewise measuredin various ways: scrap reduction, in-creased sales, shorter lead times, fewercustomer complaints, greater profits,etc.

Some ortanizations need to see re-turns on their bottom-lines to be con-vinced that TQM is a worthwhileinvestment. We see quality as a baslcrequirement to remain comoetit iveand theonlvwavto do thisisbvachiev-ing total customer satisfaction.Hawthome The benefits of TQM areeasy tomeasure. We keep score so peo-

Del Mo{t6'B c€t3 r'3. budgot

F E A T U R E

The ASEAN Frce TradeArea provides the

Phlllpplnes an opportunltyto reverse lts decades.long

economlc decllne.

8Y FELIPE 8. AI"FOI{SOPRESIDEI{I

ASIA I slnulE oF I'ANAGE Em

Take Hong Kont andSingapore for instance, bothcity-states with virtually nonatural resources. Bothopted to become freeportsand to act as conduits forthe flow of trade and invest-ments.

On theothu hand, Japan,South Korea and Taiwan,optred to develop:

o First, by encowagingimport-substituting domes-tic industries;

. Second, by imposingagrarian reform as a meansto bolster domestic markets;

archipelago compris€d ofover 13,600 islands, Indone.sia's land area is almostseven times that of the Phil-ippines.

Buoyant oil and com-modity prices fuelled thecountry's growth ftom the'50s to the '70s. More Iecmdy Indonesia has under-taken sustained efforts todivenify its economy - alesson learned from the1986-89 recession, whenweak world prices for cmdeoil plagued the count4z Therecession was cathartic, and

21

. T h e otpprnesano

AFTAF conomically - as well as politically- the world hasI changed more ra pid ly in the past few yeaE than at anyI time since 1945. And no continent has been trans-I form(d so radically in the past two drades than Asia- now the biggest, most varied, most creatively d1'namiceconomy in the wotld.

Compared to the rest of developing Asia, Japan is in theeconomic stratosphere. Ib success story was what first madepeople contcmplate a Pacific flowering.

And hdeed, it soon became clear that the rise ofJapanas an economic power was not an isola ted phenomenon.Japan's success was followed in the 1970s bt the meteoricgrowth of South Korea, Taiwan, Hong Kong and Singa-pore - cotrntries which have achieved spectaculargrowth and industrialization through the implementa-tion ofa variety ofpolicies that, at their most basic, havemade effective use of available resources - which weresometimes very limited- and have been exportdriven.

. . Third -with the excqrtion of Korea - by encourag-

ing a hemendous ratie of savings and then hamessing theseresources to finance developmenu anc,

. lasdy, these countries cho6e to aggressively promoteexports as a way tio speed up much of *rc industrializationphase then thought to be essential to progess.

Asia's second generation of MCs: lndonesia, Malaysia,Thailand. China and Metnam - emerging dragons in iheirown right - are also important players in Asia's rcmark-able success story

Indone3laThe world's largest Mwlirn nation is alsoAsia's nextbig

growth market.- One hundr€d eighty€ix milUon Indonesians repr€sent

the rcgion's mo6t populow nation and the foreign inves-tor's current darling. lndonesia's population is grnwing a t2.3o'o, a rate slightltlower than that of the Philifpines."An

ASEAN ECONOI'Y IS ASEAN I{EE}S AFTA TOREAOYFOFAFTA GROW FURTHER

wryzF:!m

r t I

,,offis ll

r So f

o $ r5 s o o ota

"",'*. glo," o".. p'

**",r" fi6 4 1 0 2 0 0 / o $ o t ! o

@PCCI lF@tn Chsb.r

IHE ASIAN MANAGER . FEBRUARY 1994

forced the Suharto govemment to make ma-jor policy changes and initiate a pr()8ram ofeconomic reforms aimed at liberalizing theeconomv

Today, very liftle of Indonesia's growurgprosp€rity has tio do with its vast oil resources.In fact, the entire complexion of the country'sexports has been transformed a being largelycommodity driven bas€ to a non-oil exports,manufachrles.

ln the last decade, the percentage share ofoil and gas revenues of Indonesia's GDP fellby almost hali from 68.6 p€rcent to 39.1 per-cmt,

In contrast, merchandise exporb grew byover 28 percenL from $18.5 billion in 1985 toalmost $24 billion in 1992, in conhast to thePhilippines' total of $9.82 billion. This year,lndonesia's merchandiseexDorb ar€ exoecdto reach 39 billion.

Manufacturing now accounts for 21 per-cent of Indonesia's total GDll Six years ago,manufacturing comprised a mer€ 16 percentof GDP By comparison, the Philippines'manufacturing sector comprised 25 percentof GDP in 1985, a figure that has very negligi-bly changed in the last 5-6 years.

Drect foreim investments in lndoneuahave increased io 1.5 biltion dollars from $300million in 1985 during the nation's crisisyears.Morc notablt investments from Japan nowapproximaie total Japanese investrnent by inMalaysia and Thailand annually.

As a result of the Suharto govemment'sfar-reaching policy changes at the 80't lndo-nesia now posts an average growth rate of670,placing well ahead of the Philippine' 2 per-cent growth.

Malay3laMalaysia has a population of 19 million,

less than a third of that of the Philippines. It isa prosperous, developing nation - one of theregion's mo6t d).namic - which enjoys atremendous wealth of natural rcsources, in-cluding much of the world's supply of tin,rubber and palm oil.

Uke Indbnesia, Malaysia's growth in the'50s and '70s was largely dependent on com-modity exports and like most of its Asianneighbours, Malaysia embarked on an im-port substitution strategy in the '60s

and '70s.

F E A T U R E

The countrv exported mbber andtin in the same way as the Philippinesrelied on its sugar and other primarycommodity exports; Thailand on riceand tapioca; an4 Indonesia on exportof oil and natwal eas.

UI(e Indonesia, Malaysia has alsochosen to dive$ifv itsexDorts. Betwenthe tate '70s and'80s, Prime MinisterMahathir Mohamad's government ini-tiad an export-orimted program ofindushial development characterizedby policies aimed at promoting an

2.

11,n*,impact of

AFIA may

not be

tu]t branothel

decade."

open, competitive economy. Merchandiseexports - primarily semiconductors andeleckonic goods - increased from $15.5 bil-lion in 1985 to,l0 billion dollars in 192. Thecor.mtry's future economic course is clearlymoving in the directionofmore sophisticated,capital-intensive technologies and export-oriented industries. It is the largest exporter ofsilicon chips in the world.

As a result of incrcased merchandise ex-ports and substantial foreign direct invest-ments amounting to over $4 billion annually- an amount about eight times that of thePhilippines - Malaysia boasts an annualgrowth rate ofnine percent, one of the highestin ASEAN.

thailandWith a land area larger than the Philip-

phes, 43 percent of which is cultivated, Thai-land was one of Asia's fi$t "litde dragon"economies, having adopted the succesi for-

IS AFTA A THREAT TO YOUR COMPANY'S OPERATIONS

E PHIUPPIN€S

! SING,qPOFEI TIiA(AND.:] IN@NESIA

10

- f l o o o

mulas that propelled Singapore, Hong Kong,South Korea and Taiwan into the ranks of thenewly industrialized.

Like most of its ASEAN neighbours, Thai-land was an exporter of primary commodi-ties. As late as the 1970s, the country'sexportswer€ primarily agicul tura l: Thailand remainsone of the world's largest rice and tapiocaexporters.

h the early '80s, however, Thailand alsochose to go in" direction of exportdrivengrowth. In the last decade, Thailand attractedconsistently strong foreign investment as ar€sult of its export-oriented prcduction poli-cies, cheap labor, an undervalued currencyand a minimum of govemment intervention.Highly deregulated since the '70s, virtuallyevery area of the Thai economy is open toinvestment, and the government has beenknown to apprcve forcign economic venhuesinto industries where existing govemment orgovernmen t-rela ted corporations operate.

Such policies have amomted to a formulafor sustained growth. By the late '80s,

Japa-neseowned and joint-venture factories weresprouting at a mte of one every two and a halfdays. In 1990-91, foreign investmentsamomted to $2 billion. Merchandise exportscontinue to grow at a steady pace. Exportswerc clos€ to $3O billion in 1992, up from $7billion in 1985.

A l though, Tha i land 's overheatedeconomy appears to be slowing - doubledigit growth has been replaced by more real-istic figures - Thailand still draws a largeshare of foreign hvestrnent. ln 1990, it wasthird in the regron, after Singapore, whichmanaged to brhg in the iion's shar€ of invest-ment, and Malaysia.

At present, Thailand is facing stiff compe-tition from lndonesia, with its large popula-tion and abundant raw materials, butThailand's proximity to IndoChina's emerg-ing baht economies ensues tllat it will retain--in the near future at least - some of itsoriginal allur€ to for€ign investors.

China and VietnamAny discussion of foreign investment in

the region and Asia's glowth market mustinclude China and \4eham.

d i

China is notable, particularly forthe size of its market. Govenmentcontinues to encourage the openingup of the domestic economy to foreigninvestment.

Although China is still predomi-nandy agricuitural, special enclaves ofindustrializ-ation are slowly coaxingChina onto the world siage as one ofthe next cmturv's economic power-houses. For instance, in the first ninemonths of this year alone, dpproxi-mately $83 billion worth of foreigninvestment found their way intoChina. Ard China's economy grew by

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a spectacular 14.5 percent - faster than anyother Asian country.

Metnam, on the otherhand, is increasinglyattractive because of its supply ofcheap labor.At present, Viehram shows everv indicationof haturing into a high-speed, export-ori-ented MC. Towards the cloee of the centurv,Metnam mdy well become one of Asia's mo6tfavoured destinations for forcign investmmt.

Le3sons Leamed?What do the e4rcriences of the little drag-

ons teach us? Very simply, that the most effec-tive policies - if we ate to achiwe rapidgrowth - should embody the principles ofeconomic liberalization, substantial foreiFflinveshnent and export driven growth. AU;ftheseprinciples are inter<onnectred and workbest when they ar€ applied wholesale.

As we've iust seen, hdonesia, Malaysiaand Thailand incorporated these policiesto build links to the glo6al marketplaci - thesource of a steady inllux of outside capital,investmmts and technology - as well as tothe market in which to sell their exDorts.

The second generation dragoni are wellon theil way to becoming prosperous, indus-trialized countries prcciselv because of theirenlightened, exportdrivenievelopmmtpoli-cies. The Philippines, must do the same: liber-alize, attract forcim investments and comrru(itself to export promotion.

AFTA is the bridge that the Philippinesneeds to link itseU to dre global economj, andcapture its legitimate shar€ of financial re.sources and markets. Thailand, Malavsia andlatjely, lndonesia, have followed thd simpleformula of building bridges to the globalmarketplace. And now they want thosebridffs to ,be wider and stronger still -through AFIA.

By providing a unified market, AFIAmakes the entire region atbactive to forcigninvestors and will no doubt athact "good"

M NCs - tho6e tha t seek a competitive base inthe global marketplace and promote speciali-zation and the division of labor betweer na-tions as opposed to MNCS that seek or yprotecd markets.-

Perhaps within this d'.ndmic, potentiauylucrative market, the Philippines may againbe given the chance to become the new

F E A T U R E

prefered investment destination be-caue of the quality of its worKorce.The type of skills and rnanagerial man-power we arc fortunatre to have devel-oped arc the exact assets that forcignbusiness values highly. Many of theASEAN countries which received bil-lions in foreign diect investment in the'80s now suffer severe shortages ofmanagers and engineers. Herc in thePhilippines, many of our middle man-agers and engineers alle either sadlyunemployed on:nderemployed. Thenskills and talents can certainly be har-

11 ̂,^.AFTA survey,

the Philippines

is neither

mentioned as

an oppoftunity

nol a threat."

nessed under AFIA.

AFIA SurueyI think a maiority of the Philippine.busi-

ness community ralize this, as well as appre-ciate the other benefits that AFIA wil brins.Many realize tlut AFIA will enhance ourcountry's competitiveness and prcductiviryIn today's tlobal economy there is no place forprotectionism or similar interventionist poli-cies. These only serve to hinder export expan-slon.

B€fore we discuss the findings of theAFIAsuwey - the second portion of olu Dr€senta-tion - let me brieflyiescribe the miethod bywhich the suwey was conducted.

last October, several thousand surveyquestionnaires were distributed throughouttheASEAN countries-excludine Brunei. lnthe Philippines, 1,570 survey forrns were sentto various IrCCI members and foreig dnm-ber representatives. The response rite fot the

WAYS TO E(PAND TO OTHER ASEAN COUNTRIES

survey thus far has been 11.3 per cent, arcasonable percentage which provides a validindication of the average Filipino busi-nessperson's perceptions of AFIA.

The opinions that follow focus on the fol-lowing areas: the respondents' agrcemmt ordisagreemmt on the d iffering percepbons re.gardingAFIA; theirass€ssmentof howAFTAwill affect &e r€sion as well as themselves ontwo different tevels- in the industry towhichthey belong and on the company level; thestrategic options theL companies should con-sider in the ad vent of AFIA; and their opinionon govemmmfs role in AFIA.

The rcsults then, suggest:. General PerceDtions of AFrAA majority of respondents from the IICCI

a$ee that ASEAN is ready for AFIA. Re-spendents frcm among the foreign chamben,however, are unsure of the region's prepared-nes6 for AFIA. Both sets of rcspondents agreedratAFIA s impact will onlv be felt aftei slx roten years of imiiementatio;. Based oninitialfindhgs of the surveys sent to our ASEANneighbours, Indonesians and Singaporeansalso agr€e that the full impact of AFTA willonly be felt after si\ to tm years. MalaysiarEand Thais, however, feel that chanses willsta to be felt in the region after 11-13 years.

. Impact of AFIA at the industry levelRegarding AFIA's impact on local indus-

tries, i€spondents from both the ItCI and theforeign ihambers agree that AFIA wi for€etheir industries tobecome more globally com-petitive. AFIA, they say, will also incnease thelevel of foreim dir€ct investment into thecountry and increase intra-Asian trade. It isinier€sting to noie, hqwevet that our re-spondents from among the foreign hade rep-iesentatives are more optimistic about theinflux of foreiqn investment as a result ofAFIA s irnplemmtation.

A majority of respondents ftom both theIrCCI and foreign chambers also recognizethat AFIA will bring about far-reachingchanges, such as evolution of industry struc-turcs. Both groups remainconfidmtthat mul-tinationals will not dominatre in any onernoustry.

. Impact of AFTA on the company levelThere are two key points that emerged

ftom our survey regarding the impactofAFIAat the comDanv level. The firsthas to do with the-perceived threat tocompany opelations; and the second,with the sowces of these thJ€ats.

Perceptions varv as to whetherAFIA presents a threat to the r€spond-ert's company. Fifty-one percent ofrespondents claim that their compa-nies' operations will not be theatenedby AFIA. However, 1ry. rcspondedthat their companies will be threatenedby AFIA s imFlementation.

In comparison to our neighbors,Filipino business exprssed a greater

THE P6IAN MANAGER . FEBRUAFY 199424

F E A ? U R E

level of conlidence in the ability of theircompanies to stay ahead of the competitiondespite increased competition as a result ofAFIA. Singaporearu and Malaysiaru, how-ever, expressed more conJidence in their com-panies than the Filipino rcspondents.

Regarding souces of perceived thrcats,the IrCCI respondents identified new indus-try entrants as the highest threat to their com-panies, while a maiority of foreign chambermembers said that the emersence of substi-tute ploducts should be a major souce ofconcem.

In a ranking of the ASEAN counbies asDerceived thrcats in terms of mtrv intoindus--tries,

both groups shared comrnon choices.Singapore,IndonesiaandThailandwereidm-tified as the toD thr€e threats to local indus-tries. Respondents from other ASEANcountries also indicated Indonesia, Thailandand Singapore as threats. The Philippines wasnot mendoned.

. AFIA strat€ties of respondentsIn the survey, rcspondents werc asked to

evaluate various stratregies to pu6ue withintheAFIA framework. The first involved stsa-tegic decisions such as expandhg into otherASEAN coutries through exports, thrcughstrategic alliances, thmughioint venturcs andthrough mergers and acquisitioru. The sec-ond involved the choice of destirution forinveshnents, while the third involved whatmethods to introduce or utilize to enhancecomDetitiveness.

ltre respondents ranked develqring ex-ports as the number one strategy to pu$ue inexpanding throughout ASEAN. Their sec-ond choice was throughestablishing sbatregicalliances.

Similarly, a matority of Malaysian,lndenesian and Singaporean respondenb agr€edthat exportdrivenFowthwas the shategy ofchoice. The Thais, howeve4, felt that develop-ing strategic alliances - establishing jointvmtwes and expansion of new foreign opera-tions - were as essential as expansionthrough the development of exports.

ln terms of invesunent directions, the Phil-ippine respondents agreed that hvesting do-mestically was an important shategic optiorlA majority of Indonesian r€spondents alsosaid that it was important to invest at home,whereas theThaissaid it was morc imDortantto invest in othe! ASEAN countri€s.

-

Re8arding sEategies to compete more ef-fectively, the Philippine respondent's top op-tiors were emphasis on quality conhol andattaining lower costs. Another option men-tioned specfically by the I]CCI group was theimportance ofdeveloping new technology. Amajority of the for€ign chamber respondmtsfelt that a shilt in the soucing of inputs wasalso imDortant

The- survev's ASEAN respondents re-vealed differeirt opinioru. The Malaysransstr€ssed the importance of automation in pro.

