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Key words: Japanese philosophy, kaizen umbrella. P/R-criteria, production pyramid, “5S” system, operational production, global trends, system approach, a state, economic agents.  

In post-Soviet countries in the last two decades there exists the tendency of loss and lag of knowledge-intensive and any competitive productions behind the world models. New innovative productions, as a rule, auxiliary ones, are formed or developed only in few cases. The processes work at different speeds and unevenly in different branches and subjects of industry.   

We think that this current business situation in some instances is the result of methodological mistakes and confusion of the notions “competitiveness of the state” and “competitiveness of its economic agents”. The merging of these two notions leads to the fatal results such as monopolization of definite kinds of economic activities by a state and, thereby, its “statesmen” vest their own (i.e. “state”) economic interests in the state. This situation is catastrophic and created by mistaken interpretations (patterns). A successful world experience shows that a state must not have its own economic interests. So called “economic interests of the state” are completely built by economic and social interests of its citizens and economic agents synthesized and metabolized due to the principles of synergy.   

For large enterprises and their productions there are still some possibilities of international financial markets and self-financing, complex mergers and acquisitions, reasonable integration decisions [1], for instance, vertical and horizontal, passing  the national boarders. However, it must be clear that financial aspect is auxiliary like one of the factors of innovative development.    

For most of companies of small and medium business (MSB) and a regulator-state the opportunities to raise competitiveness of economic subjects - such as transfer of technologies, attraction of long-term and inexpensive financial resources - are complicated especially in complex highly technical and expensive projects in the power industry, agriculture, machine-building industry, communal sphere, transport, and etc. [2].         

In the current conditions it is objectively necessary for owners and their top-managers to look for and find (!) by themselves the sources of competitive recovery in their own productions without waiting for government assistance represented by its executive and legislative bodies. This time the reference is not to the absence of financing but inability of most post-Soviet states to provide appropriate state policy and form effective state institutions.       

The topical issue deals with the necessity to go to accumulated experience of the best world models when the state competitiveness is fully dependent on indexes of competitiveness and its economic agents. The unique Japanese experience in production management is especially didactic.  

The aim of this article is to mark such elements of Japanese experience in production management which are practically worth for competitive recovery of productions of post-Soviet countries.

The analysis has shown that there are the following fundamental elements:

1. High achievements of Japanese entrepreneurs are based on the human factor – hardworking people and Japanese philosophy [3,4,5].

The peculiarities of Japanese corporate style of management [6] are shown in Pic.1 (Source: Institute of Global Business, Dc. FURUYA Nori, 2010).

The category of the “KAIZEN” philosophy is important, that means “a continuous improvement involving everybody - managers and workers alike” as far as production is concerned. Although in different ways – for top managers the issues of improvement and development are of high priority and as going down to the hierarchy level of workers the issues deal with a duty performance. Kaizen begins with admitting that any company has a problem [7].      

On the West when a problem occurs, as a rule, tools of conflictology are used. For the Japanese the implementation of the “kaizen” is based on cooperation

The “kaizen” concept - as a category of the “total modal of continuous improvement” where every member of the corporate group being welcomed and stimulated (!) has the right to express his ideas on any topic – suggests that for achieving higher results it is necessary to improve the process on definite indexes (P) – P-criteria. The process improvement is achieved by never-ending efforts of every individual and their groups. That differs from thinking of west managers oriented to the results (R) due to R-criteria.    

P-criteria of effectiveness of the activity process based on backing-up and awards are associated with discipline, time control, skills development, participation and involvement, morality, communications.       

R-criteria of managing the “carrot and sticks” method is used to evaluate the results, for instance, volume of sales, JIT payment, percentage of defects, etc. As a rule, they are simply expressed quantitatively for various levels of production hierarchy making them different from the “kaizen” P-criteria.  

Of course, in Japan owners of business and their TOP-managers are interested in results no less than any of their west colleges do. The main thing - as for any economic subject in the whole world - is to gain profit. Moreover, they care that a gap between the process and the results is eliminated. P-criteria are of interest for managers no less than R-criteria. 

