Asia Logistics Wrap

South Africa Struggles to Keep Power Infrastructure from Sliding Backwards

I was catching up on recent posts over at the Enterprise Resilience Blog and saw that Stephen DeAngelis has written on South Africa's growing troubles with supplying electricity to the country.

Since I just spent two months there from the end of October through the middle of December, I had the (unfortunate) experience of not only sitting through a few blackouts but also had the chance to gain some perspective on how the country has changed the past 14 years from the people I worked with--mostly white South Africans--as they still represent the majority of working professionals and business management.

Basically, it is not just about the electricity that you hear complaints--corruption in the government is rampant, with investigations and scandals plaguing the police, the courts, and the government. The radio stations every morning are often making fun of the government and its incompetency.

My white South African friends told me that the old government used to put forth 10-year plans for the development of the country which aided in the country's significant growth and economic rise versus the rest of Africa. However, as most of us know, that same country was tainted by apartheid.

When apartheid ended, and the multiracial government took over, it began to often reject any symbols or practices of the former government and continues to do so today, down to the fight songs sung at rugby matches. One of the casualties was the planning and execution discipline of the former government. 

Mr. DeAngelis comments on the entire article, but this section stands out for me:

The government of South Africa has known for nearly a decade that this day was coming. It didn't ignore the problem, but it was unsuccessful in enticing private businesses to built new power plants. In the meantime, it delayed any new construction projects by Eskom. When the green light for new projects was finally given, it was too late to prevent the shortages they are now experiencing. The result is growing frustration and slowed development.

"South Africans are appalled by the daily interruptions to their lives. Workers sit idle, televisions flick into darkness and silence, elevators stall between floors, gas stations cannot pump, cakes remain forever half-baked. Every intersection with disabled traffic lights becomes a four-way stop, with drivers in each direction maddeningly delayed as the endless lines of cars inch forward."

South Africa is a beautiful country and I could see it and its people yearning to develop and enjoy the benefits of advances in industry and technology. However, its government's leaders as a whole are still inexperienced as leaders and will have to learn from their mistakes and adapt to the essential responsibilities of government.

The government also has to teach the poor population how to earn a higher standard of living not through entitlements and hand-outs but through hard work, education and entrepreneurship. For example, one affirmative action quota in South Africa asks for at least one black South African to be present on every corporate board in the country. In an investigation of this program, one woman was found to be on 26 different boards alone and with very little or no contribution. This kind of scenario helps neither the boards integrate the mostly black poor population nor does it help educate and develop black leaders that could contribute positively to the corporate environment.

There are obviously positive stories as well where poor South African blacks have succeeded in acquiring an education or in becoming an entrepreneur, but it is no wonder my South African friends are betting against the government in the lead-up to the World Cup in 2010. They are betting that somehow the government is going to screw everything up, and having listened to the radio each morning on the way to work, I can't say I left South Africa without any doubt in the country's future success.

My hope is that the government finds its way so that the next time I am back in South Africa I won't be left in the dark.

Snow Tests Supply Chain Resilience in Asia

Tonight I enjoyed a nice Korean dinner in the heart of Korea Town in Tokyo. On the way out with my co-worker and his wife, we quickly realized it was snowing. Unlike other winters I remember in Tokyo, this is the first time I have seen it snow so regularly. On the way home, I had to trudge through the slush and thought not only of the effects on transportation but also on the markets that rely on milder Tokyo winters, such as the cold beverage industry. Being that my previous company specializes in domestic transportation for Coca-Cola products and raw materials, I have a feeling that this winter will slow inventory turnover further and result in lower revenues for both companies.

Of course, this is nothing compared to what has hit China, and the guys over at 3PLWire have a great post from last week to sum up the impact as it stands currently, and also provide some pointers on remaining resilient in the face of such adversity. It is always great insight to hear directly from the ground, so thanks to 3PLWire for passing on such communication.

As for whether this is a freak winter or not, I came across a post by the gents at Powerline regarding the topic of global warming, now often called global climate change as advocates of a more urgent response look to be hedging their bets on whether the weather will get warmer or colder. As Powerline points out, we may be seeing a cooling that is directly correlated with a 'quiet' trend in sunspot activity. If the research they point to is correct, we could be in the beginning of a longer cooling period of close to a century in length. In that case, supply chain planners are in for quite a few more years of increased snowfall in areas normally just south of it and the resulting effects on supply chain performance.

It can't hurt to start integrating the experience from this year into scenario planning and advanced preparation for the future.

Changes in Japan Highlighted in Economist

Many of the issues I touched on in my three-part series on changes occurring in Japanese business almost a year and a half ago are discussed again in the Economist as part of larger series on Japan. It was brought to my attention through a post over at Tom Barnett's site. Many of my comments were first echoed in the International Herald Tribune. The fact that they are now covered in the Economist is a nice, additional validation that the trends I have seen while on the ground here in Japan are not isolated to my own experience.

