Tao of Management
Last Update: 10 July 2012
NON SUM ERGO NON COGITO
(= I do not exist, therefore I do not think.)
TAO OF MANAGEMENT
by Makoto Okubo
at HEC School of Management, Jouy-en-Josas, France)
Go To The French Version
Strategy? Yes, but
It is a part of
management. Management, what is it exactly?
Nobody knows, everybody
is searching, but it's not explicit yet.
It means "master".
Then, master what ?
Whatever you master,
you may try to research it by knowing and to decide by previewing.
We may try to respond by non-thinking and to act by non-action.
In the Occidental management, the first method was essentially taken.
For a long time, the way of physics and management has been dominated by
Cartesian-Newtonian mechanism. It has influenced profoundly every aspect of the society.
On one hand, the
study of 20th century on atomic as well as subatomic world has revealed
the limits of classic ideas, and on the other hand, facing with the invalidy
of scientific hypothesis such as efficient market, perfect information
and certain universe, the management now tends to adopt the integratrice,
organic and non-deterministic thinking.
These new concepts,
including modern physics, provide often curious parallelism with the ideas
explained in Oriental philosophies. Besides, Japanese language, which belongs
to the Ouralo-Altaic family, incites us sometimes to adopt those notions.
My objective is
to present the second method, which has dominated Japanese management but
Western people have not paid so much attention to although existing since
ancient Greek era, and to imagine together the world beyond epistemology.
For that purpose, I would like to give it a new attempt of aufheben of
Japanese and Occidental cultures. The goal is not to comprehend Japanese
particularities nor trust Oriental method as viable instrument in any occasion.
I would like to
define the first method as cogito(=think) management, the second as non-cogito
management. I believe that the combination of cogito and non-cogito management
would be a key toward the new world order. As Niels Bohr suggests, the
contrary is complimentary (Contraria sunt complimenta).
This paper is, therefore,
not to address simply readers who are interested in Japanese relations
but any business people or students. I hope this might be helpful to today's
managers who have never been interested in working on Japan, but finding
themselves in environment complicated, uncertain and fuzzy.
CHAPTER 1: INTRODUCTION
"The World of Precision & The World of Integration"
How have you been dealing
with your business environment, whether internal or external? Cogito management
adopts "precision" method, trying to seize all the relevant data and information
and make a decision after substantial analysis. When the world is simple
and certain, it will be an easy job. Cogito management uses deterministic
approach. Although that hypotheses is usually illusory, the method is quite
effective where the margin of error is not significant. To cover uncertainty,
cogito management even employs stochastic approach, trying to apply statistical
method with a range of probable events, and then determine reasonable actions.
adopts "integration" method, similar to Lao-Tsu's non-action principle,
trying to integrate everything into one system, matching themselves with
the world and do not care what the world is, which they believe is impossible
to recognize by any means. Non-cogito method is not always efficient and
profitable, but is sometimes more effective, where some assumptions for
cogito management cannot substantially be expected.
Allegory 1 Fibonacci Sequence)
You have to process
the series as below:
a2 = 1, a3=a1+a2,=2, a4=a3+a2,=3
Ms. Non-cogito doesn't
care about what it is, but knows
how to process inductively,
and follows the rule:
an+1 + an, a1 = a2 = 1
Mr. Cogito insists,
however, on figuring out what it
is by definition.
It has turned out to be:
Do you still want
to define what it is ?
CHAPTER 2. TAO OF MANAGEMENT
"What we can learn
from ancient Chinese?"
1: Yin & Yang
It appears that, in
Western world, there is significant influence of dualism. In most cases,
they are mutually exclusive and not reciprocal. If you are good, you are
not bad and no problem. If you are bad, you are not good and should become
In Asia, there is
also a dualism of yin and yang. But they are merely seen as the two extreme
poles of the same reality, and mutually complementary. If you are strong
in some way, you are weak in another way. If you are inside, you are outside
in a sense. Everything is shown as dynamic, cyclical, reciprocal combination
of the two natures. You are constantly moving on the road(=Tao) between
the two poles. If you reach one pole, you return toward the other pole.
If you are too rational, you may turn toward intuition to keep in balance.
"Contraria sunt exclusiva" : Occidental
Good vs. Bad
Positive vs. Negative
Rational vs. Irrational
"Contraria sunt complementa" : Asian model
Yang <-> Yin
Strong <-> Weak
Inside <-> Outside
dual comparisons are misleading.
