How Japanese Businesses Develop and Implement Management and Action Plans (1)

[Introduction]

One of the principal methods of the Japan Productivity Center (JPC) to support businesses is comprehensive management consulting. This method aims at analyzing a company from various angles such as operation, finance, and organization, choosing high-priority managerial issues from among those identified, and planning strategies and improvement measures for problem solving. And the output of this process will be put together in the form of management and action plans for implementation. Not only large corporations but also small and medium enterprises in Japan usually develop management and action plans in this way when they enter new business domains or improve or restructure their management systems.

I have given a lecture on management consulting to local consultants in Singapore. In this lecture, when I explained about the concept and method of comprehensive management consulting, it appeared that they struck them as something new. In Singapore (probably also in Europe and North America), the jobs of consultants are highly specialized, and the reason for this is that the approach of looking at the entire client company from a broader viewpoint and coping with higher-priority issues is not so popular among them. Many Japanese businesses use this method to formulate management and action plans irrespective of whether they are assisted by consultants or not, and we consider it as a method unique to Japan. In the forthcoming three issues, which begin this month, I will outline the basic process of using this method to develop and implement management and action plans.

[Clarification of management visions]

In developing a management plan, it is necessary to clearly define a management vision of the company. A management vision uses brief wording to describe in several (usually about three) points how the company should be, and what goals it should achieve, three (or five) years later. (Nowadays, as the world changes rapidly, it is becoming difficult to determine what things will be like five years from now.) A management vision may include qualitative items such as “an open company in which employees are highly motivated to work hard” but it is important to add quantitative ones such as “\10 billion in sales” and “labor productivity of \10 million.”

As shown in the attached figure, the gaps between the management vision and the present state of the company are the managerial issues to be addressed. Strategies and improvement measures offer ways to realize the management vision, and management and action plans visualize steps to realize the vision. By making the management vision known to all managers and employees, top management can align them in the direction the company should take. It is also essential to keep the management vision, which describes how the company should be and what goals it should achieve, in mind when analyzing the present state of the company and identifying issues to be addressed.

[Framework for thinking]

In this issue, “frameworks” means frameworks for thinking. It is effective to develop a management plan using these frameworks.

I will explain about PEST, five forces, value chains, and SWOT as typical frameworks for thinking to analyze the present state of the company in the next issue. Effective utilization of these frameworks enables a way of thinking like MECE, which stands for “mutually exclusive and collectively exhaustive.” It makes mutually exclusive and collectively exhaustive analysis, examination, and idea development possible. It also makes it possible to explain the process of thinking and its results in an easy-to-understand way to others.

Originally, these frameworks were worked out as distinguished economists and experts in business administration, mainly from the United States, put forward new theory. When we use them to develop a management plan, however, it is all right even if they are somewhat different from what they originally were, and it is important that they provide means for efficient analysis and examination and easy-to-understand explanations. This is also considered as a Japanese-style management. (Continued to the next issue)