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Toyota has become one of the world's greatest companies only because it developed the Toyota Production System, right? Wrong, say Takeuchi, Osono, and Shimizu of Hitotsubashi University in Tokyo. Another factor, overlooked until now, is just as important to the company's success: Toyota's culture of contradictions. TPS is a "hard" innovation that allows the company to continuously improve the way it manufactures vehicles. Toyota has also mastered a "soft" innovation that relates to human resource practices and corporate culture. The company succeeds, say the authors, because it deliberately fosters contradictory viewpoints within the organization and challenges employees to find solutions by transcending differences rather than resorting to compromises. This culture generates innovative ideas that Toyota implements to pull ahead of competitors, both incrementally and radically. The authors' research reveals six forces that cause contradictions inside Toyota. Three forces of expansion lead the company to change and improve: impossible goals, local customization, and experimentation. Not surprisingly, these forces make the organization more diverse, complicate decision making, and threaten Toyota's control systems. To prevent the winds of change from blowing down the organization, the company also harnesses three forces of integration: the founders' values, "up-and-in" people management, and open communication. These forces stabilize the company, help employees make sense of the environment in which they operate, and perpetuate Toyota's values and culture. Emulating Toyota isn't about copying any one practice; it's about creating a culture. And because the company's culture of contradictions is centered on humans, who are imperfect, there will always be room for improvement. [ABSTRACT FROM AUTHOR]

As a man who has spent his life building up his own group of manufacturing companies at the subcontractor level, Kuniyasu Sakai knows Japanese business. It is not, he says, what it appears. In fact, writes Sakai, "I am amazed at how little Americans and other foreign businesspeople seem to know about the realities of Japanese industry." What are the realities? Small and midsize companies make up 99% of Japanese industry. These are the enterprises that are the real foundation of the Japanese economy and the source of Japan's manufacturing muscle. The high-quality goods that come bearing a famous maker's name on the case are seldom the product of that company's factory--in fact, usually one small company designed it, another put it together, another stuck it in the box with the famous maker's name on it, and then shipped it to the distributor. These subcontractors are like serfs in a highly structured feudal system. The big companies are the daimyo--feudal overlords who control the fates of their subjects. In modern Japan, the large corporations and the keiretsu function the same way: from the day small subcontractors accept their first contracts from larger companies, they have lost their freedom. Subcontractors are told what to make, when to put it on line, and how much to charge. Now, however, Mr. Sakai says, cracks in the keiretsu, caused by international economic changes, are creating new opportunities for foreign companies. In particular, foreign companies should seek their own relationships with Japanese subcontractors--a "Spartacus strategy" to free the slaves--capturing for themselves the benefits of their manufacturing excellence and giving the subcontractors a better deal than they now get from the keiretsu. INSET: Subcontracting 101.. [ABSTRACT FROM PUBLISHER]

Companies going to Washington to seek protection from imports are courting disaster. In case after case, according to the author, protectionism has proved damaging--not to the company that loses but to the one that wins. Getting Japan to accept voluntary restraints on low-priced auto sales to the United States seriously damaged General Motors's strategy to blow away the competition with high-priced foreign cars. The quotas sought and won be Bethlehem Steel and the United Steelworkers helped create a new niche in the steel industry--for mini-mills--that hurt the big steel companies much more than imports would have. Industrywide relief schemes, like the U.S.-Japanese semiconductor agreement, are unlikely to meet the divergent needs of U.S. companies. Japan will open its market for 256K dynamic random access memories as well as refrain from selling chips below cost to other countries. But U.S. production capacity is too small to reach the allowable level. And slumping demand for the chips in the United States makes the artificial price cushion less lucrative than expected. Given short-term trade problems, it's not surprising that so many companies turn to a protectionist strategy for some short-term relief. But the short-term search can turn up a long-term strategic albatross. Protection is at odds with strategic adaptation, if you don't want to come out of the protected environment staggering under the weight of a leaner and meaner competition, don't enter that environment in the first place. [ABSTRACT FROM PUBLISHER]

Webster defines symbiosis as "the intimate living together of two dissimilar organisms in a mutually beneficial relationship." This well describes the close cooperation between the government and the business community of Japan, which has done so much to make postwar Japan a power among the world's industrialized nations. In this article an expert on the subject describes this interaction, which has earned the respectful sobriquet "Japan, Inc." He shows how Japan's huge export surpluses are forcing that government to eliminate some export promotion devices and remove many import restrictions, despite resistance from Japanese companies and trade associations. The author gives pointers for foreigners in dealing with government departments and trade groups. [ABSTRACT FROM PUBLISHER]

The article discusses the differences in reconstruction in wartime China between Japanese Occupied China and Free China. The author first looks at the differences between Occupied China and Free China before the invasion of Japan. Occupied China was much more modern and industrialized, while Free China was more traditional in its agricultural roots. Under the reign of Japan, Occupied China has succeeded in consolidating its transportation system and exploiting China's natural resource reserves. In agriculture, however, Japan has failed almost everywhere, whereas Free China has succeeded introducing industry, building a transport system, and having increased prosperity in agriculture.

The letter to the editor refers to the Peter Drucker article "Behind Japan's Success," which is in the January-February 1981 issue.