I am scheduled to speak at the UnMONEY Convergence on April 14, 15 & 16th in Seattle, Washington. The subject of one of my talks will be ORTEGRITY. Today, I feature the followup in that original series. … Upon returning to California from my meeting with Dr. Coulter, I had a new focus. I knew a lot about Capitalism most of which I had learned as a student of Andrew J. Galambos. I was very clear about hierarchy. But I was a novice when it came to heterarchy. I immediately set out to find out as much about heterarchy as I could. In the early 1980’s, the best business organizations in the world were to be found in Japan. And, I soon discovered the secret of their success was their mastery of heterarchy.
HETERARCHY: The Secret of Japan, Inc.
Timothy Wilken, MD
In 1983, the major success of Japan, Inc. was serving to focus international attention on their ways of doing business. The Japanese were employing organizing strategies that produced the highest productivity and quality of work-life in the industrial world.
Their success appeared to threaten the viability of many American corporations. This threat was leading to the careful examination of the Japanese way by numerous individuals.
Their findings revealed the major focus of the Japanese was long-term and wholistic. This was in striking contrast to most American corporations where the focus was short-term and particulate.
As the world’s business corporations sought to compete and survive in the late 70s and early 80s, they sought the most powerful organizing strategies available. Who would be right — the Japanese, or the Americans?
Should businesses have wholistic concerns or particulate concerns? Did the recent major success of the Japanese prove they had the right system?
What about innovation, creativity, and originality? How do they fare under the Japanese way? Many American business leaders were forced to decide without really being able to predict the effect of their decisions.
William Ouchi is best known for his work, Theory Z, which was published in 1981 when American businesses were still scratching their collective heads in trying to understand the Japanese advantage. Dr. Ouchi pointed out that advantage, which was revealed to be a Japanese commitment to democratic leadership that resulted in increased quality, increased productivity and decreased costs while making workers at all levels full partners in business. He contrasted the American and the Japanese ways in the following chart.
Wholistic Concern Particulate Concern Collective Decision Making Individual Decision Making Collective Responsibility Individual Responsibility Implicit Control Mechanisms Explicit Control Mechanisms Lifetime Employment Short-term Employment Non-Specialized Career Paths Specialized Career Paths Slow Evaluation & Promotion Rapid Evaluation & Promotion
And how long could American businesses afford to wait before deciding? Ouchi said, “it takes a minimum of two years to convert to a type z company, and some companies might require four or six years to see effects.”
The success of the Japanese could be explained by synergic system analysis. As I examined the two ways from the point of view of synergy science, I discovered the American way was dominated by hierarchy, while the Japanese way was heavily influenced by the heterarchy.
Nearly all of America’s businesses employed other-directed management. Other-directed management is when “A” tells “B” what to do, and often how to do it as well.
Recall that hierarchy is a vertical system with many levels of organization. Those with greatest responsibility and authority occupy the higher levels. Hierarchy creates a feeling of difference or individuality. Individuals within the system see each other vertically, “He is over me.” “I work under John.” “He is way up in the company” “She is the lowest one on the totem pole.” All too often individuals within a hierarchy experience feelings of inferiority. This is not surprising in a system based on superior and inferior levels. In humans, feelings of inferiority produce hostility. In the jungle, being inferior was often synonymous with death.
This adversary reality was also experienced in the cave, and the tribe, and the feudal state , and is experienced in nearly all the corporations, institutions, governments, and militaries of earth.
Recent mind-brain science reveals that hostility produces a ‘down shift’ within the human mind to a very primitive mode of thinking — the SURVIVE MODE. This “mode of thinking” originated in the jungle, and is the master of fighting and fleeing.
Since the inception of hierarchy its constant companion has always been conflict. This now seems to be its primary limitation. One significant contributor to conflict is other-directed management.
Some corporations are seeking to move away from other-directed management through use of “delegation of responsibility”. Here, managers are still told what to do, but not how to do it. They have more freedom to self-direct. But even within systems with “delegation of responsibility”, the price of failure is usually termination or at the very least stagnation of ones career. This produces fear of failure with resultant conflict.
Conflict — Preparing to Fight or Flight
The SURVIVE MODE of the human mind is the real “king” of the jungle. We humans are clearly the dominate form of life on this planet. We have successfully fought and fled our way from the African savannah to the top of the modern corporate board room.
The survive mode is quite effective for physical conflict, with its extremes of rage and terror, but highly ineffective within modern organizations. The survive mode is our most primitive way of thinking. It was for survival emergencies in the jungle. Humans thinking in this mode are highly inefficient and non-productive, they lose access to almost all of what we call “human intelligence”. Any conflict can produce hostility within a human, and hostility always shifts humans into the survive mode.