Which is more similar to Japanese, French or Americans ?
To be somewhat like
a Japanese ...
be socialized like
a French (Individual vs. Government
or Society, Art, Cuisine, etc.)
be organized like
a German (Law, Organizational
be pragmatic like
an American (Concrete Thinking,
Practical, Market-oriented, etc.)
play a game like
a British (Island Sprit, Casting
vote rather than explicit initiative, etc.)
sing like a Spanish
(Folk Songs, Pronunciation, Soul, etc.)
think like a Chinese
(See this chapter)
believe like an
Indian (See Chapter 3)
talk like a Computer
(See Chapter 4)
is more arrogant, French or Americans?
In Paris cafe, three
persons, an American, a French, a Japanese, discussed what people is the
most arrogant in the world.
The Japanese said,
"It's American. They think American way is the best one, don't hesitate
to say it, and want you to understand it".
The American opposed,
"There is another people more arrogant than us. It's French. They think
French way is the best one, say it, and don't care about your opinion.
That would make no sense!"
The French opposed,
"There is another people more arrogant than us. It's Japanese. They think
Japanese way is the best one, but don't say it. Because they don't think
that you might understand. What an arrogance!"
By the way, can
you tell which is stronger, Utah Jazz or Holyfield?
2: Non-action and Detour
Taoists act with their
sages intuitive, spontaneous and harmonized with their environment. Lao-tsu
taught us that, if we match perfectly with the nature through "non-action" ,
there would be nothing impossible to accomplish. Viewing Tao as a continuous
reaction between the two opposite energies, they tended to be optimistic
in adversity and be prudent in prosperity. To carry out something, they
begin with the opposite: " Expand before contraction, enforce to weaken,
exalt to eliminate, give to take, etc."
If you want to push something forward, there would be always a lot of hurdles.
All the reactions would try to prevent you from realizing your objectives.
If you pull it instead, there would be the opposite reactions. The power is
usually shorter-term but even stronger. When the power gets ready to launch
by itself, all you have to do is just let it go. It will go alone in your
direction, and you will see your objective accomplished. If it is hard to
understand, imagine "archery".
To let an arrow to go forward in the right direction, you pull it instead
of throwing it. Don' t pull too strong nor
too weak. Release it when your influence disappears.
Yeah! That' s
it. It' s the spirit of non-action.
Non-action as well
as making a detour for access are the key principles in any aspects of
Japanese culture, arts, Aikido, Judo, Karate, and management.
Detour for access !
3: Tao of Management
Long-Term Vision :
Different Optimization Models
In cogito management,
your first job is to recognize your internal or external environment..
You list up alternatives, analyze them and choose the best one. This method
is based on assured accuracy of information. When information is not sufficiently
obtainable or erroneous even if provided, this method might lead you to
wrong plan of actions. Non cogito management, based on forecast incapability
and attempting to stabilize resources irrespective of situations, might
be an alternative in that circumstance, presumably in emerging markets.
Japanese management tend to set a direction to optimize
their intrinsic value; not only financial resources but also human resources,
technology, new products, information, independently of circumstances,
unlike the Occidental model, which provides the optimization at a given
time or for a given period with certain hypothesis. With the belief that
the world is controlled by organic and cyclic rhythm, Japanese model has
a long-term vision usually containing at least a whole cycle: prosperity,
recession, adversity, recovery & prosperity. With this direction, operational
plans will be set to ride on a tide. Today, US people may view Japanese
firms dead and their strategies just failed. But in Japanese perception,
they have not reached the middle of the road yet. Besides, the word " strategy"
had not existed until borrowed from military terms to interpret a foreign
word, but it seems most do not distinguish it with " tactics" .
The vision and plans had only been necessary.
You have two alternatives
A & B.
Mr. Cogito's formula
IF A >= B THEN choose
IF A<B THEN choose
His first job is
to find out which is larger, A or B.
She prepares the
system which is good for either case.
Be careful, she is not seeking (A+B)/2.
Short-Term Plans :
Continuous or Discrete Adaptation Models
Lao-tsu might say,
"Get short to be long."
