Doing business well is, in part, a question of balance. This is not just a simple theory taken from a modern business management textbook, but something that can also be seen in practice. And we aren’t talking only about balance in the accounts, although this is important, too. It’s about the need to find the right (internal and external) balance in conduct and in relations in many areas of operations, and even in the entrepreneurial approach that underlies the creation of the business itself. Therefore, it’s important to dig down into the core of a company’s structure to better understand where it has balance and what its weak points are in order to then improve performance.
Some help in this regard has been offered by Tetsuro Okazaki, a professor of economics at Chiba University of Commerce in Ichikawa, Japan, and an expert in game theory and public economics, in his study of the relationship between the coordination of functions in a business and the “multiplicity of equilibria” therein. In “Coordination Problem and Coordination among Groups: Effect of Group Size on Business Culture”, the title of the paper to be published in the Journal of Advanced Management Science, Okazaki seeks to better understand how the various groups of people within a corporation interact, beginning with social conditioning, the company’s culture and its production constraints. All of this then has an impact on the creation and development of business culture and how the company acts towards the markets and the rest of the outside world, as well as on the actual organisation of its production. In order to do this, Okazaki studies how Toyota organises its production (in particular the just-in-time, kanban approach) based on cards that are used to pass information about the production cycle from one group to another.
“In coordination games, we have multiplicity of equilibria,” Okazaki explains. “This multiplicity makes it possible to explain the coexistence of contradictory cultures in a society.” He continues, “If the group size is large, the multiplicity of equilibria disappears.” What we then get is an even more complex set of equilibrium and imbalance, of punctualities and “unpunctualities”, which, together, result in a different enterprise. Toyota’s kanban approach is one such example, and from diverse groups and a variety of equilibria we get an efficient assembly line.
Apart from a few (necessary) technical sections, Okazaki’s work sheds light on an important aspect of modern organisation and of the culture of enterprise.
Coordination Problem and Coordination among Groups: Effect of Group Size on Business Culture
Tetsuro Okazaki (Chiba University of Commerce/Ichikawa, Japan)
Journal of Advanced Management Science Vol. 2, No. 3, September 2014