An American view of the Omron culture

Today, with 23,000 employees and annual revenue of $4.5 billion Omron ranks among the best of the automation majors. Omron is the largest automation company in Japan, about 1.5 times the size of Yokogawa.

In the past, I have discussed Yokogawa (eNews 20 April 2003), their strengths/weaknesses (20 Jan. 2003). I included the first-hand insights of the CEO of a US subsidiary who discussed the Japanese culture and its impact on US subsidiaries. I asked several Omron employees whether Omron was any different. Here are some responses, summarized by me.

The management structure of Omron is no different than of any other Japanese company. Each of the major Omron companies outside Japan has a Japanese "watchdog" to oversee activities, as a primary Japanese link with Japan HQ. Omron is divided into 5 geographic regions: Japan, The Americas, Europe, South East Asia and China. Countries within a region (e.g.: Canada, France, England, Australia, etc.) are typically managed by locals, though each of the regions has a Japanese executive responsible for that region.

The normal term for the Regional Japanese executive is 5 years. Some are more active in the business operations than others, depending upon the individual. Omron always gives the local management a lot of freedom in operating the business. This includes business plan development, personnel, marketing, sales, promotion, etc. No one is expected to do something simply because it was being done in Japan. However, local managers try to coordinate some activities which make sense globally.

There is no real difference from an operating division of an American company. Managers are expected to achieve specific local targets and corporate goals such as sales growth, profit ratios, etc. It seems that Omron understands that other countries are different from Japan, and to market products and manage a local organization successfully in these other regions requires local management.

In Omron Japan, 99% of the staff joined Omron directly out of University. Many are engineers, and begin their careers in sales or engineering to gain that experience. Then, depending upon their skills, they are assigned to areas in which their strengths can be best utilized. Though the process of advancement into management is changing slowly, age and seniority continue to be recognized as important criteria at Omron. In addition, positive manager evaluations and management tests are required for advancement. Many of those designated to be on the fast track are sent to an overseas operation to gain global experience. It is interesting to note that most of the present executive management of Omron have worked in the US earlier in their careers, and English is their second language.

An important change which has taken place in the past few years at Omron Japan is the implementation of a Management by Objectives (MBO) system. The amount of a bonus earned is based upon MBO achievement, and not seniority (which was the previous criterion).

In the past, Omron was similar to most Japanese companies whereas lifetime employment was a given. Last year Omron Japan implemented early retirement programs and reduced employment in Japan by 1500 employees to reduce overhead costs. Japanese employees are being urged to think more on an individual basis in decision making rather than the traditional group thinking. In other words, Omron is becoming more Westernized in its management thinking.

Like many Japanese companies, failed Japanese managers at Omron are shifted to another position or put "by the window" until retirement. In very rare exceptions they may be let go. This is not true for non-Japanese management, who are given every chance to improve performance, failing which they are terminated.

More thoughts on scarcity & abundance

Technology thrives by turning scarcity into abundance - scarcity=high price, abundance=low price. Then the new abundance brings new problems - the abundance of cars chokes the ability to move; the abundance of food causes and unhealthy obesity epidemic; the abundance of spam burdens the benefits of email.

Abundances continue to expand till the opposing scarcity brings backlash - rules and regulations to artificially restrict the abundance. Perhaps the only way to stop spam is by charging for email. What will the price of gasoline need to be before traffic is reduced? Can food be regulated to stop overeating?

How about tobacco? How much tobacco tax will stop smoking? When it became clear that smoking caused cancer, a warning was required to be printed on every cigarette packet; but that didn't stop smokers. Tobacco companies have paid heavy penalties, which they simply add that to the cost of cigarettes, and their stock rides high, bolstered by billions of dollars of "reserves".

As we get softer and flabbier, there is an abundance of pills, potions, equipment and exercises telling us how to lose weight easily, quickly, safely and "in just minutes a day!" Have you seen the proliferation of pill commercials on TV? In spite of tight FDA regulations, there are pills for virtually anything and everything. There are some people who actually take several pills, several times a day, without considering possible dangerous reactions. And the pharmaceutical companies manipulate prices through federal regulations.

There are many who manipulate the rules of abundance to cause scarcity. For example, diamonds are found in abundance in nature. But, for over 200 years, the diamond cartel has stifled, by any means necessary, the flow of diamonds from sources not under its control. Today there are synthetic diamonds, with differences that are impossible to distinguish; indeed, they are better than natural diamonds. But the diamond cartel still manipulates the market, to create the "scarcity".

