- Email: [email protected]
Technological innovation and corporate management for the 21st century
257
CAPE '89
Technological Innovation and Corporate Management for the 21st Century * Tadahiro Sekimoto President, NEC Corporation, 484 Tsukagoshi 3-ehome, Saiwaiku, Kawasaki, Kanagawa 210, Japan Technological innovation is occurring rapidly today and is making a far-reaching impact on corporate management. In managing NEC Corporation President Sukimoto knows what it is to be exposed to a myriad of innovations in electronics technology. In this paper he presents his thoughts on management strategies to ride the tide of technological innovation.
Keywords: Communications, Information society, CAPE '89, Corporate management, Strategy, Production, Innovation, Japan, NEC.
Tadahiro Sekimoto was born on November 14, 1926. He graduated from Tokyo University (Physics Department, Faculty of Science) in March 1948 and received the degree of Doctor of Engineering from the same university in March 1962. In 1948 he joined Nippon Electric Co., Ltd. (NEC), where he became Chief of the Basis Research Department, Communication Research Laboratory in 1965. Later that year he joined COMSAT on loan. In 1967 he was reinstated to Nippon Electric Co., Ltd. as Manager, Communications Research Laboratory, Central Research Laboratories. In 1972 he became General Manager of the Transmission Division. Dr. Sekimoto was elected to the Board of Directors in 1974; Senior Vice President and Director (1977); Executive Vice President and Director (1978); and President (1980). Dr. Sekimoto is a recipient of the Prize from the Minister of State for Science and Technology Agency, Prime Minister's Office (1976); the Purple Ribbon Medal from His Majesty the Emperor of Japan (1982); and the Edwin Haward Armstrong Achievement Award from the IEEE (1982). '
~
* This paper was the Keynote Address at the IFIP TC 5 Conference on Computer Applications in Production and Engineering, CAPE '89, October 3-5, 1989, Tokyo, Japan. Elsevier Computers in Industry 14 (1990) 257-263 0166-3615/90/$03.50 © 1990 - Elsevier Science Publishers B.V.
1. The Integration of Computers and Communications It is obvious that technological innovation contributes substantially to economic growth, as is now dramatically the case with technological progress in electronics. We at NEC Corporation refer to it as " C &C" or " t h e integration of computers and communications" (Fig 1). The first computer in the world, known as ENIAC, was invented in 1948. It used 18,000 vacuum tubes and could run continuously for just 120 hours. Forty years later, personal computers are now readily available, with their operating speed being 1,000 times faster, and memory capacity 120,000 times larger than the original ENIAC. The nature and use of computers have been changing over the years from single- to multi-purpose functions and from centralized processing by a large mainframe unit to distributed processing
YEAR
1980
1960 1950
1900I 1900
~
~ 1950 1960 1970 1980 1990 2000YEAR COMMUNICATIONS
Fig. 1. C&C: The integration of computers and communications.
CAPE "89
258
Computer in Industry 9
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08 07 05 05
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z
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fault-free material. I believe in the saying that he who dominates materials dominates the technology. As far as hardware is concerned, I do not think its importance will be lost in the foreseeable future. Further progress in integrated circuits will undoubtedly continue to boost C & C in the years ahead.
La...
