On Oct. 5, 1841, two Western Railroad passenger trains collided head-on between Worcester, MA, and Albany, NY, killing the conductor and a passenger and injuring seventeen passengers. The Massachusetts legislature launched an investigation into the cause of the wreak and find a remedy. Western Railroad appointed a committee to look into the causes and the committee recommended the company restructure the organization. This structure was adapted from the Prussian Army and introduced as a way to prevent future train wrecks.
This new structure, revolutionary for its time, included some unique features:
- Central offices, run by managers (a new term introduced)
- Distinct functional divisions
- A “chain of command” with clear lines of authority and descriptions of responsibilities
The President of the Erie Railroad elaborated on the Western Railroad structure stating that it enhanced the proper division of responsibilities and a means of knowing whether the responsibilities were faithfully executed. He stated further that it would allow for the promptness in the report of all dereliction of duty and that any evils could be corrected at once.
These early management pioneers were visionaries who took what was primitive and chaotic and gave it order and workability. They were people of vision and passion who got things done. They did their best and, by and large, what they did was very good. The reign of industrial hierarchy as the best theory of management lasted nearly 200 years.
Meanwhile, Japan was experiencing the end of the Shogun era. In 1853, Commodore Perry sailed into Tokyo Harbor and demanded: “open your ports to American commerce.” During this time Japanese leaders drew two conclusions: that Japanese ports must indeed be opened to foreigners, and Japan must undertake a more modern approach to militarization. This ultimately led to World War II and military defeat.
If the previous era of American management can trace its start to a train wreck, the origins of the new era of management can be attributed to General MacArthur’s desperate need for radios. During his administration of the occupation of Japan after the war, MacArthur had to find a method for communicating with all the Japanese people. The story is reported in an article by Crawford-Mason and Dobyns (1991).
“MacArthur wanted reliable radios, a lot of them so that the occupation forces and propaganda programs could be heard in every town and village in occupied Japan, and when Japanese manufacturers in the 1940s couldn’t give the general what he wanted, he sent for Americans to teach them how. Think of that: one man wanted a radio that worked, and the world economic order changed.”
The irony of a Japan unable to produce good radios, and relying on American teachers to learn how is an amazing and humbling lesson for us. These early instructors from Western Electric placed the early emphasis on getting the factories up and running and teaching the importance of viewing production as a system.
In June 1950, Deming arrived in Toyko and began to give several weeks of daily lectures to groups ranging in size from about 200 to 600 — “some of the best classes I’ve ever had,” Deming would comment later. What Deming taught the Japanese in 1950 and in his subsequent trips to Japan — some 27 trips in all — have evolved into his philosophy of management, summarized in his works (1986, 1994). A summary of Deming’s philosophy includes these six key points:
- The marketplace is now global. There must be international standards of quality and an international language for describing quality.
- The customer is all-important. Seek to cultivate long-term relations with your customers and to continuously understand customer needs when designing and manufacturing products.
- Quality is determined by managers. The quality of the product cannot be better than the intentions and specifications of management. Quality results from the way managers lead.
- Production is a system. The supplier is your partner and the customer is the most important part of the system.
- The chain reaction. If you improve your processes and product, your costs will decrease and you will capture the market with better quality and lower prices, thus allowing you to stay in business and provide jobs and more jobs.
- Japan must see itself as a system. There must be trust and cooperation throughout Japan.