The University Record, September 28, 1992

Change necessary if U.S. to compete successfully

By Kathy Hulik
School of Business Administration

Change is the order of the day if the United States is to continue as a successful competitor, according to two speakers at the School of Business Administration’s Campaign for Michigan kickoff program on Sept. 18.

Marina Whitman, Distinguished University Professor of Business Administration and Public Policy, called for a commitment to ongoing change in production methods and public policy.

C.K. Prahalad, professor of corporate strategy and international business, advocated a fundamental rethinking of the role of top management in response to what he called a “silent industrial revolution” going on around the world.

Whitman, formerly a General Motors Corp. vice president, said that while the American manufacturing sector is not in total disorder, there are particular difficulties. “Certain industries, such as automobiles and steel, have taken on societal problems that the governments in other countries handle,” she said.

These include supporting retiree pensions and health care. “We should ask ourselves if our new producers are actually more efficient or if they don’t have to deal with the subsidies the older producers do,” she said.

Whitman argued that U.S. manufacturing productivity has increased, and that the adoption of lean production methods has created a real cultural revolution, which our competitors have forced on us.

“I feel not complacency nor despair, but a commitment to ongoing change in public policy and industry, plus continuous pressure for efficiency,” she said.

Prahalad, taking a gloomier view, said that the United States is much less competitive than it once was and, in fact, has lost its status as world leader in the production of such commodities as automobiles, tires, consumer electronics, photographic equipment, heavy equipment, financial services and semiconductors.

“For the first time in industrial history, intellectual leadership is not in the West,” he said. “U.S. companies face a performance gap.”

Arguing that we lost opportunities in emerging industries during the 1970s, 1980s and 1990s, Prahalad said that industrial revitalization will require not restructuring, but a fundamental rethinking of the management process and a new emphasis on competence.

“In the last Industrial Revolution, we substituted capital for labor,” he said. “In the new silent industrial revolution, we are substituting competence for capital. The scarce commodity will be competence, not capital.”

The silent industrial revolution, Prahalad said, will be built around customer orientation, reducing requirements of capital, and global vs. local issues, with more experimentation and development of new products that are high quality and create excitement in customers.

“It will focus on ordinary people, not top management,” Prahalad said. “It will be non-elitist and inclusive, and focused on learning, not power and privilege. Workers will share a common agenda, a respect for the individual and a sense of belonging and emotional involvement.”