Reading my posts and the articles and writing at the links above will give you a very good understanding of the transition Japan is currently going through.

The Age of Resilience (UPDATED)

Not just surviving, but also instilling the learnings from those before us

Resilience is defined by Merriam-Webster as "an ability to recover from or adjust easily to misfortune or change."  So when I hear an article titled "The Age of Resilience" I can't help but think that resilience has been the focus of humans for ages, although most likely framed simply as survival--survival of the individual, the family, the community, the enterprise/organization, the nation, and perhaps at times the entire human species itself. No matter the pursuit to survive, in history even the greatest individuals, families, communities and nations have perished as opposing agents seek their own survival in the form of the former's extinction. More often than not, the lessons learned of those that have perished become buried, not to be built further upon for the good of all. As a result, ignorance ensures that the cycle is repeated.

But, if a critical mass of systems were in place to not only help retain the lessons learned of the past but absorb at the same time the lessons being learned in real time, perhaps the institutions we maintain and desire today can be regularly built and improved upon so as to ensure greater continuity (think fluidity not permanency) between entities and across future events. The momentum of such an effort could even eventually lead to an even greater predictability of those future events--and as a result, more appropriate reaction to them.

This, in a very big-picture way, is how I see an "Age of Resilience" unfolding and as distinguished from the past. As inferred above, number of entities are continually trying to instill resilience, some consciously and not so consciously. As covered recently in Esquire under the title "Age of Resilience," Steve DeAngelis of Enterra Solutions wants to make sense out of the quest for resilience via coordinated technologies and applications that people can manage and respond to while making the world a better place.

Where supply chain solutions come into view

Decending from the stratospheric big-picture view, zooming in on the world brings global supply chains into general focus--millions of intersecting lines that traverse land, sea, air and space. At the same time, any number or combination of these supply chain lines could face destructive events that are induced by machines, humans or nature--or any combination of the three. The question is understanding the range of events possible and the corresponding action that will ensure supply chain resilience.

For the time being we can classify this pursuit generally as supply chain event management. Quite vividly, the introduction of the "Age of Resilience" article displays a diagram illustrating the resiliency mechanism for a given supply chain event. (Click Download resilience.pdf to see the diagram).

In this first diagram, the following is illustrated:

1. Detection: A system of scanners pull in information from the supply chain and communicate to an automated nerve center driven by a catalogue of rule sets; these define the range of acceptable supply chain security standards.

Assessment: The automated nerve center references its rule sets to determine whether any of the information taken from the supply chain can be classified as a decision-critical event; otherwise, information is collated as within normal operations and fed to databases for regular business use.

Analysis: Decision-critical events are assessed for the appropriate response, which begins to be formed off preprogrammed, generic models; these interact with other systems, such as weather tracking to further solidify a response directive.   

1. Rerendering: A more event specific, response model is created with alternative scenarios, particularly worst-case, and provides the optimal solution for worst-case scenario avoidance, simultaneously notifying for deployment the assets to be involved in stopping or stalling the event.

Counterattack: Human resources previously assigned for the resolution of such an event are alerted and allocated based on current readiness, environmental conditions and, to the degree possible, other intangibles.

Security: The process above occurs, in the vision of Mr. DeAngelis, within seconds and without time-consuming meetings and shoot-from-the-hip coordination efforts. System communications are carried out via encrypted transmission ensuring protection against meddling and bad actors.

Obviously, supply chain event management is critical given that no company wants its assets deployed on a regular basis for "fire-fighting duty" where there is more reactive activity than proactive. Supply chain managers want to prevent "fires" completely, or detect far enough in advance situations and conditions that are conducive to producing problems.

UPDATE: When exploring the range of applications such a system would have for supply chains, the pictures above might lead one to focus too much on physical architectures (nodes such as ports and modes such as container ships, for example). I just want to emphasize that there are a wide-range of potential applications that could strengthen the other supply chain architectures--financial, informational, relational and innovational. In addition, supply chain concepts can be applied to both goods and services firms. Reading the resilience article, and also Thomas Barnett's recent column, many potential applications are touched on.

Also, I think the focus on physical architectures leads some to overstate the danger of centralizing hardware, such as that at the Oak Ridge Institute, to pull from a decentralized network. This is the same mistake made when making the judgment that Singapore can't possibly ever be "resilient" because it is concentrated on a small island. However, if one takes into account how the other four supply chain architectures can be leveraged to distribute entity or system "DNA," financial, informational, relational and innovational architectures can go a long way towards building resilience. In fact, these latter architectures are the most difficult to do really, really well. It is the physical architecture that can relatively be quickly reestablished to fit the still existing DNA, combining that which was great before with integrated improvements.