FEBRUARY.1994 . THE ASIAN N4ANAGER

/ ( , .

plevailing

mq)d towards

AFIA appearc

to be one of

leadiness."

ductionmethods; a maiority ofThais considerachieving lower costs important; theSingaporearu stongly fuel that differentia-tion in products and service will provide acompetitive edge; while Indonesian's saidthey would divenify.

r Role of govemnentThe last asDect of the suwevfocused on

govemrnmfs-role in the imphhentation ofAFIA. A majority of r€spondents said thatthey felt that govemmerrt was not dear andbanspar€nt in its policy towardsAFlA. Onlya small number ofPhilippine rcspondents feltthat govemment was pu$uing its AFIApolicy in a manner that was clear and trans-parcnt.

As to which policy arcas the rcspondentsfelt would have greater impact on the successor failur€ ofAFIAstmtegies, the IrCCi consid-ers political unity and stability the most criti-cal factor to AFIA'S success. Foreign dumberrespondents considera sound labor and wagepolicy morc important. Of secondaryimpor-tance to the IrCCI is the pres€nce of adequateinfrastruchle, while those from the foreigrchambers coruidered political unitv and saa-bility a secondary coniideration.

Elsewhere in ASEAN, rsults indicatedthat all coutry respondents agree that politi-cal stability and political unity are the mostimportant determinants of AFIlls success.Malaysians and Singaporeans - who arecurrenuy beset by labor shortages - alsocorsider labor and wage policy a critical fac-tor. The Thais ranked corDorate taxes as the

s€cond most important determinant whileIndonesians rated interests rates second ontheft list of important factoE affecting suc-c€ss.

A maiority of Philippine respondentsagreed however that goverNnent would be-come more outward looking as a result ofAFIA. For the most part, the respondents feltthat AFIA will strensthen ASEAN'S linls tothe targer world economy and as a r€6ult ofAFIA s implementatiory theregionwould beconvenimtly "interlocked" with the rest ofthe global marketplace.

lmplicationsThe partial returns on the survey thus

rcveal several imDortant develoDments:Fi$t, the prev;iling mood towardsAFlA

appears to be one of readiness to accept thenew rcsional order and faith in the determi-nahon of the variousASEAN sovernmenis toeffect this new order It is espkiallv interesr-ing to note that the Philipp-ine respondenSappear tio have the same perception of ur-gency for AFIA as the Singaporeans andIndonesiaru.

Second, the general oudook on AFIA isoptimisfc and positive. This upbeat view isexemplified by the thinking that the regionwillnotbedominatedby multinationals, pro-vided that the playing field is level for indig-mous as well as non-indigenous companieswithin the AFIA framework.

Third, very few of the respondents seeAFIAas a thrcat tjo theircompanies orrcspec-tive industries. lnstead, the majority ofPhilip-pine respondmts see AFIA providing newopportunities and chatlmges. This despitethe Philippines having lagged behind the restof the rcgion in its economic development.

Fourth, rivals have been identified - spe-cificalJy, lndonesia, Singapore and Thai-tand.Asignificantnumber of iespondents see thesethree countries as skonger as a rcsult ofadvanced technology and ioint ventures,cheaper production inputs and Breater rc-sources. The Philipphes, confident of itshigNy skilled worKorce, has identified theneed to concenhate on total quality as a wayof competing in the rcgional economy.

Fifth, govemment has to do more f oTAFIAin terms of information diss€mination so thatthe bushess s€ctor can make long-term plansand formulate development sEategies. Auni-fied, more outward vision of the future unecessary if the Philippines is to survive inthenew highlycompetit iveeconomicenvi-ronment.

AFTA presents a unique opportunity forPhilippine industry to develop the momen-tum and synergy necessary to overcome theobstacles that have - in the Dast - seri-ouslv Drevented this resource-dch nauonfrom ichieving the progress that we arenow witnessing throughout the entireASEANresion. I

25

F E A T U R E

HRM is imperativefor business to meet

new global competitivestandards.

BY JAct ro C. cAvtNo, DpAASSOCIAI€ DEAN

ASIAI{ II{STITUTE oF MANAGEMENT

and

. The emergence ofa

. The inceasmgcomplexityand sizeof o€anizatims; and

. Theemergenceof aworkforcethatisetermotesoohis-moresophis-ticated and less likely to sacrifice quality of life for promo-tiors and higherts ano rugner Pay.

There are perhaps a number of other challenges, but Irk thes€ are the four mo6t imDortant that have-- in thethink these are the important that have - in the

immediatje past - given managbrs cause for some organi-

anagers and academicians have only, in the pastdecade or so, begun to recognize the strategicimportance of human resources and huma_n re-

well these skills and insights arc enhanced and linked toindustry and the larger ec6nomy. There are some things youcan oversimplify and overemphdsize, but never *|ls: peo-ple are a company s most lmportant resource.

Historically, HR hmctions op€rad in a separate depart-Tent providing its own set of solutions to its perception ofthe company's human resource problems. Similarly, em-ployee-related issues wer€ often

-heated as peripheial ad-

ministrative problems in an organization's iong-termstrategy. Training was though t of only as an e\pense or ds along-term inveshnent where rcturns were d ifficul t toquan-tify. Busines:es had the tendency to under-invesr in tra inin sand education as in research and development becau-se oYthe problem of the competition reaping the results.

-Becaus€ of the various challenges confronting businesstoday, HRM and employee training are now c"onsideredintrinsically valuable activities hdfilling a stratetic rolealong with other business and management firnctions.More im portdntly, HI{ specialists have talen the ini tia tive inguding toplevel decision-makhg dnd enabling managersand execuhves [o cope with changes in the workplace bvproviding new and effrtive methods of managrrg anileadine.

What are some of these challenges that have brought HRMto the foteftont of managem€nt? Biiefly, they includi:

.. lqofrg htemational competition and the way inwhich _information trJrrology is speeding up business;

'

.. Hlgher, more eLactint competitive standards, indudingquality, vaiety, crtstomization, convq$erKe and crntinuouslmovauo(l;

26

overstep the boundaries of ils own specific function, andenhance its effectiveness by involvingivery prhcipal man-ager in the organization - the birsiness' rnaniger, thefunctional managers in marketin& operations and finalce- and not irrst the pen onnel manager in the training anddevetopment oi emploVees.

Inverted PyramidAs morc companies take on the inverted pfamid ap-

proach of empowerment and cultivate high<ommitmentwork ctrltures, HRM will be catled on to assume a moresiSnificant role in the organization. As one HR practitionerputs it, "The more organizations open up and give peopleownership of their actions as wcllai encourage"theiiabiiityto manage themselves, the mote I see our responsibilitieschanging for the better." Happily, many companies todayhave come to apprcciate baining as an integral part of theiroperations strategies and rccognize that various HRM 6.rnc-tions contribute to the major changes required by organiza-hons to maintain or restoie competitive edge.

Developments in the businessiorld refl it the growhg

zational introspection and have fitther challenged them toredefine HRM's role in maintdininp a comrr..lnv's romnpti-s role in main tdining a compdny's competi-

's business environment dictates tlut HRMtiveness. Tilday's bwiness envitonment dictates that

importance ofimportance of leaming in the workplace. America is in themid st of a trd inins " rev ivd l. " A merican emolovers soe,nd anmidst ofa training "revival. " American employers spend anestimated $30 billion on training each year and blue chipcornpanies may spend an estimated three to seven percentcomParues may spend an eshmated three to seven percentof their palroll on training. Across corporate America the

"lt b encolraglrE to notothat man.go.! tod.y .|!notlcaaHy moro h..ltdrt tolot go ot omploF.e who ar!3om6ivhat lacklrE h togd-thc,llno *llb,"

new emphasis is on training programs andrevitalization of the workolace. YetAmerica'sefforts still fall short of japan and Er.uope.David Osbome, author ol Lqfuntories of De-mocracy, writes that one to two p€rcmt of allworkers inJapan, Germany, France and Sweden rcceive haining at any given tine, In theUnid States, the figure is one-tenth of oneDercmi.-

Ftaving placed a new pemium on ttain-in& the Clinton administration in the UnitedStaies has proposed that every employerspmd 1.5% of paFol for continuing educa-tion and haining for all workers - not justexecutives. Executive education is also catch-ingon:Anestimated US$12 billion is spentonexecutive education every vear. These sumsare expected to grow as iompanies continueto exDand and intemationalize.

Fortune 500 companies and their equiva-lents in Euope and Japan are making sub-stantial inveshn€nts in Eainins centers tofurther educate and upgrade thiknowledgeand skills oftheir martagers and rank-and-fileemployees. Asian organizations arc startingto get into the act too - although on a some-what smaller rale. And well they shouldstart, for the dEllenges of international com-petition facing Asia arc daunting and imme-diate.

New ChallergesThe emerg€nce of maior, largely interde

pendent economic blocs such as AFTA,NAFIA and the EC means that most barrieEto the free flow of people, money, ptoducts

I I I source development. Any company's future suc-cess depend s lalgely on its em ployies' uniqui a ttributes -specificalJy, the skills and insight of its workforce and how

THE ASIAN MANAGER . FEBBUARY Is.4 THE ASIAN MANAGER . FEBRUARY 1994

F E A T U R E

and ideas will eventually come tumblingdown. Competition will be fierce, notjust fornations striving to compete for foreign mar-kets, but on a smaller scale, for companiesthat intend to keep pace with the best com-panies in the world. Worldwidecompetitionis forcing companies toward the hithergrourld of specialized products and serv-ices. Price-based comp€tition no longer dem-onshates its once pervasive hold on the neweconomy. Comtetitive standards havechanged, placing new demands on employ-ees - particularlv those involved in the ofproduition, of service delivery and customerrelations.

But this is often wher€ many of our least-hained employees work. Because of thegrowing emphasis down the line in provid-ing value, employers are discoverhg theneed to train more equitably. For instance,where prcviously employees could make dowith a basic grasp of a growing number ofcomputer protrams, it has now become im.perative for employees to leam to use the

computer and related new technologies ef-fectively if they are to prcduce better prod-ucts and deliver better service. l tthoutsuperior customer service, efforts to improveproduct quality will probably be wasted.

The newlv comDetitive envircnment alsorequires new, inventive approaches towardsquality - whether it involves redefiningmarkets, organizational structures or proc-esses - which makes it necessary to retumto a company's traditional strengths: theinitiative and determination of its employ-ees.

Studies show that about 40% of competi-tive improvements come from things busi-nesses acquire - machines, infrastructuJe,skilled and educated emplovees. Thercmain-ing 60 percentcanbe leamed'in the workplace.Education and haining enable employees tobecome steadily more valuable as insightsleamed on the iob and acquired in the class-room lead to new insishb. At the same timethey give bwinesses a powerfirl boost in therace up the learning curve.

One Company's ExampleOne Asian company that has managed to

inteeratje HRM into the mainstream of man-agemmt is Sarawak Shell Berhad. Severalyears ago, SSB introduced what the companycalls its Human Resource Stlateg/, or HRS.SSB's underly'rng philosophy holds that everyline manager is also a personnel managerwho should play an active role in conceptual-izing, developing and implementing all per-sornel policies and svstems. A true advocatjeof the leaming orginization culture, SSBspends substantial amounts up8rading itsemployees' skills and expertise. Where thetaining expendihre norm tluoughout theregion is several thousands ofdollars per year,SSB invests clos€ to US$9,000 arurually peremployee. Cutting-edge Motorola Semicon-ductoG Ltd. in Hong Kong spends over$16500 per employee per year

Of couse, it is nothow much vou spend onyour employees every year -alihough this issometimes a good indicato! of how commrt-tedacompanyis toHRM-buthowyou hainthem and whether vou have "empowered"

them sufficiently to make the moit of theirnewlv-acquircd ski[s. Financial rewards areno longer-enough for most employees. Theirnew priorities include more autonomy, moreon-the-job cha.tlenges and opportunities forp€rsonal growth.

. SSB'S HRM program is successfirl pre-cisely because it is characterized by a hith-involvement cultur€ that brings the decisionmaking process down to the rank-and-filelevel. One of the company's many improve-ment programs is the Quality ImprcvementSuggestionScheme and the Quality Improve-ment Project that encouage employees togenerate, identify and implement ideas thatwill improve the company's overall qualityand prcductivity. The over 900 ideas gener-ated by 3,1,10 SSB employees every year in-clude rccorrmendationsdesigned to improvecustromer service or speed upproduction tech-niques. Forty percent of these ideas are aFplied at one time or another in theorganization.

Thus, through such programs, S.9B hasmanaged to create a workhg environmentthat encourages a high degree of employeeinvolvemmt and rcwards them with a senseof ownenhip in jobs and proiects. Empower-ment, haining and education go hand-in-hand. As one HRM practitioner sayg "By

giving your employees lnowledge, you alsogive them the power that forms the basis formaking decisions."

Devolutlon of AuthodtyIt is interesting to note how the growing

importance of HRM and the factors that gaverise to it have altered organizational struc-tures, ways of delegating authority and as-serting leadership. leading organizations aremoving towards high-performance work sys-

lHE ASIAN MANAGER . FEBRUARY l9O4

BREAKNECK SPEEDAT A BREAKTHROUGH PRICE

@at6DX2 Inr.l clet'ddblitrg 66.M H. {86DX2Pt@ei orInrclS3-MHZ4E6nicroo.a.sr

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Questions &Answerson Social Securitv

SSS lmplements l{ewGontribution Schedule

Effective January 'l , 1994, SSS,will inrplementthe uodated SSS contribulion schedule in line withits progralll to increase the maximum rnonthlysalary credit f rom P6,000 to F7,000.

Since tlre salary credit forms the basis forcompuling the benetits of members and theirbeneficiaries, thus, the new salary schedule trans-

FOR EI,ITLOY€D MEMBEFS:

Md,lhly

Compen3afion

Salary

Credil

MONIHLY CONl']IBUTIONS

EMPLOYEf] Ef,IPLOIEE

IOTALSS MCR EC MCFss

1. r,Jg 99150. r99 99200 :19 99250 ?.19 99350. 499 99500- 699 99700. B99 99-q00 r.099 99

1.100. 1.399 991 400 r.749 991.750 2 r49 992 250. 2.t49 992.750. 3.249 993.250. 3.749 993 750- 4.2,19 S94 250- 4 749 994.750. 5 249 995,250- 5 749 995.750..6.249 996,25G 6,749.91'6,75G oVER

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1.0001.250I 5002 0002.5003.0003.5004.0004 5005 0005,5006.0006,5007,000

6.409.00

l J 4015.202t 6030.4040 5050.7063.3076.00

1 0 1 3 012670152 00177 30202.70228 0o253 30278.70304 00329.30354.70

1 .552202803755 3 5750

t0 00t2 5015 6518 7525 0031 2537.50'37 5037 5037 5037 5037.5037.5037.5037.50

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r0 0010.00J0.0010.cn10 0010 0010.0010.0010.0010.00looi10 00| 0.00t0,q)

4 1 0570150

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100.00116 70133 30150 00166 70183.30200.002r6.70233.30

r 5 52202803 7 55 3 57 5 0

10 0012 5D15 651g i 525 C031 253/.503/ 503/ 503/ 5037.5037.503/ 5037.5037.50

14.8520.8526 7535 70s0 6571.4095 2l

1l9.t11)146.30173 50228 tQ282 tfr337.00379.00421.00163 00505 00547.00589.00631.00673.q)

Forlurlher inlormation, please callthe SSS Telephone Assistance Unit at

lates to higlrer benelit packages lhat are nrorerealistic ar)d nreaningful. This is particrrlarly inrpor-tanl for rlrenlbers in their times of need.

Adjustments in contributior)s as showtr in lheselables (in bokl types) will cover only those earningP6,250 and above.

FOR SELF.EITPLOYED AND VOLUNIANY MEMBENS:

Mo|lhlyCompensalon

SalaryCredil SS t\,rcR TOTAI-

t- t{9 99150- 199 99200- 249 992n- 349 99350 499 99500- | 6!9 99700- 8!9 990(xl I 0:rg 99

1.100. J 399 991.401). 1./49 391.750, 2 249 992,25rt. '2749992 750- 3 249 9C3.250. 3 749 9-o3.750- 4 24S 994,250- 4.749 994.i50- 5.249995,250- 5,749 995.750. 6,249 996,250- 5,749.996,750 oVER

P125175225300425600800

1,0cr01 2 5 01,5^02.0002.5003,0003 5,r04.0r)04.5105.0105.5006,0006,5007,000

10.00t4.0018 0024.U)34.004B 0064 0080m

100 m120 n0160(r02ta n240 00280 00320 00360 00.400 00440.00480 '10520.00s60.d)

3.104.40s.60750

i0.7015.0t)20 0025 003t 303i 5C5rr 0rl62 3)75 0075 0075 00/5.Cn75.0f)75.0075.0075.0075.00

13 .1018 4023 6031 50447063 0084 00

t05 cror31.3nt57 5|210 00262 5i)3t5 00355 00395.00,r35 00475.00515 00555.00595.00635.00

'EC . €r'p ̂ y.e{ ComForrsalon

923-2424 or any ol lhe SSS branch oflices.

*aor,#fanl,rifiii'^qu' Zi

SOCIAL SECURITY SYSTEM sss/06E/93

F E A T U R E

tems that arc far removed from the elitistsystems that worked in the old, mass produc-tion economy characterized by stabil rry Topdown, directive -urugem"nt styles are'adring of the past and we now hear of seu-directed teams which emphasize autonomyano teamwork.

Companies are doing away with ossifiedla yers of management beca use the new inter-national economy has made the devolution ofauthority not just fashionable nor politicallycoEect, but necessary. Where in the pastmanagers increased automation and hiredless skilled worke$ to cut down on co6ts,managers now realize that unskilled wotkersand rigrd technolo$es are onlygood forhigh-volume, standardized prcduction and cannotproduce the state-of-the-art, customizedprcducts tlut are currmtly being sought inihe globai markeglace.

