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Christophe Weber, President and COO of Japanese pharmaceuticals company Takeda, responds to “7 Questions” in the Nikkei Business magazine:
1. You announced your new strategy in October?
I spent the past 8 months since I joined Takeda [from GlaxoSmithKline] talking to various employees, from which I have reached an understanding of Takeda’s strengths and weaknesses. The strategy is to support Takeda in becoming a global, R&D led company. The structure needs to be changed to become more effective, and to develop global minded human resources.
2. How long is needed for this transformation?
I am expecting it to take 5 years. We will focus the structure on the 4 disease areas of R&D strength in Takeda such as oncology and gastroenterology and also vaccines. We will join up the R&D functions which are distributed across various countries, and strengthen their links to improve their efficiency at the same time , as well as their agility.
3. Doesn’t globalization go against becoming more agile?
It’s true that globalization can cause the organisation to become more complex. However each R&D region will be given responsibility and decision making powers. Sales channels will also be delegated more decision making authority. This should enable them to have a degree of agility and for us to grow as a global company.
4. To be a truly global company, you need to expand in developing markets?
We bought the Swiss company Nycomed in 2011. Nycomed has strong sales channels in Russia, China and Brazil. We will develop these further, to sell drugs that we have been selling in Europe and North America. Developing markets are reforming their healthcare, and this will grow rapidly in the next decade.
5. The majority of your management team come from outside Takeda. Why are so few executives from within Takeda?
I expect to hire people from outside Takeda only when there are no suitable candidates within. If there are too many external hires, it gives the impression that we are not developing our own people sufficiently. Takeda currently lacks people with global experience. We are currently thinking how to develop more globally minded people.
6. You attracted a lot of attention as a foreign executive when you were appointed President in June?
It is still rare for a non-Japanese to run a Japanese company and it is a difficult job. However, when Chairman Hasegawa called me to talk to me about this, I thought it was a challenge I wanted to take up. Mr Hasegawa has a strong will to take on the world. I felt he was a fellow spirit.
7. There was some opposition to you as a foreign President from shareholders?
There were many opinions expressed, and I listened to them with respect. It is to be expected that there will be some negative reactions when a foreigner takes on this big a reform. History will judge whether this reform is correct. I was at my previous company for more than 20 years, so I am different from other foreign CEOs who change companies every few years. I have a similar character to the Japanese in that I value stability.
The precis below is from an article written by Chieko Matsuda (Executive Director of Booz Allen Hamilton in Japan) for Nikkei Business Online’s “Corporate Governance for Everyone” series, in Japanese, but I felt as I translated it, that it was my own words, so completely do I agree with what she is saying:
Japanese companies often have an “overseas business development unit” to carry out their global M&A. However the mission of this organisation should change depending on the stage reached in expanding overseas. Even if it starts as “business development”, it often turns out that it has to manage the subsidiaries as well. So at the same time as stepping on the accelerator to grow the business, it is supposed to press on the brake, as a shareholder and auditor. When it comes up with solutions to this dilemma, nobody will help the unit out, claiming that “overseas business is your your specialist area”, and “nobody speaks English in our unit”
The audit function needs to be strengthened – Japanese companies are far too weak when it comes to risk management with regard to their overseas operations. It is necessary, if expanding overseas, to “control through structure” and review rules, processes and formats. Japanese style management through telepathy will not work for overseas M&A.
In order to design the structure in detail, it is necessary to decide on the direction. What the company should not do, and what it should preserve. If this is left vague, then it will lead to a sense that “we have no idea what the parent company is thinking”.
The top priority therefore is to set the corporate mission and values. What are we trying to do, how will we do it, which way are we facing – it is control through corporate culture as well as through structure.
The corporate vision needs to be concrete, and something that can be translated in an understandable way into many languages. It should be a base for making decisions – to go left or right – not just pretty words.
If the corporate vision and culture is not secure, then it is difficult for diversity to take root. WIthout diversity, the company will not be competitive. A homogenous workforce was efficient for labour intensive production, but we are now in an era of competition of ideas and innovation. New ideas and innovation require a diverse workforce, and what will unite a diverse workforce is common corporate culture and vision.
It is of course partly up to the top management to communicate this corporate culture and vision, but middle management must also be able to use it within their teams. It can’t just be about “reading the air” in the traditional Japanese Ninja way. What do you do if there is a claim from a customer? It cannot be resolved through kiai (“fighting spirit”) and konjou (“guts”). Wouldn’t it be convenient if you had a touchstone, for when there was a problem to be solved?
Perhaps it’s not surprising that as a member of various organisations attached to Abe’s cabinet office, Kaori Sasaki gives Prime Minister Abe 8/10 for his strategies for improving the status of women in the Japanese workplace and society.
As she is a former reporter for Japan’s TV Asahi News Station, it’s also unsurprising that she particularly rates his persistence in communicating the message that Japanese women are needed in the workplace as a vital part of reviving the Japanese economy. It’s well known in Western politics that you have to repeat the same message over and over agin until it finally gets through and I would say it is also true of Japanese society where the political or corporate leader does not have many carrots or sticks to offer to bring about change, and instead has to keep up the moral pressure until the rest of the elite realise the leader is serious, and feel obliged to join forces.