Bad actors tend to focus on the destruction of physical architectures, but as Tom Barnett has had to explain recently, bad actors can't build or are horrible at building non-physical architectures able to compete with those currently driving globalization. As a result, these bad actors make news by destroying physical architecture, but for the most part have to utilize globalization's non-physical architectures to operate--primarily financial networks and informational networks. Relational and innovational architectures operated by the bad guys are sophisticated only to the degree necessary to destroy physical architectures--not build deeply rooted and complex governance systems and institutions.

Critical masses from the individual level to entire nations will drive resilience's rise or fall

If you can figure out what this means for you, the individual, you can work this quest for resilience back to the bigger picture. Whether the event is the spread of a harmful disease in your area or a disruption in the delivery of a new computer, this will have a varying degree of impact on your family, which then can have impact on your community, perhaps the enterprise/organization you work for, on a larger scale perhaps the nation you live in and ultimately the globe.  This impact can also work horizontally at the same time between all the above entities. For example, once an event has impacted a critical mass of communities, it could rise to impact an entire local or state government.

Of course, many event detection applications have been in place for some time. An easy example is shipment tracking provided by shipping companies online. Where is my package and when? This provides great comfort to many, and we often demand even better and more accurate information pushing technology to improve above and beyond its current capabilities. But I am sure I am not alone when I say that business' response to a particular bad event in the supply chain--mis-shipment, lost item, damaged goods--has often been lackluster in terms of customer service. In the government sector, where the worst events are on the level of natural disasters, terrorism, wars, and widespread disease--lackluster responses are even more pronounced and we are left thinking that we could do much, much better.

Final Thoughts

Although I am a relative neo-phyte in this area, I look forward to following these trends further and refine my thinking and ability to discuss these concepts. This is one of the reasons I have decided to shift my career focus to tackling supply chain operations from within an IT applications provider targeting the supply chain field. Although I will still write on operations, especially the role of people in operational environments, I am excited about exploring not only the transformation of IT serving supply chain business processes, but also how those processes transform themselves.

 

Semantic Web for the Supply Chain

The "Semantic Web" is introduced via Wikipedia as:

"...a project that intends to create a universal medium for information exchange by putting documents with computer-processable meaning (semantics) on the World Wide Web...the Semantic Web extends the Web through the use of standards, markup languages and related processing tools."

Another term for the semantic Web, as I found out today, is "Web 3.0" and was brought to my attention by Enterra Solutions' Tom Barnett, who references this general description by Steve DeAngelis at his Enterprise Resilience Management Blog. In summary, Steve states that Web 3.0:

"...intends on taking advantage of grid computing (or what IBM is trying to market as "utility computing") to make surfing a faster and more valuable experience. It is called the semantic Web because it will be able to understand more fully what it is that a surfer is looking for."

This is fleshed out in Steve's excerpting of an article from the New York Times by John Markoff, cut down and merged further for convenience below, that focuses on entrepreneurs:

"Their goal is to add a layer of meaning on top of the existing Web that would make it less of a catalog and more of a guide — and even provide the foundation for systems that can reason in a human fashion...in the future, more powerful systems could act as personal advisers in areas as diverse as financial planning, with an intelligent system mapping out a retirement plan for a couple, for instance, or educational consulting, with the Web helping a high school student identify the right college...the Holy Grail for developers of the semantic Web is to build a system that can give a reasonable and complete response to a simple question like: “I’m looking for a warm place to vacation and I have a budget of $3,000. Oh, and I have an 11-year-old child.”

That last sentence sounded eerily familiar to me when I read it, as did the entire post by Steve--familiar in the sense that I had either covered these concepts here without directly referring to the semantic Web, or discovered some of this vision and these concepts in a course I took almost exactly three years ago in Michigan State's MBA program.

As Steve discusses further in his post, the capabilities of a semantic Web tool is quite important to the Development-in-a-Box (DiB) solutions being developed for deployment by Enterra:

"At Enterra Solutions, we are aware of both the promise and the challenges associated with the semantic Web. We have developed Semantic Paths (TM) for use in our systems and have already begun enjoying the benefits of this relational tool when it comes to bundling rule sets into business processes."

Returning to Steve's use of the term "grid computing," I am reminded of the time I tackled DiB as the third piece in looking at how the four flows of globalization as discussed by Barnett can be cross-sectioned into modules using the five architectures of high performance supply chains as advocated by Dr. Cavinato of Thunderbird. After Steve's discussion of Web 3.0, I realized that my insertion of Enterra's DiB solution (Enterprise Resilience Management Framework) to what I dubbed the "FAR Matrix" really leverages a semantic Web-type component (Semantic Paths above) that enables the intelligent alignment of solution modules for a particular supply chain. (Below is a JPEG of the single FAR Matrix PPT slide).

In other words, for any particular supply chain, not only will the architectures necessary to deliver value need to be in place but also those architectures need to reflect the flows of other economic activities, politics (laws and regulations), security and people that shape the supply chain environment end-to-end. The semantic Web, or DiB component, in the FAR matrix thus can help in initial supply chain configuration and in the continuing need for innovation towards establishing resilience. At the same time, such a component can also enhanced advanced planning solutions aimed at influencing a supply chain environment for delivering greater value to society--particularly in the area of security and laws and regulations.

