THE PURITAN GIFT weblog

January 14, 2013

BOEING’S DREAMLINER AIRCRAFT IN TROUBLE, JUST AS WE PREDICTED ON PAGE 7 OF THE PURITAN GIFT!

Filed under: Uncategorized — Will Hopper @ 5:51 pm

Dear Fellow Puritans:

Last Saturday the Financial Times reported five separate incidents occurring within a few days of each other affecting the structure of Boeing’s new Dreamliner aircraft. Happily no one was injured or killed, although some of these incidents occurred when the planes were carrying passengers. You can read the article by clicking on: http://www.ft.com/cms/s/0/0e0a35c0-5be9-11e2-bf31-00144feab49a.html#axzz2HyBPjekg.

On page 7 of THE PURITAN GIFT, my brother and I drew attention to the weaknesses in the procedure known as “outsourcing” and held up this very aircraft as an example to be feared. To be precise, we said:

In 2005 and 2006, a former Great Engine company, Boeing, sold 350 of its Dreamliner aircraft straight off the drawing board, with the intention of ‘out-sourcing’ the manufacture of 80 per cent of its structure and components to forty-three suppliers on three continents. We await the outcome with unease. Until then, the company had always made the fuselage and wings for its planes; that is what Boeing was all about.

Once again: QED!

Yours ever,

Will Hopper

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December 23, 2012

THE EUROZONE HAS SURVIVED AND WILL NOW PROSPER

Filed under: Uncategorized — Will Hopper @ 3:54 pm
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Dear Fellow Puritans,

For some years, cynics have predicted the collapse of the Eurozone or, at least, the expulsion from it of some of its “fringe” members — Ireland, Greece, Spain, Portugal and Italy. In blogs and elsewhere, I have consistently taken an opposite line. I believed that Germany and Poland, acting together as its natural leaders, possessed both the political will and the economic means to keep the Eurozone in being and make it prosper.

It is becoming increasingly clear that I was right. The brutal austerity measures imposed on the weaker members of the Eurozone have transformed their economies beyond belief, enabling them to earn foreign currency to repay their international debts. Labour costs have collapsed in all of them, making possible a period of strong economic growth. Ireland is back to surplus on its current account for 2012, and the other “fringe” members will follow suit in 2013. Soon we will see the surplus Asian countries switching their foreign currency reserves massively out of the dollar into the euro in the name of diversification.

The contrast between Europe and the rest of the world is staggering. The United States, which has made no serious attempt to undo its crippling balance of trade deficit, is teetering on the edge of an almost perpendicular “fiscal cliff”. Britain has taken some sensible steps in the right fiscal direction, but not enough. Economic growth is slowing in India and China, both of which are threatened with serious social unrest on account of widening income differentials. If you do not believe me, I suggest you consult the following article by Ruchir Schama, a senior executive of the leading investment bank, Morgan Stanley, which appeared in last Tuesday’s FT:

December 16, 2012

THERE IS MORE THAN POETIC JUSTICE IN THE COLLAPSE OF MICHAEL PORTER’S MONITOR GROUP

Filed under: Uncategorized — Will Hopper @ 10:10 pm
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Dear Fellow Puritans:

Brother Kenneth has just drawn my attention to an article by Steve Denning in FORBES of 30 November describing the collapse of Michael Porter’s consulting company, Monitor Group. In THE PURITAN GIFT, we argued that America’s great inherited managerial culture achieved a peak of excellence at the midpoint of the last century — and then went into a disastrous decline owing to the impact of what we called the Cult of the (so-called) Experts. Who was the chief of these (so-called) Experts? Undoubtedly that self-same Michael Porter whose company has just failed to pay interest on its debts.

Writing seven years ago — see pages 168 & 169 of our book — we quoted the following observation by a distinguised Indian academic, Sumantra Ghoschal:

And wherever in the world one studies management, there is Michael Porter’s theory of strategy. This asserts that to make good profits, a company must actively compete not only with its competitors but also with its suppliers, customers, regulators and employees. Profits come from restricting or distorting competition, bad though this may be for society. It is one of the most important tasks that managers are paid to do.

Ghoshal went on to refer to the work of theorists like Porter as “pseudo scientific” and commented that it created or reinforced pathological behavior on the part of managers

Our own comment on the bankruptcy can be extremely brief: QED.

Puritanically yours,

Will
_________
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November 25, 2012

BOTH “STAKEHOLDER VALUE” AND “SHAREHOLDER VALUE” PROVIDE INFERIOR THEORIES OF CAPITALISM

Filed under: Uncategorized — Will Hopper @ 7:47 pm
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Dear Fellow Puritans,

One of the issues discussed at the Vienna Drucker Forum was the merits of “shareholder capitalism” versus “stakeholder capitalism”. The first argues strongly that the objective of a business is to maximise profitability for its shareholders, which includes raising the share price. The second takes the view that the objective must be to benefit all stakeholders – employees, suppliers, customers as well as shareholders.

Where do the Brothers Hopper stand in this debate? We regards the stakeholder approach as superior only in the sense that it focusses on the long rather than the short term. However, it provides less than an adequate theory of capitalism, given that no one quite knows who the stakeholders are and what weight each should carry. Profitability is to be regared as a byproduct of good governace, not as the primary objective of a business. In The Puritan Gift, we atttempt to define what is meant by that expression.