Synergy science has identified conflict as the major obstacle to efficiency, productivity, and quality of work-life within all organizations. While Hierarchy clearly has some major strengths, its problems with conflict create the greatest of liabilities. If human organizations are to survive into the 21st century, it is crucial that conflict be eliminated.
conflict : friction
organizations : machinery
Synergic system analysis reveals that the major secret of the Japanese way is the reduction of conflict they have achieved within their organizations.
Synergy Increases Efficiency
Synergic system analysis reveals that efficiency within a system is a direct variable of the type of relationship that exists between the parts that make up the whole system.
In other words, it is how these parts relate with one another that will absolutely determine the success of the whole system.
Recall that adversary relationships are bad for me, bad for you, or bad for both of us. Neutral relationships have no effect on you or me. But synergic relationships are good for you and good for me — WIN-WIN.
The synergic relationship maximizes efficiency. Neutral relationships significantly limit efficiency, and adversary relationships allow no possibility of efficiency.
Synergy science reveals that conflict is an indirect variable of efficiency, productivity, and quality of work-life. Using win-win relationships within organization is like applying grease to machinery.
It is by making win-win relationships that we will form systems in which the sum of the whole system is much more than the sum of the parts. This “much more” results in what Haskell called the cooperator’s reward.
If we humans desire a share of the cooperator’s reward, then, we must learn to create win-win relationships between all the individuals within our organiztions and to reduce conflict where ever we may find it.
I pause here to mention one apparently different point of view. Recently some business writers have been singing the praises of conflict. They advise “managers” to learn to creatively manage conflict, rather than to try to eliminate it.
However a closer examination reveals that these business writer’s define “managing conflict” as creating “win-win relationships”. Whereas synergy science defines the creation of “win-win relationships” as “eliminating conflict”. So whether we refer to the creation of “win-win relationships” as “eliminating conflict” or as simply “managing conflic”, we would all agree, it is good to create win-win relationships.
The Japanese clearly have some cultural advantages in creating win-win relationships. First of all, they are a very crowded people with over a hundred million individuals living within a geographic area no larger than a single one of our states. This crowding has produces a strong force toward a cooperative life style, and the Japanese do strongly seek consensus. They also are the only nation to have experienced nuclear war, this resulted in a people deeply committed to the cooperative way.
Some Americans seem to want to explain away the Japanese success by pointing to obscure genetic and cultural differences, as if in so doing they will somehow invalidate the Japanese success. Their success will not be invalidated. The Japanese success results not from obscure genetic and cultural traits, but from simply reducing the conflict within their organizations.
And the most powerful strategy presently known for reducing conflict is heterarchy.
The Japanese Way
The Japanese reduce conflict by using heterarchy in their systems. In many ways, the basic structure of Japanese business appears no less hierarchical than our own. However, the Japanese have introduced heterarchy into their systems in at least three significant forms.
First of all, the Japanese use “quality circles”. Management and workers all sit at the same level in advisory “heterarchies”. This allows the managers to be very aware of the attitudes of those who will be implementing decisions. Conflict can be discovered and eliminated effectively within the heterarchy. All participants of “quality circles” feel they are on a full and equal basis to discuss problems and recommend changes.
Secondly, while much of the Japanese work day is spent in hierarchical organization not unlike Americans, the Japanese business day does not end at 5 pm. The mandatory socializing which occurs every night after work is structured as heterarchy. This provides another opportunity to reduce conflict and many business decisions are made in this social setting.
And thirdly, while hierarchy prevails in terms of organizational responsibility, the Japanese manager adopts a more open heterarchical style. He welcomes his worker’s inputs, and encourages them to participate in the decision making process.
This is a move away from other-directed management towards more self-directed management. This is accompanied by an almost instantaneous decrease in conflict.
If we are to learn anything from the Japanese, it should be that reduction of conflict always produces a significant increase in efficiency, productivity, and quality of work-life.
My study of Japanese business opened my eyes to the power of heterarchy. It is now obvious that all human organizations must master the power of the heterarchy. However, hierarchy is not the villain in this story. For American busnisesses to throw out hierarchy in a rush to embrace the Japanese way could be a worse mistake than to make no change at all. American busnesses are the masters at hierarchy, and here the Japanese can learn something from them.
The discovery of the Organizational Tensegrity reveals that human organizations require a system of organization that transcends both heterarchy and hierarchy.
At one and the same time the Organizational Tensegrity is neither a heterarchy nor a hierarchy, and simultaneously it is both a heterarchy and a hierarchy. There is a third alternative to either heterarchy or hierarchy.
The synergic way produces win-win relationships between all members of the system by transcending both heterarchy and hierarchy. This is the mechanism that allows the Organizational Tensegrity to eliminate all internal conflict.
The Organizational Tensegrity can then be defined as that “complex organizational system that creates a balance of both heterarchy and hierarchy to produce win-win relationships among all members of the system and simultaneously eliminate all internal conflict”.