As was written by me earlier this year and once referenced by Steve in April:

"...architectures created for economic flows alone are quite vulnerable to parallel failings in non-integrated architectures designed for political, security and people flows. This is where the ERM framework says “Oh, for that module you are working on, and with the given constraints, these are the best practices catalogued for a matching political flow informational architecture on immigration process management.” How cool would that be?"

My statement above very basically describes the semantic Web component providing an "answer" to a particular question or query as mentioned above my Mr. Markoff. At the time I wrote the above, it didn't really hit me that this was essentially a semantic Web-type component. Now, suddenly, I am reminded of my studies at MSU's Broad School in a course taught by Bill McCarthy called "Enterprise Database Systems."

In regards to supply chain applications, Bill collaborated with a Robert Haugen to publish back in January 2000 an article titled "REA, a Semantic Model for Internet Supply Chain Collaboration." I won't go into the article too deeply, but essentially the idea is posited in this case by saying that:

"A semantic model describes the content of the semantic Web: that is, what classes of objects, relationships, and functions are involved in supply chain collaboration (and)...can link economic events together across different companies, industries, and nations."

Utilizing the FAR Matrix, we can also integrate not just economic events, but all political, security and people flow events that impact the performance of supply chains. The fact that I can link the concepts being engaged on here and at Steve's blog to my past coursework is very exciting, almost in a "Back to the Future" way.

I am sure that for some readers this may not exactly be the most exciting of material, and fairly abstract in nature, but for supply chain managers semantic Web-oriented applications are sure to bring quite transformative changes--leaps in improvement versus smaller, iterative steps--that will greatly impact all industries.

(Important Announcement): Beginning in December, I am very excited to make my own entry into the world of supply chain IT applications by joining Manhattan Associates as a senior consultant. For those unaware, Manhattan Associates is:

"...the leading provider of supply chain planning and execution solutions (and)...offers easy-to-use solutions to make your supply chain work better from demand to consumption."

As Steve DeAngelis often advocates Enterra Solutions at his blog, I expect to be biased towards Manhattan's supply chain solutions in my own future writing as I begin my new job. However, I don't intend to transform this blog into a platform for promoting Manhattan solutions in regards to different supply chain issues of the day, nor will I be revealing any specific dealings or projects that Manhattan is engaged in for its business.

Rather, I definitely expect to write increasingly more about the role of information architectures in high-performance supply chains, and if this indirectly results in improving my company's opportunities and business, then all the better. How my new job will affect the frequency of my writing is yet to be seen as the work culture (foreign company in Japan) will be quite different from my current work environment (domestic Japanese); but I am looking forward to an even better second year discussing supply chain logistics in Asia.

UPDATE: More commentary on Steve's post at Dan's tdaxp.

Managing your Career in SCM

The gentlemen at 3PLWire recently pointed out on October 19 a brief summary of guidelines when mapping out your supply chain career and determining the right direction. These recommendations come from an article in Supply Chain Digest. I feel these are helpful and ring true from my own experience so far--be sure to read 3PLWire's comments as well.

The Guidelines:

• Map out your career development and fill in the gaps: Companies today are looking for a broad set of skills, covering the whole supply chain. Proactively seek experience across many functions (logistics, sourcing, planning, manufacturing, global, etc.).
• Work for a company that gets it and invests in it: Naturally, other companies want to recruit from companies perceived as supply chain leaders. As talented as you may be, if you are working for a company that has a mediocre supply chain reputation, it won’t help your cause later.
• Work outside SCM (e.g., IT/Finance): Such as broad set of skills are now required to manage a supply chain, companies look favorably on those that have experience in related areas. Rollin Ford, formerly Wal-Mart’s head of supply chain, recently took the CIO role in the retail giant, for example.
• Change industries: While some companies still want deep experience in a specific industry (e.g. retail), the trend is increasingly for companies to value a broad range of industry experience. As a recent example, SCDigest notes Reuben Slone, who led the supply chain transformation efforts at consumer durables manufacturer Whirlpool, more recently took the top supply chain spot at retailer Office Max.
• Get international experience and live abroad: It goes without saying that companies are looking today for execs with skills in the global supply chain, but MacEachern said there’s often an even greater presence for someone who has actually lived overseas for some time. “If you have lived in China, that may be considered more favorably even if you have visited there 50 times,” he said.
• Seek out board experience: Companies today are increasingly looking to add outside supply chain executives to their boards. If you get that opportunity, grab it – thinking and working at a board level will be considered highly by companies looking to fill a Chief Supply Chain Officer position.
• Build your network: Potential employers and recruiters need to be able to find you – the breadth of your network greatly increases the odds.
• Find a mentor: Identify an exec inside or outside your company who can help show you the way.