Puritanically yours,

Will
_________
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November 19, 2012

GREETINGS FROM THE ANNUAL DRUCKERFEST IN VIENNA WHERE THE FATE OF MANKIND IS BEING DEBATED

Filed under: Uncategorized — Will Hopper @ 4:52 pm
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Dear Fellow Puritans,

I am taking part in the annual Drucker Forum in Vienna. Peter Drucker (1909 – 2005) was, as you know, an Austrian who migrated first to Britain and then to the US to become the world’s best-known writer on management. He also became a serious critic of what we can call Capitalism-1, i.e. the way we have been living in the West in the past half century. The theme of the Forum is aptly described as Capitalism-2: we discuss the kind of economic order which should replace the current disorder.

This has been a splendid occasion. Over 300 Druckerites from 30 countries ranging from China and Korea to Peru and the Argentine debate and dine in almost imperial splendour. At times I think I have been spirited back to the famous Congress of Vienna which met in 1815 to decide the future of the post-Napoleonic world! It seems to me significant that so many people were willing to pay the not insubstantial costs of being here; they think the subject-matter merits it.

One of the issues discussed was the merits of so-called “shareholder capitalism” versus so-called “stakeholder capitalism”. The first argues that, for a business to achieve its objects, it must generate profits for its shareholders; the second takes the view that it must benefit all its stakeholders — employees, suppliers, customers as well as shareholders. One of the contributors — who writes the column Schlumpeter in The Economist — took the view that substituting the latter for the former would solve most of our problems. Believing that reform must go further, I disagree. I will return to this important subject in next week’s blog.

Puritanically yours,

Will
_________
Will Hopper
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November 13, 2012

WHY SHOULD ALL HELL BREAK LOOSE BECAUSE THE BBC HAS MADE A SERIOUS ERROR OF JUDGMENT?

Filed under: Uncategorized — Will Hopper @ 11:33 pm

Dear Fellow Puritans:

In his Foreword to The Puritan Gift, the late Russell Ackoff reminded us of a very old truth: “if you never make a mistake, you will never make anything”. He added that “intolerance of mistakes precludes learning” — in other words, “we learn by identifying mistakes and correcting them”.

I could add, more prosaically, that none of us is perfect and that errors are inevitable from time to time in the best regulated organisations. It is when mistakes become the rule rather than the exception that there is justifiable cause for concern.

The BBC recently made two serious errors of editorial judgment but, since one obviously sprang out of the other, they can properly be treated as one. Why then is it being vilified by the press and politicians? 99.99% of its programs are proceeding in a more than satisfactory fashion, its coverage of the London Olympics being little short of brilliant.

The conclusion is obvious: there are no serious grounds for the vilification. The BBC must treat its recent error(s) of judment simply as a learning experience.

Yours puritanically,

Will Hopper

November 10, 2012

IS WILLIAM SHAKESPEARE “SOFT POWER” IN A WORLD WHERE “HARD (I.E. MILITARY) POWER” IS BECOMING INCREASINGLY INEFFECTIVE AND, THEREFORE, IRRELEVANT?

Filed under: Uncategorized — Will Hopper @ 1:09 pm

Dear Fellow Puritans,

The profound thought which appears in the headline to this blog was prompted by an exhibition called “Shakespeare: Staging his World” which I visited last night at the British Museum. There were scores of fascinating historical objects on display and, in addition, the air was full of voices uttering immortal lines:

Shall I compare thee to a summer’s day…
If music be the food of love…
There is a willow grows aslant a brook…
Now is the winter of our discontent made glorious summer…

This outstanding exhibition is about Shakespeare’s World as seen through his eyes. (I almost capitalised the “his”). I must go back again before it closes on November 25.

I was also impressed by the number of young Chinese visitors I saw around me. When they learn Shakespeare’s words by heart (as they do), do we Brits not exert a moral and intellectual power that is by far greater than that of our nuclear weapons? And when they study his plays, do they not also learn vital lessons about the need for parliamentary democracy? I believe the answer to both these questions is a firm yes. Almost every problem that the world faces today finds some kind of echo in the work of the Bard of Avon. He can even teach us about management – see Paul Corrigan’s book Shakespeare on Management.

Puritanically yours

Will Hopper
PS: Shakespeare did not like Puritans! WH
__________
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November 5, 2012

“GENERAL DOUGLAS MacARTHUR — AGENT OF CHANGE IN JAPAN 1945 — 1952”

Filed under: Uncategorized — Will Hopper @ 2:58 pm

A talk given by Will Hopper at the MacArthur Museum, Brisbane in July 2012.

Part 1:

Part 2:

Part 3:

The full text of the talk:

BRIGADIER RULE,
LADIES AND GENTLEMEN.

IT IS A GREAT HONOUR TO BE INVITED TO ADDRESS THIS AUDIENCE ON THE OCCASION OF THE SEVENTIETH ANNIVERSARY OF THE ARRIVAL OF GENERAL MacARTHUR IN BRISBANE. AND WHAT AN APPROPRIATE TITLE YOU HAVE CHOSEN FOR THIS EVENT: “GENERAL DOUGLAS MacARTHUR: AGENT OF CHANGE”.