Synergy science teaches us the both-and point of view. Systems are not wholes. Systems are not parts. Systems are both wholes and parts. A human organization is not just a community, it is not just the individuals within the community. A human organization is both a community and the individuals within that community. We humans are usually misled by our great propensity to “either/or” thinking. This is not a question of “either heterarchy or hierarchy”.
An Organizational Tensegrity is highly flexible being able to move between heterarchy and hierarchy easily and frequently. This ability of the organizational tensegrity, to instantly shift between these two strategies, allows it to gain the strengths of both while avoiding their weaknesses altogether.
Heterarchy is best able to provide the needs of the whole — the needs of community, while hierarchy is best able to meet the goals of the parts — the goals of the individuals. And the win-win relationship serves as the binding that holds the system together.
Which way for Humanity? We humans find ourselves once again at the crossroads, which way shall we choose?
I believe our future does not lie in the Japanese way of heterarchy, nor in the American way of hierarchy. I believe it lies in the third alternative — the synergic way of the Organizational Tensegrity. In the years that have passed since I first described the organizational tensegrity, I have contracted the term to simply Ortegrity.
By the end of the 1990’s, the Japanese Miracle had faded. While they still were/are making some good products, they had lost their advantage. Why? What went wrong. … I recently discovered an answer at the School of Cooperative Individualism.
Japan’s Wrong Turn
When Japan’s economy was booming in the 1950s, 60s and 70s, Japan’s leaders had the following philosophy:
1. The PURPOSE or GOAL of a society is the happiness of its members; the purpose of goal of Japan then was the happiness of Japanese citizens.
2. Companies have two roles in society: (1) To provide products and services that contribute to citizens’ happiness, and (2) To provide jobs so citizens could pay for those products and services.
3. Profit should NOT be a company’s goal. Not even one of its goals! A company should only make enough profit to continue as a viable business; that is, to cover the R&D and plant & facility investments it needs to stay viable. If a company has a chance to make more profits than that, it should refrain from making them and, instead, either sell its products and services at lower prices, provide higher wages and benefits to its employees, or both.
That was the philosophy that made Japan Number 1, the philosophy of the Japanese Miracle, the philosophy that created the greatest economic growth (and social gains) in the history of this planet.
Most of those Japanese leaders, who received Confucian educations prior to 1945, had retired by around 1980 and were succeeded by people educated in the system imposed by General Douglas MacArthur’s Occupation after 1945. They have destroyed Japan’s Miracle, and are ruining Japan’s economy, with the same philosophy that has knocked the United States from its economic and social pinnacle down to third-world status:
1. Economic Darwinism (free competition): Society is a jungle where the strong have the right to take what they can from the weak. Government regulations hindering this should be relaxed or eliminated.
2. The role of companies is to make as much profit as possible as fast as possible. The main techniques are: (1) Advertise heavily to dupe citizens into excessive consumption and spending, and (2) Treat employees like coal, oil and other resources; get the maximum production from the lowest possible expenditure on resources; if your fellow citizens are too expensive, take your factories to places where you can hire cheaper human resources.
3. If speculating on stocks and bonds is a faster way to make big profits than researching and developing new products, then gamble your R&D budget on stocks and bonds. If speculating in land is a faster way to make big profits than increasing the productivity of workers, then gamble your plant & facility budget on land.
4. Use your profits to buy politicans who will reduce your taxes — reduce progressive taxes on high incomes; reduce corporate income taxes; create loopholes and tax breaks available only to rich people and large corporations who can afford expensive lawyers and accountants; reduce taxes on inheritances, land speculation, stock and bond speculation; and so on.
5. When this creates huge government deficits, do the following: (1) Make more money by loaning (at interest) the money the government needs to cover the deficits it created by reducing your taxes; (2) Brainwash the citizenry into ‘privatization’ of society’s assets — such as railroads, telephone companies, NASA. These, of course, became valuable because they were built with everyone’s tax money and protected my government monopolies. But when they’re privatized (sold off) only rich people and rich corporations can afford them. (3) Hector the government into reducing the deficits (resulting from cutting your taxes) remaining after ‘privatization’ by cutting services to the average citizen — that is, cutting spending on health, education, welfare and similar services. (4) Get the government to raise excise, social security, and other taxes that fall mostly on citizens who earn most of their incomes from working and must spend most of those incomes on consumption.
6. Use your advertising clout with Business Week, Fortune, The New York Times, The Wall Street Journal, CBS, NBC, ABC, CNN and other media that get most of their revenues and profits from advertising to brainwash the general public into submitting docilely to this rape and plunder; if possible, convince them that it’s in their own best interests.
Japan’s MacArthur-educated colonials have used this philosophy since the early 1980s to plunder Japan’s economy.
Bill Totten is an American born USC grad who runs a business in Japan, where he lives, has married, and raised a family. His mind has been greatly stimulated by rubbing two cultures together, not to mention rubbing together business leadership with a social conscience. His statement … is so cogent, I thought you would find it useful and challenging, as I do. — Mason Gaffney, professor of economics, University of California
To be continued …