To implement a long-term vision, Japanese management has its plans extremely
short-term, let' s say three months. Since the environment is changing without
interruption, the hypothesis valid today would become invalid tomorrow.
Long-term plans may be optimized only for a short-term. Under this philosophy,
the operational plans should be cut into small pieces, get inductively
modified and keep continuously adjusted to the environment. The competitive
advantages may be gradually established with indivisible multiple plans.
This method is similar to the "differentiation"
in mathematical term. The total activities may be compared to the integral
function. Nevertheless, Western people are not doing anything fundamentally
different, since their hypothesis and assumptions are changing day by day.
Simply, as each plan is separate and relatively longer-term, the method
would be likened to the "summation of discrete
series" . When the environment changes in
continuous and differentiable fashion, the differentiation method may be
more effectively and minutely adjustable to the circumstances. However,
when the changes occur in discontinuous or indifferentiable manner, it
can no longer adjust itself, therefore it may repeat the same thing or
Method (Non-cogito management model)
Method (Cogito management model)
Japan been competitive in international marketplace?
As mentioned above,
the Japanese model is based on continuous improvement & adjustment
rather than selective optimization. Whatever discussed in political arena,
Japanese firms have shown competitive advantages in the area where the
environmental changes have gradually occurred and only a slight and subtle
improvements may have had an impact on customers' choice, such as automobile,
computer hardware, TV set, audio, household electronics, etc. However, they
are far from forerunners in the area where environment has changed brutally
and discontinuously, such as financial services, telecommunications, operating
system, medical & chemical products, etc.
difference in consumer's risk tolerance
between Japan & US
While variable annuities,
mutual funds, and equities are the hot funding vehicles for retirement
in the US. Japanese prefer to invest on guaranteed products. Variable products
are relatively rare in the marketplace. The survey conducted by Nikko Research
randomly for 500 households in each country in 1996 shows that US consumers
tend to have a higher risk tolerance for longer investment, and the exact
opposite for Japanese consumers. This may be an amazing contrast. But,
to me, it is understandable that Westerners as "selectors" try to choose products
with higher growth for longer-term investment, and Japanese as "adjusters"
try to avoid taking risk for longer term investment, which would not permit
them to adjust for a longer time.
does Japanese Big Bang means?
It has been a long
time since Japan has suffered economic hardships. Not only public sectors
but also private sectors are trying to find a way to recover from it. But
all those measures have not given any significant impact yet. I am feeling
that the situation may be quite similar to the "freezing" of Windows 95.
Whatever you type on the keyboard, the machine never reacts.
The only way to recover is to reboot it !
model discribed above assumes that you are always on going and continously
improving. Once you stop, it might have no autonomy to restart. Japan must
take measures, whatever they might be, that are discontinous and independent
of the past in order to reboot the economy.
Don't worry, partners.
Japan is not dead, only sleeping for a moment. Of course, to improve our
returns by 5% may not be easy. However, if you really need 15% improvement,
it may not be impossible to carry out. Fortunately, we know we have
much to alter. What we must do is to make up our mind not to repair but
to recontruct things. Let us pull out the plug and
turn it on back. Once
we restart, we know how to improve it constantly and efficiently.
This is what Japanese
Big Bang is all about.
By the way, please
do not forget about cyclical nature of the world. Since you are on
the top of prosperity, it might be already your turn to worry about your
4. Detour and Advance
In prosperity, financial
resources come in one after another. There are a lot of businesses and
people are constantly busy and even hard to breathe. In adversity, although
cash inflow is limited, people have more " spare"
time. This might be a good opportunity to gain a foothold for tomorrow,
by gathering information, conducting research, reviewing the process and
accumulating human capital through training of the employees, etc. Rationalize
the process? Yes, but what for? The reduction of cost and the creation
of idle time are the key aims. The idle time of the employees are considered
the source of innovation.
To let firms go
forward, management may employ the two opposite forces: " The
law of Sun" & " The
law of Inertia" . The former is positive
intrinsic energies toward progress, expansion, innovation, joy of success,
etc. The latter is negative extrinsic energies to resist following the
current; traditional customs, old paradigm, risk aversions, fear, protectionism,
personal interests, reluctance to the unknown, etc.