MacARTHUR IS ONE OF THE HEROES OF A BOOK CALLED “THE PURITAN GIFT” WHICH MY BROTHER AND I WROTE SOME YEARS AGO. I AM PLEASED TO SAY THAT IT HAS GONE THROUGH HARDBACK, PAPERBACK AND KINDLE EDITIONS SINCE THEN. IN NOVEMBER IT WILL BE THE SUBJECT OF AN EDITION IN SIMPLIFIED-SCRIPT MANDARIN TO BE PUBLISHED IN BEIJING BY ORIENTAL PRESS, THE PUBLISHING HOUSE OF THE PEOPLE’S REPUBLIC OF CHINA. THIS WILL BE FOLLOWED BY EDITIONS IN JAPANESE AND OTHER LANGUAGES.

WHY IS ASIA SO INTERESTED IN OUR BOOK? THE ANSWER TAKES US BACK TO THE ROLE OF GENERAL MacARTHUR AS THE EFFECTIVE RULER OF JAPAN FROM 1945 TO 1951 AND, BEYOND THAT, TO THE BASIC THESIS WHICH INSPIRED OUR BOOK IN THE FIRST PLACE. WE BELIEVE THAT THE UNITED STATES ROSE TO BE THE GREATEST POWER ON EARTH ESSENTIALLY BECAUSE OF THE EXCELLENCE OF THE MANAGERIAL CULTURE WHICH THE PURITAN MIGRANTS BROUGHT TO NORTH AMERICA IN THE 1630S. YOU WILL RECALL THAT THERE HAD BEEN TWO EARLIER COLONISATIONS BY ENGLISH-SPEAKING PEOPLE: THE JAMESTOWN SETTLEMENT OF 1607/8 AND THE EXPEDITION OF THE PILGRIM FATHERS TO MASSACHUSETTS IN 1620. IN THE FIRST OF THESE EVENTS, FEWER THAN 150 PEOPLE WERE CARRIED IN TWO SHIPS. IN THE SECOND, FEWER THAN 100 PEOPLE WERE CARRIED IN ONE SHIP – THE FAMOUS MAYFLOWER. BOTH OF THESE COLONISATIONS WERE UNDERFUNDED AND ILL-PLANNED. UNSURPRISINGLY, BOTH TURNED INTO DISASTERS, HALF OR MORE OF THE COLONISTS DYING OF STARVATION OR DISEASE WITHIN EIGHTEEN MONTHS IN EACH CASE.

THEN CAME THE PURITANS IN A BRILLIANTLY PLANNED AND ADEQUATELY FUNDED OPERATION THAT BROUGHT 14,000 SOULS ON 200 SHIPS TO MASSACHUSETTS OVER A PERIOD OF TEN YEARS STARTING IN 1630 AND LAID THE SOCIAL, LEGAL AND MORAL FOUNDATIONS OF THE FUTURE UNITED STATES. THEIR MIGRATION WAS A MASTERPIECE OF MANAGEMENT FROM WHICH IMPORTANT LESSONS CAN BE LEARNED TO THIS DAY.

IN OUR VIEW, THE MANAGERIAL CULTURE WHICH THE PURITANS BROUGHT TO AMERICA WOULD EVOLVE ACROSS THE CENTURIES TO REACH A PEAK OF EXCELLENCE AT THE MIDPOINT OF THE TWENTIETH CENTURY, WHEN IT FOUND ITS FULLEST EXPRESSION IN A LARGE NUMBER OF INDUSTRIAL CORPORATIONS THAT WE CALL “GREAT ENGINES OF GROWTH AND PROSPERITY” – OR “GREAT ENGINE COMPANIES” FOR SHORT. YOU ARE ALL FAMILIAR WITH THEIR NAMES – IBM, STANDARD OIL OF NEW JERSEY, AMERICAN TELEPHONE, GENERAL MOTORS AND SO ON. WE ARGUE THAT THESE COMPANIES COMBINED EXTRAORDINARY COMMERCIAL SKILLS WITH A SENSE OF THEIR RELEVANCE AND IMPORTANCE IN SOCIETY. THEY MOST CERTAINLY DID NOT THINK THAT THEY EXISTED ONLY TO GENERATE PROFITS FOR INVESTORS AND BONUSES FOR SENIOR EXECUTIVES.

IT IS AT THIS POINT THAT WE ENCOUNTER GENERAL DOUGLAS MacARTHUR FIRST, IN HIS ROLE AS SUPREME ALLIED COMMANDER IN THE PACIFIC DURING THE SECOND WORLD WAR; AND, SECOND, AS THE EFFECTIVE RULER OF JAPAN DURING THE U.S. OCCUPATION OF THAT COUNTRY. YOU WILL RECALL THAT AFTER THE FIRST WORLD WAR, THE VICTORIOUS ALLIES SET OUT TO PUNISH GERMANY BY DISMANTLING ITS INDUSTRIES AND ENFORCING THE PAYMENT OF REPARATIONS. THIS APPROACH BRED SUCH RESENTMENT IN GERMANY THAT IT BECAME ONE OF THE CAUSES FOR THE RISE OF ADOLF HITLER.

