THE FACTORY UNIVERSITY, THE FACTORY CULTURE -- AN EXCHANGE!

THE FACTORY UNIVERSITY, THE FACTORY CULTURE – AN EXCHANGE!

James R. Fisher, Jr., Ph.D.
© May 11, 2009

“New York City used to be the world’s financial capital. It no longer is even the financial capital of the United States, Washington is.”

Ian Bremmer, “State Capitalism Comes of Age: The End of the Free Market?” Foreign Affairs, May/June 2009, pp. 40 – 55.

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A READER WRITES:

Hello Jim,

We are all so very dissatisfied with the current state of affairs. I know I have offered my share, not a fair share but a disproportional heaping of rants and raves, directed at those "in control" who have systematically abused us the tired, poor, huddled masses yearning to breathe unencumbered by the robber barons, while ranting at their heartless oppression.

We, the wretched refuse in our teeming stores (Wal-Mart, Target, Costco Best Buy and Sam's Club) maxed on our credit cards and waiting for the next unemployment check, search for our own Golden Door. I'll take what's behind #3.

My apologies to Emma Lazarus.

Jim, you were a pioneer leading the introduction of QCCs in the 70s. If you recall, one of the concepts we emphasized to the teams was avoid "curing" the symptoms. The use of root cause analysis helped to ensure we dug deeper. It has been rare that you attack the surface of an issue. Each of the initial issues raised are symptoms of deeper societal problems. The list of six solutions address removing boundaries and success criteria for everyone but old professors. Essentially the proposal is to fire old professors. Each fails to explore why the symptom exists.

Having been fortunate to attend two universities in which professors seemed available and receptive to students, or at least this student, I can't relate to that lament. Nor can I understand how an MBA doesn't prepare someone for business. That is more the student's fault. You could earn the degree by filling electives with cakewalk classes or you could challenge yourself with advanced statistics and complex finance classes.

We forget that Universities are also businesses. Endowments only go so far. Pandering to students (or companies with ed assistance programs) brings those fat tuition checks to the bursar's office. Oh, what a tangled web we weave....

Michael

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DR. FISHER RESPONDS:

As I said in my “Factory University” missive (May 10, 2009) that I applaud a sitting academic for having the courage to speak out, while seeing he still retains “remnants of the factory mindset.”

Of course, he is addressing symptoms instead of root causes. I applaud him because we have heard little noise from academics. Can you imagine how entrenched academics might however react to his relatively innocent remarks? Panic comes to mind.

And yes, universities are businesses, but they should create the model appropriate to the climate of today instead of reifying the old factory model of the past.

* * *

Our economy is upside down, and no one would notice if it wasn’t in the tank.

More than fifty years ago, Walter Reuther of the United Auto Workers went into collusion with the automotive industry, vying for pay and entitlement concessions, while giving up control and decision-making of workers in their work. Now that chicken has come to roost.

More than fifty years ago GM’s CEO Charles Wilson was right to say, “As GM goes so goes America!” We have been captive to that Detroit mystique for half a century. We are still captive albeit no longer relevant. Why? Notice my closing remarks to this missive.

* * *

In typical American fashion, when the money is flowing freely, American workers are willing to give up almost everything for that extra buck and perk. I wrote about the steel and aluminum industries regarding this in SIX SILENT KILLERS (1998).

Senior employees at Alcoa and Bethlehem Steel in the 1960s were given 13-week paid furloughs every five years. What did most workers do with this free time? Go back to school and attain new skills? No. Get a second job? Yes.

So, when they returned they tried to maintain both jobs because their standard of living had changed. The experiment was a disaster. Workers came back disgruntled and less efficient for this bifurcated focus. It was a lose-lose proposition. The company lost because workers were inefficient on the job, and workers lost because it was impossible for them to maintain the two jobs. Whose fault was it? The company’s of course because it had devised the scheme. Workers felt no sense of complicity in the furlough plan.

* * *

What was apparent but not seized upon was the fact that you cannot disrupt the factory cultural programming of workers with a poorly thought out intervention and expect to reap untold benefits. The first step in the intervention should have been to acknowledge and accept the creature the factory system had created and then appreciate the long arduous task of reprogramming required for real change. It takes six weeks to develop a habit. It takes six years to change it.

* * *

One hundred years ago, when compulsory education taught us to read, write and do arithmetic, it also taught us to behave as robots and to be taken care of by our factory system masters. We were fodder for the Industrial Revolution with an assembly line mentality. It permeated everything we did.

