history – Page 11 – understand-culture

Adam Smith and the division of labor

Adam Smith’s understanding of a process – in the sense of division of labor – can be read in his famous statement about how a pin is producted:

”One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head: to make the head requires two or three distinct operations: to put it on is a particular business, to whiten the pins is another … and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which in some manufactories are all performed by distinct hands, though in others the same man will sometime perform two or three of them.”

William Edwards Deming

William Edwards Deming (1900-1993) was an American statistician and physicist, as well as a pioneer in the field of quality management. In the 1940’s he developed the process-oriented perspective of business activities, which were later introduced into various tutorials on quality management.

However, for many years Deming’s discoveries received very little attention in the U.S. Not so in Japan. There his insights were of great interest to leading industry managers. Why? The explanation given is that in the U.S. a maximization of production volume was the primary focus of industry following the worldwide reduction of production capacity following WWII.

This was possible to do without problem in the un-damaged USA. War-torn Japan, however, had limited resources for production, which pulled the optimization of processes into the foreground.

Deming’s story is initially a comparison between the U.S. and Japan. Yet the reasons why Japan’s industries became so process-oriented surely provide insight as to how Germany became to be so process-focused as well.

Listen to the first 3.5 minutes of Steve Jobs:

Craftsmanship

America history is made up of waves of immigration, the earliest ones bringing with them and maintaining the deep European tradition of craftsmanship. That focus on how the work is done – imbedded in what later became processes and procedures – gave way, however, to Taylorism, mechanization, mass production, and eventually to the outsourcing of manufacturing to low-wage countries.

That tradition – the European medieval guilds – craftsmanship, caring about how the work is done – is being reintroduced to the United States via its current reindustrialization. German companies, for example, are not only increasing manufacturing capacity in the U.S., they are importing their methods for training skilled workers. European, more precisely, German craftsmanship is returning to America.

Importance of price: No business culture gladly admits that price is a critical success factor. The U.S. business and consumer sectors are both strongly influenced by price. Americans buy and sell more on price than on craftsmanship.

Made in Germany

England in 1887 required all products imported from Germany to be labeled „Made in Germany.“ At the time German products were considered to be of substandard quality. Germany was a late-comer to the industrial revolution, much later than England. A famous German engineer admitted that German products were “cheap and nasty.”

Many were enraged, but it led to a national discussion and a quality offensive. At the beginning of the 20th Century, and especially in the post-World War II era, „Made in Germany“ took on a new meaning: high quality, newest technology. It became synonymous with West Germany‘s economic miracle of the 1950s.

The Germans recognized the importance of such a label, of the reputation of their products. They became particularly proud of their technical and economic achievements. Germans continue to view their products as having high quality, often as being the best in the world. From the early 1980s until recently Germany was the world‘s leading exporter.

The label “Made in Germany” is used less today than in the past, however. A minimum amount of a product’s parts must be produced in Germany before it can boast “Made in Germany.”

Modern German industrial and technology companies, however, have segmented their supply chains to include manufacturing sites and suppliers in many parts of the world. Nonetheless, the label “Made in Germany” remains a key, positive element in the self-understanding of every German.

Prussian Reforms

Much of what is Germany has its roots in the Prussian reforms of the early 19th Century. Napoleon‘s rapid defeat of Prussia in 1806/07 led to a deep-dive analysis of what went wrong, of what required reform. The Germans radically changed their agricultural system, their business laws, their military training, and most importantly their system of education.

Public eduction for all was introduced. The universities adopted the Humboldt education philosophy, which stressed free and independent inquiry and teaching. Knowledge quickly became the foundation of a modern Prussian economy and state, in many ways for contemporary Germany.

The Prussian Reforms also addressed state institutions. A system of professional civil servants and a bureaucracy was instituted. Bureaucracy then stood for efficiency and professionalism. The tax laws were simplified and made transparent. The state should function more efficiently and become a motor for positive change.

Germany today remains a rather bureaucratic country, with its scores of civil servants, rules and laws. It is a country where one simply cannot do as one pleases. From the perspective of other societies this is a limitation on freedom. Germans, though, view it as a sign of security and stability. Doing things the right way, punctuality, reliability, predictability, following the rules, bureaucracy. Germany has a 200 year history of these. They are who the Germans are as a people.

Crisis and insecurity

The experiences during, between and after the two world wars continue to exert great influence on German thinking. During both wars the economy was geared fully towards producing armaments. There was little material, money and manpower to supply everyday consumer goods.

The years between the wars were filled with civil war type unrest, weak governments, and several phases of inflation including a dramatic hyper-inflation. The years after the Second World War were marked by hunger, lack of housing, severe winters, high unemployment and a fear of what the future would bring.

