Cultural Transformation at NUMMI

U.S. automobile manufacturers have begun to heed the wakeup call that sounded more than a decade ago when Japanese automakers cut deeply into American markets. As General Motors, Ford, and Chrysler began to take stock of what had happened, they were surprised to discover that they had much to learn from the Japanese, not only about the processes of production, but also about the use of human resources. Today, the Big Three have begun to rebound. In 1993, all three companies posted gains simultaneously for the first time since 1984.1 The turnaround stems partly from exchange rates that now favor U.S. exports, and partly because output from Japanese transplants is included in the U.S. figures. But improvements in the auto industry also stem from what U.S. automakers have learned from Japan.

In this paper, we examine a notable case, New United Motor Manufacturing (NUMMI), in which such learning produced significant cultural change. NUMMI is a joint venture formed by the world’s two largest automakers — Toyota and General Motors. Located in Fremont, California, in the shell of a huge GM assembly plant that had closed in 1982, NUMMI opened two years later. Now in its tenth year of successful operation, it has survived the trials that cause most joint ventures to founder.2 NUMMI demonstrates how the introduction of a new production system and a foreign culture transformed one of the worst GM plants into a world-class assembly operation in a unionized environment. NUMMI’s experience, we think, has implications for other organizations that are trying to learn from each other, especially those that work across international boundaries. Of equal importance, findings from NUMMI reveal the central role that organizational culture plays in enabling an organization to adapt to a continuously changing environment.

In 1989, five years after the joint venture was created, we formed a team of five UCLA faculty members and graduate students to work in the plant and try to understand how such a radical transformation was possible.3 We knew that to capture the essence of the change, we would have to become insiders. Because there was little theory to guide us, we would have to develop theories or hypotheses from data we collected. The few other studies of NUMMI had not examined the company from the inside.<

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References

1. W. McWhirter, “Back on the Fast Track,” Time, 13 December 1993, pp. 62–72.

2. S. Cartwright and C. Cooper, Mergers and Acquisitions: The Human Factor (Oxford, England: Butterworth Heinemann, 1992).

3. The research began in October 1989 and continues today under the auspices of the California Worksite Research Committee, a non-partisan group of policy leaders drawn from business, labor, government, and education. Financial support for the research has come principally from the California Employment Training Panel and the California Senate, with additional support from the UAW and a number of corporate sponsors. Wellford Wilms leads the team of which Alan Hardcastle and Deone Zell were original members.

4. C. Brown and M. Reich, “When Does Cooperation Work? A Look at NUMMI and GM-Van Nuys,” California Management Review, Summer 1989, pp. 26–37;

P. Adler, “Time-and-Motion Regained,” Harvard Business Review, January–February 1993, pp. 97–108; and

P. Adler and R. Cole, “Designed for Learning: A Tale of Two Auto Plants,” Sloan Management Review, Spring 1993, pp. 85–94.

5. R. Cohen, “Generalizations in Ethnology,” in A Handbook of Method in Cultural Anthropology, eds. R. Naroll and R. Cohen (New York: Columbia University Press, 1970), pp. 31–35.

6. See, for example, W.F. Whyte, Men at Work (Homewood, Illinois: Dorsey Press, 1961);

H. Applebaum, Royal Blue: The Culture of Construction Workers (New York: Harper, 1981); and

R. Cole, Japanese Blue Collar: The Changing Tradition (Berkeley, California: University of California Press, 1971).

7. A second phase of the study, supported by the A.P. Sloan Foundation and the California Employment Training Panel, is now underway. Its aim is to better understand how NUMMI’s principles are diffused to its suppliers and the implications for economic development and training policy.

8. M. Cusumano, The Japanese Automobile Industry: Technology and Management at Nissan and Toyota (Cambridge, Massachusetts: Harvard University Press, 1985);

J. Womack, D. Jones, and D. Roos, The Machine That Changed the World (New York: Rawson, 1990); and

E. Appelbaum and R. Batt, The New American Workplace: Transforming Work Systems in the United States (Ithaca, New York: ILR Press, 1994).