2. The Highly Information-Oriented Society lO-TL10~ 197075 80 85 90 952000 Fig. 2. Progress in integrated circuits. with a network of local processors of varying size. Computers, in a word, are getting more and more systematized. Progress in communications is no less dramatic, as in the case of optical communications. An optical fiber of hairbreadth diameter now routinely accommodates 5,760 channels, with the more recent type improved by a factor of four to allow about 24,000 telephone channels. Thin and light, these fibers generate less attenuation than copper coaxial cables over much longer non-repeated transmissions. As analog signals are being replaced by digital ones, their compatibility with computers is being vastly improved. Such is the world of " C & C " , in which advances in both computers and communications are being fused together. The advent of C & C is due largely to the progress in integrated circuits (Fig. 2). I began studying digital communications in 1957 when we only had transistors and found it hard to get a onemegabit pulse. With the advanced ICs of today, we can design systems and devices in terms of 1.6 gigabits. In terms of memory, for example, 1 K R A M was developed in 1973, which grew by a factor of four in two short years, and up to 1 MRAM and 4 MRAM that are being mass-produced today. Higher integration has been rapidly translated into lower costs and lower defective rates per bit. Had it not been for such progress in technology, neither personal computers, fiber optic communications, nor C & C would be what they are today. Progress in ICs, in turn, has been due to improvements in material. A trio of technologies in silicon crystallization, processing, and assessment have combined to produce high-purity and
Advances in C & C will usher in what we call " a highly information-oriented" society. Such a society may be described in many ways, but it will, in a word, be one in which its individual members can enjoy a sense of affluence. Mankind has undergone three revolutions. The neolithic or agricultural revolution of 10,000 years ago ensured steady supplies of basic food needs. Then came the industrial revolution in the 18th century which made mass-produced manufactures accessible to everyone. The third revolution, which is an ongoing process, is the information revolution, fueled by C & C technologies. All nations of the world, however, are not simultaneously affected by these dramatic changes because of inevitable time lags in civilization among nations concerned. The United States, for example, has already witnessed the dawn of the Information Age in 1955 to 1965, while Japan, having embarked on its own industrial revolution in the late 19th and early 20th century, has by now reached maturity as an advanced industrial society in which mass production and advanced technology can ensure material affluence at large. Once their physical wants have been satisfied, however, people's needs tend to become more sophisticated and diverse. The undifferentiated masses have become " t h e divided masses", as some sociologists would say (Fig. 3). Popular needs today are becoming more and more diversified, NEEDSNEBULAEOFTHEDIVIDEDMASSES~A NEEDSNEBULA \ ~ OFTHEMASSES ,/.f~_ ~ /
,'DEPARTMENTSTORE SUPERMARKET C * SPECIALITYSTORE
NEEDSNEBULAE OFTHEDIVIDEDMASSES
Fig. 3. The evolution of the consumer from the masses to the individualized masses.
Computers in Industry
T. Sekimoto / Technological Innovation
259
Age of the undifferentiated masses
Production and retailing of limited number of products in large lots (ready-made)
Age of the divided masses
Production and retailing of multiple products in small lots (easy order)
Age of the individualized masses
Production and retailing of super-multiple products in lots of one (approach-sales method order-made)
Fig. 4. Evolution in production and sales.
and I predict we will sooner or later enter the age of " t h e individualized masses". Each and every person will have his or her own specific set of needs, which must be met to ensure a genuine individual sense of satisfaction and affluence. Take the telephone, for example. All telephones used to be the same in form and function. They all looked like black toads! In order to make telephone service reasonably accessible to the general public, it was necessary to reduce cost by the only method available at the time, namely, by mass production. Today, all sorts of telephones are marketed at reasonable prices, and people can choose according to color, shape, and function. If the age of the undifferentiated masses was symbolized by the black toad, the current range of options characterizes the age of the individualized masses. In the age of the individualized masses, users may be willing to pay a little extra to have their sets custom-designed to fit their fancy. All this is a realistic scenario, given the power of technological innovation and of C & C technologies. The age of the undifferentiated masses was one of ready-made clothes, or a limited range of items produced on a large scale. The age of the divided masses is one of custom-made clothes. In the age of the individualized masses, each item of clothing will be personally designed and tailored under a system which produces an infinite range of individualized items (Fig. 4). In other words, it is the age of tailored-solution proposals. Suppliers will be required to understand and respond to the whole variety of users' tastes, and to meet their needs at competitive cost.
Industrial Enterprises (NIEs) in Asia are vigorously industrializing, running closely behind Japan (Fig. 5). Whereas the Republic of Korea lagged sixteen years behind Japan in the commercial production of color TV sets, it took South Korea just four and six years, respectively, to catch up with Japan in the production of VCRs and C D players. In semiconductor memory, the symbol of high-tech products, there are still some gaps in quality, but the president of a Korean electronics firm I met last year told me how he was trying very hard to reduce the 1.5 year lag in merchandising 1 megabits chips to just a year or less when it came to marketing 4 mega-bits chips. Technological standards in the NIEs have been rapidly improving. However, their wage levels, although on the upswing, are still below those in Japan. Japan faces a formidable challenge as it tries to cope with this competition. As a resource-poor nation, it must rely on imports to meet 99.6 percent of oil needs, 95 percent of beans, and 87 percent of wheat. The Japanese self-sufficiency rate in grain is a mere 30 percent. To remain solvent and to continue to pay for these imported essentials, Japan must continue to export industrial manufactures. Japan's situation is fundamentally different from that of the resource-rich United States. After embarking on the age of information twenty to thirty years ago, the U.S.
3. Japan and the Age of the Information Society
~/
As Japan now stands at the threshold of an information-oriented age, we find that National
1900
~
""JASIAH NIES 1950
Fig. 5. Asynchronicity of civilization.
