Decline of American and Japanese manufacturing?

Rude Awakening by Maryann Keller was an entertaining read of the decline of General Motors and the automobile industry in general during the 1980s. While trying to be gentle to Roger Smith, the book actually ends up giving the impression that most of the problems of GM lie with him. It also highlights the difficulties that all companies face - how much to centralize and decentralize. In GM’s case, its mistake (with 20/20 hindsight) was too much centralization within the 14th floor. Executives and MBAs aimed for the boardroom knowing they could retire comfortably with little regard for how the company in general was performing. While he realized that this was the problem, Roger Smith did not act forcefully enough - the division of GM into its different models was confused and lacked coherence. In some ways the book is timeless in that it provides a microcosm of the decline of American manufacturing during the 1980s and perhaps even today.

In contrast Sony vs Samsung by Se-jin Chang was a more academic look at the differences between the two companies. Written in a dry manner, it raises more questions than answers about the decline of Sony and the rise of Samsung. The root of Sony’s problems lie in leadership (or lack thereof after the retirement of Akio Morita) and its organizational culture (as a result of the leadership of Akio Morita). So in some ways, Morita planted the seeds of Sony’s demise by favoring a movement toward content and autonomy of various divisions that led to fierce internal fights that distracted the company from its markets. Samsung in contrast is a dictatorship and had a laser-like focus in displacing the Japanese in all the markets it was competing in. The author raises the correct question in terms of Samsung - can its dominance continue given its leadership structure?

In both cases, the question of how much centralization versus decentralization should a successful or soon-to-be unsuccessful company pursue? It also points to organizational difficulties as a possible reason for decline of companies and in turn industries. This is especially true if companies in the same industry pursue the same policies and organizational structures in their rise to the top.

Moreover, the books show that the much vaunted model of Japan, Inc. of the 1980s is susceptible to competitive pressures today just as American companies were at the time although perhaps less susceptible in terms of collapsing.