Also, below I am re-posting an article that discusses just what makes someone a "supply chain professional." You will find some of the career recommendations in the article are quite similar to the ones above:

Download the_emerging_scm_profession.pdf

Examining Motivational Leadership in Japan

As I work longer and longer in Japan (now almost 1 year and 3 months straight), and all that time for a Japanese company, I am becoming increasingly interested in reading on the current issues faced by firms operating here in regards to human resource management. I have been absorbed and fascinated by (OK, I am an academic nerd!) a recent issue of "President" and also a new book titled "Why Young People Quit in 3 Years: How the Seniority-based Employment System Undermines Japan's Future." (若者はなぜ３年で辞めるのか？年功序列が奪う日本の未来）

Coming from an American, it is perhaps expected that I might be critical of the traditional Japanese employment system, which is based on a combination of seniority and length of service. However, to see and read Japanese commenting on the problems of such a system in today's globalizing world, and discussing the related new paradigms, I now have local resources I can point to when my opinions are dismissed as American ignorance or misunderstanding. Of course, I can justifiably point to my own personal work experience in Japanese companies (almost 5 years). In the end, a person doesn't need to know anything to have an opinion, but I feel that I have over time earned the opinions I have on this subject.

In the newspaper Logistics Japan, there is a column called "Personnel Development into the Future" and on September 14th the topic was "Motivational Leadership." The author is a Mr. Fujimoto, a Japanese management researcher. I have translated the majority of this article from Japanese into English below:

In the employment market, the point at which the phrase "seven-five-three" began being used was from 1999. I think it came from a manager in the Osaka organization called "Youth HelloWork." This group's purpose is to support the employment of youth up to the age of 30. Similar to Young HelloWork, which is set up in different locations, these organizations aim to be "work stabilizers" offering total support for first-time employment seekers and those seeking employment again after the first job. In this process, they focus on matching youth with the right jobs and help with marketing youth to hiring companies. The phrase "seven-five-three" originated from this youth-focused effort.

Quitting Within 3 Years

For those youth that graduate school, find a job and then quit within three years, in Japan it is referred to as a "second graduation." This youth group is said to be derived from approximately 70% of middle school graduates, 50% of high school graduates, and 30% of university graduates--thus the phrase "seven-five-three" or "nana-go-san" in Japanese.

This trend has continued unswayed by economic conditions or changes in the employment market. Those university graduates that quit within three years have rather gradually increased, becoming 35% in 2002.

Considering how this phenomenon is viewed, businessmen from the old era approach it with a strict hand. Below are some of the responses to expect:

• "Of all the reasons, it's a lack of perseverence"
• "It is a lack of seriousness in confronting work"
• "Having been raised being able to get what they want, they don't know how to raise themselves up through effort and hardship"
• "As the saying goes, "patience wins the day;" what are they going to understand in just 1 or 2 years?"
• "Even if the times change, "every rose has its thorn;" they must have a steadfastness and strong will"

However, young people also have a persuasive case:

• "In the past, one would find employment once and then have a protected, stable life via the HR system specific to Japan, defined by lifetime employment and seniority-based system. If each person does their most to sacrifice the individual "for the company," as a group tied to one fate where both the company and employee become better--if that kind of company exists, please let me know..."

Gypsy Movement

The quotes from young people continue:

• "Even if one devotingly gives their all for the company, these days there is a high chance that younger workers are first waiting to see if their company is going to experience a restructuring or M&A scenario. In today's world, it seems that "good company" means a company that strictly evaluates each person on the depths of their individual performance, ability and effort. In order to capture one's dream and potential, it is only natural to seek out that type of company, job-surfing and aiming to raise up one's career"
• "Even if one graduates out of a famous university, employment is not guaranteed. Even if one enters a large company, high promotion or lifetime employment is not guaranteed. Since in this era one can only believe themselves, it cannot be helped that our identification with the organization or group would become weaker. Rather than the question of "where to be placed," we want to search for the workplace where we can raise our own performance via "our own style" as seen by Ichiro--thus this gypsy movement seems inevitable..."

The "second graduation" trend that has come about due to the above change in values and behavior is labeled often by the media as "mismatch" placement.

Expanding on this point, in the USA, the person that will be one's senior at a company is the one that determines the hiring. Once the new hire enters the company, the work contents or responsibility and rewards or rights are clearly defined. Based on this, a contract is written up resulting in fewer mismatches.

Cause is with the Seniors

Many tens of years ago, in order to hire the "cream of the crop," Recruit set-up a special hiring budget of approximately $90k per new hire. For each company to go to these lengths to acquire winning candidates incurs a heavy cost. But an even greater loss occurs if such talent is hired in this way and then lost after less than a 1000 days of employment.

Even considering this issues from the side of youth, after putting in the time and monetary investment of applying to and interviewing with several companies, including taking tests, it is a waste when they quit or change jobs after not seeing the potential of starting a bright future.