2000
260
CAPE '89
found that its powerful dollar caused the decline of its domestic industrial sector and that its competitive position was weakened, particularly in the early 1980s. Given the sustained yen appreciation since the Plaza Agreement of 1985, Japan in a sense is following the U.S., but it lacks natural resources, and cannot allow a similar process to be repeated in its industrial sector. Industry is the cornerstone of Japanese economy and society.
Computer in Industry iNTEI.LI~NT-]
FACTORY .... j
j SYSTEi~A+i5!<+~ ZATm i .............
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+ '
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ASSEM~ PROMOTEDOj N ~+ AUTOMATI
]LINE 1950 60 70 80 90 Fig. 6. Progressof production systems m Japan.
4. The "2.5 Industry" Concept In the context of increasing competition from the NIEs, a viable method of procedure may be found in promoting what I call the "'2.5 industry ", meaning: a secondary industry armed with information and software in both its products and its production processes--a new industry. The Japanese automobile industry, for example, has been so successful precisely because it has become a "2.5 industry". Mass-produced cars from the Model-T Ford onward made the automobile widely accessible to the masses, and dominated the scene as the symbol of the industrial society. However, when users' needs became as diversified as they are now, the logic of mass production carried less conviction. Preferences in design and in color vary over a wide spectrum, and functional needs range from mileage control and automatic steering to a whole new set of possibilities created by the use of microcomputers. Products in the "2.5 industry" epitomize the harmony of formal beauty and functional performance. Although such products are not primarily competitively priced, their prices, of course, should not be prohibitive. Reasonable prices must be achieved by reducing the cost of physical production, and that is just where C & C can be of help. I was once taken on a tour of the latest production line in an automobile manufacturing plant, and got a good idea of what a "2.5 assembly line" looked like. The foreman told me that not more than two or three cars of exactly the same make come off the assembly line every day.
it was in the 1950s--when the initial phase uf postwar economic rehabilitation had been comp l e t e d - t h a t assembly fines were introduced across the board to increase output+ Productivity was improved by the human division of labor as a team of workers stood in line along the conveyor belt. Labor shortages in the 1960s prompted automation, which was primarily designed to save manpower but failed to integrate the use of robots and automated tools. In contrast to such laborsaving automation, systematization to achieve higher efficiency began around 1975. Unmanned transporters, for example, were introduced to link one fine to another. Linkage of production lines with production control systems began to be sought around this time to reduce both inventory stock and production lead time. The shop floor control system is a good example. Next came the CIMS, or the computer-integrated manufacturing system, which represents the state-of-the-art today. Designing, manufacturing, production control, and other production-oriented sectors are linked by the C & C system to sales, planning, and management sectors in order to reduce lead time and cost and to improve quality (Fig. 7). When advanced robotry is combined with artificial intel-
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5. Production Systems in Japan Looking briefly at the history of production systems as they have developed in Japan (Fig. 6),
!f/~MANUFACTURINGOPERATION ~," Fig. 7. Computer integrated manufacturing system.
T. Sekimoto / Technological Innovation
Computers in Industry
ligence, eventually there will be intelligent unmanned factories in operation. Productive force is the sum of productive technological capabilities and production control capabilities. Japanese industrial manufactures owe their current reputation for performances, price, and quality to progress in automation and systematization of manufacturing processes. Less glamorous but equally vital human participation in QC, ZD, and other campaigns are also important. The introduction of leading edge technologies to the manufacturing process is only half the story. The more advanced the tangible manufacturing system, the more vital will be the intangible human participation. 5.1. Production Training
More production engineers and technicians of varying calibers than ever before will be required in the years ahead. Engineers will have to be trained in the "three I's": Integration; Innovation; Intelligence. The first " I " is for integration: if the overall efficiency of corporate activities is to be improved, it is up to engineers to design and develop strategies to integrate technology, production, and sales into a company-wide system. The second is for innovation: technological innovations that contribute to progress in manufacturing systems affect processes, tools, electronics, systems, and other specific fields of technology. It requires an original and innovative frame of mind to combine innovations in diverse fields in order to achieve a better overall system of production. The third is for intelligence: at a time of rapid changes in technology and in society, it requires both intelligence and foresight to anticipate and survive such changes. Technicians, whose primary qualification has been skill in hardware production, will be required to have additional expertise in software to optimize the use of manufacturing systems. They must acquire and accumulate know-how in maintenance and reform in particular, and to transplant it onto hardware systems. At NEC, technicians who are
261
<~BREADTH~>
Fig. 8. Man as a "V".