THE ALLIED POWERS LEARNED THEIR LESSON THE HARD WAY. AFTER THE SECOND WORLD WAR, A HANDFULL OF GERMAN AND JAPANESE WAR CRIMINALS WERE PROSECUTED AND SOME WERE HANGED BUT THE ALLIES DID NOT TRY TO PUNISH THE GERMAN OR JAPANESE PEOPLE AS A WHOLE. INSTEAD THEY SET OUT TO BUILD STABLE, PROSPEROUS SOCIETIES IN THOSE COUNTRIES IN PLACE OF THE DICTATORSHIPS WHICH HAD GONE BEFORE. THE JAPANESE AND GERMAN PEOPLE RESPONDED CONSTRUCTIVELY TO THIS APPROACH. THANKS TO THIS EXERCISE IN CO-OPERATION BETWEEN VICTORS AND VANQUISHED, GERMANY AND JAPAN TODAY RANK AMONG THE WORLD’S MOST PROSPEROUS DEMOCRACIES.

IN THE COURSE OF THE U.S. OCCUPATION, ALMOST EVERY ASPECT OF JAPANESE LIFE WOULD BE TRANSFORMED: THE RULE OF LAW WAS RESTORED, FARMLAND DISTRIBUTED TO PEASANTS, WEALTH IN GENERAL REDISTRIBUTED, HUMAN RIGHTS SUCH AS FREEDOM OF SPEECH AND OF THE PRESS GUARANTEED, WOMEN’S SUFFRAGE INTRODUCED, AND A DIVINE RULER CONVERTED INTO A CONSTITUTIONAL MONARCH. ROOSEVELT’S NEW DEAL WOULD HAVE A PROFOUND EFFECT ON THE SOCIAL ORDER THAT EMERGED; INDEED, SOME HAVE ARGUED THAT THE NEW DEAL MADE AN EVEN GREATER IMPACT ON POST-WAR JAPANESE SOCIETY THAN IT EVER MADE IN THE UNITED STATES.

IT FOLLOWS THAT MacARTHUR WAS NOT ONLY A SUCCESSFUL MILITARY COMMANDER – HE WAS ALSO A GREAT POPULIST REFORMER WHOSE METAPHORICAL FOOTPRINTS CAN BE SEEN ALL OVER JAPAN AND, INDEED, OVER ASIA TO THIS DAY. HIS ACTIVITIES WERE GOVERNED BY A SECRET DIRECTIVE, NUMBERED JCS 1380/15 ISSUED BY THE U.S. JOINT CHIEFS OF STAFF, PARAGRAPH 25 OF WHICH PRESCRIBED THAT HE WAS TO ‘SHOW FAVOR TO POLICIES THAT PERMIT A WIDE DISTRIBUTION OF INCOME AND OWNERSHIP OF THE MEANS OF PRODUCTION AND TRADE’. THAT CHIEF EXECUTIVES OF LARGE JAPANESE COMPANIES ARE TODAY PAID ONLY ELEVEN TIMES THE WAGES OF AN ORDINARY WORKER IS IN SOME PART DUE TO HIM; THE COMPARABLE AMERICAN FIGURE IS 475 (GERMANY ENJOYS THE NEXT LOWEST MULTIPLE: TWELVE).

COL. ROBERT McCORMICK, THE RIGHT-WING EDITOR OF THE CHICAGO TRIBUNE, WHO HAD BEEN ONE OF MacARTHUR’S GREATEST ADMIRERS, WAS SO UPSET WHEN HE HEARD ABOUT THE GENERAL’S ‘SOCIALIST’ REFORMS THAT HE FLEW TO JAPAN TO DISCOVER FOR HIMSELF WHAT WAS GOING ON. HIS WORST FEARS CONFIRMED, HE ABANDONED HIS CAMPAIGN TO MAKE MacARTHUR PRESIDENT OF THE UNITED STATES; JAPAN’S GAIN WOULD BE AMERICA’S LOSS.

PARAGRAPH 13 OF THE SECRET DIRECTIVE STIPULATED THAT: ‘YOU WILL NOT ASSUME ANY RESPONSIBILITY FOR THE ECONOMIC REHABILITATION OF JAPAN OR THE STRENGTHENING OF THE JAPANESE ECONOMY . . .’ AMERICA DID NOT WANT TO RECREATE JAPAN’S CAPACITY FOR WAGING WAR. HOWEVER, AN EXCEPTION WAS MADE WHERE THE INTERESTS OF THE OCCUPATION FORCES WERE CONCERNED. AN EXAMPLE WAS PROVIDED BY THE VARIOUS PUBLIC COMMUNICATIONS SYSTEMS WHICH, WHEN THE OCCUPATION BEGAN, WERE ‘IN A SHAMBLES’; TELEPHONES, TELEGRAPHS AND RADIO STATIONS SCARCELY FUNCTIONED. THERE WERE VERY FEW RADIO SETS IN THE HANDS OF THE PUBLIC. MOST CENTRAL AND SWITCHING TELEPHONE AND TELEGRAPH SYSTEMS, AS WELL AS THE INTERCONNECTING LINES, HAD BEEN DESTROYED BY BOMBING; WHAT REMAINED WAS MOSTLY UNUSABLE, DUE TO NEGLECT BOTH BEFORE AND DURING THE WAR. FEW TECHNICIANS WERE AVAILABLE TO EFFECT REPAIRS AND, FOR THOSE STILL THERE, TRAVEL WAS ALMOST IMPOSSIBLE.