A century of wars, an explosion of innovation, burgeoning population growth across the globe, reduction of the distance between us, and the birth of the Information Age and a global economy have all converged to make timely problem solving a worker-centered rather than a mahogany row affair.

The incredible insanity of the times is the belief that power resides in Washington, DC and corpocracy, in the leaders of the twenty advanced technology nations of the world, when such leadership behaves like puppets to the giant puppeteer of unanticipated cataclysmic events.

Consequently, not only is our economy upside down, but effective decision-making is as well. But, alas, workers, not even professionals, have been programmed to be responsive to this new reality. They wait. We wait. So events rule the day.

Society is too late smart, and this has been its patterns since the beginning.

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Now, automotive workers because of the extended recession are being given anywhere from a month to more than two months furloughs with 80 percent of their take home pay. Interviewed on television, most of them said they were going fishing, hunting in Canada, fixing up the house, or “just laying low.” Not a single person interviewed said he would take a course at the local junior college to increase his employability

This is the entrenched factory mentality that we have created: passive, reactive, and conditioned to being taken care of by the paternalistic system that has kept workers in arrested development and permanent adolescence since WWII. This is a luxury society can no longer afford.

John Strothmeyer documented all this in CRISIS IN BETHLEHEM (1986) showing how the steel and aluminum industries induced workers into greater dependence with their 13-week furloughs every five years, and excessive employee perks not attached to performance. Workers, instead of responding with appreciation, Strothmeyer tells us they “crippled the goose that laid the golden age.”

The United States and Europe are at root societies that have been riding the boom and bust period like global beach bums catching the soaring trends and not learning from the rapid declines, absorbing their transgressions with little real pain, while not expecting the rest of the world to catch up, but, alas, the world has.

* * *

Sovereign States across the globe are using a heavy hand called “sovereign wealth funds” (SWFs), a new term coined for state owned investment portfolios, which account for one-eighth of global investment.

Ian Bremmer writes in “Foreign Affairs” (May/June 2009), “These trends are reshaping international politics and the global economy.”

When politics instead of economics drive the world economy, he says, “State capitalism introduces massive inefficiencies into global markets.”

This should come as no surprise because “profit motive” is not a state but a private economic driver. God only knows what kind of a world we will have without motivated wealth creators. Wealth creators have been the measure of America’s greatness. Like it or not, this is changing in the current economic woes, and has been for some time. Governments are entering the vacuum created by the impotence of private enterprise. You think I exaggerate?

When we think of the giants of “big oil,” we typically think of British Petroleum, Chevron, ExxonMobil, Shell and Total. If we do, we are terribly misinformed. They own only about ten percent of the reserves and production, while state owned companies control more than 75 percent of global oil reserves and production. SWFs for these interests are being made in such places as Abu Dhabi, Ankara, Beijing, Brasilia, Mexico City, Moscow and New Delhi, not New York City.

Even the President of the United States is operating as if a CEO of the nation with Washington, DC the corporate and financial capital of the enterprise. A good deal of the private sector is now beholden to the government because of the stimulus packages and corporate bailouts. State capitalism has indeed come of age.

* * *

You mention that I was a pioneer in Quality Control Circles in the 1970s and 1980s. I was. You are also right that we looked for chronic problems under the auspices of “Total Quality Management,” but QCCs had no teeth and were regimented to cosmetic or hygiene interventions such as workplace ergonomics, lighting, operating manual design, and so on.

There were exceptions. I remember an energetic QCC worker identified $5 million of scrap waste in one operation, and nearly lost his job for “stepping outside his job description,” and embarrassing the management.

You see he was not a manager but a technician, but obviously a very good one. He came to me for counseling for fear he was going to lose his job. Others saw what happened to him with the shadow of silence following the operation thereafter.

QCCs were a group-oriented process and they never made purchase with professional employees who considered themselves “individuals,” and part of the management corps. They were however equally passive, reactive and obedient to the dictates of the factory culture as were their blue-collar colleagues.

* * *

I am neither pro worker or anti management or pro management or anti worker. My beef is that the culturally conditioned workers and managers needed today are not being produced in a factory culture. Corpocracy has not changed the cookie cutter molds that have produced them.

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My beef with the MBA program is that it epitomizes the cookie cutter mold. My desire is for MBA’s to be stand up people and not complicit toads to a failed and failing factory system.