knowledgeable in both hardware and software are known as " C & C technicians". 5.2. The H u m a n Factor
The desired image of such production engineers and technicians of the future is that of a "Vshaped" individual (Fig. 8). She or he must be interested and knowledgeable in wider fields than her of his specific area of expertise, of which mastery is necessary as a matter of course. The broader her or his general perspective, the deeper will be her or his special knowledge. A broad perspective with little depth of special knowledge makes for a "horizontal bar-shaped" woman or man, while depth of specialization without interest in anything else makes for a "vertical bar-shaped" woman or man. One or the other may be useful from time to time, but those with greater depth and breadth will be most heavily in demand. The desirable image of women and men is worth considering because the human factor will be of greater importance now in the informationoriented society which I believe Japan is turning into.
6. Artificial Servants Another name I like to use for C & C is "artificial servants" (Fig. 9). Computers function as Computers Communications Input devices Output devices
*-, ~ ~ ~
Artificialbrains Artificialnerves Artificialorgans of sense Artificialvocal chords and limbs
Semiconductorsand ICs
~
Artificialcells
Software
~
Intelligence
Fig. 9. Artificial servants.
262
CAPE "89
artificial brains, communications as artificial nerves, and input devices as the artificial five senses. The sound input device, for instance, functions as a human ear, and output devices as artificial vocal cords a n d / o r limbs. Semiconductors are artificial cells that make up the body parts of these artificial servants. These artificial cells have been developing at an amazing pace, and will continue to do so in the future. Our artificial servants, therefore, are still very young and promise to develop into marvelous pieces of work. They are fundamentally different from machines as we conventionally know them because "their masters" can use software to impart intelligence to them. But "software" here is not limited to computer programs. The most important component of software is the expression of human ideas by which I mean the mind of the management of a corporation, or of the manager of a particular division, which uses the CIMS. C & C systems are to be carefully planned, designed, and built to achieve specific objectives. They are no longer ready-made, but nowadays can be tailored to fit the needs of the prospective master-user. C & C systems should vary form corporation to corporation, each fitting a specific corporate configuration and reflecting a specific corporate culture. In the not too distant future, I suspect that management of different corporations will come to be compared and assessed in terms of their specific C & C systems.
7. Corporate Management Corporate performance has generally been assessed on the basis of the bottom line. The balance sheet describes " m o n e y " and "property", but says nothing about "people", who are the most important of all management assets. I once proposed the concept of "technology premium" (Fig. 10) as an indicator of the strength of a corporate entity in terms of its staff of trained personnel, its stock of know-how and technology expressed by, for example, the number of patents it owns. It is now fashionable to say that information is the fourth strategic management resource (after people, property, and money) and to emphasize the importance of SIS: the "strategic information system". As society becomes more information-oriented, corporate information systems will be of
Computer in Indust~
LIABILITIES ASSETS
1T ETC
SHAREHOLDERS' EQUITY
S, RESOURCES
Fig. 10. Technologypremium. greater importance, and no appraisal of corporate strength would be complete without reference to the speed, frequency, and accuracy with which corporate information systems are used to consolidate management strategy. There are some technical problems as to how to quantify these elements to facilitate an appraisal of what may well be called the "information premium" (Fig. 11) of corporate entities. The higher the premium, needless to say, the stronger the management position will be.
8. The Strategy In the increasingly information-oriented society that is emerging in Japan now, business corporations are obliged to initiate management innovations. Innovating new manufacturing systems, which I have discussed at some length in this paper, is certainly of great importance. However, the most important factor in corporate management at any time is the collective human resource. A corporation after all is a collective entity of individuals designed to deliver more than the sum of its constituent parts. The management revolution means respecting, fostering and optimizing a
LIABIIJTIES ASSETS EQUITY ETC Fig. 11. Information premium.
Computers in Industry
person's potential as a human. A n d creativity is the unique ability that makes us human. The management revolution can Only be achieved through C & C armament in every management field. Or to be more precise, it is arming management with artificial servants which can serve to bring their human masters' creative genius into full play. We find in this world human endeavor by humans, for humans, of humans who five under a burden of historical reality that is woven from the
T. Sekimoto / Technological Innovation
263
contingency and the necessity. I have worked in research and development, production, and sales sectors, and tried to do to the best of my ability whatever jobs happened to come my way. Every human being has a heart, and the most crucial test for management is whether it can inspire human hearts. As a human being and as a manager, it is an article of faith with me to respect the human heart.