I have been involved in a number of companies' new hire research and career advancement activities, and I would say the feeling is that most of the causes behind early retirement (quitting) can be traced back to the seniors. When youth meet their senior(s) for the first time, if they act as sort of "life mentors" and not just "work seniors" then I would expect the young workers' trend of "leaving the front lines" to drop with a thud.

The Youth HelloWork group I mentioned above surveyed a wide number of youth on the question "From the following three types, which would be your ideal senior?" The three types are: 1. Senior with unsurpassed leadership, 2. Senior skilled at his work, and 3. Senior full of humanity.

Most of the answers focused on #3, with further meaning as "someone that can be respected." I think a leader is generally thought of as "someone that moves people," but I would like to modify that and say that a leader should be thought of as "someone who moves peoples' hearts."

From my reading, it is obvious that changes need to be made in the general methods of current HR management within Japanese companies. Even via the introduction of Western methods, or an acceptable hybrid management system, it is still an extremely difficult task to turn the tide of years and years of entrenched habits and customs in the workplace. Truly innovative companies willing to accept the necessity for dramatic change will find ways to overcome denial that the old ways no longer are the path to success. However, at the same time, these companies will find ways to merge and integrate global best practices for a truly beneficial and customized solution that doesn't completely estrange the older generation. In the most extreme cases, it will mean getting the right people on and the wrong people off the bus.

Singapore and Resilience

After getting some distractions out of the way, it is time to hit the blogging trail again.

A while back, Steve DeAngelis at the Enterprise Resilience Management Blog posted on the resilience of Singapore. His first post, from August 25 titled "Singapore's Resilient Strategy" posited the following:

"No one can doubt that Singapore's economic miracle has become permanent. Its resilient strategy is positioning Singapore for an emerging future rather than trying to get the country to cling only to those sectors that made it successful in the past, like electronics and finance. It jump started its strategy by importing world-class scientists, building world-class facilities, and ensuring that its standards are as high as any around the globe. It's a great lesson in resiliency."

This conclusion was arrived at via a look at an article by Wayne Arnold in the New York Times. For more on Steve's train of thought, visit the full post as titled above.

In response to some feedback by Singaporeans and others, Steve did a second post on August 29 titled "Singapore Revisited" to further look at his initial post and highlight the feedback towards further enhancing the discussion:

My blog concerning Singapore's Resilient Strategy has received more comments than most posts. One pundit, Nimble Books Publisher W. Frederick Zimmerman, decided Singapore's is a fragile not a resilient strategy. He wrote:

Unfortunately for Singapore, it is a classic example of a single point of failure. I respect Steve D. & Enterra, but in the proliferated 21st Century, resilient assets must be distributed assets. Singapore, by definition, isn’t.

Zimmerman's point apparently refers to Singapore's small size and location -- a geostrategic fact of life learned last year by New Orleans. As noted below, however, geographical location has good points as well as bad. My entire point was that Singapore is trying to expand into more economic sectors (beyond electronics and finance) in order to avoid setting itself up for an economic "single point" failure.

See the rest of the post for the Singaporean perspective. Later, however, in a more recent post from September 13, Steve goes a bit further on the distributed assets concept and this is where I want to focus. Coincidentally, on September 13 I was attending the 2006 Asia Pacific Logistics Federation gathering where I heard a Mr. Roger Lee speak. Mr. Lee is the Director of the Singapore Institute of Materials Management in addition to being an active entrepreneur and book writer, but focused his presentation on "The Evolution and Application of Knowledge Management in Logistics."

Having at the point already read Mr. DeAngelis's first two posts, I began to realize that most people were focusing on Singapore's reslience in terms of its physical presence--Singapore the island, Singapore the people. However, as I have covered thoroughly in an explanation of my FAR Matrix (Flows-Architectures-Resiliency), we can frame the four flows Thomas Barnett covers in describing facets of globalization--economic, political, security, and people--in terms of the five architectures of high performance supply chains--physical, financial, informational, relational, and innovational.

Amongst the above five architectures, most of those responding to Steve focused on the physical architectures, which are admittedly hard to distribute outside of Singapore as an island unless it is buying large swaths of similar land in strategic locations within proximate reach. But looking at the other four architectures, these can be much more easily distributed and Steve touches on distributing informational architecture in the example of data back-up centers. But Singapore can just as easily distribute its financial architecture, as well as relational and innovational architecture.

These architectures can easily house the distributed "DNA" of the physical architecture models Singapore has put in place so that, in the case Singapore the island is significantly impacted by natural disaster, these architectures can refeed the post-disaster area with the distributed financial, informational, relational and innovational resources required to rebuild. In this case, we are not focused on Singapore's resilience as an island but as a replicative concept around the world--Singapore as a resilient concept or idea--that transcends the physical fixation on the island's fragility.

