Issues Facing the Japanese Economy in 2013 (January 2013)

Visiting the Old, Learning the New: The role of technical standards revisited—Taylorism and standardization

TAMURA Suguru
Senior Fellow, RIETI

Windows 8, a new operating system (OS) for personal computers (PCs), was launched at the end of 2012. Many people may be considering replacing their PCs as the new year begins. When asked about technical standards, they would probably feel that they have nothing to do with them. However, the aforementioned OS has become the most widely used technical standard. Although we may not be well aware of them, technical standards have become a key part of our daily lives, and they appear to be a factor that must always be taken into account when considering a new business plan or policies for scientific and technological innovations in 2013. In addition, technical standards intrinsically serve various purposes. In this column, in honor of the new year, I would like to introduce the scientific management principles proposed by Frederick W. Taylor about a century ago, and discuss them in order to rediscover the classic role of technical standards and help in the formulation of new policies.

Introduction

It is not an exaggeration to say that the history of technical standards goes hand-in-hand with the history of mankind. One reason for this is the historical fact that processes that lead to efficiency as a result of standardizing the outcomes of individual originality and ingenuity are repeated. However, technical standards are not usually cited in classical business economics theory. One of the few examples is The Principles of Scientific Management by Frederick W. Taylor, which describes the role of technical standards. The fact that Taylor proposed this idea at the end of the Meiji Period in Japan indicates how old technical standards are.

Taylorism

It is believed that modern styles of management were brought about by the scientific management principles (Note 1) proposed by Taylor. The basic idea behind them, which are now called Taylorism, was announced at the American Society of Mechanical Engineers (ASME) in 1903.

Taylor was born in 1856 in Philadelphia, Pennsylvania, in the United States. He planned to become a lawyer in his youth, but ended up working for Bethlehem Steel, an iron and steel company, and other companies. His experience in the steel industry gave him the idea for The Principles of Scientific Management. Although the scientific management principles Taylor proposed tend to exclude human factors, their significance is highly valued, and according to Peter Drucker, thanks to Taylor's The Principles of Scientific Management, the working masses in developed countries have now reached a higher standard of living than that once enjoyed by the wealthy (Note 1) (Note 2).

The Principles of Scientific Management emphasizes the importance of objectively establishing working conditions in order to maintain and improve productivity in factories, as people behave according to their subjective views. In this concept, Taylor mentions the important role of standardizing the tools and implements used by factory workers as technical standards as follows (Note 1):

Standardization of the tools and implements used in factories
"the standardization of all tools and implements used in the trades, and also of the acts or movements of workmen for each class of work"

Standardization of working conditions
"the development of the science of bricking, with rigid rules for each motion of every man, and the perfection and standardization of all implements and working conditions"

In contrast with Taylor's study are the results of the Hawthorne experiments conducted by George Elton Mayo and others in Chicago around 1920. As in Taylor's study, the Hawthorne experiments were also conducted using factories as the research subject. The Hawthorne experiments concluded that human relationships in the workplace can have a significant impact on productivity. This study evaluated the impact of human relationships on productivity by analyzing human networks in the workplace. This complements what was lacking in the quantitative management discussed by Taylor in the sense that it discusses human relationships and productivity.

Implications of the scientific management principles in standardization policies

As seen by the dissemination of the Windows OS, technical standards have been playing an increasingly greater role in product innovations today, along with the development of digitization in society. This has to do with the fact that connecting products to a network has become an essential requirement. Digitization is the process of standardizing information into 1's and 0's, and its essence that began in the early 2000s could now be called the "standardization revolution." Although a significant number of business models for online businesses are also expected to emerge in 2013, all of these rely on technical standards.

Meanwhile, the kinds of technical standards Taylor focused on were for managing factory processes, which led to process innovation rather than product innovation. To put this in modern parlance, in The Principles of Scientific Management, Taylor mentions a method of process innovation using technical standards. In order to improve a company's efficiency, Taylor discusses the importance of technical standards in lessening the impact on working efficiency of differences in human capacities. Given the current worrisome situation in Japan—in which the low birth rate and the aging population and a shortage of skilled workers negatively impact company productivity—the discussion and ideas Taylor proposed a century ago to increase production efficiency without relying on individual capabilities still provide an important point of view, even in present-day Japan.

In general, technical standards for product innovations are often established as de facto standards or consortium standards, as seen in PC operating systems, rather than as de jure standards, since this is an area where competition among companies is fierce. On the other hand, in the technical standards required for process innovations, there are many standards for social infrastructure, including test methods. These standards, with their nature of being social public goods, are difficult to formulate without public involvement. This means that the role of formulating public standards is still important. Although there are currently about 10,000 standards in the Japanese Industrial Standards (the official technical standards in Japan), many of them that have been used for a long period of time are in the area of social infrastructure (Note 3).

While formulating technical standards centered around contemporary information exchange protocols to promote product innovations is important, the development and enhancement of technical standards to support process innovations is also important. Moreover, since technical standards in this area have a significant function as public goods, the involvement of public institutions such as the Japanese Industrial Standards Committee (JISC), which is in charge of public policies, as well as the National Institute of Advanced Industrial Science and Technology (AIST) and the National Institute of Information and Communications Technology (NICT), which formulate technical standards, continues to be important. To this end, the development of a human capital base to maintain this system is also important.

Conclusion

In this column, I discussed the contemporary role of technical standards and their policy necessity by reviewing the classical role of technical standards. I also discussed the role of technical standards as part of a social infrastructure and the importance of its development. Finally, as the new year has begun, I would like to recommend The Principles of Scientific Management for reconsidering the importance of the technical standards that serve an essential function in our current society.

December 28, 2012
Footnote(s)
  1. ^ Taylor, Frederick Wilson (1911), The Principles of Scientific Management, Harper & Brothers, New York, London
  2. ^ Peter F. Drucker (1973), Management: Tasks, Responsibilities, Practices, Harper & Row, New York.
  3. ^ "Standards and Intellectual Property Management Strategy and Policy" (AOKI Reiko, ARAI Yasuhiro and TAMURA Suguru), Policy Discussion Paper Series, 12-P-017

February 18, 2013

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