CAPE '89
Technological Innovation and Corporate Management for the 21st Century * Tadahiro Sekimoto President, NEC Corporation, 484 Tsukagoshi 3-ehome, Saiwaiku, Kawasaki, Kanagawa 210, Japan Technological innovation is occurring rapidly today and is making a far-reaching impact on corporate management. In managing NEC Corporation President Sukimoto knows what it is to be exposed to a myriad of innovations in electronics technology. In this paper he presents his thoughts on management strategies to ride the tide of technological innovation.
Keywords: Communications, Information society, CAPE '89, Corporate management, Strategy, Production, Innovation, Japan, NEC.
Tadahiro Sekimoto was born on November 14, 1926. He graduated from Tokyo University (Physics Department, Faculty of Science) in March 1948 and received the degree of Doctor of Engineering from the same university in March 1962. In 1948 he joined Nippon Electric Co., Ltd. (NEC), where he became Chief of the Basis Research Department, Communication Research Laboratory in 1965. Later that year he joined COMSAT on loan. In 1967 he was reinstated to Nippon Electric Co., Ltd. as Manager, Communications Research Laboratory, Central Research Laboratories. In 1972 he became General Manager of the Transmission Division. Dr. Sekimoto was elected to the Board of Directors in 1974; Senior Vice President and Director (1977); Executive Vice President and Director (1978); and President (1980). Dr. Sekimoto is a recipient of the Prize from the Minister of State for Science and Technology Agency, Prime Minister's Office (1976); the Purple Ribbon Medal from His Majesty the Emperor of Japan (1982); and the Edwin Haward Armstrong Achievement Award from the IEEE (1982). '
~
* This paper was the Keynote Address at the IFIP TC 5 Conference on Computer Applications in Production and Engineering, CAPE '89, October 3-5, 1989, Tokyo, Japan. Elsevier Computers in Industry 14 (1990) 257-263 0166-3615/90/$03.50 © 1990 - Elsevier Science Publishers B.V.
1. The Integration of Computers and Communications It is obvious that technological innovation contributes substantially to economic growth, as is now dramatically the case with technological progress in electronics. We at NEC Corporation refer to it as " C &C" or " t h e integration of computers and communications" (Fig 1). The first computer in the world, known as ENIAC, was invented in 1948. It used 18,000 vacuum tubes and could run continuously for just 120 hours. Forty years later, personal computers are now readily available, with their operating speed being 1,000 times faster, and memory capacity 120,000 times larger than the original ENIAC. The nature and use of computers have been changing over the years from single- to multi-purpose functions and from centralized processing by a large mainframe unit to distributed processing
YEAR
1980
1960 1950
1900I 1900
~
~ 1950 1960 1970 1980 1990 2000YEAR COMMUNICATIONS
Fig. 1. C&C: The integration of computers and communications.
CAPE "89
258
Computer in Industry 9
10-'
08 07 05 05
...a
5 16K R
l
t.a.a
z
__1 t.a.a t.a-
t.t.a mm
fault-free material. I believe in the saying that he who dominates materials dominates the technology. As far as hardware is concerned, I do not think its importance will be lost in the foreseeable future. Further progress in integrated circuits will undoubtedly continue to boost C & C in the years ahead.
La...