Under the “kaizen umbrella” there is a complex of management practices and tools, used by them: customer orientation, TQC (total quality control), robotics, quality circles (QC), suggestion system, automation, “5S”, “3M”, discipline in the workplace, TPM (total productive maintenance), Kanban, quality improvement, just-in-time, zero defects, small-group activities, cooperation labor-management relations, productivity improvement, new-product development.  

2. In practice the Japanese use one of their favorite philosophic metaphors about three eyes which has become effective modern tool of management:

the “insect-eye” allows to see objects and processes in smallest details and interrelations:

the “eagle-eye”  allows to see the production (and fight !) picture in general;

the “fish-eye” allows to watch, analyze, and forecast deep, often hidden flows, trends, influences, and interactions invisible when watching exteriorly.

The results of general analysis help to synthesize further effective activities. Let us proceed to considering them.

2.1. “The Insect-eye” (for current productions). Properly in Japan there is the “kaizen umbrella” being a whole complex of interrelated elements which is used continually in practice and described in the literature, for instance, in the paper by Y. Monden “Dao Toyota” [8].  For managers the most popular, important, and comprehensible elements are those of the kaizen umbrella, the “Dao”, which do not require huge financial expenditures. These changes are made by changing the very organization of production, but effective immediately after their implementation. In this case, the time-tested Japanese means deals with increase in profits by improving the “5S”, “3M” system. The “5S” system is basic, fundamental in enterprise management, its “production pyramid”, pic. 2 [7,9]. The “production pyramid” is a graphic hierarchy image of criteria of production effectiveness and their interrelations for ensuring the main index, which is profit.     

Japanese enterprises often exhibit “5S” posters as a part of visual management. Mass implementation of the method is considered and essentially is (!) a drastic means for reduction in expenditures. Being a fundamental basis of world-view for activities another result is that in the process of “5S” implementation the workers obtain very careful and delicate attitude toward the “items” of production.  

Practically the following generalized step-by-step algorithm of “5S” implementation is used most commonly (according to Kobayashi Yoshisuke, 2010):

1. Establish the “5S” committee and chose a leader in each workplace.

2. Carry out explanatory work to form the awareness of the “5S” launch performed by every member of the corporate team.

3. Form a checklist of objects to be controlled.

4. The first thing to do is a Big Cleaning of premises, territories, items.

5. Keep on with order, cleanliness and tidying-up continuously.    

6. Implement supporting decisions for “5S” called method of checkpoints photographing (MCP).

MCP means a group of the same objects from the same shooting angles, directions, and at the same places (checkpoints) are photographed at certain regular intervals.    

The photographs are combined in consolidation tables. The results are regularly discusses and evaluated. The stands are considered to draw attention not only of the superiors, but other visiting strangers, this motivates workers and increases confidence of counterparties.       

It is of importance: Implementation of “5S” and “3M” methods pervading the organization provokes an immediate effect with moderate supplementary costs. The contrary is also the true – no cash inflow into business can become effective if there are no effective business processes, this means for the Japanese nonuse of the “5S” philosophy.

It if of high importance: Presence of a true leader (a business owner, a top-manager, a team).

According to the Japanese, disadvantages in implementation of the “5S” principle is a source of troubles, since they make 4M worse and decrease the P,Q,C,D,S,M level (see abbreviation in Pic.2).

2.2. “The Eagle-eye” (the way to move for current productions).

Some time ago we studied basis and superstructures, different lifestyles, industrial, postindustrial society, etc. For every-day managerial objectives this approach hardly works. But if using Japanese and American experience of management tools (see Pic.3) [9] it is possible to optimize current business processes practically as well as simultaneously (!) launch the production of new products and technologies.

Modern operating production is able to redevelop fast and absorb improvements. It requires tactical and fearless entrepreneurial spirit, concentration of all efforts of managers and workers. It is the stage at which, as a rule, the most considerable investments are necessary and cost centers are formed demanding clever risk-management.