THE SMALL MILITARY ADVANCE PARTY WHICH LANDED AT ATSUGI AIRPORT NEAR TOKYO ON AUGUST 28, 1945, TWO DAYS BEFORE MACARTHUR, HAD CONSISTED MOSTLY OF MEMBERS OF THE U.S. ARMY SIGNAL CORPS. AFTER COMPLETING ITS WORK IN CONNECTION WITH THE SURRENDER, THE CORPS’ PRINCIPAL TASK WOULD BE TO CREATE A CIVIL COMMUNICATIONS SECTION (ALWAYS KNOWN AS “CCS”) WITHIN THE SUPREME COMMANDER’S HEADQUARTERS. CCS WAS FORMALLY ESTABLISHED ON OCTOBER 2, 1945. ITS STAFF CONSISTED OF CIVILIAN ENGINEERS DRAWN MOSTLY FROM AMERICAN TELEPHONE; ITS MANUFACTURING ARM, WESTERN ELECTRIC; ITS REGIONAL AFFILIATES, ‘THE BABY BELLS’ AS THEY WERE CALLED; AND THE BELL LABORATORIES.

THE CIVIL COMMUNICATIONS SYSTEMS WERE RECONNECTED WITH COMMENDABLE SPEED BUT WERE FREQUENTLY OUT OF ACTION FOR THE LACK OF RELIABLE EQUIPMENT. CONGRESS HAD REFUSED TO MEET THE COST OF BUYING AND EXPORTING AMERICAN-MADE MACHINES; FOR THE CCS, CONSEQUENTLY, THE MOST INTRACTABLE PROBLEM WAS THE LACK OF LOCAL MANUFACTURING CAPACITY CAPABLE OF PRODUCING EQUIPMENT OF ADEQUATE QUALITY. CCS’S INDUSTRY DIVISION, WHERE OUR ENGINEERS WORKED, BECAME IN EFFECT A MANAGEMENT CONSULTANCY WHOSE PRINCIPAL OCCUPATION WAS TEACHING CONTEMPORARY AMERICAN MANAGEMENT METHODS TO THE JAPANESE MANUFACTURERS OF COMMUNICATIONS EQUIPMENT.

THE REFORMS PROMOTED BY THE CCS WOULD HAVE BEEN INEFFECTIVE WITHOUT THE SO-CALLED ECONOMIC PURGES THAT MacARTHUR HAD IMPOSED IN 1947 ON ALL OF JAPANESE MANUFACTURING – NOT JUST ON THE MAKERS OF COMMUNICATION EQUIPMENT. A TOTAL OF 1,937 COMPANY EXECUTIVES AT THE LEVEL OF MANAGING DIRECTOR AND ABOVE IN 154 LARGE COMPANIES WERE AFFECTED. NO COMPENSATION WAS OFFERED – SOME OF THE MEN DISMISSED ENDED UP DRIVING TAXIS. THESE PURGES WERE UNDERTAKEN PRIMARILY FOR POLITICAL REASONS – TO DISCOURAGE JAPAN FROM BECOMING A WARLIKE NATION AGAIN – BUT THE OCCUPATION FORCES WERE NOT UNAWARE OF THEIR PURELY ECONOMIC IMPLICATIONS. ACCORDING TO COL. CHARLES L. KADES, WHO HAS BEEN CALLED THE SECOND MOST IMPORTANT MEMBER OF THE OCCUPATION STAFF, THE AMERICANS THOUGHT THAT PUTTING NEW BLOOD INTO TOP EXECUTIVE POSITIONS WOULD BE GOOD FOR JAPANESE INDUSTRY.

IN THE EARLY DAYS OF THE OCCUPATION, THE COMMUNICATIONS EQUIPMENT MANUFACTURERS HAD TO BE TAUGHT THE VIRTUE OF CLEANLINESS. SOON AFTER HE ARRIVED, ONE OF THE AMRICAN ENGINEERS CALLED HOMER SARASOHN VISITED A SMALL COMPANY WITH A LARGE NAME SITUATED IN THE SHINAGAWA SECTION OF TOKYO: THE TOKYO TELECOMMUNICATIONS ENGINEERING COMPANY OR TTK – I WON’T TRY TO SAY IT IN JAPANESE. ITS LISTED CAPITAL WAS UNDER $600. THE MINUSCULE STAFF WAS HOUSED IN A FEW DILAPIDATED ARMY HUTS, WHERE IN A RAINSTORM THE EXECUTIVES HAD TO WORK WITH UMBRELLAS OVER THEIR DESKS. TO REACH IT, VISITORS DUCKED UNDER CLOTHESLINES, ON WHICH NEIGHBORS HUNG THEIR CHILDREN’S DIAPERS. BOMB DAMAGE WAS EVERYWHERE.

THINKING THAT THIS LITTLE COMPANY HAD POTENTIAL, SARASOHN APPROVED THE AWARD OF AN ORDER FOR A SOPHISTICATED AUDIO-MIXING CONSOLE ON BEHALF OF NHK, THE JAPANESE NATIONAL BROADCASTING COMPANY, AN ORGANIZATION MODELED ON THE BRITISH BROADCASTING CORPORATION. HEARING NOTHING FOR SOME TIME, HE PAID A SURPRISE VISIT TO THE FACTORY. THE WORKPLACE WAS DIRTY. THE COMPONENTS LAY ABOUT COVERED IN DUST. THE DESIGN WAS CRUDE AND INCOMPLETE. NEITHER THE PRESIDENT OF THE COMPANY NOR THE CHIEF ENGINEER WAS PRESENT. HE CALLED THE STAFF TOGETHER TO DISCUSS WHAT SHOULD BE DONE, BUT THEY WERE UNRESPONSIVE; NO ONE WISHED TO SWEEP THE FLOOR. TO MAKE HIS DISPLEASURE CLEAR, HE DID SOMETHING THAT WOULD BE RUDE IN ANY COUNTRY BUT ESPECIALLY SO IN JAPAN: HE STOOD UP IN THE MIDDLE OF THE MEETING AND WALKED OUT WITHOUT SAYING A WORD.

