They came from all over to ride the new metro rail on the day it opened. It was cold and foggy that early in the morning, but the line to buy tickets from the new-fangled machines stretched half a kilometre. Just for a 10 minute ride on the shiny new trains, shipped from Japan.
The trip from north Dhaka to the government complex is one part of one line; five more are planned. An expensive and time consuming undertaking, but Dhaka's population has tripled in three decades, to 22 million. Easing congestion within the capital is an urgent task.
Another task is to improve access into the city from without, and to better connect the other towns and cities of the country to each other.
The new expressway that runs 55 kilometres from Dhaka to Mawa is the first to offer high speed, unrestricted travel along a major commercial corridor of Bangladesh. It is also the beginning: Bangladesh needs eight such expressways, more than two thousand kilometres of open road.
The metro rail line and the expressway are among 15 high-profile transportation and energy infrastructure projects scheduled to come online within the next four years, at a cost of more than $45 billion.
Infrastructure spending eats up more of the Bangladesh government budget than education and health care combined.
The spending will continue, for “developing country” status is both a marker of progress, and a starting gun: In a few short years, Bangladesh will have to compete in the export markets without the help of quotas and preferences.
This will be against competitors who have already done a lot of digging and poured a lot of concrete. Vietnam has built several thousand kilometres of expressway in the last 20 years.
The scramble for markets rather than the scramble for colonies is not the only change from the days of the early industrializers. For developing countries today must contend not only with competitors abroad, but also with the rising tide of expectations within their own vast populations.
Getting organized
One quarter of the world's population inhabits South Asia -- home to the most populous country on earth. India's much smaller neighbour Bangladesh, no bigger than the American state of Iowa, itself boasts a population larger than that of every sovereign country that existed a century ago, bar China, at that time the fourth largest empire in history.
The expectations of those Chinese subjects likely differed from what citizens in India and Bangladesh expect today. Expectations about livelihoods, education, and health care, shaped by exposure, via travel, mass media, or social media, to standards of living elsewhere.
To meet these expectations, South Asian countries will need more than railways, highways, bridges and ports: They will need to get organized.
A little more than a century, the overwhelming majority of people in the Western world lived and worked in the countryside. Livelihoods were provided by farms, workshops, family businesses, and partnerships. Essential services, such as primary education, vocational training and medical care, were provided by social networks and private associations within the community: The schoolhouse, the local doctor, the church.
As working age men and women in the West flocked to the cities for jobs, organizations that had not originally been large, such as the hospital, the university or the municipal government, grew larger. Over the course of the twentieth century, these organizations, whether doing business or providing services, re-structured the economy and society in the industrializing world.
To get organized, developing countries will have to build not just the physical infrastructure, and the power plants and grids to supply it with energy, but also the organizations that can provide the livelihoods and social services required to meet great expectations, and to generate the economic surplus to pay for it all.
What is the energy that powers organizations? Management.
The rise of management
To accomplish their goals, whether profits, services, or national security, organizations employ a variety of people, who carry out a variety of tasks. The principal task is management: Creating a whole that is greater than the sum of the parts.
To accomplish this task, management focuses on people and their activities, individually or in teams, and on their relationships with others in the organization, and to the mission of the organization as a whole.
Management was not a topic that interested English-speaking economists. As American economist Kenneth Boulding put it: “Economics deals with the behaviour of commodities, rather than the behaviour of men.”
Classical and neo-classical economists, at least until the last decades of the twentieth century, focused on the forces of supply and demand, the factors of production, and the dynamics of markets.
Marxist economists, for their part, focused on inexorable forces of history, which they perceived in economic structures and class conflict. They were interested in structure, not agency.
Those with more practical concerns, however, could ill afford such diffidence. Statesmen and leaders of the American republic, faced with the challenge of securing their hard-won independence from threats posed by the Old World, needed practical initiatives to promote economic development.
Alexander Hamilton's “infant industry” argument for protective tariffs was an early effort to introduce greater management to the economy as a whole, but it was war against the British in 1812 that focused American minds on the need to manage economic development; Henry Clay expanded Hamilton's ideas into a national development plan that proposed a national bank and federal subsidies to build transportation infrastructure.
