The science of Javanese management: Organizational alignment in an Indonesian development programme

AuthorLouis Setti,Jonathan Pincus,Michael Useem
Date01 December 1992
Published date01 December 1992
DOIhttp://doi.org/10.1002/pad.4230120504
PUBLIC ADMINISTRATION AND DEVELOPMENT, VOL.
12,447471 (1992)
The science of Javanese management: organizational
alignment in an Indonesian development programme
MICHAEL USEEM
University
of
Pennsylvania
LOUIS SE'ITI
World Education
Inc.
and
JONATHAN PINCUS
Cambridge University
SUMMARY
Studies of business organizations reveal the importance of combining two elements for mobiliz-
ing and aligning action in large organizations: informed decision making and contingent incen-
tives.
A
national development programme in Indonesia tested both elements under
exceptionally demanding conditions. The Government of Indonesia ended its subsidy of agri-
cultural pesticides in the late 1980s, and it sought to prepare its large but poorly educated
farming population in the use of ecologically based integrated pest management (IPM) meth-
ods. With a staff of 2,000 trainers by the early 1990s and a curriculum emphasizing information
analysis and management decisions, the Indonesian national IPM programme created a capa-
city to train as many as 50,000 farmers per growing season. Field studies, trainee surveys
and other evidence reveal that, consistent with national programme objectives, (1) pesticide
applications were reduced by more than
60
per cent; (2) pesticide use depended more on
field decisions, less on prescriptions;
(3)
small landholders were as likely
as
large holders
to master IPM techniques;
(4)
IPM-trained farmers experienced no
loss
in rice yield and
significant savings in pesticide expense;
(5)
IPM-trained farmers sought to share the new
information and skills with other farmers. Together, informed decision making and contingent
incentives provided the organizational foundation for a sustainable national change in agricul-
tural methods.
INTRODUCTION
Large-scale development projects would seemingly share little in common with large-
scale business organizations. Improving rice yields in the irrigated paddies of Java
would appear to have only the remotest connection with assembling car chasses
in Detroit. Yet similar problems confront managers in either setting: both must
The authors would like to thank Russell Dilts, Kevin Gallagher, Peter Kenmore, Joel Lamstein, Wolfgang
Linser, John Pontius, Anwar Wirdhani and an anonymous reviewer for helpful suggestions, and the
Food and Agriculture Organization for support. Michael Useem is on the faculty
of
the University
of
Pennsylvania, Louis Setti is on the staff of World Education, Inc., (Boston), and Jonathan Pincus
is a doctoral student in economics at Cambridge University.
027
1-2075/92/050447-25$17.50
0
1992 by John Wiley
&
Sons, Ltd.
448
M.
Useem,
L.
Setti
and
J.
Pincus
mobilize the co-operation of large numbers of individuals and align their performance
with general objectives.
Studies of business reveal the importance of two strategies for mobilizing and
aligning individuals in large organizations. One consists of extending a capacity
for informed decision making deep into the firm. The other consists of instituting
tangible and well-calibrated performance incentives for managers. The first empowers
individuals to make more effective decisions, and the second disciplines those
decisions around organizational objectives. Together, they serve to align individual
behaviour and organizational goals.
The organizational power of informed decision making can be seen in studies
of innovation in United States (US) manufacturing (Kanter, 1983), information sys-
tems in banking (Zuboff, 1988) and automobile production in Japan (Womack
et
al.,
1990). The power
of
aligning incentives can be seen in studies
of
managerial
compensation, ownership and company performance (Abowd, 1990; Leonard, 1990).
Firms in which managers are more empowered and better informed to make decisions
enjoy higher rates of product innovations, faster product development and improved
product quality. Firms in which managers receive compensation and ownership
investments contingent on past organizational performance display improved organi-
zational performance.
Operating in tandem, the two factors of informed decision making and tangible
incentives should make for a potent organization. To examine the power of the
two elements, we turn to a development setting as a kind of extreme test. A national
development programme incorporated both elements into its organizational strategy.
But
the programme goals were exceptionally demanding: massive numbers of indivi-
duals were to make major behavioural changes in a short period in a fashion that
advanced national development objectives. The concepts of informed decision making
and contingent incentives were to be applied not to
a
select set of college-educated,
white-collar managers, but to masses of poorly educated, small-holder farmers.
It
was an unlikely setting for the methods of innovative organizational management
to take hold. If proved on this scale, within this time frame, and with this clientele,
the alignment power of these concepts should be applicable to a host
of
more favour-
able settings.
THE DEVELOPMENT PROBLEM
The large-scale development programme in question was initiated by the Government
of Indonesia in 1989. It was intended to bring immediate improvement in rice farming
methods throughout the country. It was to do
so
by persuading Indonesia’s farmers
to reduce their reliance on a modem agricultural technology, namely pesticides.
The government’s initiative came at a propitious moment. The world’s fifth most
populous country, Indonesia, and its more than 175 million people had experienced
rapid economic development. Indonesia’s gross national product per capita in 1967
stood at US$50, about half that of India and Bangladesh. Twenty years later, it
had reached $450, a third higher than that of India and more than twice that of
Bangladesh (World Bank, 1989, p.
164).
Poverty rates declined from an estimated
40 per cent in 1976 to
22
per cent in 1984 and 17 per cent in 1987 (World Bank,
1990a, p. xvi). The decline of poverty was particularly notable on Java, the island

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