SHORTLY AFTERWARDS, THE PRESIDENT AND THE CHIEF ENGINEER ARRIVED IN HIS OFFICE, FULL OF APOLOGIES. THEY WANTED TO KNOW WHAT SPECIFICALLY THEY SHOULD DO. SARASOHN TOLD THEM WHAT WAS EXPECTED. THE COMPANY RESPONDED WELL TO THE CHALLENGE AND PRODUCED AN EXCELLENT MIXER CONSOLE. AND IT WAS ON TIME. AS A RESULT, THE COMPANY RECEIVED MANY MORE ORDERS UNDER CCS’S AUSPICES. THE SMALL COMPANY WITH A LARGE NAME IN TIME BECAME A LARGE COMPANY WITH A SMALL NAME: SONY. THE CHANGE TO THE NEW TITLE TOOK PLACE IN 1958. THE PRESIDENT AND THE CHIEF ENGINEER WHO CALLED ON SARASOHN WERE ITS FOUNDERS, MASARU IBUKA AND AKIO MORITA. SONY WOULD BECOME FAMOUS FOR TECHNICAL INNOVATION AND QUALITY IN THE CONSUMER ELECTRONICS MARKET. IT ADAPTED THE NEWLY INVENTED TRANSISTOR FOR RADIOS AND OTHER SMALL HOUSEHOLD APPLIANCES, MAKING POSSIBLE OUR MODERN ELECTRONIC WORLD; IT SET NEW STANDARDS FOR COLOR TELEVISION; AND INVENTED AND POPULARIZED THE WALKMAN. LATER IT WAS FOOLISH ENOUGH TO ACQUIRE COLUMBIA PICTURES AND CBS RECORDS.

WHEN THE COLD WAR REACHED A PEAK OF INTENSITY IN THE LATE 1940S, WASHINGTON INSTRUCTED THE ALLIED COMMAND TO DO WHAT IT COULD TO STIMULATE JAPANESE INDUSTRY IN GENERAL. (THIS WAS, OF COURSE, DIRECTLY CONTRARY TO THE INSTRUCTION CONTANIED IN IN SECRET DIRECTIVE JCS 1380/15.) ACCORDING TO SARASOHN, WHEN THE NEWS OF THIS CHANGE OF POLICY ARRIVED IN 1949, IT ‘RANG DOWN THE CORRIDORS OF MACARTHUR’S HEADQUARTERS’. SARASOHN AND HIS COLLEAGUES PROPOSED THAT CCS SHOULD PRESENT A FORMAL COURSE OF LECTURES ON CONTEMPORARY AMERICAN MANAGEMENT METHODS TO THE COMMUNICATIONS EQUIPMENT MANUFACTURERS. THERE WAS OPPOSITION TO THIS IDEA FROM ELSEWHERE WITHIN THE ALLIED COMMAND, ON THE GROUNDS THAT THIS WOULD BE A STEP TOO FAR; AMERICA, IT WAS ARGUED, SHOULD NOT GIVE AWAY ALL HER INDUSTRIAL SECRETS TO A FORMER ENEMY WHO COULD, AFTER ALL, BECOME A FUTURE COMPETITOR.

ONLY THE SUPREME COMMANDER COULD DECIDE BETWEEN THESE COMPETING POINTS OF VIEW ON THIS NEW AND IMPORTANT SUBJECT. IT FELL TO SARASOHN, WITH HIS LONG EXPERIENCE OF JAPANESE INDUSTRY, TO MAKE THE PITCH ON BEHALF OF HIS SECTION. IT TOOK PLACE IN THE MEETING ROOM OUTSIDE THE GENERAL’S PENTHOUSE OFFICE ON THE SIXTH FLOOR OF THE HEADQUARTERS BUILDING. THERE WAS A FORMAL PRESENTATION OF OPPOSING ARGUMENTS, EACH SIDE HAVING TWENTY MINUTES TO MAKE ITS CASE. THIS PROCEDURE, KNOWN AS A ‘FLOOR SHOW’, WAS STANDARD PRACTICE WHEN THERE WAS DISAGREEMENT AT A HIGH LEVEL ABOUT AN IMPORTANT MATTER.