2. The Highly Information-Oriented Society lO-TL10~ 197075 80 85 90 952000 Fig. 2. Progress in integrated circuits. with a network of local processors of varying size. Computers, in a word, are getting more and more systematized. Progress in communications is no less dramatic, as in the case of optical communications. An optical fiber of hairbreadth diameter now routinely accommodates 5,760 channels, with the more recent type improved by a factor of four to allow about 24,000 telephone channels. Thin and light, these fibers generate less attenuation than copper coaxial cables over much longer non-repeated transmissions. As analog signals are being replaced by digital ones, their compatibility with computers is being vastly improved. Such is the world of " C & C " , in which advances in both computers and communications are being fused together. The advent of C & C is due largely to the progress in integrated circuits (Fig. 2). I began studying digital communications in 1957 when we only had transistors and found it hard to get a onemegabit pulse. With the advanced ICs of today, we can design systems and devices in terms of 1.6 gigabits. In terms of memory, for example, 1 K R A M was developed in 1973, which grew by a factor of four in two short years, and up to 1 MRAM and 4 MRAM that are being mass-produced today. Higher integration has been rapidly translated into lower costs and lower defective rates per bit. Had it not been for such progress in technology, neither personal computers, fiber optic communications, nor C & C would be what they are today. Progress in ICs, in turn, has been due to improvements in material. A trio of technologies in silicon crystallization, processing, and assessment have combined to produce high-purity and
Advances in C & C will usher in what we call " a highly information-oriented" society. Such a society may be described in many ways, but it will, in a word, be one in which its individual members can enjoy a sense of affluence. Mankind has undergone three revolutions. The neolithic or agricultural revolution of 10,000 years ago ensured steady supplies of basic food needs. Then came the industrial revolution in the 18th century which made mass-produced manufactures accessible to everyone. The third revolution, which is an ongoing process, is the information revolution, fueled by C & C technologies. All nations of the world, however, are not simultaneously affected by these dramatic changes because of inevitable time lags in civilization among nations concerned. The United States, for example, has already witnessed the dawn of the Information Age in 1955 to 1965, while Japan, having embarked on its own industrial revolution in the late 19th and early 20th century, has by now reached maturity as an advanced industrial society in which mass production and advanced technology can ensure material affluence at large. Once their physical wants have been satisfied, however, people's needs tend to become more sophisticated and diverse. The undifferentiated masses have become " t h e divided masses", as some sociologists would say (Fig. 3). Popular needs today are becoming more and more diversified, NEEDSNEBULAEOFTHEDIVIDEDMASSES~A NEEDSNEBULA \ ~ OFTHEMASSES ,/.f~_ ~ /
,'DEPARTMENTSTORE SUPERMARKET C * SPECIALITYSTORE
NEEDSNEBULAE OFTHEDIVIDEDMASSES
Fig. 3. The evolution of the consumer from the masses to the individualized masses.
Computers in Industry
T. Sekimoto / Technological Innovation
259
Age of the undifferentiated masses
Production and retailing of limited number of products in large lots (ready-made)
Age of the divided masses
Production and retailing of multiple products in small lots (easy order)
Age of the individualized masses
Production and retailing of super-multiple products in lots of one (approach-sales method order-made)
Fig. 4. Evolution in production and sales.
and I predict we will sooner or later enter the age of " t h e individualized masses". Each and every person will have his or her own specific set of needs, which must be met to ensure a genuine individual sense of satisfaction and affluence. Take the telephone, for example. All telephones used to be the same in form and function. They all looked like black toads! In order to make telephone service reasonably accessible to the general public, it was necessary to reduce cost by the only method available at the time, namely, by mass production. Today, all sorts of telephones are marketed at reasonable prices, and people can choose according to color, shape, and function. If the age of the undifferentiated masses was symbolized by the black toad, the current range of options characterizes the age of the individualized masses. In the age of the individualized masses, users may be willing to pay a little extra to have their sets custom-designed to fit their fancy. All this is a realistic scenario, given the power of technological innovation and of C & C technologies. The age of the undifferentiated masses was one of ready-made clothes, or a limited range of items produced on a large scale. The age of the divided masses is one of custom-made clothes. In the age of the individualized masses, each item of clothing will be personally designed and tailored under a system which produces an infinite range of individualized items (Fig. 4). In other words, it is the age of tailored-solution proposals. Suppliers will be required to understand and respond to the whole variety of users' tastes, and to meet their needs at competitive cost.
Industrial Enterprises (NIEs) in Asia are vigorously industrializing, running closely behind Japan (Fig. 5). Whereas the Republic of Korea lagged sixteen years behind Japan in the commercial production of color TV sets, it took South Korea just four and six years, respectively, to catch up with Japan in the production of VCRs and C D players. In semiconductor memory, the symbol of high-tech products, there are still some gaps in quality, but the president of a Korean electronics firm I met last year told me how he was trying very hard to reduce the 1.5 year lag in merchandising 1 megabits chips to just a year or less when it came to marketing 4 mega-bits chips. Technological standards in the NIEs have been rapidly improving. However, their wage levels, although on the upswing, are still below those in Japan. Japan faces a formidable challenge as it tries to cope with this competition. As a resource-poor nation, it must rely on imports to meet 99.6 percent of oil needs, 95 percent of beans, and 87 percent of wheat. The Japanese self-sufficiency rate in grain is a mere 30 percent. To remain solvent and to continue to pay for these imported essentials, Japan must continue to export industrial manufactures. Japan's situation is fundamentally different from that of the resource-rich United States. After embarking on the age of information twenty to thirty years ago, the U.S.