The problems of "scarcity and abundance" are deep rooted in the human condition, in human society. I'm reading up on this interesting and significant topic, and I hope you'll enjoy sharing some philosophical insights in future eNews issues. Stay tuned...

The information glut

Digital information is mounting fast in Science and Government. Digital sky surveys, for example, access over 2 billion images. NASA has millions of magnetic tapes (many of them poorly maintained and documented) with space data. The White House churns out some 6 million e-mail messages per year. And military intelligence records include more than 1 billion electronic messages, reports, cables, and memoranda. Who can manage all this data? Is it even possible to manage?

We are facing a fundamental paradigm shift. Digital technology has removed many of the limits of information distribution: it costs no more for me to deliver this eNews to 500, 5,000 or 500,000 people. But will this bring better, more thoughtful thinking? Or, will I suddenly "burn out" when I get 100,000 responses to my "liberal" editorials? Hey, on the other hand, perhaps it will make more of a difference t more people. Howard Dean demonstrated the power of digital linkages, which others are now trying to emulate.

According to a team of UC Berkeley researchers, worldwide information production increased by 30% a year between 1999 and 2002. Suddenly, almost every aspect of life in and around the world is being recorded and stored in some information format - paper, film, optical and magnetic media. The new information produced in just one year (2002) was equal to half a million new libraries, each containing a digitized version of the entire Library of Congress. And it's increasing exponentially.

Here are some stats from this Berkeley study:

• The amount of new information stored reached about five exabytes (or 5 million terabytes) in 2002, compared to 50% of that in 1999.
• Some 92% of new information is stored on hard drives.
• New information flowing electronically on radio, television and the Internet in 2002 totaled nearly 18 exabytes.
• The telephone accounts for the largest percentage of information flow, with e-mail placing second.
• While original information on paper continues to grow, most comes in the form of office documents and mail - not books, newspapers and magazines.
• North Americans each consume 24 reams, or 11,916 sheets, of paper a year, while Europeans use 15 reams, or 7,280 sheets.
• Peer-to-peer file sharing has exploded, and MP3 music files and digital video accounted for 70 % of the files on the hard disks of users who participate in online file exchanges.
• Globally, the average Internet user spends 11.5 hours online a month, while the average US Internet user spends more than twice that time.

CSIA 2004 Annual Conference Presentation

There are about 1,000 Automation Systems Integrators in the US, and just 20% of them are "independent" (80% are major suppliers' SI services). About 75 members and affiliate members (suppliers who sell through SIs) attended this annual conference. There was a strong sense of camaraderie among the CSIA members, generated lively discussions and the feeling of growth and optimism.

You might like to review my presentation and the notes for my speech, "Systems Integrator growth challenges in the global environment". A pdf of my Powerpoint presentation is available on my website.

The March of Folly from Troy to Vietnam (to Iraq)

This book brings the people, places, and events of history magnificently alive for today's reader. Barbara Tuchman died in 1989; if she was alive today she might have included the Iraqi War as a postscript in her next edition, as an example of folly. Her words provides an eerily correct diagnosis of GW Bush's policies.

Here are some quotes:

"A phenomenon noticeable throughout history regardless of place or period is the pursuit by governments of policies contrary to their own interests. Why do holders of high office so often act contrary to the way reason points and enlightened self-interest suggests? Why does intelligent mental process seem so often not to function?"

"Wooden-headedness, the source of self deception, is a factor that plays a remarkably large role in government. It consists in assessing a situation in terms of preconceived fixed notions while ignoring or rejecting any contrary signs. It is acting according to wish while not allowing oneself to be deflected by the facts. No experience of failure shakes belief in its essential excellence."

"Government remains the paramount area of folly because it is there that men seek power over others - only to lose it over themselves."

"Leaders of government do not learn beyond the convictions they bring with them; these are the intellectual capital they will consume as long as they are in office. Learning from experience is a faculty almost never practiced."

"In its first stage, mental standstill fixes the principles and boundaries governing a political problem. In the second stage, when dissonances and ailing function begin to appear, the initial principles rigidify. This is the period when, if wisdom were operative, re-examination and re-thinking and a change of course are possible, but they are as rare as rubies in a backyard. Rigidifying leads to increase of investment and the need to protect egos; policy founded upon error, multiplies, never retreats. The greater the investment and the more involved in it the sponsor's ego, the more unacceptable is disengagement."