SARASOHN EXPLAINED THAT CCS HAD DONE A GREAT DEAL FOR THE COMMUNICATIONS EQUIPMENT MANUFACTURERS BUT NOT ENOUGH. THIS INDUSTRY SHOULD BECOME A MODEL FOR THE WHOLE OF MANUFACTURING; IF JAPAN DID NOT BEGIN TO GENERATE WEALTH ON A LARGE SCALE, SOCIETY COULD REVERT TO ITS FORMER FASCIST STATE. MANY OF THE FORMER SENIOR EXECUTIVES IN MANUFACTURING INDUSTRY HAD FOUND THE EARLIER CLOSE RELATIONSHIP WITH THE MILITARY ONLY TOO COMFORTABLE – PROFITS HAD BEEN GUARANTEED AND LABOR UNIONS SUPPRESSED. IF THE NEW GENERATION OF MANAGERS, WHOSE AIM WAS TO PRODUCE GOODS THAT THE MASS OF THE POPULATION WANTED AND COULD AFFORD, WAS TO SURVIVE AND PROSPER, THEY REQUIRED GUIDANCE WHILE SETTLING IN.

‘NO-ONE EVER ACCUSED MacARTHUR OF BEING OPEN-MINDED’, SARASOHN WOULD LATER SAY JOKINGLY, ‘BUT YOU COULD REACH HIM WITH REASON’. THE GENERAL SAT AT HIS DESK LISTENING INTENTLY, PUFFING ON HIS FAMOUS CORNCOB PIPE, UTTERING NOT A WORD AND WITHOUT CHANGING HIS EXPRESSION. THE PRESENTATIONS OVER, HE SAT FOR A MINUTE OR SO IN FURTHER SILENCE AND THEN WALKED TOWARDS THE DOOR. SARASOHN THOUGHT TO HIMSELF, ‘I’VE BLOWN IT’. HOWEVER, JUST AS HE REACHED THE EXIT, THE GENERAL TURNED AROUND, POINTED HIS PIPE AT SARASOHN, GLARED AND SAID ‘GO DO IT!’.

THE TWO ENGINEERS RETREATED FOR TWO AND A HALF MONTHS TO A QUIET AND RUNDOWN HOTEL IN OSAKA THAT HAD BEEN TAKEN OVER BY THE U.S. ARMY FOR OFFICERS’ REST AND RECREATION. NO NOISY PARTIES WERE PERMITTED AND FEMALE GUESTS WERE EXCLUDED – EVEN WIVES. A PERIOD OF INTENSIVE WORK FOLLOWED, WHILE THE MEN WROTE THE SERIES OF LECTURES THEY WOULD PRESENT. THE TYPED COPIES, WHEN ASSEMBLED, BECAME THE ‘CCS MANUAL’. THERE WAS A RATHER GRAND TITLE PAGE. LIKE A NORMAL BOOK, THE MANUAL HAD A PUBLISHER: CIVIL COMMUNICATIONS SECTION, GENERAL HEADQUARTERS, SUPREME COMMANDER FOR THE ALLIED POWERS — AND EVEN A PUBLICATION DATE AND PLACE: TOKYO, JAPAN, JANUARY, 1950. THE TEXT WAS PRECEDED BY A CRISP FOREWORD, WHICH ARGUED THAT, IN THE LONG TERM, INDUSTRY COULD BE EFFICIENT ONLY IN A DEMOCRATIC ENVIRONMENT.

THE CCS SEMINAR WAS PRESENTED BY THE ENGINEERS ONLY TWICE – IN TOKYO IN 1949 AND IN OSAKA IN 1949/50. HOWEVER, AFTER THE OCCUPATION, IT WOULD BE TAKEN OVER BY THE TRAINING ARM OF NIKKEIREN, (THE JAPANESE EMPLOYERS ASSOCIATION) WHICH CONTINUED TO PRESENT IT REGULARLY AS A TOP MANAGEMENT TRAINING COURSE FOR ALL OF MANUFACTURING UNTIL 1974 – IN OTHER WORDS, FOR 24 YEARS. ITS CONTENTS NEVER VARIED. BY THAT TIME ALL THE OBJECTIVES OF CCS ENGINEERS HAD BEEN ACHIEVED. HOWEVER, THAT WAS NOT QUITE THE END OF THE MATTER: THE COURSE CONTINUED TO FEATURE IN A PLACE OF HONOR IN THE TRAINING ARM’S SYLLABUS UNTIL 1982, THIRTY-THREE YEARS AFTER THE FIRST SEMINAR, EVEN THOUGH IT WAS NO LONGER BEING PRESENTED!

SINCE THE LATE 1980S, JAPAN HAS SUFFERED FROM DEFLATION AND RISING UNEMPLOYMENT. HOWEVER, THE BEST JAPANESE COMPANIES CONTINUE TO BE WORLD-BEATERS. IN SPITE OF THE PRECIPITOUS DECLINE IN TOKYO STOCK EXCHANGE PRICES AFTER 1990, THE MARKET CAPITALIZATION OF TOYOTA MOTOR, FOR EXAMPLE, IS TODAY MANY TIMES THAT OF GENERAL MOTORS AND FORD TOGETHER. JAPAN’S ECONOMY MAY HAVE CEASED TO EXPAND DRAMATICALLY, BUT IT IS STILL THE THIRD LARGEST IN THE WORLD. IN SPITE OF RECENT SETBACKS, MOST OF THE ACHIEVEMENTS OF HER ECONOMIC MIRACLE ARE STILL WITH US.