9. For some of the most thoughtful work done on organizational culture, see E.H. Schein, Organizational Culture and Leadership, 2nd ed. (San Francisco: Jossey Bass, 1992). See, also:

C. Argyris, Increasing Leadership Effectiveness (New York: Wiley-Interscience, 1976).

10. Results of the larger study are scheduled for publication in a forthcoming book by W. Wilms.

11. R.T. Pascale and A.G. Athos, The Art of Japanese Management: Applications for American Executives (New York: Simon & Schuster, 1981).

12. E.H. Schein, “Coming to a New Awareness of Organizational Culture,” Sloan Management Review, Winter 1984, pp. 3–16.

13. C. Argyris and D. Schon, Organizational Learning: A Theory of Action Perspective (Reading, Massachusetts: Addison-Wesley, 1978); and

J. Marshall and A. McLean, “Exploring Organization Culture as a Route to Organizational Change,” in Current Research in Management, ed. V. Hammond (London: Frances Pinter, 1984), pp. 3–20.

14. M. Beer, R. Eisenstat, and B. Spector, The Critical Path to Corporate Renewal (Boston, Massachusetts: Harvard Business School Press, 1990), pp. 67–109; and

Schein (1992), pp. 313–333.

15. Interviews and discussions between Wilms and Usery, 1991 to 1993.

16. In 1988, the Chevrolet Nova produced by NUMMI was ranked number two of all cars (foreign and domestic) sold in the United States, in the J.D. Power quality survey. See:

“Four Small Cars,” Consumer Reports, February 1986, pp. 119–126; and “Oh, What a Feeling,” Road & Track, July 1985, pp. 74–78.

17. G. Raine, “Building Cars Japan’s Way,” Newsweek, 31 March 1986, p. 43; and

D. Buss, “ ‘Gung Ho’ to Repeat Assembly Errors,” Wall Street Journal, 27 March 1986.

18. J.D. Power rankings are based on customer satisfaction on 100-plus items like squeaks and rattles or fit and finish, in the first ninety days of ownership.

19. Survey of NUMMI team members, internal document, 1993.

20. M. Brody, “Toyota Meets U.S. Auto Workers,” Fortune, 9 July 1984, pp. 54–64.

21. O. Kimura and H. Terada, “Design and Analysis of Pull System, A Method of Multi-Stage Production Control,” International Journal of Production Research 19 (1981): 241–253.

22. B. Kogut, “A Study of the Life Cycle of Joint Ventures,” Management International Review, special edition, April 1988, pp. 39–52.

23. Federal Trade Commission Order (Washington, D.C.: Docket No. C-3132, 29 October 1993).

24. K. Lewin, Field Theory in Social Science (New York: Harper & Row, 1951);

W.G. Dyer, “The Cycle of Cultural Evolution in Organizations,” in Gaining Control of the Corporate Culture, eds. R. Kilmann, J.J. Saxton, and R. Serpa (San Francisco: Jossey Bass, 1985), pp. 200–229; and

M. Beer and E. Walton, “Developing the Competitive Organization: Interventions and Strategies,” American Psychologist 45 (1990): 154–161.

25. Schein (1992), pp. 298–301.

26. See V. Pucik, “Strategic Alliances, Organizational Learning, and Competitive Advantage: The HRM Agenda,” Human Resource Management 27 (1988): 77–93.

27. Much of this account is based on a highly publicized report by two journalists who, despite the book’s title, had only limited access to the plant and collected most of their information from off-site interviews. See:

J. Fucini and S. Fucini, Working for the Japanese: Inside Mazda’s American Auto Plant (New York: Free Press, 1990).

28. Womack et al. (1990);

J.P. MacDuffie, personal communication, 17 February 1994.

Acknowledgments

An earlier version of this paper was presented at a conference, “The Challenge of Multinational Competition,” sponsored by the Carnegie-Bosch Institute, Carnegie-Mellon University, held in Stuttgart, Germany, in May 1993. The paper is based on Wellford Wilms’ book, Restoring Prosperity, to be published by Times Books, Random House in 1995. The authors wish to thank Nils Brunsson, Stockholm School of Business; Noritake Kobayashi, Keio University; Janice Klein, MIT Sloan School of Management; and Alexander Astin, UCLA Graduate School of Education and Information Studies.