When the solar force
is superior to the force of inertia, your job is to set your position in
balance and adjust your sails with the wind. On the other hand, when the
force of inertia gets stronger and blocks the firm, it may be more effective
to draw it to the opposite direction and utilize the force of inertia to
launch, by creating problems, denying past goals, promoting crisis, investing
at risk, setting unrealizable budgets, etc. When the employees react against
the contradictions, imbalance, fear of penalty, crisis, their passive resistance
should be transformed into positive intrinsic energy to move on.
to catch customer's heart?
A book titled"How
to catch woman's heart" was widely read among sales people. Apparently,
women are driving consumer market. Let' s take an example from that
book. You are with your girl friend mixed with anticipation and reluctance.
How should you ask her to stay?
Alternative 1 :
You stay? ,,,,,You can go, if you like.
You go? ,,,,,You can stay, if you like.
Logically the two
sentences are the same. But the book explains the latter would be better.
In the first case, when she heard "you stay?", she had a little "no"
on her mind, and the words
"you can go" will release her to go.
In the second case, when she heard" you go?", she might have a small
disappointment on her mind, and "you can stay" might let her to stay.
In fact, this kind of reverse psychology has been quite effective in
marketing area, although I have never tried it in a romantic context.
deregulation in financial service industry
When you compare
two regulatory systems A & B and find a point that A is more restrictive,
you may often find another point that B is more restrictive. Some restrictions
are related with other authorizations. If the door is open, the safety
boxes are locked (US model). If the door is closed, the safety boxed are
open (Asian model). To make the latter type of countries open the door,
the first step might be close the safety boxes.
5. Dynamism of Yin
and Yang in Management
The world is too complicated to characterize
in any single word. Contradictions are always found; competition &
cooperation, conflicts & harmony, success & failure, etc. Under
the equilibrium in conjunction with dynamism of Yin & Yang, any combination
of opposite forces are possible by actions & reactions vis-à-vis
with the environment. " Oxymoron" ,
the combination of contradictory concepts such as competitive cooperation,
harmonized conflicts, successful failure, may be an appropriate answer,
if you try to describe it in a word.
a) Cooperation & Competition
There is a perception that Japanese as
collectivists are cooperation-oriented while Americans as individualists
are competition-oriented. This is not incorrect, but may be inaccurate.
While Japanese firms often show renowned harmony, they sometimes manifest
intense competitions with external and internal rivals even more aggressively
than Western firms. For Asians, cooperation and competition are the two
faces of a thing. For example, whom highly competitive Japanese salespeople
are competing with? In most cases, what they have on their mind are not
external competitors such as those of other firms, but internal competitors
such as those of next sections of the same firm or rivals in their section.
By competing one another, they cooperate to realize the firm' s
turnover, which would lead to competition with other firms, that could
be viewed as cooperation in the industry or nation' s
Collectivism may bring harmony, companionship,
sympathy and collaboration, when the members are psychologically equal,
but may cause strong jealousy and competitive sprit when some members try
to be superior. If we say the ambition to become a winner is a driver for
competition in individualism, the evasion from becoming a loser may be
a driver for competition in collectivism. In addition, the latter tends
to limit the scope of competition within insiders. For example, most of
the Japanese firms have expanded their exports not through competing with
foreign outsiders but through competing with domestic exporters. Except
for truly global firms such as Sony, Honda, etc., they view only domestic
firms as emotional competitors and have little allergy to team up with
foreign competitors in order to beat domestic rivals.
I hope we could expect some interesting
arrangements in the context of Japan Big Bang initiative, if we can transform
such a " non-global"
perception of competitions into various partnerships with foreign companies.
Paradox : Karaoke
behavior of Japanese & Westerners
Karaoke, that is
indispensable for Japanese private and business life, seems to have become
familiar to Western people. In the US and France, I have seen Westerners
bring Karaoke devices to a party and sing songs together. Japanese would
prefer singing alone, and joining someone's singing might be impolite.
This would be a precious occasion for self-assertion.
I assume both people unconsciously challenge their prototype as individualists
or collectivists. Everybody has both characters. The collectivism implication
might be applicable to Westerners to some extent.