The limit deals with the presence/absence of domestic and global demand and etc. It is not by accident that nowadays many Japanese productions have the capacity of 30-70% or even stop from time to time. For instance, ASASHI brewery works, TOYOTA global assembling conveyer in Nagoya, etc.  Moreover, high level of production management allows to soften the impact on economics and society. There is a background of fast increase in production as the global market climate is changing for recovery.

Global competence is growing worldwide. In Asia-Pacific region new companies, for instance, in Japan or India, appear and grow.

Being extremely difficult the super-task is to create and develop the competitive productions.  Let us suppose that in the world ranking on ease of doing business not Japan but Russia or the Ukraine werea country of the first ten. In this case, it would be our country but not China or Japan in which up-to-date technologies and resources of the global investors of the W. Buffet or B.Gates class would come. Thisverysituationmustbeourtask.

This viewing gives another vision of obstacles and rat racing typical for business climate of post-Soviet countries such as regulatory limits, corruption, raiding, primitive financial markets, degradation of qualified employees, etc.

2.3. “The Fish-eye” means the detection of current productions to be developed and new productions to be created, assessment of risks, threats, merits and capabilities. These are not only analysis models of SWOT, 5 forces, etc, but account of global trends and other delicate interactions.   

When practicing kaizen decisions on creation, maintenance, and development of profitable productions Japan uses the method of 5W - Who?, What?, Where?, When?, Why? - and 1H - How?.

The entire approach of “three eyes» is very close to the methodology of the system approach [10] more familiar to us combining analysis and synthesis [1] with further optimization or choice of effective decisions with due consideration to interests of all participant (stakeholders), which is also profitable to use.  

Conclusions for entrepreneurs of post-Soviet countries.

It is necessary to keep in mind a gravity of not only natural but geopolitical and economic conditions of Japan in the early 50`s and the positive example, which they showed to the whole world, including hardworking, pursuit to permanent development and other fundamental features of Japanese approach to production management.

It is useful to remember the following phases of gaining the status of the world economic power by Japan [7]:

$1·         large-scale import of technologies from the USA and Europe;

$1·         programsofqualityincrease. TheideasofDc. Deming and Dc. Juran, who had been not so famous in the USA before that time, were perceived in Japan and almost incidentally occurred to be consonant with Japanese mentality. Thatwasamiracle. Later the Japanese went farther than their teachers; 

$1·         exceptional range of fighting for productivity of labor. Nothing similar takes place in China nowadays. And it is a big competition challenge directly to Japan and the whole world;

$1·         creation of flexible productions capable of redevelopment within extremely short periods;

$1·         creation of national and transnational corporations.

Nevertheless, Japan gained the status of the world`s economic power thanks primarily to people – managers and ordinary workers. Only the few believed that it could be ever possible. R. Kipling wrote, “The Japanese should not do the business. Theyarenotsmartenoughforthat.” [12] Buthewasterriblymistaken. The young Japanese studied languages, got the best education in the USA and Europe. There were clans being formed similar to Kennedy`s clan [13]. For instance, the former Prime-Minister of Japan, a successor of the political dynasty, the Hatoyama`s clan, has created and is using “Yuai” philosophy. He writes, “If there is too much freedom, equality gets lost. If there is too much equality, freedom gets lost. A bridge connecting freedom and equality form “Yuai”, a mental liaison.” [13] We do not know what result the Japanese will achieve. The wind may be pretty fair. And the world will see a new model of progress due to reveal of the human potential.  In the world and both in Russia and the Ukraine particularly it is visible that changes of the paradigm of entrepreneurship are coming and of vital need.     

We have our own history. But it is somewhat similar to the Japanese one. The main thing is that all elements of gaining production competitiveness are possible for us. Owners of business and their top-managers will see the results soon enough. It is important to use these tools systematically and continually. 

Soon new technologies and investment resources will come and distributable profits will appear.