As in the FAR Matrix, an Enterprise Resilience Framework as Enterra intends to deploy is the glue that brings these architectures in sync, and which houses the triggers that would signal which distributed resources to redeploy to a post-disaster Singaporean island. At the same time, those utilizing the island with regularity as a supply chain node/hub would be assisted in knowing where, when and how to reroute supply chain flows via linkage to this ERM.

Whether Singapore will be able to eventually transcend the physical constraints of being an island state is to be seen with time. But after the presentation by Mr. Lee, I believe Singapore does have the minds and talent that could eventually push it in that direction as a coordinated strategy.

IHT Article on Japanese Business Practices

It hardly seems coincidence that following my series of posts on Japanese business practices, published at Asia Business Intelligence, there was an article published in the International Herald Tribune eerily similar in content and theme. Titled "Made in corporate Japan: New approach to business," the article is written by Patrick L. Smith and contains some nice quotes from a variety of people that complements my own writing. On the other hand, I believe the article leads to conclusions that rely too heavily on evidence from Japan's 1st tier companies.

Interestingly, Mr. Smith quotes Mr. Abegglen, the author of Kaisha, the book I mentioned in Part I of my article:

"A lost decade? Nonsense. A painful transition? Yes," said James Abegglen, chairman of the Asia Advisory Service and an expert on Japanese corporate organization. "Companies have done what had to be done to redesign themselves. They've retained basic values while changing what had to be changed."

Being one of the authors of Kaisha, I doubt Mr. Abegglen could be expected to use the "lost decade" label. But, not all Japanese companies have "retained basic values while changing what had to be changed." In reality, I believe the majority of Japanese companies are "trying to retain basic values while also attempting to change what has to be changed" and thus the foundation of corporate Japan and society--what I argue is found in its 2nd and 3rd tier businesses--is still enduring this painful transition.

Next, Mr. Smith goes on to discuss the "hybrid management system" that I illustrated via my personal experience on the ground:

With Japan now recovering, what is emerging here is a hybrid management strategy that is partly Japanese and partly Western, or a kind of "third way" in the corner office. Executives, management experts and consultants say this is producing a reinvigorated corporate sector that is more focused on primary businesses, better able to maximize human capital, more dedicated to advanced technologies such as robotics and second to none in cost-effectiveness.

The example used by Mr. Smith, Toyota, is of course the company from which Denso, the company I worked for and discuss in my article, was born:

The corporate ideal as this hybrid takes hold here is Toyota, Japan's leading auto maker. Company executives, notably the chairman, Hiroshi Okuda, have long been known for their cutting- edge management methods even as they espouse Japan's traditional corporate principles. Companies should not devote themselves solely to profit, Okuda said often during his just-ended tenure as head of Nihon Keidanren, the leading business association here - they are also social institutions with obligations to the communities in which they are embedded.

I think the oversimplification here of Western, particularly American, businesses being solely profit-driven without regard for communities is unhelpful. Toyota and Denso management ratios in the USA are heavily American, an environment which hasn't been a hinderance to the firms' success. This suggests that American management can be very flexible in balancing the profit motive with a more holistic focus on corporate health.

The below paragraph on Toyota helps explain Denso's parallel success as Toyota's #1 supplier throughout Japan's down period:

With aggressive overseas expansion and shrewd product development, Toyota weathered the years of sluggish growth at home as well as or better than any other Japanese company. In the last fiscal year, which ended on March 31, the company increased capital investment by 41 percent to ¥1.53 trillion, or $13.1 billion. In the three months to June 30, the first quarter of its current fiscal year, it reported a 39 percent rise in profit to ¥371.5 billion.

As I illustrated in my article, the actual execution of the expansion and product development mentioned above was key for Denso, as well as Toyota--establishing a human capital management system that could assimilate via leveraging the best aspects of American people and culture melded with Japanese business principles, particularly those in manufacturing.

The quote below stood out to me as referencing my point about the competition that comes with globalization and how Japan's 2nd and 3rd Tier companies are no longer as protected as before by market barriers erected by the Japanese government:

"We used to hear all about Japan as No.1 and the virtues of Japanese management," said Shin Kanada, Toyota's senior managing director. "Then in the 1990s the pendulum swung the other way. I'm a little jaded at this point. Of course culture and tradition are factors, but what determines management strategy is what has always determined it, and that's competition."

Thus, as I concluded, domestic Japanese companies have to adopt almost global strategies even while confining themselves to operating only within Japan. As a result, this phenomenon complicates statements such as the one made below:

Fujio Mitarai, the president and chief executive at Canon, who recently succeeded Okuda as the head of Keidanren, is noted for drawing a distinction between the global and local aspects of corporate management. The new-look Japanese company, according to Mitarai and other executives, accepts world standards in terms of balance sheet and cash flow management, transparency and cost controls while preserving Japanese practices in areas such as employment and close ties to suppliers.

While I have long agreed on the enhanced supplier relationships developed and cultivated by Japanese firms, my experience is in fundamental disagreement with preserving practices in employment. I am not talking about pure numbers and length of employment, or even severance practices--my focus is on how employees are recruited, trained, developed and retained.

