Nummi in Today's Modern Business Term Paper

Excerpt from Term Paper :

Over time, GM put a variety of learning mechanisms in place and a systematic approach to alliance learning and knowledge transfer emerged. These mechanisms include managerial assignments to NUMMI, visits and tours to NUMMI, a technical liaison office for managing learning activities, leadership commitment and involvement in the learning process, and a learning network to articulate and spread the knowledge." (Inkpen 2005-page 115)

The absence of these mechanisms early in the alliance was a key factor affecting how the alliance developed. Many of the individuals in management at GM throughout the early years of the alliance felt that it was a waste of time, and that environment did not change until the early 1990's when Jack Smith (one of the individuals responsible for the initial agreement between Toyota and GM) achieved a high enough level at GM to begin to implement some of the changes spoken about earlier in this paper. This was eight years after the alliance was formed and began to operate.

Smith was, and remains, a strong advocate for the alliance. He is probably the catalyst for all the good that has happened for GM through participation in the alliance.

A management's role in organizational learning should be one of catalyst and architect. While multiple advocates are important, there must be at least one strong champion of learning in a leadership position." (Inkpen pg 116). Jack Smith was that champion at GM.

Beginning early in his career at GM, Smith was quite adept at establishing networks and by belonging to a variety of networks both in and out of the workplace was able to facilitate many changes that he believed would be beneficial to GM's long-term survival and growth.

Although many people may not recognize it, anyone who works in an organization belongs to a network." (Bork 1991-page 91)

This statement was true at GM before Jack Smith took charge and even more so after he had done so. Before the alliance had a champion like Jack advocating for the usage of the information gleaned from the alliance, the networks were able to continue as they had before, with no special emphasis or recognition placed on those managers and employees who had attended the training or who had learned from their experiences at NUMMI. Those networks all changed perceptibly after Smith took control.

He let it be known from the start that he was very interested in learning and assimilating the knowledge gained into the GM environment. When it was perceived that career advancement and enhancement could be earned or gained by studying NUMMI and its effects on GM, there were more individuals who were likely to volunteer to gather and disseminate such knowledge. These same individuals were also much more likely to be more focused and intent about their learning because it would affect them individually.

To learn through alliances it is not sufficient to merely expose individuals to new knowledge; the intensity of efforts applied to the learning is also critical. Unfortunately, many companies are unwilling to incur the expense of setting up learning-oriented systems." (Inkpen pg 116)

This was especially true of GM in the early years after the alliance's formation. Management knew and believed that there was knowledge to be garnered from the alliance, but had no clue as to how to gather such knowledge.

Management also did not know how to implement the knowledge (when gained) into the GM culture in any effective manner.

Inkpen states that the cost of learning is sometimes quite heavy, but that most the time it is well worth the cost. Inkpen compared Toyota's willingness to pay the cost of learning compared to GM's reluctance to pay the price.

In one case, the Japanese partner sent dozens of engineers to the joint venture for short-term assignments with no clearly defined tasks, leaving the American partner wondering how the Japanese partner could afford it. From the Japanese partner's perspective, the value of the learning more than compensated for the cost of the engineers." (Inkpen pg 116)

Initially the Japanese placed a higher value on the learning side of the alliance equation, while GM did not. This could be because of the two vastly different cultures in which the companies operated, both in a business sense and in society's environment.

Japanese society has been around for thousands of years and has learned to value abstract as well as concrete thinking abilities. Americans are still learning about learning.

Americans to a great extent are also much more impatient concerning accomplishments (or at least what they deem as accomplishments) than the Japanese, who take a decidedly more long-term approach. Experiencing the different cultures is something else that can be gained from the forming of the alliances.

Wherever the companies are headquartered, founded and maintained is always going to have some bearing, some effect, on the alliance and how each partner is perceived by the other. This perception, or lack of perception as the case may be, can also be the root of some dissension and discontent with the alliance.

It is highly recommended therefore an effective communication plan be put in place by the companies in order to guide their efforts through the duration of the alliance.

A communication plan can establish what is to be learned, who is to learn it, how the information will be disseminated (and by whom) and what duties are going to be assumed by what individuals. A communication plan can also be both short- and long-term in nature and can act set the guideposts for verifying whether the goals and objectives of the company are being met, or are being left on the wayside.

With a communication plan in place, the alliance becomes a cooperative alliance rather than a competitive alliance. With NUMMI, GM looked askance at giving out any more information than was absolutely necessary to the Japanese. GM management viewed that as giving information to a competitor. The Japanese, on the other hand, were more than happy to conduct guided tours through the plant, and to demonstrate how the system worked. The Japanese looked on the alliance as a cooperative venture wherein both parties could benefit.

What is ironic about the different attitudes displayed by both parties, is that while GM was (through the first eight years) very reluctant, very reticent in regards to providing information to the Japanese and the Japanese were just the opposite, the Japanese probably ended up learning more during those years than did the Americans.

Many experts believe that alliances can produce more effective learning on the soft side of business issues (ie; ideals, relationships, management philosophies, culture etc.) than on the hard side (finance and operational issues).

The soft side refers to the development and management of relationship capital in the alliance. Relationship capital consists of the socio-psychological aspects of the alliance that are positive and beneficial to the alliance. Two important areas of relationship capital are mutual trust and commitment." (Cullen 2000-page 223).

In the NUMMI relationship, at least initially and for the first decade, there was a definite lack of trust, especially from GM, and the commitment may have been made to put forth the hard capital that was needed to ensure the alliance's success, but the commitment from the soft side of the issues was definitely lacking.

Commitments from both sides of a strategic alliance are important and both sides should be aware of the partner's motivation(s) for entering into the strategic alliance in the first place.

Many experts believe that a knowledge-based formula should be used to decide if an alliance makes sense to both parties before the alliance is formalized.

We argue that firms can build alliance capability and enjoy greater alliance success by implementing organizational processes that facilitate the accumulation and sharing of alliance management know-how embedded in prior and on-going alliance experience." (Kale 2003-page 1).

Kale expresses the belief that firms who engage in more alliances naturally gain a portion of the necessary know-how to apply what they have learned through the alliance experiences. He also states that many times that know-how is not enough to garner the most beneficial parts of the same experience. He writes that, "knowledge can arise from the firm's own experience (experiential learning) or from similar experiences of other organizations (vicarious learning)." (Kale pg 2). He goes on to clarify his beliefs by saying; "Though vicarious learning is useful, given the attendant complexity of managing an alliance the knowledge underlying this capability has to be nurtured and developed through direct experience." (Kale pg 2).

That direct experience (at least on GM' behalf) was sorely lacking in the early 1980's when the NUMMI alliance was created. Throughout the years, as the GM managers who were sent to NUMMI to work and observe, did so, they gained valuable knowledge and information, that could have been,…

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