A recent survey by the American Bureauof kbor and Stati;tica estimates that by 2005.most iobs will be concentraH largely in pro-iessional, technical and managemeit sfeci-alities. Employmmt in ttrc ;;nuJachiringind ustry is expecd to decrease bv thee per-cent. Computerprogrammlngwiti be the fast-est growhg industry, increashg 56.?, ftom1990. On thewhole, morc whitecollar iobsareexpected as the number of executive, admin-istrative and managerial employees |s ex-pected to clirnb by 27-,.. As we move into thene\t century, specialized knowledge will ac-count for j larger portion of reienues urpractically a.tl industries.

These aie American statistics, but I thinkits safe to say that we will be experimcing asimilar hend herc in Asia. But eranted thathigh-volume production hasn'ibeen com-pletely rcjecd, competitiveness in masspro-duced commodities wil l sti l l reouirecontinuous improvement that only ivell-hained, skill€d employees can provide.

Fomal Educatlon and Education ln thoWo]kplace

At this point, may I digress somewhat andsay thdt ultimately, I would like to see morcshatiegic alLiances betw€en colporations andmanagemmt institutioru in such arcas as de-veloping strategy for HRM and deigningbainint to support career advancement. Asan easily accessible partner h problem-sotv-n& management institutions can prcvideindispensable aid to a company's growth andat the same time, gain invaluable opportuni-hes to h v igorate their own leaming processeswith examples and case studieJbased onexperience. Through such partnerships, bothemptoyees and students can dvail of an edu-cation ihat is up to-date, relevant and athmedto changes in technology and business prac-uce.

As a profussor at tl€ Asian Instituie of N{an-ag€m€nl I shdre ess€ntialy dne sarne rcsporEl-bilitie as a trainer. We bdth l€lp o* Outgo

g)

make iniormed career de-cisioru and dwelop Ereirskillsalongtlresepa&ul esAive to produce manag-enwhcekpwledqeandattitudes are relevait anduseful b business. '

As teachers and hain-ers though, we some-times tend to fo€et thatthe onus of teaching restswith us. We think that ifthe students fail to leam,it is entirely thetu fault -that they're simply tooobtuse to grasp what wehave iust taught them.But this isn't the waythings work - our goalshould be nothing lessthan to make certain thatthe student or the em-ployee walks out of theclassroom or trainingseminar w i th some"value-added" aftitude,skill orknowledgewhichwill either serve him hgood stead in a futule career or help himirnprove the qualiw of everv Droduct andservice offered'by his company.'lt s a simplemessage, but on; I try not

'to loee sieht of:-"lf

the student does nof leam, the teaiher doesnot teach."

But in the workplace - as in the classrcom- what one leams the mo6t from doesntalways necessarily have to be what is right orwhat is the accepd way of doing things.Many of the mosfthouehtlprcvokini q$cus-sions in tie dassroom have resultied fromsomeattempton thestudent's palt tocome upwith a theory - however narent or flawd- a: to why works or doesn'tworK.

Mistakes or half-mistakes are sometirnesthe best teaching tools. Some companies haveevm made it a point to recomize mistakewhign proved to be the best"teaching tool.And indeed, it's much better to take i con-structive approach to mistakes because it isonly when we see mistakes in terms of failweor arribing blarne - as opposed to clai mingr€sponsibility - that they ictually become apart of whv and how we have failed.-_

And itis especially encouaging to notettia t managers tjoday arc noticeablv more hesi-tant toletg;of empioyees who are somewhatlackhg in top-oFthe.line skills. As long as anemployee prove that he is hard-working andproductive, a maiority of employers todaywor.rld prefrer to tnvest in baining the workerto meet the new skills rmuired of Nm thanrcsort to outright termination.

It's easier to quantify productivity rm-tmsresulting from Sasic onllne training ltheehmes the cost spent on haining), thdn tio

"leadit€

organizatifis aremovlng toryardshigh peftmarcewolk systems thdarc far rcmovedftom the elitlstsystems thdworked in the old,mass productioneconotny."

measule r€tutns on con-t i n u i n g e d u c a t i o nthrough serninarsorevenfull-timeMBAprograms.Teaching is ultimately anexercise in hope. Teadr-ing or haining for mean-i n g f u l r e s u I t s -tsanslating whathas beenleamed to commihnentand then to action - can-not easily be measued.

After your hour in theclassroom or the work-shop, you hope that thestudent will have comeawaywithsomevaluableinsight or some germ ofan idea thatwill help himwork better And it is gen-erally safe to assume thatby providing employeesnecessary skills, knowl-edge and attitudes, man-agers create a solidknowledge foundationthat can then be rein-forced through still more

training. Tra.inhg is still the besl vehicle fortransferring knowledge and gmerally willproyrde pay-backs throughout the manager'sProtessronal caree!,

The EmCo:pe as a Sffigb ResorceWfi today'sprcrniumonservice, manag€rs

strould pay mor€ atFtion not only to satisfyingcuslorn€r needs,but to satisfying and pmvidinglonS-Em oppottunities b ho6e who rruttErmctin te poduct-servicecustomer chain theunployee. llrey ate business' rnct imporbntstraE$c r€soime and slrould be seen as aninveshstrath€rthanasa ccttobeminimizedor scrimoed ql

Peopie managemort should be ascribed ash"atsgk role in oryanizatiorsand oEanizaoon$$oda work bw"ards dweloping a"new brcedof manager who urderstandi Ee'various skillsrequir€d-of him - flom firurKe b rmnufactur-in8 h, HRM. The Elationship betwe€n a com-pany and its employees demands theinvolvernent of every manag€r - not tust t6ein the persornel departn€nt. I-lR Dractibonerssipuld rnake it treir responsrbiliti, to take anactive mle in-oubting aimpanies to cpmFtemore sucaEsshrllv-

Essentially, employes are eager to do agood iob. If management allows, they willchoose to take greater responsibility for theirwork, contributing ideas that will ultimatelyprovide a bettier work envircnment and €rr-hanc€d prlductivity. A challerged enployeewho trink of hirnselias a parh€rL *reb;siie$6workbeter ard qeates d more orofitable com-pany. But this end r€$nt can oriy be adrievedthrough enlighued HRM policbs and a rc-newed ernphasis m leaming. I

THE ASIAN MA,{AGER . FEBfiUARY 1S4

ASian ManaoersBookshelf

I'The manager's resounc€ for taking charge, shaplng strat€gy, competlng In tho global ma.ket, and much mor€...

whethet they M hade$hip ot nanwiaF a b^ok worth EMing.' -Kay R.Wninore, pr€sident, Eastman Kodak'Cnig Hicknan's prcnise is ptotound. lt is also enomously signilicant lot lhe dende ol lhe g0S. The batanceand synetry between leadeghip andnanaganenl E polye ullyand cleatlycunnuniaw in switic, p@tialways.Everyone - NrcnE, eduutots, prctessional dc.- n\t just businees accutiw should benetit innediaaty andulinately ltun dnply undeshMing lhis idea Wtose time hes cune'.Stephen R. Covey, author ol 7 Habits ol Hi0hly Etfective People.

ilind ol the ltlanagerSoul ol the Leaderby Craig R. Hickman

The aulhor puts to rest the fruitless debate about'managers' and "leaders',especially debunking todayb alltoo prevalent worsh ip ol leadership. What com-panies need are lhe skills ol both: lhe practical, analytical, orderly mind ol amanager, and the experimental, visionary, creative soul of a leader'A balanced Wrcach t0 ke need to take tu adnntage ol exisli\g skills,

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ln the second half of atwcpart series, Robert

Davies explores thewinning characteristicsof best practice firms.

BY ROBERT DAVIESASSISTANT PROFESSOR OFSTRATEGIC MANAGEMEI{T

LONDON BUSINESS SCHOOL

lenge conventional assumptions. For example, bvsimultaneously delivering *Lings viewed by competitors asaltematives. Japanes€ firms havebeen brilliant at this. Thevhave steadilv built their capabilities to deliver superiorcustomer value by doint things cheapet faster, smalletmore reliably, more c(mvenientlli more flexiblv and with'greater

attention to individual customer nceds. while com-petitors arestill trying to figure out whether to 80 for lowercost or d ifferentiation.

Stimulating Strate$c lnnovationAn increasing number of organizatiorrs have exposed

their mana8ers to techniques such as brainstorming andiateraf thinking (Edward De Bono, kt./,?l lltinkirtgfor Mnnagctlltfit,197\), as a way of generating a more creativeapproach to strategv. Though these exercises can be bothinteresting and fun, the resultsare often disappointing. Thereare some exceptions. Role play-in8 exercises in which managersview their industry through theassumptions, capabilities andobjectives of current and poten-tial competitors and then designstrategies to attack their ownposition can produce valuablenew insights. Exploring howsuccessful firms from other in-dustries might compete in yourindustry, or using business meta-

Happenhe Innovation Stage: Creating Strategic andOperational Breakthrcughs

lmitative strategles rarely producecompetitive ad-vantage. \4/inninS requires creating shategles that chal-

phors drawn hom other indtatries (e.g., Toyota exploringthe implicahonsoforganizingacar factory like a supermar-ket, or Virgin Atlantic exanining long-haul air travel as if itwere a form of entertainment, or Banc One comparing abanl< branch to a McDonald's outlet or a cataloBue shop-ping operation)can also stimulate ne\^,and creative ideasabout how to comDete.

Another techniqueof value is the systematic explorationof "coltrarian" strat!'gies. This involves exploring the im-plications of pursuing exactly the opposite strategy to thathaditionallv followed by the firrn or bvother major playersin the industry. The power of this technique is its exploita-tion of the fact that t^,hile imitation rarelv works, goingagainst the conventional wisdom can xrmetimes yield aunique advantage. Interestingly, recent research on corpo-rate rquvenation suggesls that successful tumaNunds atfirms iike Hotpoint, Edwards High Vacuum and WilliamC<x)k q,ere achieved in part by questioning the industry'sconventional wisdom and pursuing contrarian strategies(Charles Baden-Fuller and fohn Stopford, Rejul)enating the

Mnturc Bust ess,199�2).

Strateglc Success andCreative Tension

\ ihile all of the above tech-niques can be ofvalue. they alsoshare common drawbacks. Theyall rely on specially organiz,ed"events" rather than on-Boingpr<xes.ses, and they ar€ t)?icallyconfined to the ranks of plannersor managers. They do nothing toshmulate a creatiYe approach tocontinuous imprcvement bv the

THE ASIAN MANAGER . FEBRUARY 1994 35

F E A T U R E

larger workforce. Oneanswer lies in the powerof "qeative tension" (Pe-ter *r.ge, Thr F illh D isc i -pline, 1990, that somebest practice firms havebeen able to engenderwithin their total organi-zation. The source of thistension derives from thechallenge created by fo-cusing the attention ofthe entire workforce onthe gap between the firm's shared vision andthe currentcom petitive rcali tv facins the fi rm.However, to be fully effecdve, thi broadercorporate vision must be translad into aseries of meaningful local visions or goals inorder to pnDduce a local competitive chal-lenge on which individual workers andworkgroups can focw thea seative energies.

lnqeasing cleativity and irmovation hasthe benefit ofexpanding the range of shategicoppoftmities available to the organization. ltalso increases the range of choice, This can bea huge advantagg but it can also add to theproblem of choice. For some managers andor8anizations this can be a serious source ofditriculry

Ih6 Chmsc StaEe: Prlorities, DocislonStyl€s and Dllemmas

_ Choice is fundamental to strategy Amongother things, fir:rn-s must choose-where rocompete, which outomers to serve, what tosell, what to make and what to buv, whichsuppliers and distribution channeli to use,whatcapabilities and competitive advantagesto develop, which techn;logies to use andhow to or8anize themselves. In our dealingswith managers we identi fied three key choiieproblems:problems of priority seftin-g; prob-Iems wrtn tne Drocess otchoice; and problems in man-aging dilemmas.

Pdodty Settlngln many firms strateAic

planning has become littlemore than an exercise for gen-erating lengthy wish lists.l{hile each individual item -an expanded product range.broader market coveraie,faster new product develop-ment, lower co6ts,betterqual-ity, shorter lead time, etc. - isadmirable in itself, taken to-Fther they are guaranteed toparalyze the organizationwith strategic indigestion.

Jjsualy this paralysis impliesouslness as usual.

ln marked contrast, man-agers in best practice firmswer€ t,?ically able to point to

36

also often poorly imple-mend. hier€stingty, inmany firms, theseobvi-ous failures of the deci-sion process were ofbennot discussed openly,though they weie thesubject of much idle de.bate in private.

In our experience amorc effective decisionprocess is "collective re

'The onlytrue sourceof competitiveadvantagewill be anolganizdlon'sablli$ to leamfaster than ibcompetitoF."

rcached, particularly when asignificant change in strategywas being contemplad. Fre-quently managers split intorival factions. However, thecommitment to consensusmeant that discussion wascontinued well past the pointof usefulness, frequently de-taying strategic decisions thatwerc critical to the competi-hve success of the firm. Reso-lution came either when thefirm wasovertaken by events,or whm a powerful seniormanager (often the CEO)stepped in and violated theconsensus rule bv imposing adecision. In viola'ting'the co"n-sensus, however, the decisionmaler fiequendy also lost theactive commitment of thos€who had been ovemrled. Thelate decision was therefore

a much mor€ ordered hierarchy of strategicpriorities rooted firrnly in ostomer needs.These priorities had been determined bv de-tailed inquiry into what the customers v;luedmost highly and they were driven svsteman-ca lly eithei by the n&d to elim.inate a signi fi-cant competitive disadvantage, or to open asustainable advantage over the competition.These priorities, and the reasons for the trade-offs that lay behind them, were consistentlyreinforced by reference to the firm's visionand mission and were widely understoodthroughout the organization. lhough not ar-ticu la H in these terms, the best practice firmshad in effect built a 'stratreAiC staircas€, toreach the firm's vision, with iach step repre-sentrng a specific set of consistmt strategicinitiatives (Hay and Williamson, lqql )

The Myth ot ConsensusThe problem with the choice process

stemmed ftom thebelief among most manag-ers that achieving a consensus on the firmtsstrategy would

-increase commitment and

therefore also greatly incrcase the chances ofsuccessful implementation. Iir theorv thismight be true,but in practice we often ioundi t to be otherwise. The 6 rst problem stemmedfrom the fact that a fulJ consensus was rarelv

sponsibilitv. " This en-courages broad involvimert in decisions andfree and open debate; however, there rs aclearly defined decision maker or decisionrule (such as a maiority vote) tlut is 6nal andbinding. The agreement is that all views wiltbe seriousiy considered, but that those in-volved are honor bound to abide by the collec-tive decision and to be held fidividuallyresponsible for implementing it.

The MaEgement of DllemmasThe third common choice ofproblem was

as.sociated with the handling of iiilemmas, orputanotherway, the resolution of apparentlyconfl icting opposites (Charles H-ahpderi--fumer,

Corwmte Cuh rre, lgqo). This issue isneatly illustrad by a joke that is apparentlytold fi Japan aboufthe way Westem" manag-ers hand le d ilemmas. fhe;<it<e Uegirs wittr ttiequestionr "What does a Westem manager dowith a questionl" The punch line is: "Heanswe$ it!" Unlike their Japanese counter-pa rts, most Westem managers do not find thisparticularly hmny. What else woujd you dowith a question? The lapanese find it furmybecaur they believe tirat questions odmask a dilemrna and that it is foolish to lry toanswer a dilemma. You resotve dilemrnai by"being with them. ' This ptaces them in icontext of creative tension with the prospectthat may be resolved in a wav that thev d;tv-ers the best of both worlds.

-

The managementjob is firll of dilemmas:d iffer€ntiation, qua lity or varieW versus lowercosb cenhalization versus decentralizanon;functional structur€ versus product structure;plarmng versus opporhmism; individual ini-hative versus teamwork; local discretion ver-sus central predictabil ity; visionaryleadership versus detailed management.Many of these dilemmas arc actualiv moreabout mieans and processes than about ends.By forcing a choice between these altemauvessome firms have found they have given upcompehbve advantage tio morc innovahvecompetitiors who were able to reconcile theseappar€nt opposites. In ourexperience thebestapproach is to make very clear choic€s aboutends, butnot to force premafure choices aboutthe detaits of how thiv will be accomplished.This allows for bottl greater creativity andtreater fle\ibility and adaptabiliry tt also fo6-ters a level of involvement in the determina-

FEBRUARY 19gI . ]HE ASICN IVIANAGER

F E A T U R E

tion of the day-today details of strategy thathelps pmmote coEunihnent.

The Commit Stage: Moving fiomComdlance to Commitment

Many managers still do not see employeecommitment as a critical asset or caDabilitvworth significant investrnent. They view th!co6ts in time and effort as real, but the benefitsas intangible and uncertain. We have seen anumber of strategies fail, however, simplybecause managers did notspend enough timeworking to generate the conunitment of thoseemployees whose day-today actions woulddetermine how effectively the shatety wasformulated. While most rnanatenclearly rcc-ognize the value of open communicationabout the firm's shateg}/ and objectives, oftenthis is confined to d telthg or informing em-ployees of ttle implicatiorrs of a vision orsttatjegy developed elsewhere. In terms of theapproaches illustrated in the figure on theprevious page, the rcsult is action based oncompliance rather than commitment

Compliance is not a very satisfactiory basisfor the kind of continuous imorovement thatis increasingly required if firms are to sustainan advantage. Commitment is not howevetsomething that can be easily "engineered in"at the end of a shategy forrnulation process.The foundations mustbe carefully laid at eachstage of the Strategic Action Process. For ex-ample, employees are more commifted if theyshare the organization s vision, purpose andval ues, which they are more likely to do if theyhave shared in the process of creating them.Employees are also more comrnitted of theyarc able to monitor and correct their ownperformance, if they understand the competi-tive realities facing the fim and how theser€alities arc [kely to chante in the future.They will also be more committed if they areencowaged to use their own creativity a.ndinitiative and if thev have some sav over thestruchues and systems under dhich ttreywork and the way their worl is organized.