The entire West German economy had to be rebuilt. This was achieved surprisingly fast due to the generous and far-sighted help of the Western allies and on the production of high-quality technical products. After nearly thirty years of instability, unpredictability and hardship, there was a strong demand among the German people for reliable, durable, high quality products. The Germans wanted security and predictability.

The German product philosophy has not changed, even though there are few alive who experienced the war years. The experiences were so dramatic that they have been passed on to the younger generations. German products which carry the name Bosch, Siemens or Volkswagen speak to the experiences of both earlier and current generations.

“Win some. Lose some.“

Americans are willing to accept the resolution to a conflict which does not go in their favor. They may not be happy, but if the process was fair, they will accept the verdict and move on.

Nor will their manager, asked to intervene in order to resolve, hold any kind of grudge against either of the conflict parties. American managers know that they are paid to serve as judge in resolving internal disputes.

Historically, the United States has little experience with revanchism. Revanchism, from French revanche or revenge, is a term used since the 1870s to describe the desire to reverse territorial losses by a country after losing a war.

Revanchist politics rely on the identification of a nation, of a people, with a nation-state. This mobilizes ethnic nationalism, claiming territories outside of the state where members of the ethnic group live.

Erbfeindschaft

The Germans have very low tolerance for conflict resolutions which declare clear winners and losers. Do Germans do their best to avoid open confrontation because the one or the other side wants to avoid being the loser, or because their sense of humility forbids them from being the declared winner?

A look into recent history might help us to understand why Germans avoid zero-sum mentality, preferring instead win-win situations.

The so-called German-French Erbfeindschaft – loosely translated as traditional or hereditary enmity or hostility – was a term used to define the wars between the two peoples going back to King Louis the XIV up until and including the Second World War.

The Germans won the Franco-Prussian War of 1870-71. The annexation of Elsass-Lothringen by Germany led to French desire for revenge.

The French are then on the winning side of the First World War. The Treaty of Versailles punishes Germany very harshly, making a lasting peace almost impossible. The Germans see it as political and military humiliation, which the National Socialists use to their advantage in the 1930s.

Then the Second World War. The Germans defeat and occupy France. But the Germans lose that war. But this time both sides have learned their lesson. They decide to integrate economically in order to end once and for all the so-called Erbfeindschaft. They choose cooperation over confrontation.

The Germans believe that a conflict is not resolved when one side loses and the other wins. A conflict is resolved when both sides accept the resolution.

Revanchism

Revanchism, from French revanche or revenge, is a term used since the 1870s to describe the desire to reverse territorial losses by a country after losing a war. Revanchist politics rely on the identification of a nation, of a people, with a nation-state. This mobilizes ethnic nationalism, claiming territories outside of the state where members of the ethnic group live.

See the strong desire during the French Third Republic to regain Alsace-Lorraine from Germany after defeat in the Franco-Prussian War of 1870-71. French Emperor Napoleon III had declared and lost the war. In the Treaty of Frankfurt, France lost Alsace-Lorraine, which France under King Louis XIV had previously annexed from Germany in the 17th century.

French revanchism was one of the forces behind the Treaty of Versailles, which ended World War I. Alsace-Lorraine went back to France. Blame for the outbreak of the the Great War was pinned solely on Germany. Huge reparations were extracted from the Germans.

The United States Congress rejected the Versailles Treaty, citing its harsh, unfair and one-sided punishment of Germany, and warning against the inevitable development of German revanchism.

Alsace-Lorraine. Just one piece of territory in dispute between two neighbors. One of many examples in European history. Their experience as a people, their historical consciousness, has taught the Germans to seek lasting resolutions to conflicts. Acceptance, freely chosen, is the foundation.

Poor Richard’s Almanack

On December 19, 1732 Benjamin Franklin first published Poor Richard’s Almanack. This book was filled with proverbs and advice, and was so popular that it was continuously published for 25 years, selling an average of 10,000 copies per year.

Many of the proverbs and pieces of advice dealt with time, particularly time management. Some of the best known time proverbs from this book include:

Early to bed, early to rise, makes a man healthy, wealthy, and wise.

Lost Time is never found again.

He that wastes idly a Groat’s worth of his Time per Day, one day with another, wastes the Privilege of using each Day.

If you have time, don’t wait for time.

Employ thy time well, if thou meanest to gain leisure.

Ah, simple Man! When a boy two precious jewels were given thee, Time, and good Advice; one thou hast lost, and the other thrown away.

Dost thou love Life? Then do not squander Time; for that’s the Stuff Life is made of.