The hybrid management model now emerging carries with it a fundamental truth, executives and consultants say. No company can incorporate import ideas without reference to the society in which it operates. The machinery company Fujitsu, for example, briefly adopted an across-the-board compensation system a few years ago based on performance instead of seniority. When the only tangible results turned out to be frustration and conflict among employees, Fujitsu soon dropped the new system.

I am also not arguing that Japanese-Western management practices are zero-sum--I believe also in the hybrid model.

"An Anglo-American method such as this it assumes employees can manage themselves independently and place the highest value on financial reward," said Shintaro Hori, the chairman in Japan of Bain, the global consultancy. "It doesn't succeed if people are trained differently and have different values. Pursuing financial interests alone is not a virtue here - it's a negative."

Again, I believe the "pursuing financial interests alone" meme is a misunderstanding of Western business practices today. But if you live and work in Japan today in the 2nd and 3rd Tier foundation of the Japanese economy, you will see that the way people are trained is not in tune with the Japanese society and culture of today. So while a complete introduction of Western management tools may be a mistake, retaining human resource management practices already exist in their complete form also does not address and adapt to the changes in Japanese society that I described in my article and that I see and hear about every day.

Many analysts say they expect Japan's emerging management model to have a significant impact on its presence in world markets. "Coming out of this are highly sophisticated companies that will keep Japan a manufacturing nation far longer than, say, the United States or Britain," said Abegglen, the chairman of the Asia Advisory Service.

I touched on this phenomenon in my post on Toyota in China utilizing American management methods.

In the end, the hybrid management systems that came from larger Japanese companies adapting overseas will lag in implementation at Japan's 2nd and 3rd tier businesses. Companies in industries that have strong international linkages--such as manufacturing and logistics--will face the most immediate threats in terms of competition even if they don't operate overseas. Managers in these firms must not only understand the positioning of their business in the domestic market, but also how it relates to the global market and the markets its customers compete within. Simultaneously, this contextual knowledge must be passed onto employees towards better training and cultivation in facing such a dynamic environment versus what Japanese firms experienced in the isolated Japanese markets of the past. Lastly, in my opinion and iterated in my article, this training and development must occur more quickly with more accurate placement of people in the right roles and positions.

Reflections on Transitions in Japanese Business Practices from the Bubble Era to Today (Part I)

(This is a reposting of my article that appeared in three parts at Asia Business Intelligence (ABI), courtesy of Rich Kuslan, on August 8, August 22 and August 28. At ABI, you can see Rich's attached comments).

Part A: Overestimating Japan in its Rise, Western Business Underestimated Japan in its Descent

During Japan’s bubble years throughout the mid- to late-1980’s, there were many books and articles written for the Western business community that advocated the “Japanese way,” and warning the Western business community to either adopt Japanese practices or lose out in head-on competition. A widely read book that exemplifies this period is titled “Kaisha: The Japanese Corporation,” and is reviewed at Amazon as follows:

“Much of the literature on the legendary success of the Japanese corporation has rested on the premise that the Japanese possess certain cultural traits, not easily transferable to the West, that provide them with inherent advantages in executing corporate strategy (see, for example, William Ouchi's Theory Z). Abegglen and Stalk, however, maintain that the successful strategies of the best Japanese “kaisha” (corporations) are more imitable than not. They discuss such learnable, competitive fundamentals as debt financing, high retained earnings, a short-run concern for building market share, and a partnership with labor. While the preoccupation with the Japanese managerial style can become tiresome, Kaisha offers a different interpretation and is recommended.”

I was assigned to read this book during my first visit to Japan as an exchange student at Waseda University in 1996, already about five years into the post-bubble era. By that time, the vulnerabilities of Japanese firms were regularly appearing in domestic newspapers in the form of high profile scandal, bankruptcy and financial mismanagement that extended to large contracts private firms held with the Japanese government. The aura of the Japanese firm’s prowess seemed to be crumbling and looked to give way to the West regaining its sense of superiority as the leader in global business practices. This background context while reading and dissecting Kaisha provided insight into both the origins of Japanese firms’ perceived unrivaled ascension and the sources of their increasingly publicized failures in managing business realities.

One more trip to Japan from January to March of 1998 to complete my senior thesis helped solidify the feeling that Japan was entrenched, at least domestically, in a downward trajectory in terms of its business climate. During those three months I stayed with a good Japanese friend from a wealthy family, and even their household had become quite conscious of their spending, pessimistic about the Japanese economy’s future. Interestingly, my friend’s father, who was president of a large film developing chain, directed most of his criticisms towards the knowledge and education of his sons, and by extension the younger population of Japan. His concerns then about the learning and progress of Japanese youth seem very prescient today, but as I will illustrate in my second post, any wholesale dismissal during this period by Western firms regarding the state of Japanese competitiveness would have been mistaken.