Ihe Challengies of Commitment inBest Practlce Flms

In terms of behavior illustrated in thefigure above, managers in best practice firmswerc much more achve in moving beyondsimply communicating towards the more ac-tive pusuit of employee involvement, dis-covery anq ncreastrgly empowennent atevery stage of the Strategic Action Process.This behavior was not without its challenses.The managers we spoke to were very awarethet own behavior had to be fully consistentwith the firm's espoused values and that theyhad to be willing to be called to account if theyfell short.

With communication morc of a two-wayprocess, managers werc albo required to listenand adapt, rather than simply advocate andinform. One particular managerial challenge

THE ASIAN MANAGER . FEBRUARY 1994

was the loss of contol anduncertainty associated withdelegating responsibility forkey performance objectives tot h e d i s c r e t i o n o f t h eworkforce. They reported thatat times it was hard not to seethis as abdicating their mana-gerial responsibil i ty andequally hard to resist thetemptation to constantly in-terfere. To be successful theyfound that they had to rede-fine their role from that of anevaluator, detailed decisionmaker and controller, to therole of guardian of the vision,coacb f acilitator, orchestratorand rcmover of obstacles.

Many of the managers wespoke to reported that thistype of behavior often feltunnatural and counter-intui-

"lncreasilg

cteativity andinnovation hasthe benefit ofexpanding thennge ofstrate$coppoltunitlesavallable to anorgFnlzation."

better - people are cynical,lack the skills or suffer frcm"leamed helDlessness." Over-coming the'se obstacles re-q u i r e s p a t i e n c e a n dperseverance. Based on ourexperience, our advice wouldbe tllat while lone-term strate-gic success is eno-rmous, man-agers should neverthelesscareftdly examine their owncommitment to the ioumevbefore setting out. Going half-wav down the path and tum-ing back can leave theorganization in a worse com-petitive position than not set-t ing ou t a t a l t . Fa i ledcommitment, in other words,can make complia.nce harder.

In orqanizitions wherebehaviorls based largely on

tive. lt required a leap of faith and a strongpersonal vision, based as much on "gut feel-ing" as on conventional logic. Often the final"conve6ion" to involvement and emDower-ment had come out of crisis. The old wavs ofdoing things werc jurtnot working and riroreot the same was seen as a sue path to disaster

The Rlsb of EnporyednentAn increasing number of marugers, espe-

cially in firnu ex-posed to intemati'onal com-petifron, have realized the importance ofachieving a higher level of understandingownership and initiative from employees ifthey alc to compete effectively. However, anumber of these managers have had negativeexperiences in their attempts to generate em-powerment and commitment. Workers re-mained uncq)perative, orlacked the initiativeor the abfity io respond appropriately andresults were disappointing. Mor€ detaileddiscussions with these managers often re-vealed that their decision to incourage in-volvement or empowermenthad been drivmmorc by logic than by a furdamental belief inthe righhess of the approach. lt was notbacked by any lea p of fa ith or shong persona I\ ision. The problem was that as evidencebegan to accumulate that the approach mightnot be workint as well or as quicklv as tlreyhad hoped, iirey began to havd secondthoughtsand they stopped "walking the talk. "

As their own commitment to involvementand empowermen t began to ercde, so d id thatof the worker" who$e behavior wascribcar rosuccess.

It is tempting to ass€rt dtat had the maiag-ers not wavered in their own commitment tothe pr€ess then it might have succeeded, butit is impossible to know. What is certain is thattenerating empowermentand a corrunihnentis always a slow and difficult pnxess. Oftenthings Start to look worse beiore they look

compliance, the design of theorganization's structures and reward sys-tems is a critical determinant of how effuc-tively shategy is implemented. ln effect,design determhes compliance. ln organiza-tions based on commitment, by contrast, thereverse may be true. In best practice firmsthe goal oi design shifts from control toaccommodation and support for the firm'svision. That is why in the Stratetic ActionProcess the "Design" stage is placed after the"Commit" stage.

IFr,m,i* t*"'Bahnci'u Flt and

The successful implementation of anystra tegy rcquircs tlut the intemal or organiza-tional architectwe of drc business is consistentand supportive. Therc are a number of check-lisb or frameworks designed to help manag-ers focus on this issue. One of the most familiaris the McKinsey "Seven 'S' Framework"which focuses atbention on the match be.twef,j]. Strutew and the organization's capa-bilities or S* ls, as well as on the supportingrole of organizational Structure, the measure.ment,iewardandinform anon SFtems,SharcdValles or culture, management and leader-ship Sryle and finally the attihrdes and capa-bilities of the people or Stqf within theo€anization. Shategic success is supposedlybased upon the organiz-ation's ability to en-sule "fit" ainong these seven "56" (Iom Pete$and Robert Waternran, In Surch of Excelletce1982; Richard Pascale , Managtng on the Edge,199{).

Among our sample of managers therewere many examples of strategic failue asso-ciated with poor fit. One common problemwas the existence of rcward systems that m-couraged behavior (e.g., sales maximization)that was inconsistent with the Dlarmed strat-egy (e.g., focusing sales effort on high profitcustome$). AIso common was the exisence

37

F E A T U R E

of a hierarchical, functional organizanonstructurc alongside a sUategy that called forrapid new product development and designflexibiliw. We also discovered numerous ex-amples of strategies requiring individual andotganizational capabilities that the fim justdid not poEsess and of technical and opera-tionally driven culhles that were totally in-consistent with espoused strategies ofcustomer r€sDonsiveness.

Equally important, however, our discus-sions of stratesic failure also revealed thatwhile "fit" mat be a necessary condition forshategic success, it is not a sufficient condi-tion. Particularly revealing were our dirus-sions with manaters from successfulorganizations that had suffered significantrcversals of sEategrc forhne. lt appeared thatthe benefib of 6t betw een strutew, skills, struc-ture, shared oalues, stvle and sfarfcould rapidlyhlm into the liability of ilertia when the exter-nal competitive environment of the firmchanged. Fit, in other words, wasalsoassoci-ated with a reluctdnce to change a winningformula, at least until the emergince of a cnsrsforced the organization into a critical reassess-ment. Managers werc, therefore, faced withanother dilemrna.

The objective, obviously, is to some.howbalanc€ fit wift f:lexibiliry Discussions withmanaters hom companies that had achievedsuccess in adapting to rapidly changing com-petitive environments (including computeN,electronics and automobiles) revealed a clueas to how this dilemma could be reconciled.

In each case the best practice firms hadadopted flexible product and ostomer fo-cused organizational structures rather thanmore traditional functional structures. Thevwerc also active in promoting task-orientedproduct and customer tieams with clearly ar-ticulated goals and purpose and specific per-

the needs of the customer'scustomer. Careful listening tocustomers for less tangible butno less important to "gut feel-ings" about things was alsoencouraged.

One of our favorite exer-cisesbef ore discussingorgani-zational design is to askmalagels to draw the struc-ture of their organizationworking back from the cus-torner rather than down fronthe chief executive. In bestpractice firms this has usuallybeen reasonably straightfor-ward-the structure flows. Inmany firms, however, thestructure rapidly fragments.Dscontinuities across depart-ments, f unctions, hierarchicallevels and geographical loca-tions reflect the dictates ofhis-

"Many

manageni stilldo not seeemployeecommltmentas a cdticalasset orcapabilitywolthsignificantinvestment."

existence of a shared, per-formance-related visionhelped the organization chan-nel its collective energies to-w a r d s a c h i e v i n g a n dsustaining fu hre competitiveadvantage - the organiza-tion was focused on the chal-lenges of tomonow ratherthan on the accomplishmentsof today. The vision was alsoused to provide a stimulus toconunuous rmProvementthroughout the oryanization.It had been designed, in otherwords, to be actionable.

Second, recognizing that asenr of crisis can be a power-ful motivatot the managersin best prachce firms used"proactive crises" as a meansof challenging task-focused

fomranci targets. These teamgoals were, in tum, clearlylinked to the overallcomparyvision in order to ensure c<pr-dination and consistency. Fi-nally they had developedintemal structuGs and sys-tems that exposed a broadrange of p€ople in the firm'svalue creation and realizationprocesses ranging broadlyfrom R&D design, purchas-ing and production to logis-tics, marketing, sales andservice to dircct contact withcustomers . Contact was fol-lowed by extensive exchangeand networking of informa-tion about customers; includ-ing: relative product or servicepedormance, fu ture perform-ance and functionality; theimpact of changing technol-ogy; competitor offurings; and

38

"A key elementin how wellwe leam isthe way wecommunicdewith oneanotheL"

losses as well as the loss ofmarket share and the erosionof both investor and em-ployee .conf idence. Fre-quently, these "reactive"

crises involved change onother people's tierms. The or-ganization was forced tomake significant changes instrategic directiory accompa-nied bv drastic ccnt cutting,major redundancies, de-lay-e ng and r€struchring, all ofwhich had the effect of leav-ing the organization con-fused and demoralized.

The Charactedstics ofBest Practice Fims

We obs€rved three impor-tant and interrelated charac-teristics of best practice firmsthat helped them maintaintheir bias for action. First tlrc

tory and the firm's own administrativeconvenience rather than that of custorncni.There is a bias for control rather than a bias foraction.

The Actlon StageThe ultimate test of any strategy sefting

process is whether it prcduces action thatleads to competitive advantage. ln a rapidlychan8ln8 marletplace this requires erperi-mentation, flexibilitv and the ability to adapt.Many previously successful organizationsthat we encountered had failed because thevhad lost theirbias ioraction. They had devei-oped organizational "slack" ald become re.sistors to change rather than creators ofchange. However, change could only be re-sisted for so long. Eventually, there was acrisis, precipitated by significant financial

teams and workgroups to ac-complish objectives that might on the surfacehave appear€d impossible. These "crises" (or"dangerous opportunities" to use the Japa-nese term for crisis) were designed to be fullyconsistent with the overall vision of the or-ganization, but also to challenge it to step"outside the box " of conventional thinlqng toachier e bredkthroug hs in performance. Thesebreakthroughs included halving defect ratesor the length of the prcduct developmentcycle, adding features while significantly rc-ducin8 costs and red ucing product or servicedelivery lead. times from months to weeks,clays or even nours.

Some classic examples of the achievementof "impossible" goaliinclude: Motorola's re,duction of order turnaround time on two-way radios hom 3) days to three and itsreduction of the development time for itscellular phones from three vears to less than12 months; lntel halving the time betweenchip generations to less than h,vo years; Can-on's origmal development of the personalcopier for under $1,000 and Toyota's reduc-tion of the time to exchange dies on its stamPing lines over a six-month target pedod ftomthree hours to less than ten minutes and sub-scquently to less than a minute. In each ofthese case; managen werc able to generatethe energy usually associated with extiemallyimposed crises and focus it on the systematicaccomplishment of their organizational mis-sion5. Tmportdntly, unlike many real crist's,these "proactive crises" were not tr€ated asone-offevents after which the orsanizationcould breathe a collective sish of r€lief andthen rclax. They became part and parcel of theorganization's culhlre and values of constantimprovement, as well as an enduring symbolof what was possible.

These "pioactive crises" served to r€in-force a third important capabilitv we observedin the best prachce firms.

-This was their abitity

FEBRUARY 1994 o THE ASIAN I4ANAGER

F E A T U R E

to adapt their pr0Cucts, thei services andthemselves very rapidly as market nedschanged. Realizing the virtual impoesibilityof always getting it exactly right the first time,they sought instead tio refine their capabilityto develop, iaunch and adapt products andservice in a very short cycle - a prcc€ss thathas been aptly called expeditionary market-ing (Flamel and Prah alad,7991).

To cibe an example, between 1986 and191, Toshiba inhoduced over 30 diffetentmodels of lap-top computers into the Ugcoverhg virhrally every market segment andgiving it the leadingsharewith apgoximately2ffl" of the $7.5 billion lap-top market. Mean-while, IBM did extensive rnarket rcsearch andproduced numerous protot'?es, but fotlow-ing the disappointing rcception of its 1986portable did not achrally launch a laptopuntil 191, by which time its sharc of the USmarket had fallen to less than two per cent.The important feature of the best-practicefirms, by contrast, was that thev did not letthemselves get bogged down'in excesivemarket research, but were out in lhe market,trying it tiesting it and improving it in realume.

To summarizg the best practice firms ap-peared bo have developed a capability for"just-in-time strategy." These just-in-timeshategies dispensed with large investrnmtsof time and money in the creation of detailedmaster plans designed to anticipate everyeventuality. Thev invested instead in articu-lating a vision;d in developing the organi-zationt ability to run and leam from strategicexDerunents.-This

involved redirecting rcsources tio-wards hoadening the o4ganization's reser-voir of skills and capabilities and developingits ability to do quick studies. It also involvedencouraging the development of intuition asan adjuirct to analysis and enhancing theo€anization's sophistication in cutting itslosses where feedback showed ther€ to belirnited promise (Karl Weick, The Competi-tive Edge, in David Teece, &. Substitutes lorSlrotegy, 198n. The best practice organiza-tion's invested, in other words, in their abilitybo leam from their current actions and adiustquickly. Wthin the context of the StrategicAction Process, th.is leaming is not tlead asa separate stage, but as a central and continu-ous theme.

Continuous leaminglIt has been suggested that in the future the

only true source of competitive advantagewill be an organization's ability to leam fasterthan i ts competitors ( Arie De Ceus. Plaruringas Le run& Har.nd Business Reuiau, March-April 1988). Consistent with this principle,much has b€en written rec€ntly about the"leamingo€anization." It is important not toloose sightof the fact that ul tima tely organiza-tions achieve this stahE only if they arc com-

THE ASIAN MAMGER . FEBRUARY 1994

posed of leaming individuals.ln practice, leaming is oftenpain-ful, particularly when itinvolves unleaming some-thing we think we alreadyknow. Our experimce in con-sulting as wel as ftom ob-serving our own behaviot isthatther€is a natural tendencyto "shift thebuden" of adiust-ment away from oursilvesand on to others, irrcluding"the orqanization." There is areal danger that our collectivepreoccupation with leaming"organizations" may actuallyserve tjo divert attjention awayfrom ourselves and our ownpersonal need to leam or un-ream.

The Role ofCommunlcatlon

uln bestpacdce fimrs,the goal ofdeslgn shlftsftom contd toacoomoddotland support forthe firm'svlslon."

for€ a key determinant of theindividual and the organiza-tion's ability to change aparadigm. They are willingto challenge and set asidetheir own intemal conversa-tions.

All of the f ailures we idm-tified under the differentstages of the Strategic ActionPtocess were comDoundedby the failurc to leam. Strate.gic mistakes need not becompetitively fatal if we canleamfrom them ouicklv. Wit-ness the strategii suciess ofHonda in the US motorcyclemarket, wher€ it rapidly ad-iusd to the failue of its ini-tial shategy of selling largebikes in dircct competitionwith US manufacturers andimoorts in favor of the small

A key element in how well we leam is theway we communicate with one another. Inmost o.ganization's we have dealt with, in-cluding our own, communicationhas more rodowitliadvocacy (C. Argyris, SE atqy, Changeand Defenshx Routines, 1985). The commondefinition of an effective communicator issomeone who is able to advocate his or herviews eloquently and forrefullv - pa*icu-larly if they agre6 with our owri.

At best, howevef, advocacy is only anindirect lever on orsanizational action, Ad-vocacy is only suc&ssful in prcducing ac-tion through the listening of others. lf theydisputewhat we ar€ advocatinq then weriskha ving a "d ialogue of the deaf.;For action tofollow from this deadlock, some form ofpower is usually required to unblock things.Reliarce purely on power and position toaccomplish obiectives, however, is a riskystrategy in the long run. It may prcduceaction, but it is likelv to be comDliant actionrather than fully coinmitted aciion.

Organizations that are full of pure advo.cates are unlikely to be true in learning or-ganizations. This is true, ironically, evenwhen they are made uo of vehement advo-cates of the leaming organization. tramingortanizations are peopled by listeners, notpurc advocates. Listeners arc open to thealtemative viewsof tlle world exlressed bycolleagues from different functioirs, by em-ployees at all levels of the organization andespeciallyby customers. They arc willing tobalance ind'modify their own advocary rnthe lightofnew and altemative possibilitiesaboui the needs of the marketoiace and theskills, values and behavior th;t will be rc-qu ired to exploit them. They encourage crea-tive "what if...l" rather than restrictive "ves

but..." conversations. They believe that iheability to listen for new and altemative pos-sibilities is the essence of lea ming and there-

bikes that customers actually wand. Un-like many of its competitors, Honda waswilling and able to step outside of its ownpr€conceptions and change its decision inthe light of what the market wanted. Most ofthe failures that we encormteEd could behaced in some degr€e to firmsand managersacting unwittingly within their own inter-nally cr€ated "virtual" r€ality. None of us isimrnune from this traD. What is essential is torealize that our own behavior and our ownlistening and leaming capabilities ar€ ourmoot powerful point of leverage in the sys-tem, and to work on those first.

Summary: Tho Path to Comp€tfthreAlva.rtaSo

To a significant degr€e all organizationscreate their own competitive rcality. Thepurpose of th€ Strategic Action Process is toprovide a framework that encourage man-agers to determine that reality by consciouschoice rather than reactively. lnstead of fo,cusing on how the organization can adapt toits environment it focuses on an exDerimen-tal apprcach to shatety designed to changethe mvironment. The different stages of theProcess takes managers through an iterat veleaming cycle for moving vision into action.On the first iteration managers can use tllesuccessive stages of evaluate, inquirc, deate,choo6€, dmmit and design as part of thepro(tss of formulating a relevant and action-able shared visior. On a second iteration thevcan begin the proces of building the strategic'bridge' toaccess the vision. Subsequent itera-tions can then be us€d to monitjo{, refine andcon€ct the shategy.