3. Japan and the Age of the Information Society
~/
As Japan now stands at the threshold of an information-oriented age, we find that National
1900
~
""JASIAH NIES 1950
Fig. 5. Asynchronicity of civilization.
2000
260
CAPE '89
found that its powerful dollar caused the decline of its domestic industrial sector and that its competitive position was weakened, particularly in the early 1980s. Given the sustained yen appreciation since the Plaza Agreement of 1985, Japan in a sense is following the U.S., but it lacks natural resources, and cannot allow a similar process to be repeated in its industrial sector. Industry is the cornerstone of Japanese economy and society.
Computer in Industry iNTEI.LI~NT-]
FACTORY .... j
j SYSTEi~A+i5!<+~ ZATm i .............
[
+ '
]
ASSEM~ PROMOTEDOj N ~+ AUTOMATI
]LINE 1950 60 70 80 90 Fig. 6. Progressof production systems m Japan.
4. The "2.5 Industry" Concept In the context of increasing competition from the NIEs, a viable method of procedure may be found in promoting what I call the "'2.5 industry ", meaning: a secondary industry armed with information and software in both its products and its production processes--a new industry. The Japanese automobile industry, for example, has been so successful precisely because it has become a "2.5 industry". Mass-produced cars from the Model-T Ford onward made the automobile widely accessible to the masses, and dominated the scene as the symbol of the industrial society. However, when users' needs became as diversified as they are now, the logic of mass production carried less conviction. Preferences in design and in color vary over a wide spectrum, and functional needs range from mileage control and automatic steering to a whole new set of possibilities created by the use of microcomputers. Products in the "2.5 industry" epitomize the harmony of formal beauty and functional performance. Although such products are not primarily competitively priced, their prices, of course, should not be prohibitive. Reasonable prices must be achieved by reducing the cost of physical production, and that is just where C & C can be of help. I was once taken on a tour of the latest production line in an automobile manufacturing plant, and got a good idea of what a "2.5 assembly line" looked like. The foreman told me that not more than two or three cars of exactly the same make come off the assembly line every day.
it was in the 1950s--when the initial phase uf postwar economic rehabilitation had been comp l e t e d - t h a t assembly fines were introduced across the board to increase output+ Productivity was improved by the human division of labor as a team of workers stood in line along the conveyor belt. Labor shortages in the 1960s prompted automation, which was primarily designed to save manpower but failed to integrate the use of robots and automated tools. In contrast to such laborsaving automation, systematization to achieve higher efficiency began around 1975. Unmanned transporters, for example, were introduced to link one fine to another. Linkage of production lines with production control systems began to be sought around this time to reduce both inventory stock and production lead time. The shop floor control system is a good example. Next came the CIMS, or the computer-integrated manufacturing system, which represents the state-of-the-art today. Designing, manufacturing, production control, and other production-oriented sectors are linked by the C & C system to sales, planning, and management sectors in order to reduce lead time and cost and to improve quality (Fig. 7). When advanced robotry is combined with artificial intel-
mm,EssPam. ] .. \
] ~ ] ~
//jJ/)
~+CUTm.
(_m,-
7
~.~FACTORY
z
"~
+
=m ;
i '~OATABASE ~ ' ~ , -
5. Production Systems in Japan Looking briefly at the history of production systems as they have developed in Japan (Fig. 6),
!f/~MANUFACTURINGOPERATION ~," Fig. 7. Computer integrated manufacturing system.
T. Sekimoto / Technological Innovation
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ligence, eventually there will be intelligent unmanned factories in operation. Productive force is the sum of productive technological capabilities and production control capabilities. Japanese industrial manufactures owe their current reputation for performances, price, and quality to progress in automation and systematization of manufacturing processes. Less glamorous but equally vital human participation in QC, ZD, and other campaigns are also important. The introduction of leading edge technologies to the manufacturing process is only half the story. The more advanced the tangible manufacturing system, the more vital will be the intangible human participation. 5.1. Production Training
More production engineers and technicians of varying calibers than ever before will be required in the years ahead. Engineers will have to be trained in the "three I's": Integration; Innovation; Intelligence. The first " I " is for integration: if the overall efficiency of corporate activities is to be improved, it is up to engineers to design and develop strategies to integrate technology, production, and sales into a company-wide system. The second is for innovation: technological innovations that contribute to progress in manufacturing systems affect processes, tools, electronics, systems, and other specific fields of technology. It requires an original and innovative frame of mind to combine innovations in diverse fields in order to achieve a better overall system of production. The third is for intelligence: at a time of rapid changes in technology and in society, it requires both intelligence and foresight to anticipate and survive such changes. Technicians, whose primary qualification has been skill in hardware production, will be required to have additional expertise in software to optimize the use of manufacturing systems. They must acquire and accumulate know-how in maintenance and reform in particular, and to transplant it onto hardware systems. At NEC, technicians who are
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Fig. 8. Man as a "V".