Unfortunately, the cookie cutter mold continues to produce people to manage things when computer software can do a better job. MBA programs have failed to generate people to lead, and to display the courage to challenge the status quo. Market logic and profit purposefulness are not leadership.

“States Capitalism” across the globe is filling the void created by private enterprise’s failure to appreciate the importance of social justice to its survival within its operations and with its markets. I witnessed how inured corpocracy can become to this in South America and South Africa. The United States is not the only capitalistic society guilty of such exploitation, but it is coming to roost now for them all. People who have nothing have nothing to lose. Rebellion is in the air.

* * *

Social justice is a matter of moral principle. We weren’t put on this earth to create wealth for our own self-aggrandizement. We were put on earth to make a better more civilized and just world for all.

This may seem an abstract idea when shown so bluntly in all its nakedness. But I assure you it is quite concrete. The downside of not living within this principle is perhaps the greatest hazard to future world tranquility. No dimension of society has a more intimate role in this than the business community.

* * *

The reason MBA programs infuriate me is the misapplication of energy and intellect of otherwise brilliant minds, while at the same time reifying what is wrong with our society, which is the enhancement of wealth for its own benefit. Equally wrong is "to give wealth away" like a gift instead of showing people how to create their own wealth. You diminish people when you give them what they have not created or earned themselves. Self-worth is a function of pain, sacrifice, failure and success, all of which are missing in a factory system of flippant munificence.

Wealth, per se, has become the only arbiter of worth for many. When taken to its absurdity, it leads to economic meltdown with the definition of progress always “more,” and “more,” as we know, can never be satisfied.

Self-worth is not so limited an asset. It is an expression of the utilization of one's inherent abilities.

We live in an MBA world. It thinks, feels and behaves in terms of financial assets enhancement, not of the enhancement of people. No one questions that the purpose of a corporation is not only to make a profit but “more profit.” I ask, why?

(1) Imagine if the focus of MBAs was to find ways to get beyond the factory system, and in the process save industries and jobs, and create more reliable instruments to anticipate and neutralize economic downturns.

(2) Imagine if MBAs could deprogram worker dependence on management and counterdependence on the company to operate more freely as independent contractors. It might resurrect the worker's spirit and increase the health of the body of his work.

(3) Imagine if the aim of business was to improve the cultural health of society.

* * *

We have for too long had the cart in front of the horse. Profits are the cart; people are the horse. The horse has been pushing the cart (profits) when it could be much more effective and efficient pulling it and society to new horizons.

Simplistic? Perhaps. But it has been a mistake to focus exclusively “on the bottom line,” or the outcome (the cart or profits) when how you manage the process (the horse or the people) is and always has been the key to everything.

People are the critical mass. And people in crisis, when they are made aware of the crisis and the impact of the crisis on them, have pulled several times their normal weight. Likewise, they have made miraculous impact on what was felt to be hopeless situations. That has never changed. It is time, once more, to take note of that.

WHAT HAVE WE LEARNED?

If there is one thing that the current economic meltdown has taught us, it is that market logic and profit fixation have run amuck. We are in a new phase of capitalism according to such voices as Ian Bremmer. He sees the end of free markets and the dominance of politicians in state capitalism. Is he correct? I don’t know.

Bremmer claims state capitalism has been in the works since 1973 when OPEC agreed to cut production in response to the United States’ support of Israel in the Yom Kippur War. Since then, commodities have become a geopolitical weapon.

Much is now being said about the Great Depression of the 1930s. What is not mentioned is that between 1932 and 1934 there were over 4,000 strikes across the United States. There was rank and file rebellion in this country. Historian H. W. Brand in his book “Traitor to His Class” (2008) claims President Franklin Delano Roosevelt deserted his patrician class. But if he did so, I believe, it was to stem a revolution.

There is evidence that FDR reluctantly created the “New Deal,” and reluctantly signed into law the Social Security System because of the inordinate pressure of ordinary Americans. They were tired of the money class ruining the day. The torpor of the times with millions unemployed was restive for action. Did FDR fear a second revolution? I think he did.

At the time, the intelligentsia, academics, writers, entertainers and other intellectuals saw Marxist communism as a possible alternative to chaotic capitalism. They would suffer greatly for their beliefs during the “Great Red Scare” of the 1950s when the House Un-American Activities Committee “blackballed” them as communist sympathizers. Many never worked again in their professions.

* * *

Could such hysteria be rekindled in the not too distant future? Of course it could. We are a reactionary society. Could American society be again threatened with possible revolution? Certainly, the seeds of discontent are always there waiting for a flame to ignite them.