Overall, we have found this appoach tobe an excellmt vehicle for deploying stsategythroughout the organizatior so thateverydayoperations become mor€ strategic. Withoutthis no strategy can eve. really succeed. I

30

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"What is it that the Asianexperience adds to

management theory that wasnot already In the western

experience? "

BY LEOI{ARDO R. SIIOSPROFESSOR

ASIA IflSTITUIE oF MAI{AGEMEI{T

estern tradition has historicallybeen wont to conkast itself againstthe "C)riental". It is not just thatvague feeling of superiority com-

mon to human associations whichcauses us to corLsider outsiders lessfortunateand therefor€inferior Asthe ancient Creeks, so the modemWesthas perceived our differencesto lie in something quite specific:its "rationaliry" Ther€in, it is be-lieved, lies the difference betweenEast and West. W€stem culture isnotiust any culture but insofar as itbased on rationality, is universalculture. As an Americar authorput it "Cultural rclativism suc-ceeds in destroyint the West's 1mi-v e r s a l o r i n t e l l e c t u a l l yimperialistic claims, leaving it tobe tust another culturc (Bloom, p.39)."

l-ately, however, there has beentalk about "Asian" managementas distinct from "Westem" man-agement. What is it that the Asianexperience adds to managernenttheory that was not already in theWestem experience? Must man-agement be either Asian or West-ern? What happens then to

THE ASIAN MANAGER . FEBRUARY

strategy formulations of the firm with thecorporate vision. Its usefulness can be gaugedby its wide use. The furction of "visioning" isto spell out where the company wants to be in

the fuh|'e. The clearcr the vision.

l the clearer the mission. The clearerthe mission, the easier to set meas-urable objectives. So focused, thecompany can priorit ize andoptimize the, economics of finiteeffort and limited resowces.

Tho Plouem of RatlmalltyThere is, however, an inherent

problem in this concept of vision,It emerged rather unexpectedlydurine an informal breaKast dia-loguJbetween a distinguishedAmerican orofessor and author of' manymarugementbooks,WarrenEennis, and some guests of th€Asian Institute of Management.The occasion was the Institute's25th Anniversary Celebration inManila in February 1993. Bernissooke about leadership and saidarnong other things thit Cue lead-ers had vision. During the openforum one of the participantsrather casually made the remarkthat Hider, too, had a vision. There

ItbrnEnterpriseuniversal management principles?

Some light may be shed on this debate byexamining the shategizing process. Take the"vision." It has become the norm to besin

f

1994 41

F E A T U R E

was no appropnate rcsponse given tio theimplied criticism of the virtues of " visioning. "

It was a rude rerninder that "vision" islnabshaction. As such it tells us no0rins of itscont€nt. In shategy formulation, visi"on ab-shactly names the beginning (which is alsothe intended "end" ) in the orocess ofstrategizint. Sirnilarly in the leadir, it namesformaly that which guides $e erercise ofleadership. In both cases, the term "vision ' isa puely format concept. Stahgizing andbidership can be conceptualized

"into a " uru-

vetsal" raional process applicable to any andev€ry sihration, but only if it rcmains on apurely formal and abstract level.

A Hitler (or a Toio, for that mafter) and aMother Theresa might conceivably leam andapply conectly the-same formal process otvisimnr8. TtEy might wen leam'about t€seabdc rclevance of Midael Porter's conceptof "va[e drain" Nevertheless, trcsestuderrbofa "tmiveEally" applicable ratiorul pr(rtrswouldsrd up-if we mav be allowed arimder-shErstt__doing differint rhings ln some-ale's happy phnseol%y, ttt€y might aI do uheftrng right but not rncssarily Ere nght dfng.

The purely formal, "turiversal' rationalproc€ss of managemert is essentially hcom-plete and problematical. Strategy is the effi-cient and effective use of means to achievechosen ends. As a pu.rely formal process itapplies toany conceivablei'mearu" or "ends. "

It rationalize the activities of the firm so thatit may do things efficiently, so that it may dothings right. But as such it does not saywhether it is doing the right thinq.

Hereis whercAsian arid Westein manaee-ment can to their separate ways, evinprcscinding entircly from ethical issues. Sincemanagenmt is a mo6t practical affair, it willtake place in a concrete context and sihration.The "forrnal" processis fleshed out with "con-

clete" rieanings and values and the commontool can Esult in distinct productions. Be-cause lhey can differ about-what is the rightthing, Q"dity in management is thus notmerely "doing the thint right the fust time,"for this refers to efficimcla It is also doing theright Oring.

Wostgm and Aslan ManagementL€t us illustrate. Firm (A) has certain goals

toachieve. Itmaythendecidequiteratio;a[yftat in the case of its workeis it wtl onlyreward their "performance", thai is, thosaactivities that prcmote the firm's goals. Con-sequenoy, it wil try to be "lean and mean" bycontinuously ridding ibelf of "faf', that is,

Having chosen a goal, themost rational apprcach is to choose the mosteffici€nt means to achieve the eoal. That iscalled toal or instrumental ratio;afiry

It follows that such traig as "seiioriw",

shou-ld notbe rewarded assuch. For senioritvis not performance. It does not contribute tothe attairunent of the firm's goal. It would

42

therefote be irrational, in thisway of thinkin& to promotepeople on the basis of sen-ioriry

Clearly, fim (A) will dif-fur in many essential waysfrom firm (B) which hap-pens to rcward seniority, notaccidentally but systiemati-cally. It in addition, firm (B)believes in "life-time em-ployment" then we have aneven wider "cultual" gapbetween firms (A) and (Bl.As far as firm (A) is con-cemed, firm (B) acts "irra-

t i o n a l l y " . O n t h eassumption that rationalmana8ement is efficientmanagement and thercforeshotrld be more successfirl

"A sigyr of thistum to thetradltlmalisthe cunentv€ue ddlstingulshlngthe leader fiorrthe manqger,6 John Kotterdoes."

analysis irational ard onlygoal-rationality is called ra-tional.

The shifts that are occur-dng in Westem manage-ment theory and practicemay be described as at-tempts of the modem or-ganization (thebur€aucracy)to reclaim what it had previ-ously t€jecd, the kaditionalorganization (the clan) (seeSitos, 191). The literatutegenerally sp€aking contin-ues to use the same debunk-ing "language" vis-vis thehaditional, although nowwhat is being debunked astraditional is the bueauc-racy.

Norbert Alter describesthan irrational management, then the succeiisof firm (B) would appear as a puzzle to firm{A). This may be whf the West seems to be sofarinated by Japanese management.

Now theauihor of Knizrl;akes liftle ofthese "irrational" practice of lapanese firmsand prefers to focus on techniques. Out, theseJapanese techniques have as their fourdationcertain common and shared values, such asreciprocal loyalty between company andworLers. They mjy appea r transferable, sinceas techniques they are described in behavioralterms. But as M. Imai himself says, knlzen is"away of life." As technique it is but an expr€s-sion of a way of life. Itssoul is culturp.

Fromaformalpointof view,bothfirms (A)and (B) are rational. Both are consistenr rntheir understanding of organtation. Theyare bothpurposive, using means as they un-dentand their chosen ends. The issue be-tween Eastdnd West in management theory isnot about formal rationalitv Ii is about valuesused to flesh out their rationalities. Thev differsystematically, as two different syst6ms oforganization, be(ause they ranl organiza-tional values diffurmtly. ln the end, goal-rationality is determined by value-rationiliry

There is then a real sense in which we canspeak ofAsian and Westem management, ormorc acc-urately, oI Asian and modem West-em manatement. The rclevance of corporateculhue for undeEtanding the dynarnics ofthe firm is a rclatively niw "didcovery" inmanagement theory It is, in our opinio4 thecontribution of the traditional to the modemotganization.

Burcaucracy and ClanThere is a clear parallel intended in the

difference between Westem and Asian man-

the Euopean development tiowards a newmodel of organization as a debureaucrausm,detaylorism and defordism, all ttrese "isnu"

beng used nbchangeably. Alb wiEs aboutthe "new proftssiorals"who are creating thenew organization. Ro6abeth Mo6s Kanter an-nomces the emergence of the "innovative" hcontrast to the "segmentalist" organizations"the old bueaucratic chanqe-reisters, "

Still, we observe thatmote rccentdeveloD-mmts, while indicatng an attempt to ov;-come the negahve consequences of thebu-r€a ucracy, suggest tha t these organizationscannot seem to escape the srip of that whichis ma inly responsibli for the"uriwanted conse-quencd, nairely, goal or instsumental, some.times also<alled functional, or more recendystrategic, rationality. Thus, they continue to bebureaucratic in the fundamental sense dlatWeber meant it.

This rational and abstract conceDt of theorganization is still at work in the new oqgani-zation: for the organization remairs a "thing"with its own goal. The result is ttra t everyddngin the organization - including ie membenlbecomes a merc instrument for achieving itsgoal. That is the Weberian "special sense,"thatmakesa bureaucracvabureiucracv Fromit follows all the charaiteristics of ttr6 "fullvdeveloped" bureaucracy, includ inq a certain"dehumanization" which, Webei says, is"welcome" to capitalism.

What this rationality demands is the "pro-fessional' whom Wetier rather unambigu-o u s l y d e s c r i b e s a s t h e " h u m a r i l yuninvolved," and ttrerefore strictly "objec-hve" profussional. Tha t is the ideal bueaucrat:impersonal, objective, calculating stsicdy de.termined by the goals of the organization,

agement we've dicussed with Max Weber's Weber's Cdtlque of the Tradltlonalcontastbetween thebureaucratic and tradi- TheshortcorningofWebet,sreadingofthetionalideal-typesandalsowithhisdistinction kaditional - why"he was unable to g[ve it abehveen goal-rationality and value.rational- more positive int6rprctation - was a-ration-ity. To Weber, value-rationality is in the final alist bias which retiuced the traditional to a

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residual concept. As heexplains his "interpre-

live" (rxrstehmfu) sociological method, theadequacy of the meaning of a social action isproportionate to its goal-rationality. Sincethere ale social actions that arc not goal-ra-tional, these must be explained as mere "de.

viations" from reconstituted rational acnons:what they would have been, had they bemgoal-rational.

For another, the traditional is understoodby Weber in tr,vo senses, formally and materi-ally Formally, it is defined as beliefin traditionsimply becaus€ it is tradition. Materially, it isidmtified with the kiruhip svstjem which isdetermined by personal reljtionships. For-malJy defined,-tradition is, by deiinition,closed and static and this is often a critiquelevelled aSainst it.

However, the "kinship system" cannot besaid to be essenhally static. For the kinshipsystem can be quite dynamic and open, forinstance by "exbension," something Weberdid not think important in an assesJment ofthe haditional, probably because he was in-tent on contrasting modem Westem cultur€ove! against it. The kinship system by exten-sion becomes potentiallv universalist whennot rcstricted to blood retatiorships and opento "outsiders." Secondly, it can becomedemocratic as participative practices in fapa-nese firms demonstrate. Unive6alism anddemocracy - two supposedly modern (andWestem) characteristics - arcnot incompat-ible with the kinship system, as is sometimessuPPo6eo.

Because Weber understood the kinshipsystem as a deviation from the bureauqacy,he failed to apprcciate its positive organiza-tional qualities. The kinship slstem is not anirrational deviation flpm the bur€aucracy butstands on its own right with its own rational-itla lncontrast to thebur€aucratic abshacnon,the conciete kiruhip group is not a means butan end: it does not exist to work but works toexist. It is this unde$tanding of the organi-za tion that d istinguishes the fa rnily "system "

from the bueaucracy.Inshumental rationality when tumed into

a philosophy is usually called "positivism,""behaviorism," "scientism, " among othernames. Here, we have already mel one prob-lem itseates as a philoGophy: it rclativizes allvalues. It is, as Weber would say, value.ftee.Or as others would say, it is about "facts,"

about "what is" and not about "what ought tobe."

Herbert Sirnon drew the conclusio4 onthe authority of "logical positivists", thatthereforevalues and ethicalprcpositions wer€beyond the puwiew of scimce, for "there isnoway in which the correchress o{ethical propo-sitions can be empirically or rationally tested(Simoo p. 46)." Since Simon was writingabout the "science" of administration, it fol-lowed that values were bevond its purview.

Howwer, Weber's own description of the

4

method of rrrsleftende soci-ology implies that it iscoun-terf actual. It do€snotalwaysexplain "real" activity of"real" pe<ple but only howpecple would act if tlrey wereentircly goal-rational; (if treywerEnot rcal p€ople?). So, itisibelfnot alwals about "what

is" but about what 'ought tobe', nanrely goal-rationil, notas valrc-free as believed, norpuely descriptive but alsoprcsaiptive.

Positivistphilosophywithib rationality, is ibelf undei-goint critique and "rccon-

stuction" But a boadeningof ratidElity inevitably Fes-tablistres a link with the tradi-tional d1at was severed by

'Stntegt bthe efficientand efhctiveuse of meansto achievechosenends."

Besides being constitutedb y t h e " n o u v e o u ) lprofessionnels," it is alsodescribed as the refolr deI'artisanat, (return ofartisanship) presumablyas in artisans who thinknot in terms ofbricklayingor walls but of cathedrals.

But an even more di-rcct refer€nce to the tradi-tional is contained in Folfhe Common Gnd by H.E.DalyH.E.and J. B. CobblrThey hope for "a new g'peof economy different ftomeither capitalism or social-ism as they have been un-derstood in the past... Butfor those who still find itdifficult to thinl of an

instrumqtal mtiqulity ln this linl(age, it is theb-aditional dut may tum out tro be dynarruc,rational and universalist and the irsbumentalratic'nality lhat daimed a mqropolv on reas<rnand universalit', inational and etrncrenmc.

Redafnig tlr TradtondThis leads to another observation. A

unilinear development frcm kinshiD tjo mod-ern bureaucratii organization is ihe usualassumption. But ifthe kinship svstem can andhas m6demized, this assumption is as ques-tionable as the rationalitv thet insDir€s it-. Onthe micro level of the ."-itemrise, ihis shouldnot be difficult to comprehend. The ;apaneseenterprise usually can be described as a mod-em traditional organization.

the rheru on page 41 zufr;esrs how anorganization can be moderr ard traditional atthe same time: a haditional spiritusing modembctmiques. It can also serve to explain howmanagement techniques may appear thesame and yet be differcnt, according to adictum of Fuiisawa, cofourder of HondaMotorCorporation: "Japanese and Americanmanagement is 95o. the same, and differs inall important r€spects (quoted in Adler etA t . ) . "

A sign of this tum to the haditional is thecurrent vogue of disdnguishing the leaderfrom the manager, as lohn Kottir does. ButKotter's concept of a manager fits Weber'sidea of a bureaucrat. It is not surprising thatKotter find s it necessa ry to supptemen t ii w iththe idea of a leader. Kotter's solution is aprovisional solution at best. It has a parallel inthe "human relations movement," which de-pends on the pe$onal efforts of the managerat human relations while leaving the s).stemas impersonal as ever. ln short, althoughKofter expresslv decries instrumental ration-ality, he fifu to'r..cognize its slstemic dimen-sions (s€e Silos 192a and 192b).

Again Alier's description of the new or-ganization also suggests a kaditional tum.

economy that does not fit on this spectrum,we suggest that they consider feudalism."(Daly and Cobb. p. 15, fn. 6).

The authors expressly deriy that ther ln-tention is "to call for a retum to feudalism."But they do believe "that surveying a widerrange ot econorruc systiems can open our eyesto new poG6ibilities. Of these, feudalism isworthy of carcful consideration. "

What is relevant is the reason why theythink feudalism deserves a second lool.

" T h e f e u d a l s y s t e m w a s m o r ecomm unitarian than either socialism or ca pi-talism in both theorv and Dractice. lt has beenbadJy matigned since the Enlightenmmt bythose whose intierest reouired the extiroationof the continuing powir of community inhuman life."

In conclusion one may say that clearly ashift is taking place, not only in businessmanagement but in other spheres of theoryand practice and shift seems to revolvearoundwhai we have called the problems of rational-ity and values. In mote micro-organizationalterms, it seems to rsvolve around the prob-lems of the bureaucracv and the clan. I

Adler N.,Doktor R.S.,Reddjng C., "From rhe Atla.ti( to rh€Pa.ifi.Cdtu.y Cr6{ultural Manatemsr Revie{€d,"

1986Yea ! Raier ol MooSentut ol ttt lomat of Mataia..nt,

Alter N,,"lmovarion er organistion: deux tetinmih en.onornce," Rar.tdr.d'*de srrb/d8ia avriljuin 1993, xxxiv-2, I71

Blmm, inan, Tl'. Ct6i,S d th. A'netu Mint1. NN \otl:Simon and S.hust€r, 1987

D.ly H.E. and Cobb J B. Jr., Fd rhe Common Cdl] R€di.eringthe Ecmomr towa.d Community, Tle Envno.n€.i, and a Sushinable Futur€. &Bt6: Bea.on Pt6, 191t9.

lm.i U., Kai.r^: Th? rey n ltpar r Co,rydtrnp Sr..As. N4Yort, M(Craw Hill, Inc., 1991

Kant€r R.M., 1985, Tr. Cft,xA€ M4sta Londd: Unwin HymanLtd,1985.