IN 1993, TWO EVENTS OCCURRED WHICH WOULD DEMONSTRATE HOW MUCH THE WORK OF MacARTHUR’S ENGINEERS HAD MEANT TO THE JAPANESE. FIRST, MASAHARU MATSUSHITA, ADOPTIVE SON OF THE GREAT KONOSUKE MATSUSHITA, FOUNDER OF THE COMPANY WHICH BEARS THEIR NAME, VISITED SARASOHN IN SCOTTSDALE, ARIZONA, TO THANK HIM FOR WHAT HE AND HIS COLLEAGUES HAD DONE FOR JAPAN. IT WAS A TOUCHING MOMENT. AT THE SECOND CCS SEMINAR IN OSAKA IN 1949/50, THEY HAD BEEN PUPIL AND TEACHER. AND SHORTLY AFTER THIS VISIT, MATSUSHITA ELECTRIC REPUBLISHED THE CCS MANUAL IN AN ELEGANT JAPANESE-LANGUAGE VERSION FOR DISTRIBUTION TO ALL ITS SENIOR EXECUTIVES. WE WERE GIVEN A COPY.

IF GENERAL MacARTHUR HAD NOT SAID “GO DO IT” TO END THE FLOOR SHOW WHICH I MENTIONED A FEW MINTUES AGO, THE WORLD MIGHT BE A VERY DIFFERENT PLACE TODAY.

MY BROTHER AND CO-AUTHOR, KENNETH, HAS ASKED ME TO ADD A COMMENT AT THIS POINT. WHAT THE AMERICANS UNDER MacARTHUR TAUGHT THE JAPANESE IS OF RELEVANCE TO THE ENTIRE DEVELOPING WORD TODAY, PARTICULARLY AFRICA AND THE MIDDLE EAST. IN OUR OPINION, THERE WOULD BE MERIT IN CREATING A CCS INSTITUTE TO MAKE THESE LESSONS GENERALLY AVAILABLE TO ALL WHO EXPRESS INTEREST. HERE IS THE CCS TEXTBOOK IN ITS ORIGINAL TYPESCRIPT ENGLISH-LANGUAGE FORM, STRAIGHT FROM 1950; HERE IT IS THE ELEGANT JAPANESE-LANGUAGE TRANSLATIONO PRODUCED IN 1993 BY MATSUSHITA; AND HERE IS AN ENGLISH-LANGUAGE VERSION PUBLISHED BY THE IRISH GOVERNMENT IN 2008.

I WILL BE HAPPY TO ANSWER QUESTIONS LATER TODAY.

November 4, 2012

COULD PROFESSOR MYRON TRIBUS HAVE PREVENTED HURRICANE SANDY? — SEE PAGES 259 & 260 OF THE PURITAN GIFT!

Filed under: Uncategorized — Will Hopper @ 1:25 pm

Dear Fellow Puritans:

The question posed in the title to this blog may seem a strange one. Who is or was Professor Myron Tribus and how could he have reversed a hurricane?

Myron was, and is to this day, a distringuised scientist, academic and public servant. A former Xerox executive, he became Undersecretary of State for Science and Technology under Richard Nixon and later Director of the Center for Advanced Engineering Studies at MIT.

When working under Nixon, Myron took part in several studies of hurricanes, concluding that “if the relevant clouds were seeded with ice crystals”, it might be possible to direct them away from centers of population — see pages 259 and 260 of The Puritan Gift for the entire story. If Myron had been allowed to undertake some experiments along these lines, it is just possible that subsequent minor hurricanes could have been diverted out to sea and the impact of larger ones, like Sandy, seriously moderated.

Regrettably, no-one was willing to spport Myron in this initiative. He resigned later from the Nixon Administration because, as he said, “it exhibited a complete lack of interest in the advancement of science and technology”.

My brother and I think very highly of Myron. When he read an early draft of our book, he wrote that “he felt like a small boy who went out to shoot squirrels and came back with an elephant”. Obviously a man of impeccable judgment.

Yours puritanically

Will

__________
Will Hopper
9a Flask Walk, London, NW3 1HJ
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November 3, 2012

THE EFFECT OF HURRICANE SANDY ON ELECTRIC SUPPLY WAS PREDICTABLE — SEE PAGES 259 to 262 OF “THE PURITAN GIFT”

Filed under: Uncategorized — Will Hopper @ 12:13 pm

Dear Fellow Puritans:

When I read about the collapse of the US electricity distribution system in New York and New Jersey, I thought at once of pages 261 and 262 of THE PURITAN GIFT, which argued that: (a) this industry was thoroughly out of date; and (b) that there was “an urgent need to invest $150 to 200 billion in a series of regional grids, simultaneously converting from electrical to digital transmission”. We also quoted a Wall Street banker who said current arrangments were “a national disgrace” and that “between 4 and 5 percent of power is lost in transmission”. He compared this with a 2 percent loss in the better European systems. In other words, if the system had been modernised, the consequences of the Hurricane Sandy would have been much less severe. It is half-a-century out-of-date.

There is an even more intriguing suggestion on page 259 of our book. Could the Hurricane Sandy have been prevented? I will discuss this in detail tomorrow.

Puritanically yours,

Will Hopper

__________
Will Hopper
9A Flask Walk, London, NW3 1HJ
tel: +44-(0)20-7435-6414
mobile: +44-(0)7545-025-692
fax to email: +44-(0)872-115-0831
skype address: willhopper
http://www.puritangift.com
Follow me on: http://www.twitter.com/puritangift
OUR WEEKLY BLOG: https://thepuritangift.wordpress.com/

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