Sasaki, who now runs her own interpreter and media communications company Unicul, and has recently founded a branding consultancy ewoman, does have a couple of recommendations for further promoting the cause of women. One is that Japanese women should be offered the option of retaining their maiden name. As she points out, if you have built your professional reputation with your maiden name, through published research or other professional activities, you suddenly become very difficult to find, and your brand is weakened, if you then have to change your surname – something that I worry about for Western women too.
Her second point, in response to Japanese business leaders who say they cannot find any women with the relevant industry experience to sit on their boards, is that it is precisely the point of having diversity on the board, for effective governance, that people with different experience and outlooks should sit on the board.
Ulrike Schaede (Professor of Japanese Business at the Graduate School of International Relations and Pacific Studies at the University of California, San Diego) urges Japanese companies to follow the German rather than US corporate governance model in her latest article for the Nikkei Online. She suspects that the target of 8% minimum ROE for Japan’s listed companies, as proposed in August of this year by the Ito Review for the Ministry of Economy, Trade and Industry, was set with reference to the US average of around 15% ROE. While supporting an improvement in ROE for Japanese corporates, she argues that comparing ROE in two such different economies is like comparing the ‘moon to a turtle’.
Similarly she argues that dividend payout ratios (usually criticised for being way too low for Japanese companies) cannot be meaningfully compared across industries, let alone across countries.
In fact Japan’s commercial law, dating from the 19th century, was based and German and French laws. The German chairman of the executive committee is similar to the Japanese President of a company – the legal representative of a company. Their decision making powers are far more limited than the American CEO. Over 50% of American CEOS are also the chairman of the board, but this dual post has come under heavy criticism recently.
In Germany, it is illegal for an executive to be both the chairman of the executive committee and also on the board of directors, unlike in Japan and the USA. Furthermore, if the company has more than 2000 employees, there must be a representative of the company union on the board.
Schaede also thinks the frequency of board meetings in Japan – every month – is a problem, if external directors who need to travel long distances to get to them, are to be able to attend. She recommends meeting quarterly, but for a full day rather than just 3 hours and that the strategy of the company, rather than reports on past events should be discussed.
Such reforms would allow Japan to set a new style of corporate governance in Asia, she believes. But if the main driver for reforming corporate governance is to attract foreign shareholders or keep them happy, it seems to me, from my recent conversation with a woman who invests funds on behalf of high net worth individuals, that the US model is the one most investors judge by. She has never invested in Japanese companies, because the dividend pay out is too low. She’s not interested becoming a shareholder in stakeholder oriented companies.
Nidec’s President Shigenobu Nagamori has just been voted the Presidents’ President by other Japanese CEOs in the Nikkei Business magazine. Nidec, known as Nippon Densan in Japan, is a manufacturer of electric motors found in hard disk drives, household appliances and other equipment.
Around 90% of their 100,000 or so employees are overseas – mostly in ex-Japan Asia, but with nearly 3000 in Europe, they make it into our Top 30 Japanese companies in Europe, nudging out another company that is a quiet Japanese success, Horiba. See below for the updated chart.
Nagamori founded the company in 1973 with three colleagues, and has a reputation for being outspoken and unafraid – most recently hitting the headlines for hiring ex President of Sharp, Mikio Katayama as technology chief, despite his having been pushed aside for his perceived failures there.
Rooting around on the web reveals Nidec feels different from other Japanese companies – for a start many of its Japanese executives in Europe are on LinkedIn. It is also very transparent and clear about the company and what it stands for (although I am not entirely convinced by the slogan “all for dreams”), and 6 of its 9 strong management team come from other companies.
Nidec decided to focus on the auto industry recently, and to that end acquired the motor and actuator business of the French company Valeo and Italian company ASI, which explains the large number of Italian operations. This talent for M&A was the factor that Nagamori was most highly rated for by his peers, along with the untranslatable “ningenryoku” – literally meaning human strength, skills or ability as opposed to technical skills – perhaps we’d call this leadership, or interpersonal skills, EQ even, in the West.
Nidec’s Japanese roots are still obvious though – “Employment stability based on sustainable business growth” is cited as its top management creed.
Other Top 30 Best Presidents whose companies are also in the Top 30 in Europe are Akio Toyoda (Toyota) at #3, Shigetaka Komori (Fujifilm) at #5, Hiroaki Nakanishi (Hitachi) at #15, Kazuhiro Tsuga (Panasonic) at #17=, Yoshimitsu Kobayashi (Mitsubishi Chemical Holding) #17=, Carlos Ghosn (Nissan) at #17= and Fujio Mitarai (Canon) at #30
IBM Japan had been struggling for some years when Martin Jetter was appointed President in 2012. The previous Japanese nationality President had been somewhat unceremoniously booted out, I assume for being perceived to be part of the common problem that many long standing Japanese subsidiaries of foreign companies have – namely of being even more staid in their traditional Japanese ways than their native Japanese competitors.