Clay's “American System” encountered opposition in a divided American political arena, but the economic landscape was changing, not least due to the railroad and the universal bank, organizations that were inconceivable without the simultaneous development of structured management practices. In the words of Georg Siemens, founder of the largest of these universal banks: “Without management, a bank is so much scrap, fit only for liquidation.”
Applied across the broad spectrum of society and economy, management transformed the industrialized West into a society of organizations. The result was infrastructure, of a new type.
Unlike bridges and tunnels forged from cement and steel, fixed and obdurate, organizations are formed with people, with their variety of motivations, aptitudes, and expectations, all shaped by social trends, norms and values that are themselves not fixed, but in flux.
The protean nature of social reality presents a stark challenge to organizations: Respond to change, or perish. The end may come slowly or swiftly, but for most, the end is inevitable. This is most evident in the world of business, where familiar brands that persist for generations are the exception, not the rule.
A quick drive through the twentieth century
Few brands have lasted as long, and are as familiar as Ford, the iconic automaker from the nation most associated with the automobile.
This may be because the Ford Motor Company remains the only American automobile manufacturer, out of hundreds formed in the twentieth century, that did not go bankrupt, or get acquired. And only by the skin of its teeth.
Ford created the mass market for automobiles, and changed the trajectory of industrialization. Using assembly line methods pioneered in the meat-packing industry, Henry Ford reduced the time to build a car to four days, leaving competitors flailing.
Within 15 years of its founding, Ford was the largest and most profitable manufacturing enterprise in the world, boasting unprecedented cash reserves of $1 billion in its accounts for 1920.
Seven years later, Ford was on the verge of bankruptcy.
Henry Ford had sought to keep making the same car, in the same colour, in the same way. But what had been innovative in the 1910's grew stale by the 1920's.
The car had captured the imagination of Americans: It was no longer just a means of transportation. Buyers wanted emotion, not just functionality. The automobile market had evolved, but Ford had not.
Over at General Motors, a patchwork of automobile brands that had been choking on Ford's exhaust fumes, new CEO Alfred Sloane realized that things had changed, and that the market for cars had fragmented into different “customer segments.”
GM responded with different models to appeal to each segment, and to the middle-class desire to “trade up” from one brand to another. If Ford introduced modern assembly line methods into the auto industry, GM introduced modern marketing.
GM combined market knowledge with a culture of improvement; company management spent the two decades between the world wars optimizing the production methods that Ford had introduced to the industry. While Henry Ford viewed managers as “helpers,” to be hired and fired at his whim, GM recruited the best managers they could find. Superior management, rather than new technology, made GM the industry leader.
GM's leadership lasted until the 1970's, when rising oil prices sent buyers in search of cheaper, more fuel-efficient cars; functionality replaced emotion. Inflation and belt-tightening created an opening into the American market for those skilled at building utilitarian cars, and the Japanese manufacturers drove straight through it. Led by Toyota.
Traditional manufacturing logic viewed the worker as a cost to be minimized, or a problem to be solved; industry winners were those who could drive down labour costs the most. Ford did so by simplifying assembly and replacing skilled workers with lower-paid unskilled workers, until the company could sell cars profitably for $290 in 1924, the equivalent of $5,000 today.
Toyota, by contrast, treated workers as an asset to be developed, rather than a cost. By organizing workers into teams, and empowering them to not just staff the assembly line, but to manage it, Toyota made workers more valuable. This “lean manufacturing” required fewer workers, and, by taking delivery of inventory “just in time,” less working capital.
By flattening hierarchies on the factory floor and blurring the distinction between workers and managers, between those who did the work and those who supervised the work, Toyota did not merely optimize production; they reinvented it. Like GM before them, Toyota became the industry leader not due to technology innovation, but through management innovation.
The lessons of the twentieth century apply to the twenty-first. Today, manufacturers assemble smart phones instead of transistor radios or CD players, but the quality of management will determine how these businesses will fare, and management innovation will determine whether they become market leaders.
Services such as higher education and health care, for their part, are now viewed not merely as public goods to be subsidized by government or charitable organizations, but as potential sources of revenue, from international visitors. Service organizations, however, pose a different management challenge.
Operations management
In manufacturing, the things that matter can be easily monitored and measured: productivity, reliability, and consistency. With a service, however, what matters is something not easily measured: the quality of the experience.