knowledgeable in both hardware and software are known as " C & C technicians". 5.2. The H u m a n Factor
The desired image of such production engineers and technicians of the future is that of a "Vshaped" individual (Fig. 8). She or he must be interested and knowledgeable in wider fields than her of his specific area of expertise, of which mastery is necessary as a matter of course. The broader her or his general perspective, the deeper will be her or his special knowledge. A broad perspective with little depth of special knowledge makes for a "horizontal bar-shaped" woman or man, while depth of specialization without interest in anything else makes for a "vertical bar-shaped" woman or man. One or the other may be useful from time to time, but those with greater depth and breadth will be most heavily in demand. The desirable image of women and men is worth considering because the human factor will be of greater importance now in the informationoriented society which I believe Japan is turning into.
6. Artificial Servants Another name I like to use for C & C is "artificial servants" (Fig. 9). Computers function as Computers Communications Input devices Output devices
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Artificialbrains Artificialnerves Artificialorgans of sense Artificialvocal chords and limbs
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Fig. 9. Artificial servants.
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artificial brains, communications as artificial nerves, and input devices as the artificial five senses. The sound input device, for instance, functions as a human ear, and output devices as artificial vocal cords a n d / o r limbs. Semiconductors are artificial cells that make up the body parts of these artificial servants. These artificial cells have been developing at an amazing pace, and will continue to do so in the future. Our artificial servants, therefore, are still very young and promise to develop into marvelous pieces of work. They are fundamentally different from machines as we conventionally know them because "their masters" can use software to impart intelligence to them. But "software" here is not limited to computer programs. The most important component of software is the expression of human ideas by which I mean the mind of the management of a corporation, or of the manager of a particular division, which uses the CIMS. C & C systems are to be carefully planned, designed, and built to achieve specific objectives. They are no longer ready-made, but nowadays can be tailored to fit the needs of the prospective master-user. C & C systems should vary form corporation to corporation, each fitting a specific corporate configuration and reflecting a specific corporate culture. In the not too distant future, I suspect that management of different corporations will come to be compared and assessed in terms of their specific C & C systems.
7. Corporate Management Corporate performance has generally been assessed on the basis of the bottom line. The balance sheet describes " m o n e y " and "property", but says nothing about "people", who are the most important of all management assets. I once proposed the concept of "technology premium" (Fig. 10) as an indicator of the strength of a corporate entity in terms of its staff of trained personnel, its stock of know-how and technology expressed by, for example, the number of patents it owns. It is now fashionable to say that information is the fourth strategic management resource (after people, property, and money) and to emphasize the importance of SIS: the "strategic information system". As society becomes more information-oriented, corporate information systems will be of
Computer in Indust~
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Fig. 10. Technologypremium. greater importance, and no appraisal of corporate strength would be complete without reference to the speed, frequency, and accuracy with which corporate information systems are used to consolidate management strategy. There are some technical problems as to how to quantify these elements to facilitate an appraisal of what may well be called the "information premium" (Fig. 11) of corporate entities. The higher the premium, needless to say, the stronger the management position will be.
8. The Strategy In the increasingly information-oriented society that is emerging in Japan now, business corporations are obliged to initiate management innovations. Innovating new manufacturing systems, which I have discussed at some length in this paper, is certainly of great importance. However, the most important factor in corporate management at any time is the collective human resource. A corporation after all is a collective entity of individuals designed to deliver more than the sum of its constituent parts. The management revolution means respecting, fostering and optimizing a
LIABIIJTIES ASSETS EQUITY ETC Fig. 11. Information premium.
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person's potential as a human. A n d creativity is the unique ability that makes us human. The management revolution can Only be achieved through C & C armament in every management field. Or to be more precise, it is arming management with artificial servants which can serve to bring their human masters' creative genius into full play. We find in this world human endeavor by humans, for humans, of humans who five under a burden of historical reality that is woven from the
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contingency and the necessity. I have worked in research and development, production, and sales sectors, and tried to do to the best of my ability whatever jobs happened to come my way. Every human being has a heart, and the most crucial test for management is whether it can inspire human hearts. As a human being and as a manager, it is an article of faith with me to respect the human heart.