Kor|er I. A Forckt Ch4n8.: Hn| rad$hip Dife6lrcm Mn,,8ennt. New York The Fe Pls, 1990

Sil6 L.R.,1992a, "teadeF and MatuB€E: An Updare," I,.Asian Mdndy, (Manik) Ja^-Mat.,192

SilcL.R,,199l, (])r*6: Th€ Two Fae of Organizarim. Manila:The Asia. tnstitute d Matu8emdt, 191

Simon H.4., Adn'nisttotd Aeh."iof. 3rd ed., Na Yort: The

IHE ASIAN MANAGER . FEBRUARY 1994

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R, BRIGHTERFoR BUSilIESSET ITS CUSTOMERS,

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Your official PLDT 1993-1994Metro Manila directories feature these innovations:

r New look, better formatr Clearer, sharper-looking adsr Separate sections for government, business

and residential subscribers

r Complete Zip Code ol the Philippinesr Expanded Fax Directory Section

H'DIRECTORIEs PHILIPPINES EORPORATION

Tnp'IFr�TE igAa t ,towqgos.t>

tiud Ottlco: 2322 Paeong Trmo Ext., Matatl, t otro irrnilsTel. NoE. 819-3E26. 818-07it2 F.r No. (53) (2) 81E-t343

Cabu Ofllc€: callerdo 8tdg., con. Maritom Av.nuc, C6bu CityTsl. No. 7-31-4't F.r No. 032.224943

il

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F E A T U R E

10/^raunanges,to

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the astqdshing grrowth rates - both current and proiecd- forAsia over the next decade. It is hardly sulprising thm,thatdiect markebs the world over are looking carefully atbting the Asian market before comrnitting thernselves toa full rollout or even an office wi0rin the region.

Unfortunately, not many of ihem have succesft ly -and profitably - entered the marketplac€. This is despite awhole body of widence that pravesAsianrEspondmb notonly g€neratea better r€6ponse rate tlan treir NorthAnreri-canorEutopeancounterparts,but also offer fte inte igentrnarketer far higher average order values than they arcaccustomed to Gceivint in their home markets.

The poblem appears to be twqfold. First thete ate theselFinflicted iniudes. By this, I mean succ€ssftd NortrAmerican package that have been mailed into Asia widr-out the remotest attention being paid to the logistics ofdealing with an overseas marka. Consider these threeexamPres.

. Using the "$" sitn rather than stating "US$" throughout the package. Hong Kon& Singaporc, Malaysia andTaiwan all have their ov,'n local versions of "$," all of which

a6

Doubllngyour response

In Asla...

BY I(nE WADI I)|RECTOR OF

lrrERfl n(!|{lr. Bu9llE33woft.D ltarcffloiB sEnMcEs

--:

W" have all heard about

Packageare worth substantially less than the US$. lt is hardly

.suprising that when a North American direct marketermails into Hong Kon& the Hong Kong r€spondent slDuldsend him a dcque in HK$ (curcndy worth US$0.12 c€nts)which the NorthAmericanmarkeberisneitts inapositionho encash or us€ to cover his cosb. And all because lie forgotto lrse the initials "US" beforc the "$" sign.

. when reply envelop€s are included with direct mailpackages, they tend !o be the same ones used in the conti-nental United Stabes or the dlect mailer's home counky.TheyhaveUSorforeignpostalr€ptymarkingsandmayendwith the state and zip code. This helps neither the respond-ent nor the mailer, as such an envelooe is unlikelv to 6nd itswayback to the directrnarketer,ItsfiouHbe t pt"."a -ittan air mail mvelope with the letter "USA" - or theapprcpriate country dearly listed at tte bottom and withplenty of room for pootage stamps on the top right handcomer.

. ln order to inqease r€sDonse rates, North Americandirect markeiers generally offur toll freephone and fax lirres.Unlortulately, tlrese cannot be acc€ssed, for example, out-sidethecontinentalUnidStates.Asarcsult,abusinessman

]HE AgiqN MAMGEF . FEBRUARY 1994

wishing to respond instantly to a mail piece ,,Allthe basiowill find himself with no uwble phone ,rr rar human emotionsnLrmbers, forcmg him to go throug,h inrcm,r-honaldirectory e"nquirt". i" rina ',,jior'r.."ii;; t!!ryld lynatives, often with-out succelis. effuctive direct

Hurdles such as these are hardly likely toassist in generatint healthy response rates.

Second, there is a general lack of knowl-edge and factual information about the Asranmarket. To compound the problem, a multi-tude of "experts" seems intent on offeringintemational direct marketeN advice on enter-ing the Asian marketplace based on outdatedperceptions and misleading generaliza hon-s;

multinational direct marketers will p.ohtin Asia. Far from it, but there are enoughNorthAmericanand European businessessuccessfullv selling everything hom highhcket newsletters to training courses andeven corporate grfts such as Collin Str€etBakery's fruit cakes to prove it can be done.

The key to succens lies in the approach.Durint the test phase, it is critical to take aregional - not national - apprcach, un-less the product or service being sold isunique to a specitic Asian countrv. lakinga nahonal approach; i.e., deciding in ad-

mail copy suchas geed, baland ioy wlll bejust as €fbcllvein the Asianmaftetdace,"

in fact, anything except current, real-life experience.As a result, a tl?ical multinational direct marketer who

has decided to test tlle Asian market often ends up with asubstantial loss instead t'fa 100"., r retum on his mlrletineinvestmentj dnd subsequcnth withdra\^ s from the multinational direct marketing arena blaming Asian marketconolnons.

This is not meant to imply that all North Ameican or

THE ASIAN MANAGER . FEBRUARY 1994

vance that Japan is your target market, isthe equivalentof anAsian mailerdeciding thatArizona willgenemte the belit response for his campaign before testmailins inb the United States.

Having recognized that the regional approach is thecorrect one for the test phase, the choice of lists becomes allimportant. On the whole, regronal respondent lists outper-form l(rcal lists for a whole variety of re'axrns. including:

. The respondent has demonstrated a willingness and

47

SPeakers - H.[. Dr. Amnuay Viravan, Deputy Prime Minister, Kingdom of Thailand * The Homurable f, Hugh Faulkner, FC, Executive Directof, Business Council for SustainableDeVe|opment,Switzer land*Mr,DavidK.NewbiggingChairman,Rentoki |CroupPLC,|Jni tedKingdom*Ml.HermanRona|dHochstadt ,chairman,EC|C5Ho|dings,Ltd. ,5 ingapore*Mr.L.GordonCrovi tz,Edi torandPubl isher,FarEasternEconomicReview,HongKong*Dl.MichiyukiUenohara,EXecut iVeAdvisor,NECCorp� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �[oyHeanHeon&DPM|, |P,Pre5identandChief [xecut iveof f icer ,TheMBfCroup,Malaysia*Mr.Richardcordon,chairman,SubicBayMeropo| i tanAUthor i ty , � � � � � � � � � � � � � � � � � �Fu| |er ,ChiefExecut iveof f icer ,Monj torCompany,U5A*Mr.Katgok� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �Consultants Limited, Hong Kong * Dat6 Francis Yeoh Sock Pinp Group Managing Director, YTI Corporation Berhad, Malaysia * Mr. Allan C. Howatson, Senior Research Associate, TheConferenceBoardofCanada,Canada*Mrs.BRAMooryat iSoedibyo,PresidentDirector ,PTMust ikaRatu, tndonesia*Dat6BaharuddinMusa, lo intChie{Execut iveof |cer,As|at icDevefopment Berhad, Malaysia * Mr. C.D, Tam, MBt lP, Senior Vice President and Ceneral Manager, Motorola Semiconductors HK., Ltd., Hong Kong I Mr. R. D. Aga, Charrman andMana8ingDirector ,ThermaxLimited, /ndia*Mr 'ArunMahizhnan,SeniorRerarchFe| |ow, � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �ThaniCorp. ,Ltd ' ,Thai land*Mr.ReneDomin8o,s imeDa$yProfessor inManufactur jng,Asian|nst i tuteofMana8e� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �& Caniage, Ltd., Singapore I lwentylou intenationally renowned speakers will make Nesentations dunn, the @nierencc

lTnrcnnwPercgrtne Capllal Limited |Ef,f,||

mfHo'tnssnerhadw5fl

83.^"Ee*Fhtp, ".3@ METRO PACIFI(] (:ORR)RATION

Principal Sponsors: Pere8rine Capital Limited (Hong Kong) . Alphatec Elec{ronics Co., Ltd. (Thailand) . United Laboratories, lnc. (PhilippineslMetro Pacific Corporation (Philippines) . MBf Holdings Berhad (Malaysia). Equitable Banking Corporation/Megalink (Philippines)

Country Media Sponsors: The Business Star o. The Philippine Star (Philippines) . The Standard . Sing Tao (HonB Kong . The lakarta Post (lndonesia). The Nation (Thailand)

A59ciateSpon5or:|o|| ibeeFoodsCorporation(Phil ippine5,.PicoArttxhibit ioncontractors(Phi|s.|,|nc.(Phil ippin��� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �

A f f i l i a teSponsors :As ian8ank/ABCapi ta lGroup.Bas ic /Fo te ,Cone&Beld in& lnc . .Dev€ lopmentBankof thePh i l ipp ine .LandBanLof thePh i l ipp inesPhilippine Convention and Visilors Corporation o Boehringer Ingelheim/Pharmaton Capsules (Philippin5l . PT Waslita Karya (lndonesia)

! Pls. chorge the conference fee ic my credit cord

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F E A T U R E

ability to do business beyond his nationalbor.rrdaries.

. Where the response involves pavment,it indicates access and ability to remit pay-ment in US Dollars, which is the currencv ofintemational business, even in Asia.

. The list is likely tobe an English languageone, as Engiish is, realistically, the only com-mon business language between all Asiannauons.

. local lists, especially compiled ones, areur ikely to be responsive or particularly accu-rate, especially in countries where direct mailis not prevalen! e.9., China.

. Second, the package should be adoptedto one Asian marketplace in at least 10 days.As the degree of "adaptadon" that can beundertaken varies considerably between testand roll-outphas€s, each change to the controlpackage should be considercd in the contextof these two phases, where relevant.

1. Lang!4|e. The language to be used foryour direct mail campaign can vary tremen-dously as Asians speal over twenty differentprimary or national languages, with dozensof additional dialects used within the indi-vidual countries themselves.

T€st - During the test phase it would besensible to rcstrict vour direct mail Diece to theEnglish language and mail only-to Englishlanguage lists. Not only can you keep costsunder control, but you also red uce the possi-bili ty of loss caused by receiving responses inforeign languages.

Rollout-Thereafter, vou mav wish to testl(Xal language packages - especiatly for;a-pan, Korea and Taiwan - which a re the majorindustrialized countries in the rcgion thatprefer to receive promotional literatur intJreir own language. You must, howevet makeit abundantly clear throughout the direct mailpiece tlut the resulting pro<Juct or servicebeing sold wiil be in the English language andrequest their rcspons€ in English on the orderform.

Future roll-outs could be mailed in bilin-gual packages. In Hong Kong for instance,you could use an English/Chinese packagewith the same tiext appearing in both lan-guages in the package. It is important to re-member that the local language equivalentmust not be a direct translation but a carefuladaptation by a local specialist, failing whichvou could end uD with unforhrnate resurs.'

2, CoW. All -the

basic human emotionstriggered by effective direct mail copy such asgre€d, fear, jo, etc. will be just as effechve rnthe Asian marketplace. A few basic guidelinesdo have tobe bome in mind, both thoughoutthe test and roll-out phases. These include:

. You must avoid inflammatory copy. Sin-gaporc does not take kindly to p< itical inter-fer€nce in its intemal affairc; Indonesia is verysensitive to religious comments, especiallyabout Islam and Christianity; Thai land is sen-sitive to its public perception of loose moral-

THE ASIAN MANAGER . FEBRUARY 1994

ity; and, all these have to be bome in mind toavoid offending any potential rcspondent'ssensibilities.

ln addition, therc are legal pitfalls such asrequirin8 registration within the local juris-diction if you shol d be offering financialservices, as is the case in Hong Kong.

. Several tests have shown that, generallyspeaking, short copy out?erforms its longercotmtjerpart. Eight-page letters invariably pullbettjer rcsponses than lGpage letters and therelative rursophistication of the Asian directmarketing industry may have a role to play intrus,

. Whetier you use American English orEnglish English is entir€ly at your dirretion.You should, however, bear in mind that ther€can be some unfortunate side effects, espe'cially when undertaking translations for bi-lingual packages.

For exarnple, "l have a flat tire," could betranslated in Chinese as "Mv aDartment isexhausted," as apartments are known as"flats" in several Asian countries, while "ty're"

is the EngJish q>elling for the American "tire, "

which English speaking countries know onlyas an altemative to "exhaushon."

. Avoid localizin8 the cop_v When aFtempting to create visual ima8ery, cop).writ-ers invariably use non-standard language andlocal rcferences toemphasize theirooint. Con-sider, for example, any kind of baseball anat-ogy. This is likely to draw a complete blankfrom people in Hong Kong and Singapore,although itcould trigger some recogtuhon InJapan and the Philippines, where baseball ismore widely known.

. Firully, bear in mind that English maynot be dre first language of tlfe recipient.Although he may be able to speak and writieit, simpliciw of tone would be far more ef-fective than complex jargon or the latestbuzzwords.

3. D$ign. Once again, the relativeunsophistication of most Asian marketsmeans that extensive input to design andatwork is generally not effective. As a rule ofthumb, clean, simple, easy to follow designtends to generate better response tlran itsmore complex counterpart. Afew simplerulesworth nobne are:

. Expensive and heavy paper stock isunlikely to be ju-stified, as it will add to yowpostage bill, without necessarily increasingresponse. Even the most basic North Ameri-can paper stock is likely to b€ acceptable whencomparcd to its equivalent Asian counter-part.

. The use of colors is particularly impor-tant. For erample, black indicates moumhgin Chinese culhrc, esp€cially when it bordersa photogrdph. Red and gold are ausprciouscolors to the Chinese, but red lettering signi-fies a th reat or challense to some communitieson the Indian sub{ontinent.

. The complexity of opening, folding and

re-sealing the package especially self -mailers,shor.rld be bome in mind. Aqain, unlike theirNorth American counterparts, Asians are notaccustomed to packages that require a degreein o/igdn i to operate. If the dir€ct mail piece isparhcularly complex or attractively pack-aged, it stands a grea ter chance of becominS acollectors' jtem than generating respon-se.

4. Cunencle3 and pricing. The only hter-national currencv is the United States t\:rllarThis is muallv true in Asia. Asia also - as arule - ii less price sensitive than NorthAmerica. This may have to do with the factthat relative incomes are increasins at a dra-matic rate and there is still a rarcity of Wesr-em inJormation, goods and services withinthe Asian market.

Furthermore, Asians are prepared to pay ahigher price if they r.rnderstand the goods areto be delivered from distantdestinationssuchas North America. Bearing this in mind, cur-rencies and pricing can play a positive role inincreasing response rates whm used as fol-lows:

Test - Ensue a single pricing structur isoffered in US$ or{y. The currency must bespecifted as "US$" and not $ throughout thepackage as there are several other dollar de-nominated cunencieswithinAsia, all of whichare worth considerably less than the US$.Payment by credit canl would be vour easrestoption, although you mav also wish to acceptbank drafts, but onlv if drawn on a US bank inthe United States.

Rollout -At this stage vou could incorporate the ability to cash personal cheques drawnon US banks as well as acceptin8 money infreelv convertible currencies; e.9., Hong KongDollar, Singapore Dollar, .lapanese Yen, etc.Remember to allow for the additional costsas,s(riated with convertins back to US Dol-lars. The use of lcral credii cards is likelv toBenerdte a substantial increase in resporlserates, especially in countries such as the Phil-ippines where Peso denominated credit cardsare more widespread US Dollar denominatedcredit cands.

India incidentally, is a special case whereeconomic libera lization has suddenlv openedup the market to multinational maiiers. lndi-ans can rcmit funds - up to US$300 at a time- for authorized catetories of expendituesimply by completing the Reserve Bank ofIndia's Form 2A, supported by a proformamvorce.

By including details of this procedure, orbetter still, enclcning a pre-printed Form 42and prGforma invoice, response rates in Indiawill exceed those obtained by offering pay-ment in US$ denominated credit cards onlvInciden ta lly, for certa in ca tegories of erpendi-tur€, it is now possible to us€ a "cashiering"

service to convert Indian RuDee cheoues intou>$ on vour behalt

5. PremlumS. Certain sectors of the Asiandirect marketplace are already spoilt for

49

F E A T U R E

doice rn terms of pJemiums. The pubtishinglndustry |s a parhcular case n point. Thefollowing griidelines can assist with doublingr€s, ponse ra tes in Asia during both testing andnou-out Dhases.

. Non-editorial, elecbonicpremiums suchas calculators and world tim; docks tmd iowork well in Asian countries with the generalexceptions of Hong Kong, Singapore and Tai-wan. This is hardly surprisine as these kindsof electronic premiums' tend io be nunufac-turd and sola loca Uy at exbemely low prices,thereby reducing th6ir perceived value in theminds of potential rcspondents. lt wouldtherefore bi better to offur editorial or relatedpremiuns, whercver po6sible, and parucu-ladv in these tluEe markets.

i geatinmind thatthepremium will carqran intrinsic postal or delivery cost in additionbo the actual cost of the premium ibelf andslrould thereforebe asliglitand easy to deliveras Do6$DIe.-.

It is important to note that sweepstakesor lottery type offers are illegal in severalAsian countries. Where legat, prior approvalof the local govemmmt-departrnent con-emed will be reouir€d.

6. R€oot|3e -Devlco.

Response can begenerated -by mail, phone or fax durlng bothiest and roll-out phas€6. Where the maiiing isa business-to-business mail.ing offering a fa.loption is essential ds it overcomes the hurd lesnormaly associated with deliverability ofmail from some Asian countries.

As with North America, fax is immediate-catching the proopect whenhe is athis mo6tlec€ptive - and shortens the lead time be-tween mailing cosb and revenues gmeratedfrom responses. For consumer rnailings, mailis still the best form of response, although itwould nothurt to offer a fai option in case ther€spondent chooces to r,rse hG office fax ma-chine to'r€sDond.