The Table 1 shows some practical summaries by the example of the Ukraine which can be implemented at present.


In conclusion it is to be pointed out thatthe factors, described herein, may be really and successfully implemented only at those productions of post-Soviet countries where the spirit of entrepreneurship and creativeness lives, and where the problems of dispersal or legitimation of ownership/current management do not exist or divert attention, and where the obstacles to obtaining various decisions, licenses and rights are decreased, and where the strength for positive and creative attempts but not for  opposing to pressure of raiders and corruption still remains, and where awareness of hopelessness of  weak-willed “drifting”, “sawcuts” of  financial streams and property, since in the whole civilized world it is effective and honorable to build legal profitable business and form strong capitalization of own companies including innovative ones [14]. Fortunately, such leaders have already come in post-Soviet countries and their new generation is growing.   

The Japanese experience shows that as far as the issues of economics competitiveness increase are concerned the priority for the current state must be creativeness and effectiveness of its institutes. Japanese institutes including antimonopoly, “The Organization for Small and Medium Enterprises and Regional Innovation (SMRJ)”, the Ministry of Economic Affairs and Trade, etc. have direct influence upon its economic agents and, thus far, a place of the country in the world markets in general.    

List of Literature

$11.        Prazyan M.V. Problems of Economic Justification of Integration Decision Effectiveness// Еconomica Promyslovosty. - 2004. -  2 (24). - p.30-34.

$12.        M.V. Prazyan, L.S. Shakhovskaya. Urgent Issues of Retirement Reform Development in the Ukraine and Its Long-Term Perspective Finance // Conditions, Resources, and Factors of Russia’s Development in XXI: collection of scientific papers/VolgGTU - Volgograd, 2009. - p. 175-178.

$13.        Ovchinnikov V.V. Sakura branch: Story about the people the Japanese are.– 4th ed. – М.: Mol. Gvardiya, 1988 – 222 [2] p.

$14.        Matsushita К. Principles of Success/ Konosuke Matsushita; tr. From Engl. – 3rd ed. – М.: Alpina Publishers, 2010. – 128 p.

$15.        Japan. How to Understand It: Essays of Current Japanese Culture/  Какеепонять: очеркисовременнойяпонскойкультуры / ed. Roger G. Davis, Osamu Ikeko: tr. from Engl. Y.E.Bugaeva. – М.: AST: Astral, 2009. – 317, [3] p.

$16.        SapporoInternationalCenter. Japan International Cooperation Agency TEXBOOK. Management on Business Course. F.Y. 2010 SIC JR 10 – 198.

$17.        Imai M. Kaizen: The Key to Japan`s Competitive Success/ Masaaki Iman; tr. from Engl. – 4th ed. – М.: Alpina Publishers, 2009. – 276 p. – (Series «Models of Management of Leading Corporations”).

$18.        Monden Y. The Toyota Management System / tr. from Engl. М.: Institution of Complex Strategic Research, 2007. – 216 p.

$19.        SapporoInternationalCenter. JapanInternationalCooperation Agency TEXBOOK. Production management (A) F.Y. 2010 SIC JR 10 – 182

$110.     ZgurovskyM.Z., PankratovN.D. The Basics of System Analysis – К.: Vindavnich group BHV, 2007. – 544 p.: illustr.

$111.     МаmаrdashvilyM.K. AsIUnderstandPhilosophy. – М.: “Progress” publishing group, 1992. – 408 p.

$112.      Mc.Millan C. The Japanese Industrial System: tr. from Engl./ Gen. ed. and intr. by S. Vikhansky– М.: Progress, 1988. – 400 p., illustr.

$113.      Panov A.N. The Hatoyama`s Clan. The Family Portrait on the Background of Japan`s History. – М. ZAO OLMA Media Group, 2010.- 224 p. – (Classified Material)

$114.      Manchulyantsev O. How to Grow the Billion-Company: School Truth of Venture Business/ Oleg Manchulyantsev. – М.: Alpina Publishers, 2010.-192 p.