Cars don't care much about the experience on the production line, but pupils, parents, and patients care about how they are treated.
And neither the experience nor the outcome are necessarily improved with longer school terms, more exams, longer hospital stays, or more procedures. What does improve an experience? Effective communication.
The modern hospital is among the most complex contemporary organizations, where a variety of tasks are carried out by many people, centred on the expertise of medical and surgical specialists, and their command of medical technology. Hospitals rely on this expertise to treat patients, and to market their services.
From the patient's perspective, the expertise of the surgeon obviously matters, but so do many other things, including the hospital environment, and how well the various activities, from pre-op, to surgery, to post-op, follow-up and rehabilitation, are coordinated.
The patient experience thus depends on teamwork and timely and effective communication among all parties. This is the task of management. The expertise of the specialist and access to modern technology are necessary, but not sufficient.
The temptation to conflate quality and quantity lurks in all service organizations, distracting managers from their most important task: Innovation.
It was by redesigning and restructuring how the hospital was managed and how patient care was delivered, not just by recourse to medical expertise, that hospitals in Chennai were able to make inroads into the medical tourism market.
Just as the Toyota factories do not resemble factories elsewhere, the leading hospitals in Chennai are not managed like hospitals elsewhere. They emerged sui generis, from the “less is more” culture of their host societies.
This makes sense, for management, as Peter Drucker pointed out half a century ago, “is the means through which a society makes productive its own values and beliefs.”
A fine balance
In pre-modern societies, values and beliefs were expressed through social relations with kith and kin, with those who had sworn fealty to a monarch or a cause, with defenders of the faith.
Medieval religious orders, cloistered in their monasteries, madrassas, and temples, shunned society at large. Pre-modern organizations served their members.
Modern organizations, by contrast, are expected to serve members and non-members alike, to be inclusive. The right to equal treatment, enshrined in many laws enacted across the world, instructs municipal governments, hospitals and schools to serve society at large. Some organizations, such as the modern university, are expected to shape wider society itself.
But while organizations pursue objectives that are universal, such as profits, or adopt norms that are widespread, such as inclusion, the workplace remains local, a reflection of the culture and values of the host society.
Effective organizations are adaptations that balance the home-grown with the imported and the universal.
An effective network of organizations also emerges sui generis. Silicon Valley, perhaps the best known example of such an ecosystem, grew out of the freewheeling, rebellious culture of northern California in the 1970's, overlaid on the specific institutional and legal environment that prevailed there. Attempts to create “silicon valleys” elsewhere have not achieved the same results.
Lessons from Japan
If organizations and ecosystem are adaptations that vary across time and place, then no nation has pulled off this balancing act in the manner of Japan, the first non-Western nation to defeat an industrialized European nation in war, and the first Asian nation in several centuries to challenge Western hegemony of global trade.
“Lean manufacturing” was one among many Japanese social innovations that took Western technologies and methods and adapted them to Japanese culture, values, and behaviours.
The aggregate result of such innovations was a society of organizations that drove the larger project of nation building to create modern Japan.
The project encountered its share of internal opposition, to be sure. Defenders of the faith, loyal to pre-modern Japan, fought a rearguard action for well over a century after the Meiji Restoration.
But Japan demonstrated that modernity and tradition could coexist, that specific cultural values could be expressed, through management, to build a new social infrastructure, and transform economy and society.
Back in Dhaka, engineers from Japan and Bangladesh have begun work on the next metro rail line, burrowing underground from the airport to the railway station in the old part of town. Once completed, the metro rail system may well transform Dhaka, just as the metro rail in New Delhi has transformed the Indian megacity.
The task ahead is to complement the ongoing physical transformation of South Asia with social transformation: To manage work effectively and treat workers as assets rather than costs, to acknowledge social change and to innovate and not just optimize, to adapt knowledge and practices from elsewhere and not just copy, to build organizations that serve all members of society, to modernize and yet express local culture and values.
Can the developing countries of South Asia meet the great expectations of their citizens? Yes, if they can find their balance, and get organized.
Rezwan Hussain is a writer and researcher in Dhaka. He previously spent a decade in investment banking, in New York.