When Ging a reply envelope, ensue thatyou a uow adequalte space tor postage stampswhich may be considerably liuger'and morenumerous than in North Ameri-ca or Eurooe- and shou.ld subsequent rcsponse ra tes ius-tify it - discuss the tossibility of an intema-tional business rcply envelope with the postalservrce.

Telephones are the option least likely tio beused, eicept duing thercll-out phase;henelocal telephone numbers are made availableto Espo;dmts, with orders being taken andfulfilled by local agents, dishibutors or even ahrlly-staffu office of the multinational

7. Fulilmcxrt, Once you have received ther€sponse, it rs your responsibility and goodbusness practice to deliver the product orseruic€ into the hands of the recipienr asquickly as poosible, rcgardless of the'distanceinvolved.

For this pu4>ose, a whole host of courierservices a re likely to be the mo6t appropria te,with DHL, Federal Express and UfS, in pa.-

fl,

ticular, having estabtished substantial opera-tions in various Asian countries. By negoti-ating a discounted bulk rate, the cost offulfilling orders by cour.ier should be noSreater than registercd air mail.

Normal air mail is not advised as anv-thing with foreign postal stamps is unlikely

-to

find ib way tio the intended recipimt, espe-cially in some of the poorer Asian countries.As r€gistering dnd irsuring the package in-variably adds to the cost, th; finaidifferentialbetween r€gistered air mail and couner uur ikely to be substantial. Altematively, youcould offer the recipient the option of recbiv-ing fulfilment by c6urier for i modest addi-tional fee, with over 50"/" likely to take you upon the offer

8. Tsxo3 afld Crl3toms Duttrs€. Asia is aweb of custorns and import duties whichafJects theintemational direct marketer's abil-ity to do business on a substantial scale, atleast initially. These vary corsiderably, fromvirtually nothing in Hong Kon& to l4 differ-mt ta),es and surharges on the import ofselected itens into Indonesia. The foliuwrngsbate$es may be used to overcome this pariticular hu.rdle:

Tost - During the testing stage, it may beappropriate to make local custorts and im-port d uties the sole responsibiiity of the rccipi-ent.Aslongasthisinformationisprcminentlypublistred - especially on tire fuponse de-vice - and t}te firlfilment is undertaken bvcourieq the chances of the merchandise beinlrciected by the recipient due to customs andimport duties is likely to be negligible.

Roltout - Once a test in the Asian market-place has proven successful, and a specificcountry or countries have beeil identified aso{ering the best rcsponse raties, it may beadvi.af le to€stablish; local f orwading facil-ity with bulk shipment being undertakm hothe local importiirg agent wh-"o then anangeslor cwtoms duties to be setded before fbr-warding dre goods on to the final reciplent.

The logical conclusion of this would, ofcours€, be eshblishing lour own ftrtl officefacilities in the countrv, but this is onlv to beconsidered where a wi.role series of tesis haveindicated that respon-ses will continue to pruvide the same hi!*r returns as those e\pcn-enced initiallt even when ushg loiallycomDiled lists.

9. ]{ame and Addl€3a FomEts. This is aparticularly difficult problem to overcome inAsia, which contains a multitudeof nameandaddressint options. These range from thevirtual standardization achieved in Sinsa-pore to the often chaotic addressing seen"incountries such as Pakistan. When you add tothis s(enario the fact that a typical Hong KongChinese name can be listei in at leas'i eishtdiffermt ways, tie magnitude of the problEmDecomes cleaf.

Ta3t - As a starting point to overcomethis difficulty durlng the test phase, it is

necessary to break down the name and ad-dress 6elds into as many different segmentsas possible; i.e.,"first name, middle name,sumame" rather than iust

"name." This willallow you to allocate the appropriate part ofthe person's name to the rclevant field, al-though it is no tuarantee that subsequentpersonalization can be undertaken correctly.

By doing so, however, you will stand anabove-average chance of being able to de.dupe names intemally within yourown data-base, and offer your file for subsequmt rmtalin a forrnatthatwould allow it tobededupedagainst others by the list r€nter.

Roll.out - During the rol l-ou t phase, youmay_wish to undertlke some fo-rm of irr-sonalization, but thjs is best left to ex&ri-enced computer bureaus who know whichpart of the person's name can be used forpersonalization in which country.

_As the Asian direct marketing industry isonly now seriously beginning to use mag-nehc tapes and diskettes, you would alsofind it a lot easier to obtain names on self-adhesive or cheshire labels initiallv, but itwould still beuseful to request respondentsto complete a detailed breakdown of thecomponents of their name and addressrather than rely on the information shownon the original labelwhich may be affired tothe resooise device.

10.T63t, T€standTo3tAgaln. If yourfiIsttest does not succeed, don't despair, butconsider at least two other tests asJollows:

. Use the same package, mailed to adifferent series of lists.

. Use a different package, mailed to theo cinal lists.

By a process of deduction you will be ableto determine if the list or package was re-sponsible for the rcsults, and ifall3 tests failto perform satisfactorily, you can reasonablyconsider your product or service better soldin the Asian marketplace through othermeans; e.9., local agenls and distributors,rather tltan direct marketins.

A firul noe of caution: before undertakingany direct mail campaipft, ensure Srat thelogistical arnerdmenG ou-tlined ea ier (using"LJS$" duoughout, rEl"ly envelopes widr spacefotr pGtage and tte leths "IJSA" - or yourcamtry's narrE at tre bott)rlr - nqFtoll fr€ephoneard faxnumbers, eh.) ar€ alwa'sinplace.

Tkse are tre avoidable erron, y* trey appear consishndv in diect mail oackae with*re blame for tte resulting pooirspo"nse sub-sequody (and wlonglyt;atdilued 6 tc,lsianmarket.

In Hont Kon& an old Chinese proverbnotqs, "The joumey of a thousand milesb€gins with a single step. " By initiatint thesechan8es to your conhol package, you willnave taken the stnqle step necessarv to testthe Asian market correctlv beforc h6pefullyrollingout into thousandi of pieces 6f proi-itable dir€ct mail. I

THE ASIAN MANAGER . FEBRUARY t9g4

J6u! G. Gall€3i06, Jr,

"Paradigm

paralysis ishazardous to acompany'shealth."

Challenging existing rules...

an Discol,YrinS The Future, a! video by futurist foel Barker.I the Swiss watch industry isI taken as the best examole ofparadigm paralysis. In 1968,Switzerland controlled over 65%of the world market for timepieces and took in more than8ff/. of the profits. By 1980, itsmarket share was down to lessthan 10P/o and its share of Drofitshad dropped below 20''l..

The culprit was the quartztechnology r€volution which theJapanese watchmakers quicklypiggybacked on. The irony wasthat it was the Swiss themselveswho invented the quartz tech-nology. However, their watchparadigm only accepted gears,bearings and mainspdngs, sothey rciected the quartz inven-tion. The rest is history

Il recent months,l conductedfive sttategic planning work-shops with various types of or-sanizations. In each of thes€*orkshops, I detecd the syn-drome of paradigm paralysis inone form or another, which in-hibited these organizations fromperforming at higher levels ofexcellmce.

In the following examplesculled from these stratetic plan-ning workshops, the country, theindustry and the organizationhave been discuis€d for reasoruof confidentiality. what is im-portant are the paradigm paraly-sls ressons.

Cae A tl|e ProductSupodorfty Pandlgn

CompanyA is known world-wide for the superioritv of Prod-uct Group A eicept in CountryABC, whet€ it is well-known forptoducts in other industries.When Prcduct GrouD A was in-troduced to Country ABC a fewyears ato - at a time when theindustrv was about to take off, it

SmatesY andParaffi Paralysis

stress€d superior product fea-turcs as its principal selting point,thie same message theentrenchedcompetition wis providint thecustomer.

Since Product Group A be-longed to an industry whoseprcducts were quite expensiveand b€cause the typical buyerwas not knowledgeable aboutthe finer points of the product'sfeaturcs. the customer oDted forthe lower risk altemative of buv-ing the competition's produitswhich he was verv familiar with.The result was a mediocre fourthplace for Product Group A intjerms of market share in an in-dustry wherc it should have beenNo. 1 or 2.

To prove prcduct superiority,the onlv recourse oerceived tobe avaiiabte was toiait for sev-eral years until product Group Ahad proven its value. Howevetwaiting was suicidal because thecomDetition would have en-tr€nc-hed its€lf further in this fast-growth market - to the extentthat they could notb€ dislodgedanymore.

The solution I suggested wasto change the message from oneof product featue to a messagethat highlighted Product GroupA as the best-selling product inmore sophisticated and demand-hg markets abroad; and, thatthe competition's brands were

"Peode utho cleatenew paEdlgns arercudly ortslderc."

not farinq as well.A oue;tion will then aris€ in

the customer's mind: Why arethe comDetition's brands (thebrands h-e's more familiar with)farin8 poorly? At this point, thetypical customer who gets lostin the product feature iargonmay develop a prosperity forProduct Group A, since per-formance in more dernandingmarkets mav provide a betteryardstick thai the familiaritycriterion. When the customergets into this frame of mind,additional adve*ising now goesrn lor the coup de grqce.

Ca3e B: Tho tlbhc FooverPa.adgn

Companv B is in the fastfoodindustry ofeountry BCD whereit belongs tio the top ten in termsof sales, but it is still a far cryfrom the industrv leader. Exhib-iting a very highlrowth rateandprofitabilit, Company B hasbeen succ€ssful due to its nichingstratjegy, wher€ it niched into amarket segment that wanted aDrcduct line different ftom tllatbeing offered by the industryleaders.

During the workshop, I askedthe following question: If youdiversified vour orcduct line toinclude thaiof the industry lead-ers, would you lose your prcs€ntclients? The answer fiom theworkshop participants was aunanimous "No!" However,there was a very obvious incli-nation to cling to the pr€sentproduct line which has provmto be very successful.

When I pointed out to themthat their long-term sales obiec-tive could not be achieved sincetheir pr€sent product line onlycater€d to 2G30Pl" of the market.the idea of diversification intonew product offerings becamehighly acceptable.

lHE ASIAN MAMGER . FEBRUARY 1 9945'l

lateral or vefticaltransfers in thecompany create"instant

outsiders."

C6e C: The T]€nd ParadlgrnCompany C is in the real es-

tate business in Country CDEwhere it is one of the top fivecompanies. Dudng the work-shop, the senior executives ar-rived at a s€emingly ambihous.long-term sales obiective whichwas based on the high growthtr€nd of the compan),. At thatpoint, my questions and theiranswers went something likemls:

Is there enough of a market toaccommodate a doublinq ofvouralreadv ambitious sali oLiec-tive? Yes. Can Vou..rpe.utingand financial capacihes cope,rpwith this twofoid inctease? y"".Why not go for it? Quite difficult,meaning more work and morepeople to hirc. Can t vou crv allihe way to the bank?i.ootsiilea good time to shed tears.

Case D: Ihe TonuF of OfnceParadlgln

Organization D is an indus-ky associahon located in Coun-try DEF which wanted to be aseffective and as influential asanother industry association inthat country. The associationpresident (only presidents ofmember companies were eligi-ble for this position) and hisboard had a tenure of two years,after which the board positionswere passed on to other mem-bers.

Attended mostlybvcompanvpresidents, the wo;kshop fiialli,came up with viable long-termobjectives and strategies when Ipointed out to the group thatinstitutionbuildingusually takesmany years to accomplish. Thismeant that the present associa-tionprcsidentwillmostprobablynot have any maror proiectscompled at theend ofhis term,nor will his successor, and that itwill most Iikely be his succes.sor'ssuccessor who will reap all theglory some five years down therfrad. Onc€ thispointwasaccepdby everybody, the long-te.ni "l-Ftivel ang strate$es were easilytormulated.

C6e E: The Folou nte l€ade?Pard4|r't

Organization E is an entityowned joindy by rveral compi-nies. It operaties in Countrv EFGand basiaally offurs public'enrer-

tainm€nt as its prcd ucts. Runninga very distant second to the in-dnsby leadet it more or less ac-cepd thissihEtionasDermanentRiause it was pardt'- but notmaiority - owni{ bv fte ind ustrvleader, ii simplv followed the latterin mo6t of its dlbrtainmerit activi-

very successfi-rl in capitalizing onfan loyalty, primarily towards iSentertajners and secondarily forib membercompani€s. So did Or-ganizadon E, but not as sucress-tullv.

il/hen the workshop qroupadmitted *rat the enteaiiti"o ,iftlrc leader will alwals be nuchmore popular than thme of Or-€lanization E, everyone agreed thissorry sifuation would always ex-ist So I zuggested another *ay ofcapturing loya_tty. Why d idn't theyFoup meu competmg qltertain-ers by regroru so that geographicallovalw rs aroused? ln CountrvfFC,

-regional loyalty was veri,

high. With everyoire accepting thiLstrategy,it tumed out that ftelong-term objettive had a very goodchance of beurg attained ii i-rut ashort span of two years.

Pardgm d Panlysb RulesSince a paradigm is a set of

rules tut defines binmdaries andtells you how to behave inside theboundaries to be sucr€ssful, thercis an implicit prcssur€ to play thegame according to tho6e rules.Especially if a company is not tleindustry leader, paradigm pa-ralysts makes lfie comPany quitemyoprc, wruch prcmotes a ten-d€ncy to play by the leader's rules.. In Case A, the industrv nrledictad product feah!€s-as thename of tre game. Since ProductA was superior, Company A futtdre rules werc in its favor. ADpar-ently, the anstorner was pliyingbv a different set of rules wirichemphasized familiarity not onlvwith the company buf ako witirthe brand.

Case B utilized the nr.le of "if itainlbroke, dont fix it."OnlywhorCompany B's executives rcalizedthat their long-term objectivescould not be met by perpetuatinga risk-averseaftitudedid theyagEeto change the rule to "if it ;ntbroke, fix it anvwav"

CaseC fotlowedthesterconpehending rule. An accuate enh-ronmental scan followed by an

ties. For example, tre leadet was

honet appraisal of intonal opera-tions revealed *re conservative-ness of what appeared originallyto be an aggr€ssive posturc.

In Case D indusky associa-tioru wually follow the nrle ofone- or twcyear projecls, in linewith the period of Flule of theassociation's board. Fortunatelv,0re conflictbetween the long-gn;objectives and the present iay ofdoing things wasresolved in favorof the former.

Case E is another tlDical sihE-tion wherc the indusl; folowerdanc€s to the hme of itre leader,ther€by pelpetuating the sarnemusic bo tlle follower's disadvan-tage. By playing a differcnt tun€,Organization E may just tum outto be the band leader in tlE fuhue.

Ihe &tslder SolutlonDespite the fact that mo6t of

these organizations exhibitedsound management, paradiqmparalysis sti.ll entered dre plctirebecause o{ a t€rdency tro atick tothe old rules. In mv case, I was anoubider and was not Dart of theevisting paradigms so I was free tosetupmyownnrlesandask "Whynot? '

Ba*er pub it apdy when hesa'E that people who cleate newparadigms are usually oubiders -individuals who have no invest-m€nt and thercforc have nothingto lce. He further states that newrules ar€ alrnogt always writtq atthe edge. This must also be ther€ason corporate gianb such asIBM, Mercedes Benz,Wetinghouse, RJR Nabisco andEli Lilly recendy hired CEG ttntwere all outsideE

An "outside/' mmtality canalso be found iruide an olganiza-tioabutthereareusua$v6ryftwwho poss€ss this trait. A CEO or asenior executive therefore has tobe on the look-out for this tvDe ofindividuai durhg meetin2!- andbrahslorming s€ssions. Or he canqeate one by efking lateral orvertical (but both inErdeDart-mental) trarufers in the comfany,where managers become "Gtant

oubiders" in their rtew pooitions.Paradigmparalysiscanindeed

be hazardous to a comDanv'shealft Conriouslvand corutantlvchanging the nnei, however, cai.rspell the differtnce between in-dustry leadership and moribundmediocrity. I

52 IHE ASIAN MAI.IAGER . FEBRUARY 1994

Robert V. Chand.an

"ln the early days Idid not care whethera deal was fair, I onlywanted to start upmy company."

Gold rush...

I f there is one golden rule inI business, it is that, "The oneI who has the gold makes theI rules." ln this month's col-umn, I would like to look intoways of raising money for a start-up colporation.

Rule number one. No onewillput up money for your venture ifyou have no money and if youare not willing to commit all -or at least a la€e portion of it -to your venturc. Your willingness,to invest your own money intlthe velltur€ is the litmus test forhow much you believe in yourown ideas.

l,ly'hen we set up Chemoil weput in $120,000 to start up thecompany. My own shareamounted to $,10,000 - for onethird of the company. I was paid$50,000 a year, a 40ol" cut in payfrom what I was previouslveamin& but enough to ma(eendsmeetinSouthemCalifomia.My other partners were silentpartners. Ten years later, thecompany had trown into a $4O0million revenue corDorationrepresenthg a worthwhile in-vestment for them and a drcamcome true for me.

In the earlv davs I did not carewhether I received a cut in Dav orwhether I owned a third of-thecompany. I only wanted to getChemoil started. As luck wouldhave it, one of the silent Dartne$later sold his interesi to thecompany for fi0,000 - what heput in it. So at the end of the deali owned 50o/o of the companv

How do you bu d ybur'eq-uitv? This is the mo6t difficult Dartofstarting a busines. Paryb fiavekied then hand in tite st(Xk mar-ket and rcal estate. []x countrieswhere you can leverage rcal estateup to 7F8ffl. you can probabtybuild a reasonableequiw baseovera five vear period.

-

I chose -to

take the real estate

Finding a PartnerforyourVenture

route because I realized I couldthen concentlate on other ven-tures as well; r€al estate took thebetter part of my weekends, butthe rest of the week could bedevoted to my core business.