If the Obama government fails to get a grip on this current crisis, it is a possibility. The irony is that these banks and lending institutions are using money from the bailout to pay lobbyists to prevent corrective legislation. It happened recently when Congress failed to pass real estate legislation supportive of desperate homeowners.

There is more truth than fiction to the more things change the more they remain the same. Political and corporate power is using this economic collapse to reconsolidate their power base. My wonder is if the rank and file will allow it.

* * *

While General Motors is flirting with bankruptcy, one wonders if taxpayers will be expected to cover the costs of pensions the company promised workers. The cost for GM, alone, is estimated at $13.5 billion. The “Big Three” automakers’ retiree health benefits are not insured, but the government has insured autoworkers pensions up to $54,000 a year.

Who pays for those retirement benefits if the “Big Three” go belly up? Our grandchildren do.

Such utopian largesse happened during the good years (1945 – 1965) when the automotive leadership and the government leadership could not see beyond the latest gas-guzzling models. The rest of the United States copied the Detroit corporate factory economic dependency model during the hey days of unionism as best they could. Now many of these workers have no such guarantees.

* * *

So, here in 2009, more than 5 million or 9 percent of the workforce are unemployed, home prices fell in nearly 90 percent of U.S. cities in the first quarter of this year, one in every 374 homes nationwide is in some state of foreclosure (one in every 135 Florida homes is in foreclosure), credit card debt is soaring, and people feel they have done nothing wrong. They were programmed in factory dependence and have behaved consistent with that dependency.

Now, they feel their leaders are betraying them, but these leaders have been betraying them for more than fifty years, most notably in the past quarter century.

As management guru Peter Drucker has noted, corpocracy immediately after WWII paid itself ten times the average pay of the production worker. Sixty-five years later, that differential has soared to more than a thousand times the worker in the trenches pay.

* * *

When Bill Clinton became president, the people in Treasury who created the policy of deregulation, which has caused much of the present panic, paradoxically, are the same people in charge of restoring regulation to Treasury.

The Democratic Congress a quarter century ago, which removed usury limitations to credit card companies giving them permission to punish credit card holders who could lease afford the exorbitant rates, are the new Democratic Congress setting out to restore these credit card limitations.

This absurdity competes with “In Praise of Folly” of Erasmus written 500 years ago.

It could be argued both parties in Congress have abandoned their constituencies, being manipulated by those ever present puppeteers, the lobbyists. Now, in crunch time, due to the government’s vacillation and ineptitude, social security is expected to go broke by 2037 and Medicare by 2017.

The talk again is about privatization of social security. Imagine where ordinary retirees would be if such privitization were the law today. No doubt we would be on the brink of revolution.

To demonstrate the ineffectiveness of Congress, they may punish American workers who retire at age 65, which once was the maximum benefit level of social security, by raising the level of maximum social security benefits to age 77 or older.

It is why I argue leaderless leadership has been the preferred model of the day driving us like the Pied Piper over the cliff.

Ordinary workers and taxpayers have trusted the leadership “to take care of them,” and we see where that has gotten them. They have been betrayed not only by government and corpocracy but also by a factory culture of counterdependency. It is an out-of-date system built for another time. It was a factory system willing to be surrogate parent to workers and taxpayers, and often a generous one, until it was a luxury it could no longer afford. We are in that day now.

* * *

We are in a spiritual as well as economic meltdown where little minds and large egos rule the day. We have had a minor breakthrough with the presidency of Barak Obama. What it will mean in four or more years remains to be seen. Will people put the factory mentality behind and assume a more active and energetic role, or will they retreat further into the net of dependency? Whatever route they take will have significant consequences. That is for sure.

* * *

To nudge us towards self-direction is why I write these missives. I don’t write for journals. I don’t write to get on Charlie Rose malarkey discussion panels. I don’t write for national attention. I write to keep my sanity so that I don’t do something stupid to remove myself from the chaos.

I live humbly and comfortably for I could not in my wildest conscience live otherwise when I know there is so much suffering around me.

I don’t do much. I am old and I’m in my last innings, and so I write. I am able to write because I have a lovely wife, Betty Ann, best in the land, the sun, the moon, the stars and the earth to me, who allows me to write unsullied by either compliment or criticism. I could not think much less write without this support. I dedicate everything I do to her, my wife for twenty-three years now. She would prefer I continue on my South Africa novel, but life keeps intervening. My apologies to all for this.

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