The Case for Management Technology

Hiroaki Matsukawa (Professor, Department of Industrial and Systems Engineering)

Products are eliminated from the market if they lack proprietary technology that provides a competitive advantage. However, having such technology does not guarantee survival. Without advanced management technology, this competitive advantage cannot be leveraged, and the products will ultimately be forced out of the market.

A century ago, one product changed the world: the Ford Model T, which sold 15 million units. While it was an incredible car, it was not built on groundbreaking proprietary technology. Instead, it utilized a revolutionary management technology known as the three S's: standardization, specialization, and simplification. The culmination of these principles was the assembly line at the Detroit Highland Park Plant, the first in the world to incorporate a conveyor system. Production efficiency multiplied, employee wages doubled, the price of the car was halved, and any Ford employee could afford to buy one. This ushered in the age of motorization. As this example shows, management technology is indispensable for market competition, and its importance is only growing in our modern, globalized economy.

The term "management technology" was first used by F. W. Taylor (often called the father of management) in his work on "Scientific Management." Taylor clarified that while proprietary technology is important, management technology is equally crucial. He demonstrated that by using management technology to boost production efficiency, both companies and workers could profit, which in turn could prevent labor disputes and contribute to corporate management on many levels.

Taylor once conducted a study on the efficiency of carrying pig iron at an American steel company (Midvale Steel). At the time, managers instructed workers to walk slowly when carrying the heavy pig iron and quickly when returning empty-handed. Through various experiments, Taylor collected and analyzed extensive data, discovering that efficiency was actually higher when workers walked as quickly as possible with the heavy load and as slowly as possible on the empty-handed return. By allowing their muscles to fully recover on the return trip, not only did the total amount of pig iron carried per day increase, but the workers also became physically stronger. The workers gained higher wages and better health, while the company's cost savings exceeded the wage increases, boosting profits and preventing labor disputes.

In today's business landscape, time-based competition has become as crucial as competition over quality and cost. This competition involves two key cycles: the innovation cycle (product development period) and the operations cycle (manufacturing and sales period). To shorten the innovation cycle, "Technology on Technology"—the management technology for new product development that leverages proprietary technology—is essential. To shorten the operations cycle, it is vital not only to reduce manufacturing time but also to implement supply chain management (SCM) to shorten procurement and sales times. For instance, in procurement and sales logistics, it is often more economical to reduce the total transit time from origin to destination by eliminating various delays and periods of stagnation, rather than simply using expensive, high-speed transportation to shorten the travel time alone. This requires shippers and consignees to share information, synchronize their logistics activities, and implement optimal scheduling. Without management technology, this kind of optimal scheduling is impossible, and a company that could win with its proprietary technology is more likely to lose because of its management technology and be forced out of the market.

In this way, management technology serves as the foundation of corporate competitiveness and a weapon for succeeding in global business. To avoid becoming a company that excels in technology but fails in business, it is essential that we thoroughly hone our management technology.