'Management by means'

PROFIT BEYOND MEASURE: H. Thomas Johnson, Anders Broms; Nicholas Brealey Publishing, London; Distributed by Rupa and Co., 7/16, Ansari Road, Daryaganj, New Delhi-110002. œ11.95.

THE CLOSING decade of the last century was a remarkable time for business corporations all around the world. Companies everywhere experienced steady growth and improving financial performance. But, the best of times for business was also the worst of times for the ecology and environment around the world. When companies were reporting record-breaking financial gains, numerous seminars and symposiums dwelt on the need to restore the spirit and soul back to business. The managers, who were responsible for bulldozing everything on the pathway to increasing the shareholder wealth, did emerge as the most ardent advocates of the principle of management by results (MBR).

Whereas, according to the authors of the book under notice, the proper role of the manager is to lead people, and let them understand business as a system of work, a system which connects each worker's capacity to perform with a specific customer's needs. By focussing on its members' activities, the manager will improve the system's capability to serve the needs of the customers. This is what is known as management by means (MBM).

The contrast between driving work with financial targets (MBR), and organising work systemically (MBM) was clearly enunciated by Edward Deming several years ago: ``If you have a stable system, then there is no use to specify a goal. You will get whatever the system will deliver. A goal beyond the capability of the system will not be reached. If you do not have a stable system, then there is no point in setting a goal. There is no way to know what the system will produce.''

Toyota Motor Corporation of Japan has been delivering for the past 20 years the highest quality product and service, at the lowest cost, compared to any other automobile maker anywhere in the world. For the past 40 years continuously, Toyota has been making profits, without layoffs. Toyota designs and markets new varieties of product faster than any of its competitors. It tops the industry in overall productivity.

Toyota's legendary ability to achieve high quality, large variety, low cost, and at the shortest time arises from mastering practices, which maintain and reinforce a balanced and continuous flow of work - from order to delivery, and even beyond. Toyota's production system integrates flexibility and problem-solving ability into the flow of direct work content itself. It produces in response to a customer's paid order, exactly what the customer wants, when he wants it, and consumes only the resources it takes to produce the item ordered, and no more. Toyota does this with such managerial practices, which impinge on each employee's work, relate and respond as closely as possible to each customer's order.

Scania, a Swedish manufacturer of heavy trucks, buses, and diesel engines has had an excellent track record of 65 years of continuous profits. Scania's primary innovations have focussed on a unique modular approach to product design. Modularisation is a principle of design, which divides a mechanical system or structure into standardised elements - ``modules'' which can be interchanged. It reduces the cost of accommodating change, because it enables change by varying only the minimum number of components that affect the condition being changed; all other components remain the same.

In order to develop its modular design capability, Scania's engineers spent several years of research and study; just as Toyota's manufacturing engineers spent decades to create a unique production system. Perhaps, the most noteworthy feature of both Toyota's and Scania's management systems is their approach to measurement and goal-setting. It has become almost an ubiquitous tenet of contemporary management to set quantitative targets, and then create control systems (like performance appraisals, budgetary reviews, incentives and other things to ensure that such goals are achieved. The danger here is that if management sets quantitative targets and makes jobs depend on meeting them, people are very likely to meet such targets even if they have to kill the company in the bargain.

Measure in ``profit beyond measure'' which is the title of the book seems to imply the quantitative techniques of measurement. Perhaps, another connotation of this title can be that better profits - both qualitative and quantitative - may be realised by employing MBM. The book has seven chapters, and also, three appendices, by way of further elucidation and illustration of the concepts outlined in the main body of the volume.

Chapter one introduces the reader to the concepts of MBR and MBM. The big three automobile manufacturers in the U.S. - Ford, General Motors, and Chrysler - are compared with Toyota, to illustrate the advantages and benefits of the two systems of management.

Chapter two elaborates the history of MBR during the four decades from 1950 to 1990. It highlights the pitfalls and problems encountered in this system. The next three chapters describe the extensive field research, demonstrating how production/design/assessment activities conform to the principles, which resemble the way of the natural living systems.

Chapter six provides a ``method manual'' to achieve the work-to- order practices described in the case studies outlined in the earlier chapters. Management practices must harmonise with the principles that govern the operation of natural systems. Managers must focus on the means, and not the ends. They will become capable of focussing on the means - on processes and people, on every worker and each step - only when they understand and realise that the organisations are adaptive living systems, that they are organic, and as such they must adhere and correspond to Nature's principles.

Chapter seven concludes the book by indicating that the adoption of MBM does more than just improve the performance and longevity of individual companies. It is synonymous with the ecosystemic thought and practice, which are essential to sustain human life on earth.

MBM proposes a way to organise work - slower, quieter, more harmonious, and more likely to vouchsafe human survival; while being sufficiently profitable to ensure long-term survival and well-being of the corporates. It views business as a living system through which humans may use and transform technology to achieve a fuller and a more satisfactory life in harmony with other life forms and with the system that sustains all life on earth.

This is a revolutionary book which will make most persons sit up and raise their eyebrows. It is bound to create ripples in the management world. More than in the West, the philosophy behind MBM is likely to find favour in India, and in the Far East; the tinge and trace of its flavour will mesh more with the tradition and tenets of the culture and orientation of these countries, where people consider and concede that the means are far more important than the ends.

R. DEVARAJAN

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