The Greening Revolution
The decade of the 1980s brought with it a growing sense of unease with command-and-control regulation. Despite enormous expenditures, it was not at all clear that the end-of-the-pipe approach to pollution control and regulation was working.7 Alternatives such as market-based incentives and tradable emission permits demonstrated that pollution levels could be reduced in a dramatically more efficient and cost-effective manner. In Europe, a more collaborative and goal-oriented approach to regulation was the norm; the focus was on actual environmental and social improvement rather than the specification of particular treatment technologies or pollution control devices.
I, too, was undergoing a transformation of sorts. In 1986, I joined the faculty at the University of Michigan Business School, having completed my doctoral work in strategy and planning in 1983. My transition from a regulatory to a business strategy orientation reflected my own growing disenchantment with the command-and-control approach to dealing with environmental and societal problems. Rather than simply trying to halt polluting projects or mitigate damage, I became increasingly interested in understanding why such seemingly bad projects were being proposed in the first place.
This change proved fortuitous: By the late 1980s, there was a growing receptivity to environmental and social issues within companies—and business schools. As luck would have it, this openness developed through innovation in another arena: quality management. As you might recall, in the late 1970s and early 1980s, Japanese companies were literally overrunning their American and European competitors with higher-quality and lower-cost goods. From steel makers to automobile firms, to consumer electronics manufacturers, companies were scrambling to match the Japanese quality advantage. Because of widespread plant closures and downsizing, there was palpable concern that the West would lose to "Japan, Inc."8
After three glorious postwar decades of high-volume, standardized mass production with quality inspected in (after the fact) rather than built in (as part of the design and production process), Western companies were being out-competed by a new and better way. Instead of countering with their own unique strategies, American and European companies became obsessed with learning and copying the ways of Japanese quality management.9 Among other things, they built the capacity for "continuous improvement" (kaizen) into the management system by empowering workers to improve their work processes rather than blindly following prescribed procedures. Managers' mindsets changed from a fixation on centralized control and a "results" orientation (detecting defects and fixing them) to a preoccupation on decentralization and a "process" orientation (improving the management system so that employees could prevent quality problems from occurring in the first place).10