As far as cooperation is concerned, we
should also pay attention to the remuneration system. While American reward
system is more task-oriented, Japanese system is more human-oriented, where
evaluation depends on how you have made contributions to the firm, the
teams and the other employees. You may maximize your gains by sharing information,
transferring knowhows, educating and giving chances to others. In this
circumstances, the employees may be competing with each other through cooperation,
in other words, repeated games of gives-and-takes. With American reward
systems, you might be sometimes better off if you hold key information,
preserve knowhows, and do important jobs by yourself. There might be the
sort of jobs requiring more "teamwork"
such as operations, processing, production, customer services, etc., as
well as the genre of jobs needing more "competitions"
such as planning, R&D, investment, sales, etc.
I'm afraid, many Japanese firms, with cooperative reward system,
seem to be demanding their employees to compete with each other, while many American
firms, with competitive reward system, appear to be begging their employees to
work in harmony.
b) Consensus & Creativity
A firm has a variety of people with different
backgrounds and opinions. It would not be an easy task to reach consensus,
even for the Japanese known as people toward consensus. Besides, seeking
consensus is not always a good approach. because consensus might kill creativity
of the plans. The creative plans are generally biased to a particular direction.
If the plan is too left or too right, right or left person disagrees respectively.
The process of consensus, which is equivalent to averaging process, may
make the final products banal. See Financial Modernization Bill!
On the other hand, the consensus assures lower risk of the plan, since
the plan was reviewed carefully from all the different standpoints though
If you are financial managers, you may
be familiar to the efficient curve of risk and return. We may apply it
to the creativity, that is return of planning, and its associated risk,
and consider to choose the strategies on the efficient curve. By
doing so, you are choosing the most creative plans with given risks you
can tolerate with.
When you are going on the tide, all you
must do is to do "nothing".
Some businesses may grow at 15% without doing anything. Doing nothing is
easy to say but hard to carry out. For example, just try think nothing.
You may be now thinking "Don't I think anything?" Normally you are forced
to do "something" to justify your salary, which would make the matters worse.
If you can remove all the frictions, the business will find its own way enjoying
stable growth. The best way to do nothing may be to find consensus of all the
managers and keep in harmony.
On the other hand, when you are going
against the tide, you would be drained into death without doing anything.
What you should do is to create the frictions to step on. You need the
creativity and stimulation. You should let each manager to work independently
and pick the innovative ideas. Some degrees of conflicts would be welcome
to awaken the sleepy company.
CHAPTER 3. NOTION OF
"What can we learn
from ancient Indians? "
1 : Conception of Emptiness
-Two status of existence
(Ancient Greece) full - empty
-Three status of
existence (Ancient India) empty (ku) - full (ge) - implied (tai)
The mirror world
The best way to
integrate is not to exist
2: Hadronic existence
The existence is defined
a priori by the nature of material or spirit
The existence is
defined a posteriori by the interactions with the world (Ancient India)
- Management of
- Upstream Rationales
& Downstream Rationales
- Vertical Specialization
& Horizontal Specialization
CHAPTER 4. INTELLECTUAL
"What can we learn
- The Americans run
- The Japanese walk
1. Just-in-time System
The Japanese as Ouralo-Altaic
I America to go
I this afternoon
movies to go can not.
Inverse Polish Notation
D A B * C + =
(D ni A to B o kakete C o tashite dainyusuru = machine language)
cf) D = A
* B + C (D is replaced by A multiplied by B plus C =
BASIC, C++, Pascal, etc.)
Inverse Polish Notation
Efficiency in operation
Why is it so difficult
to work in group in English or in French?
Two advantages of
Japanese language toward consensus
2. How to liberate
yourself from fixed ideas?
- Imprisonment in your
Why do you learn
Japanese even if you never use that language in your life?
: Another reason
to learn foreign languages
- Imprisonment in
our fixed ideas
Koans & Nazokake:
The art of jump and association
- The Management
Give birth to the
things that have not existed. (American, French, etc)
Associate the things
that have nothing to do with. (Japanese, etc.)
CHAPTER 5. AUFHEBEN
OF CULTURES (CONCLUSION)
"When do Westerners
become more asian than Japanese?"
1. Asset Liability
Management : New World of Taoism
2. Net Present Value
Concept : Hadronic Existence
3. New communication
tool: "Japanglish" or "japonçais"
"Contraria sunt complimenta"
Let's master the world
together by the complimentarity of Cogito & Non-cogito Management
part of this publication may be copied, duplicated, translated without
my prior written consent. This publication is not intended for commercial purposes , and I am not
liable for any potential problems that this publication might produce.
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