There was much concern that Jetter came with a reputation for being a fierce cost cutter. He is an IBM veteran, having joined the company in Germany in 1986 but holding some key positions in IBM’s US headquarters previous to his arrival in Japan. He did indeed heavily restructure IBM Japan, with the result that it posted its first revenue growth in twelve years, after only a year and a half into his reign.
In a recent interview with Nikkei Business, Jetter is keen to stress the positive steps he took to achieve this. Firstly he set up 4 regions, with their own sales forces. He also made a point of visiting customers personally in those regions, holding regional forums.
Secondly he made sure that time was spent on understanding exactly what customer needs were, and thirdly IBM Japan has embarked up a major training programme for employees.
Asked what needs he identified and what he did about it, the most striking initiative, for which his backers in IBM HQ must have provided strong support, was to meet Japanese customer needs for global IT provision by setting up IBM Japan offices in Singapore and Bangkok and ensuring that there were Japanese speaking consultants outside of Japan for Japanese clients to talk to – including in Europe and North America.
IBM’s particular strengths are the security and stability that its long history promises. This is particularly key for new technology services such as cloud and big data analytics, says Jetter, clearly recognising Japanese corporate risk aversion. He also asserts that IBM will be able to provide as high a standard of customer service, digitally, as Japanese companies have provided face to face.
He also points out that IBM has a clear strategy, despite recent dips in profitability – and has got rid of businesses in which it cannot differentiate itself, such as networks, printers, PCs and low end servers.
His reward for his success in turning around IBM Japan and faith in the IBM line is to be appointed as the head of the “troubled” Global Technology Services division from January 2015. As the Nikkei comments, he is a soft spoken, gentlemanly type in person, but it’s probably his reputation as a hard nosed cost cutter with HQ backing that has won him this promotion.
When I started working at Mitsubishi Corporation in London, I was intrigued by the fact that Mitsubishi had first opened the office there as early as 1915. Most British people, if they have thought about it at all, would assume Japanese companies did not establish themselves in the UK until well after World War Two. In fact it turned out Mitsubishi Corporation was a relative late comer to London amongst the sogo shosha (Japanese trading companies), although the Iwasaki founding family had links with the UK from long before 1915.
I was reminded of these links thanks to a recent talk by Dr Ohnuma Shinichi, professor of Experimental Ophthalmology at University College London (UCL) to Japanese business people in London, where he showed slide after slide of the names of the Japanese future elite who studied at UCL in the Meiji era, starting with the 14 students from the Satsuma clan in 1865, through to Iwasaki Toshiya, who studied Chemistry at UCL in 1901.
Dr Ohnuma was showing us these slides to remind us of how the founders of the modern Japanese state and business had fearlessly travelled and lived abroad, and there was a keen discussion afterwards as to how this spirit of adventure could be revived amongst young Japanese people now.
One of Dr Ohnuma’s suggestions was that Japanese companies should demonstrate that there is a positive advantage to have worked abroad, and to ensure there are proper roles for their employees with overseas experience to fulfil when they return.
At Mitsubishi Corporation it was an unwritten rule that top executives have overseas experience, and as a consequence, most new graduates join Mitsubishi Corporation and other trading companies in the expectation that they will be posted abroad. I realise however, that for other major Japanese companies, whose origins are more domestically oriented, it would be rather hard to implement this rule straight away, when in most cases hardly any of their current executives have overseas experience.
Smaller companies may have more scope to put such criteria in place however. The leaders of such companies can set the tone themselves, just as Sony’s Morita Akio did in 1963, when he controversially relocated himself and his family to New York, in order to understand the US market better.
It is surely no coincidence that the current President of Sony, Hirai Kazuo, lived abroad as a child and worked for Sony overseas. Despite Naruke Makoto (ex President of Microsoft Japan)’s assertion that nobody has ever succeeded who went to international school, Hirai did indeed go to the American School in Tokyo.
Sony may be having its problems right now, but I truly hope it succeeds in its revival plans, and proves that the spirit of entrepreneurism, openness to the world outside Japan and adaptability to change of its founder can live on, if the founder himself has set the tone correctly by his own actions.
(This article was originally published in Japanese, for the Teikoku Databank News)
My book on the history of Mitsubishi Corporation in London since 1915 is now available in digital Kindle format (link to amazon.co.uk)
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- Quelle est la meilleure approche pour obtenir le soutien de mes collègues au Japon?
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- Comment interpréter les signes lors de réunions avec des Japonais?
Les Européens qui travaillent avec des collègues et partenaires japonais se posent souvent ces questions. Les séminaires de Japan Intercultural Consulting sont l’occasion de discuter et d’analyser les différences culturelles que vous rencontrez au quotidien. En utilisant des études de cas et des discussions en groupe, nous vous offrons des solutions concrètes pour développer de meilleures relations avec vos collègues et partenaires japonais.
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