AN EXAMPLE OF MANAGEMENT STRUCTURE

In studying product development methods and the inherent differences between methodologies followed by the U.S. and Japan, it is useful to keep in mind the differences in management structure, even outside the idea of a keiretsu. Rather than delving deeply into the intricacies of the management of Japanese companies and the structure of the keiretsu, both of which are well researched and documented subjects (although probably not well understood even today in the West), we provide an example of the structure of a large Japanese company, emphasizing the parts relevant to composites.

Nippon Steel Corporation is the largest producer of crude steel in the world, with 1991 production figures in excess of 28.6 million tons. The company's "rich endowment of capabilities and experience is now beginning to flow into (diverse) fields beyond steelmaking," one of which is the area of carbon fiber and advanced composites. Its management philosophy is best summed up by the lines they used to describe their company: "Like a great river, flowing steadily but changing constantly, the history and work of Nippon Steel are a matter of both tradition and transition." It is a "tradition" of over a hundred years of steel-making that in their words "encompasses new technologies to make steel ... a tradition that does not - and will not - change." It is a "transition" in that as the company developed new areas to solidify its role in the steel market, it built up technologies and know-how in the areas of civil engineering and building construction, regional development, information systems and analysis, transportation systems, chemistry, ecology, and environmental protection, all of which lead to diversification into new business lines. These include new and profitable businesses in engineering, urban development and building construction, electronics/information systems, new materials, chemicals, and life- related service businesses. These today account for 25% of Nippon Steel's total sales and are projected to expand to over 40% in the next few years. The emphasis is not on decreasing the role of its steel making industry but on expanding its markets. In the case of carbon fiber and composites, the basic premise is that as steel is replaced by advanced materials (ceramics, carbon, and advanced composites), Nippon Steel will be in a strong position to sell those materials, thus positioning itself for diversification and replacement in order to hold and expand markets and market share in a global economy. The competition between its different products is not seen as a disadvantage, but a move towards increased market share and a hold on both traditional and emerging market segments.

The Technical Development Bureau (TDB) coordinates and directs R&D activities in six different laboratories: (1) Steel Research Laboratories; (2) Process Technology Research Laboratories; (3) Advanced Materials and Technology Research Laboratories; (4) Electronics Research Laboratories; (5) Plant Engineering and Technology Center; and (6) R&D Laboratories at the steelworks.

The company's entire research and development budget is allocated to the TDB, which then allocates these resources to the different segments. However, only 40% of the resources are directly controlled by the TDB, with the other 60% being virtually directed at the behest of individual research groups. The groups primarily function as independent units within an overall company strategy. The TDB, however, serves to promote integrated research, consistently match R&D actions with management and business needs, and focus efforts towards new ideas.

The primary emphasis is on linkage and integration from actions in the laboratories, so as to enable early and effective realization of technology. Rather than focus on activities such as R&D, the groups are encouraged to think in terms of "research & engineering," linking traditional R&D roles with those of engineering, to create a technology fusion through innovation. Again, as was seen in a number of other Japanese companies, there exists a critical blend of product development with process development, resulting in practical and immediate applications, rather than just innovative ideas that do not see the production floor. Basic research is thus focused towards engineering applications rather than on isolated ideas.

It is interesting that within the overall structure, research group leaders are expected to interact with customers and develop market areas for the company. They are encouraged to make generic (rather than product specific) presentations on materials and or application techniques to customers, allowing ideas to surface as "joint" ideas. Developmental work is done quickly, often at company cost, to prove viability and develop a sense of trust. The team is then exhorted to have constant interaction with the customer and suppliers, building a sense of trust and commitment and inculcating a feeling of joint ownership and membership in the team, an idea that we are now pushing under the TQM revolution. It is somewhat surprising, however, to note that these ideas are so firmly ingrained that when questioned, team members do not claim to be using any special TQM techniques, but they do so almost as a matter of course.


Published: April 1994; WTEC Hyper-Librarian