"Persistence in error is the problem. Practitioners of government continue down the wrong road as if in thrall to some magic power which directs their steps. To recognize error, to cut losses, to alter course is the most repugnant option in government."

eFeedback

"I see the two major political parties as either a) suffering from a bad case of ostrich-itis (if we pretend that the situation will go away, it will), or b) struggling to do what they can while being owned by powerful interests who apparently don't care what happens to America. I'm inclined to believe it's a little of both.

"It's apparent to me that *we* have solve our energy problems ourselves, rather than waiting around for the government to do it. It would be best to do it the traditional American way: provide people what they need in the free market, and be rewarded for the effort by that market.

"I've been thinking about an alternative rail transport system which could move people and goods using privately owned vehicles riding on a public rail - just like the massively successful highway system. Imagine a small SUV with a locking mechanism on the roof. It rides on the road for your local travel, possibly on battery power, possibly using current hybrid gas/electric technology. For the long-distance hauls, you drive into a docking station, where it connects to an automated drive unit mounted on the overhead rail. Enter your destination on a panel inside the vehicle, which sends the request to the carrier, and you're off. Read the paper or watch TV.

"The rail supplies power and communications. Control is completely automated. Vehicles may therefore follow each other close enough to take advantage of the slipstream created by the lead vehicle. Congestion is reduced, as automated vehicles move much more efficiently than people-driven vehicles. Wind generators located near the 'highway' may power the rail. Any alternative energy source will do. The system is not locked into one technology. While your vehicle is on the rail, it recharges its batteries, if it has them.

"Not all rail vehicles need to have the ability to ride on the roadway. Package delivery companies could purchase vehicles which ride between various shipping and receiving docks which have rail built right up to them. These vehicles may be unmanned.

"Tolls for usage of the rail will be offset for the individual user by the savings in gas or electricity. It's 250 miles between St. Louis and Kansas City. At 27 MPG, that's 9.26 gallons of gasoline. At current prices, that's about $18.52. A toll of $10.00 saves you $8.52. Your savings are greater as gas prices rise, which they surely will.

"Finally, this whole thing should be developed open source, avoiding patents as much as possible. This isn't about making a mint, although the automakers will be happy to build hybrid vehicles, should the idea catch on, and road crews would certainly enjoy building the infrastructure. Plenty of work for tens of thousands of Americans, including the engineers who contribute to the design.

"Personally, I'd be thrilled to have a chance to work on the design part, without any patent or licensing fees, if it meant that just one American soldier could go home to his family at the end of his tour of duty, rather than dying in some pointless oil war. Let's make the Middle East irrelevant!

"Note: Some of these ideas are already in circulation. Technically, my idea would be called a "Dual-mode" (road/rail) "Personal Rapid Transport" (or PRT) system, and there are a few concepts already out there!

"The gas usage per capita has not changed significantly over the last decade, even though the gas mileage per auto has improved. We apparently drive more, taking advantage of the surplus of mileage (estimated at $600 per car per year). So we use oil at a constant rate independent of car mileage or size.

"Results :

• The commuter air flights are "gone" in the northeast
• Traffic is up
• Less public travel for short hauls.
"Interesting..."

"I'm really sick of hearing all the whining about off-shoring and outsourcing. Granted, there is certainly some reckless profiteering going on (to the clear detriment of the many hard working people who produced those profits), but that has always been the case and (unfortunately) always will be. That doesn't mean we shouldn't report on it when it happens; we should, and have an inherent obligation to make the public aware.

"However, things like this monumentally stupid CNN list of companies that have sent jobs offshore that runs on the otherwise fairly respectable Lou Dobbs show every week is there purely for the hype factor - to rile up the uninformed. I'm appalled and disappointed with Mr. Dobbs for being so shallow as to permit such an insidious piece of distorted propaganda (which surely he is astute enough to be aware is just that - hype) to be aired on his show.

"Americans are understandably and appropriately sensitive to job losses, whatever the reasons. Thanks for providing a dose of much-needed balance to the education of the American people; too bad it isn't reaching the same audience as CNN and exposing the Chicken Littles for what they are!"