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December 19, 2005

Toward a New Academic Discipline in Japan: International P2M Association

Toshihiko KINOSHITA (Professor, Waseda University)

This is a summary of Prof. Kinoshita's presentation at the Inaugural Meeting of the International P2M Association, which was held at Tokai University's Koyu Kaikan in Kasumigaseki on October 30, 2005.

Project and Program Management (P2M) is currently known as a certification system, which has been developed in Japan. It was originally intended to deal with a serious problem in Japan's plant engineering business, where project management (PM) for each individual plant was efficiently carried out, but plant management programs including all on-going projects generally resulted in low profitability for a firm as well as for the business as a whole. Actually, in the post-war era of high economic growth until the end of the 1980s, many Japanese firms were doing well based on competition among their own business units (jigyoubu), and partial optimization for each unit led to a good overall result for a firm. Since the end of the Cold War, however, total sales in domestic markets have been sluggish and mega-competition has become fierce so much so that every Japanese firm must seek total optimization through interaction of all of their business activities. This phenomenon has widely been observed, not just in plant engineering, but in most business areas in Japan. Then the question is how we can develop a new business model in Japan, where the economy has been maturing and suffering in the "lost decade."

In the U.S. corporate executive, mostly graduates from professional business or law schools, have tried to apply the Anglo-Saxon style of "one-rule-fits-all" model in managing their firms, and to adopt rather inflexible PM for individual projects. The same method may not be applicable for Japanese firms to be successful. Nowadays, the problems that Japanese firms are facing are more complex than ever with local as well as global issues, such as corporate social responsibility, environmental issues, etc. Therefore, we need to abandon the one-rule-fits-all approach and develop a new vision and successful models for P2M, based on our past experience and research efforts in this field.

In fact, the same problem seems to be shared by non-Anglo Saxon societies, especially Asian countries, where traditional Asian management is no longer working in the rapidly globalizing economy, but the Anglo Saxon style of management does not fit well in the Asian social climate either. Therefore, we must develop a new discipline for P2M in order to give appropriate solutions to the current problem commonly shared by many economies, and try to lay a foundation for knowledge accumulation and dissemination through the newly established International P2M Association.

It is interesting to see what is really happening in the U.S., where Project Management (PM) has originated and been well developed. While the U.S. economy as a whole appears to be doing well and maintaining its leading position in the world, there are a number of serious problems developing underneath, especially in the individual plant level. For example, most of the 44 chemical plant projects of the major US chemical companies such as 3M, Dupont, Texaco, etc. have suffered initially from construction delays and cost overruns, and, after construction, more than half of them have experienced underutilization and operating losses, according to a recent study by RAND. It is also reported that more than 70% of recently constructed factories in the U.S. have closed down within ten years of operation, and that about three out of four mergers and acquisitions in the U.S. have ended up with net losses. In any case, the current status of PM is now being questioned even in the U.S.

It is needless to say that there are many cases of project and program management failures recently found in Japan and Europe. While technologies in general and PM techniques in particular are developing year by year, those developments are not being digested and translated into profits at the firm or corporate level. In Japan, for example, some IT companies like Sanyo have failed to manage newly emerging technologies in competitive markets. There seem to be a large number of Japanese companies, mostly in manufacturing and some in non-manufacturing sectors, having a very advance level of technologies and management systems such as JIT, Kaizen, QC and costumer-orientation, but lacking conceptualization and formalization of their excellent systems and, as a result, struggling in a foreign environment with heterogeneous values and work ethics.

What we should do, therefore, is to develop a new P2M approach to be universally applicable so as to cover manufacturing as well as non-manufacturing fields such as services and regional development, and to conceptualize and formalize excellent management systems in Japan to make them a de-facto standard for management in global business around the world. We also need to emphasize our academic and educational mission including wide-ranging research activities regarding P2M and practical methods of education and dissemination at home and abroad through our International P2M Association.

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