How do you find partners? Istaited with people of meanswho knew me well. One of mypartneni was my ex-boss at thecfmpany I had then recently left.

.rHe became my partner in myventure after I spoke to him 0fmy inter€tit in real estate. Heasked about my most recent ac-quisrtions and t told him aboutthe deal I was about to closewhich had to do with an 11-unitapartment building worth$750,000, and which required adown payment of $200,000. Hesaid he wanted to be 50% part-ner. When I asked him to comewith me to s€e the propety, hesaid, "l don't have to. Your$100,000 is woth more to youthan my sharc is to me."

Other possible sources arecompanies who service the in-dustry. In the bunle ng busi-ness (fuel oil supply for shippingcompanies) thiswould mean theterminal companieli barge com-

"Rule numbel one:No one will backyou ldea wlth moneyif yor arc not wllll4to commit your ownmoney to theventute. "

panies, and fuel oil suppliers.It is sometimes wise to start

the company without adequatecapital. Once the company begins operating you can find thecapital.-I 've

found that a lot ofinvesto$ don't want to fund astart-uD. The kev to this sear€h isto be ai enthusiistic promoter ofyour ideas. One of-my friendsstruck up a conversation with as€at mati| during a flight to NewYorkandexpoundedonhisideasfor the companv he was about toestablish. One

-thing led to 0le

other and within a week he re.ceived a phone call from hisseat mate who - as it turnedout - iust happened to man-age a fund for high-tech com-Danies.-

There are as manv wavs tofind a Dartner as thereate colorsin the-rainbow. The imDortantthing to remember is that youmust live up to your partner'sexpectations. They expect youto make money for them; thisshould be one of your goals. TheEack record of an entrepr€neuris much like a resum6. Your Dastsuccesses make it easier for youto raise money for a futwe deal,

The next ouestion should behow to taise ; bank loan. Find-ing banks who specialize in yourbusiness is the first steD, In ouroil busines the Eurooein bankswe approached were specializ-ing in lending bas€ cr€dits. Thatis, they would take your invm-tory and receivables as collatera-land would extend you a loan. lnthe commoditv business, a dol-lar of equity * get you $5 ofcrcdit which ideally you couldtum into $45 worth of sales.With a $10 million equity basevou could then theoretica llv3upport sales of $450 million.

There a re lots of ways to skinthecat. I

, THE ASIAN IIIAMGER . FEBRUARY 1994

Antonb n, Sam3on

c0mpanies, thePhilippines rankedtwelve out oftwelve."

"In a surveyamong twohundredmultinational

0n a scale of...

TwelveStrffii*sd#particularlv when held in a coun-try once considered a backwaterand behind one's own (they usedto come here to study manage-ment) now pulling resolutelyahead and being given the atten-tion and r€spect previously ac-corded to oneseelf - can be,well... depressing. What otherword describes the feeling?

The Pacific Rim Forum withfour hundred or so participants,held recently in Bali, had speakerafter speaker declaring the nextcentury to be East Asian.

And here's the painfirl part.They rattled off country aftetcountry demonstratint brightprospects and not once didanybody mention the Philip-Dlnes.-

The only time in the plenarysessions that the Philippines wasmentioned at all was to say thatin a survey conducted amongtwo hundred multinationalcompanies in the region on thernv€stment athactiveness of eachcountry in East Asia, the Philip-pines ranked twelve. Out oftwelve.

How can they ignore us -we happen to b€ on the rnap.

All anyone talked about wasChina and its proiected 14%Srowth rate... because thingswete slowinf down after theboom times. China was so fre-quently mentioned that one feltlike asking for a toothpick to pryit out from between the teeth.Like bits of sweet and sour pork.

lsn't China the country thatused bohave Red as its fiEtname?You remember? That paticularcolor used to dmote an aversiontowards making money andlettingpeople keep it. And wasn'tit or y four years ago that this

Being Ntmber

country got a bad press for let-ting tan&s nJll thro€h tents withstudents inside them atTiananmen (ls that lees seriousthan brownouts?)?

And that other rising statVietnam. Ddn't it use to con-sider devil as Dart of one wordthatstarted wiih/oreigfl ? What'sit doing up therc ahead of us?

How did evervbodv overtakeusa

Here is what the first elevmcou.nhies have in common.

e They reward business suc-cess by letting the investor keephis money and send ithomeif hewants tro. Of course, he doesn't.He wants to make mot€ monevwith it.

. They have simple ruleswhich the whole bureaucracyunderstands and imDlements.Including the unwritt6n onesonthe "extraordinary" expensesupfront. They don't up the antein the niddle of plant construc-tion, or have a new person fromthe other camp again asking fora share of the extraordinaryexDense... or e$e.

. Thev r€verc entr€Dreneursand consider them heioes; not

"All anyonetdked aboutwre Ghlm and ltsFoJected t4%glowth nte."

people that need !o be inveti-gad, but imitated.

. They have no hang-upsabout foreigners. Money has norace, color or crced, Itiust createswealth and iobs and'the multi-Dlier effect of ttrcse two.

. They do not consider busi- .nessman-bashing a nationalsport which anyone can join.Their taxes arc simple to figureout. They ate not consideredkilling instruments to makepeople behave. If ther€ are taxinvestigatioru, they are quick.There is no striptease of cr€atinganticipation or anxietv on whoor what's next. A qriick ,udg-ment, paymmt of the amountand thear back to business.

. They understand that in-vestrnent cannot come ftom do-mestic savings alone. ForeigncaDital is necessarv.-

. They realize ihey are com-p€ting for the same funds withother countries. So, they put ontheir make-up, swing their hipsand advertise. Puckercd-up la-dies don't generate intercsl Allthey know is gossip about pr€ttygirls with low morals.

Isn't that list simple?Why can't we do the same?

Tho6e who know the answer tothat one s€em to have gottentir€d of r€peating themselves.

Maybe, there is a method inthis madness. lf communists canbecome hter capitalists them-s€lves, mavbe we should tumcommunisi first.

That's why we're talkint tioour Reds. Thev mav be able toteach us a thiirg oi two aboutmoney and how to athactit Waitbut that means waiting to become commrmist first and thenintroducing the free market af-terwards. Why, that can bring usto the year with the three zeros.

Voila. There is a plan, after all,And we're stickind to it. I

54 THE ASIAN MAMGER . FEBRI,AFY 1994

Mlchaol A, Hamlln

Samson says...

there is such a lhingas "hog heot)en."But you hqpe to diefrst.

Samson is alsowonied about theproblems that havehindercd-butlet'sbe fair, disabled -theeconomic devel-opment initiative ofthe Philippines at atime when most ofAsia has beenBrowing fastier andfor more sustainedperiods than any

'Tony Sanron,the flrst vicepresHcnt ofPIDT, is not asedoG peFon.Ihat makos hima geat dinnelcompani('n,"

other retion in history. In a com-parison with the "Tigers" ofAsia,ne oDserves:

a We hqwfue tiues the numfuroI newsqry* They cooer po-I i t ic a I sc andals, neto gowmmm tregulations on business dnd in-uestme t plans scraryd..a Their businessmen detenninewho will be theNiticians.-Ourpoliticians deteflnine who willbe businessmen,. Their goueflne t's role is tosupqrt business, eliciting itsideas on h,.o to improoe the eco-nomic climate... Our gopefi-me 's k to ftgulate and imposerestictions on business opera-tions.... They concentnte on what isWsible...We duell on the im-Wsible.

Much of his thinking has con-cemed people Samson knowsand works with (Uh{h).

. Bores. The best altenatiTte isto ignore a bore, You don't euenhaae to be polite. Once helaunches futo the glories of eoe-ry t hin g Wu hlnE not experimcd-yautn.That's righr. And don'tcoTEr your mouth,o Eqnatics. You likr CDk? lhmvftx thouwnd, what attout W?Whot prid do Wu ptier? (Pe-rid? Idon't ewtren@rbr titles.

I just lile quiet musictotalkW.)h,WlikBsch - urly or late?Hmn, IaTiftviota -uhich pefoftiance?fu.nrotti at It kala?B4ore he lost uejght?Catcha. You'ue justbecome hisuictimforthe night.. Workaholics. A5studelts, u\rkahol-icsuere the twwhosubmitted. term W-Wsthatuercthickerthan eoetVbodyelse's. They alanvs

The RealWorld

erious people arc denseand know it," the decid-edly and inspiringly un-wholesome P. f. O'

Rourke suggests, and "Serious

tjopics make unimportant peo-ple feel as imDortant as whatihey are discusiing. "

Polihcians, for example, arepeople who try to sound-seriousall thetirne. "For some unlorownreason, people in power are sup-posed to be experts. In all fields,"saysAntonio R. Samson, So thevtai<e sounding serious, well, s6-riously. It rnakes them look im-portant - and electable.

Howevet unimpottant peo-ple - for whom facing up toreality involves nothing morethan an acceptable level ofrisk tothe integrity of their psyche andself-esteem - will eniov Life intlu Middle hne.It can broidenyour horizons. Potentially andmercifully, those of your nextdirmer comppnion as well, whomay be too serious for his or herown gooo - or yours.

The lirst vice president ofPLDT is not a serious person.And that makes him a great din-ner companiory I hear It alsomakes him an unpredictableManila columnist aciordine to F.SionilJose. One who, "sees tiinesdifferently - and more clearlythan most ordinarv mottals,"Armando Baltazar observes.

Samson's pred ictably unpre-dictable interests cover a broad- and gmerally ftee-wheelhg-spectrum. Cfuonologically,hereminisces, analyzes and fore-casts. You won't read much adu-lation - of nations, people orgods - and his critiiis;s areobservations of character, oftenlack of characte4 yet they arecommentaries, not indictments.Even as commentary though,

. they can dreadfully wound."What do we put in the time

capsule ior theway we arc now?"he asks.

a One mu)ie star con makt morcnonev in a year thnn two thou-sqnd school t eachers...a More and more people arc an-su,Yring the question, "lMo uillbe the next President?" withanother question: " Does it mat-ter?". Therc are morc people writingcolumns. And because oJ tnrdprocessots, their pieces are get-ting longer. Not necessarily bet-ter. And not alwaw original.

He do€s not preach, or expecthis readers to shlre his opinibns.If they do, great; if they don't ,they don't matter an\,.wav -unl'ess they have a betier iciea.

Concemed that the develop-ing capital market will rcmain apreserve of the privileged andwell-positioned, Samson de-scribes a brochure published bythe unf ortunately f ictional entity,"Doint Business in the Philip-pines." The "Housewife'sGuide

to the Stock Market" counsels:. ... it bnot rois to get tN ottarhedto a sto€k. Tteat it iust lifu tnvdtsryUe comdiit. Unlke W;hufuud. Or like your husfund, asthe cay tny be.. ,. . do not be a pig and hope thatyour P1 can become P1N. Sure ,

LIFEI[,

ll4IDDIItAN E

did the bonuswo*, eaen ifit unson the migrotion patten of sandcranes... Workaholics, unfortu-nately, nnke the best subodi-nates.

It's easy to imagine a non-seri-ous Samson having difficultydealing with the realization thithe is, afterall, getting on in life.Old songs and Getting Personalcan be terrifying.

. Being Forty-Five, You aremore tolerdnt of othefs. Thingsthaf used to irritate you - liktWople who cut you bf) on theh ighwoy, bor n- a goin proylwr swho arc lookifig for a contest onBible-quoting, and littetuugswho throw candv u)raltet out oftheir cdr windci:n * ttou nswshrugoff.ltllry argue? Why con-xlince them? Life is tN short.a Old Songs. The greotest ro-mances and old songs are aboutbrokm rules, and hearts sterydon becouseofthem. PIdv it agoin,please. And with feeling.o G eft ing P ets onal. Ahers undo cfedth,e thingswiththcit PCs.Good for then. It's ce ainlymuch foster and more frcient.Me, I'd rather unfk on fiy Wdand thefl let my secretary do herthing on the uo Wocessor.Typ-ing, after oll, is not the same aswriting... I don't u,ant to con-fuse the t?Lv.

Oh well, "As Charlie Brownputs it: "Life is full of rudeawakmings." Ltfe in the MiddleLane is a book about rudeawakenings presented in small,munchable morsels. And so eachpiece is finished off with a smile,or a chuckle.

B€cause it's a relief to knowthat there is something we cando about these awfulawakenings. We can refuse totake them seriously. And con-centrate on more imDottantthings instead.

Seriously. IIHE ASIAN MAMGER . FEBBUARY 1994 55

Monette S, lturalde

More than a restaurant...

recently vacated by the aristq.cratic British officer and hisbreathtakingly lovely Tai-Tai, theChinese sedan chair bearerreached the top of the hill andheaded for the almost statelygranite building ahead. Leavinghis sedan chair in the shade safefrom the merciless gaze of thenoonday sun, the exhausted manslipped thankfully into the dark,inviting interior.

Over a century later, thischarming granite building *perched at the top of VictoriaPeak on Hong Kong island -still welcomes weary travellersfrom all over the world into itscool, quiet interiors. Fiercelyloyal residents also make it apoint to dine regularly at ThePea-k Cafd and enjoy its delight-ful ambience, steeped in HongKong's history - and romance.

The Peak Caf6's transforma-tion intri a Hong Kong landmarktook awhile. ln 1947, the shelterfor sedan chair bearers was con-verted into a Caf6 serving lightrefreshments to visitors of thePeak. Soon, the Caf6 developeda loyal clientele, comprised ofPeak rcsidents and visitors whowere eager to savor Hong Kong's

we decided to samDle the exten-sive selection of fini wines whilenibbling on exqnsite basil noonbrcad with balsmto creah al.d.smokedsalmon-Cheeksrosyfiomwine, we made our way to theconservatjory for ttle main meal.

The sparc ribs were glilled topedectiory counterpoinEd by thedelicate chuhela My dinnercom-panion tackled with gusto the stirftied shltt ks noodles with ba$e-cued pork, pnwns and rallopbrcchette. Warm bem/ compoebaked in pufi pasty with ruri rai-sin ice qearn and cappuccino cof-ibe rounded out the meal nic€lla

, I- 'st Dec€rnber on a fr€ezingly

coro everung, we once moretekked to The Peak Ca€. Thistime, we sat by the rcarint firc.Pamela Choy, who represents TrrAsion Meruger mHcrl:.9k:r:'g adld,joined us for dinnel, took over themenu selection. To tlraw us out,she ordered Tai Pafl crab bisauewith abalone and crab meaL Tlimcame an assortment of Thaismoked du& curry with drcnytomatoes and sweet basil; cristsamcas 6lled wi*r sweet oeasand cilantro; kdd)an shittake, sipwpeas and potato cuny; the usualstu fuied, shitto.ke noodles, andnaan btead.

One thine that never remsto change is the menu. And Mar-tin C. Allies, general manager ofthe Peak Caf6 who brieflv ioinedour table, aftests to that. Oncemanagement did try introduc-ing new fare on the menu, onlyto be stormed by irate HongKone residents who miss€d theirfavoiite selections. Some goodthings should never be changed.I'm sure the sedan chair bearerwould afieewith that. I

at the Iar end of the gardenoffer a breathtaking view of the

South China Sea and at night a

The hak Cafe

renched with perspira-tion, his slight but wirybody straining with theload of the sedan chair

past. But the mvages of time tooktheir toll and the Cafe fell intodi$epair In 1989, theCaf6's land-lord, the Hong Kong Govem-ment, closed it down.

But not for long. Outbiddingthe tenders of other professionalrestaurant operators, the pres€ntowners launched into the pains-takingtaskof resto ngthebuild-mg.

Visitors to the Caf6can choosefrom three distinct seating areas,each with its own unique atmos-phere. Located inside the natu-ral granite wall of the origrnalbuilding is the interior bar andseating area fashioned in the oldEuroDean stvle and embellishedwith Chinese antiques.

Warming one end of the res-taurant is a wood buming fireplace. The lofty trussed roof sup-portlng octatonal iron and glasschandeliers, the dark timberflooring, and the myriad ofgenurne antique paintings,screens, clocks, marble-toppedtables and fragile-looking chairstransport the visitor to the HongKong of old.

Stepping through the archedgranite doorways, one entets theconservatory greenhouse, a re-cent addition builtalong one sideof the original building. Over-looking the garden, the tlass-mclosed conservatory allows thevisitor to eryoy a meal whilecommuning with nature, what-ever the clime. ln fact, it is anideal place for enjoying hightea, while daydreaming to thegentle beat of raindrops.

The verdant garden -with slate walkways gracedwith Eurcpean wrought-ironfumiture - is a favorite eat-ing area on sunny days andbalmy evenings. Cozy tables

mantle of twinklingdiamonds.

How to reach ThePeak Caf6? Gone ar€the sedan chair bear-ers. lnstead, one can motor upthrough the steep winding nrads.A more romantic way is by ThePeak Tram, which canbeboardeda short walk up the hill behindthe Hong Kong Hilton. Seatedcomfortably in the recently-renovated, gleaming chrome andwood cable cat the visitor istransported almost lying downto the top of Victoria Peak.

It is best to call ahead andmake reservations, as this au-thor discovered to her chagrin.A regular business visitor toHong Kong, she had longdreamed of visiting VictoriaPeak. When she finally had theopportuniry she was told at thedoolr-'We're fulli come back inan hour, " Believe me, ther€ is notmuch to do in the vicinity on acold, rainy evening. So wetrooped back to the door andbegged to b€ let in out of the rain.Mercifully, the waitress pointedus to the counter of the openFhow kitchen, where lndiantandoori chicke was beinggrilled.

Perched on stools wornsmooth by courtless derrieres,

"The Peak Cafi6welcornes wearytravellels from allover the wodd Intoits cool, quletinterlors."fr{* tdr a ,

Tl{E ASIAN MANAGER . FEBRUARY tS4

TheNewDaw

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