Rudlin Consulting provides expert analysis and consulting to people working in or with Japanese companies in Europe.
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In a week’s time, Rudlin Consulting will move to Norwich, UK. One of the reasons behind this choice of location is to be near the Sainsbury Institute for the Study of Japanese Arts and Culture. I am keen to explore further how corporate cultures can be expressed “non-verbally”, through Japanese arts and culture, and also hope there is scope to collaborate with the Institute.
So of course I went to the lecture that Mami Mizutori, formerly of the Japanese Embassy in the UK, and now director of the Institute, gave to the Jiji Top Seminar (a monthly lunch for Japanese business people in the UK) last week. The title was “Do you invest in the power of culture?” She focused on the importance of soft power to Japan. Whether or not you believed that only Japanese can really speak Japanese and therefore only Japanese can really understand Japanese culture, (and I am guessing she does not subscribe to this point of view) she pointed out how a non-Japanese perspective on Japanese culture can help Japanese themselves to appreciate Japan’s culture.
Would an exhibition of Shunga (erotic art) ever have been put on in Japan, she wondered, the way the British Museum did last year? Probably the Japanese establishment would have deemed it to be pornography, not art, and therefore too controversial to touch. She also told the story of Joe Price, who started collecting Ito Jakuchu, a late Edo period (18thc) artist who had been neglected, but then became popular, culminating in a blockbuster exhibition in 2006 in Tokyo, the backbone of which was Price’s collection.
As this article described, Price was then able to use his collection to help cultural institutions in the 2011 earthquake region.
Mami also lamented that there is (no longer) a tradition of individuals sponsoring the arts the way there is in the US, and to a certain extent, the UK.
She wondered whether this was because post war Japan is a much more egalitarian place, and sponsoring the arts would be seen as flashy.
Pre-war many wealthy individuals did build up art collections (the Mitsubishi founding family Iwasaki’s Seikado collection or Idemitsu for example) and post war there is some sponsorship, such as Suntory’s famous concert hall. So the question I did not ask, was whether she was hoping that Japanese companies could fill the gap more than they do now.
As was pointed out by Akiya Takahashi, the director of Mitsubishi’s Ichigokan Museum in a recent interview (in Japanese) in the Nikkei Online, many major exhibitions in Japan are sponsored by newspapers and often take place in department stores. The staff therefore tend to be newspaper marketing employees, and there is a consequent lack of professional museum and gallery people, who can network with their peers in other countries. Also, what museum and gallery staff there are tend to return to universities to become academics. He is trying to change this by developing professionals at Ichigokan, encouraging them to travel abroad.
Furthermore, the newspaper sponsorship/temporary exhibition culture means that Japanese museums often do not have a permanent collection of any great strength. Again, Takahashi has been encouraging Mitsubishi to buy up some private collections for its museum. So my old employer Mitsubishi Corp is certainly doing its bit to help Japan’s soft power (and in the UK too – sponsoring the Japan room at the British Museum). I am very much hoping to see other Japanese companies “putting their money where their mouth is” as they say, and I suspect that was the subtle message of Mami’s talk too.
I visited Japan for the first time in a year and a half at the end of last year. I try to go to Japan once a year, each time looking out for subtle changes in a country I have been visiting or living in for the past forty years.
This time I felt some of the “genki” (a useful Japanese word meaning energy and health) had come back, compared to visits in 2011 and 2012 when there seemed to be a general atmosphere of depression.
However I also felt Tokyo had slowed down. There were visibly more elderly people, but also the younger people moved more slowly, partly as they were gazing into their smartphones as they walked.
Japan’s “yasashisa” (gentleness) and rich cultural life make it a great place to grow old. Of course I realise that it is the current generation of retirees who have it the best - a decent pension and healthier, longer lives in which to enjoy it.
My generation, both in Japan and many European countries, face the prospect of not being able to retire until we are 70. So we have at least another 20 years of working life ahead of us. In Europe it is now illegal for employers to discriminate on the grounds of age, and the default retirement age of 65 has been phased out in the UK.
Europeans reaching their fifties will not be able to afford to retire early as previously. But if they cling on to their jobs they are made to feel like they are blocking the way for younger people and are vulnerable to redundancy programmes.
It is hard to get a job in another company once you are over fifty – and there is also a question of motivation. The prospect of another 20 years doing the same thing – particularly if it is a “gemba” (shopfloor) type, active, high pressure job, is not appealing. The second half of a working life should be more about reflecting on acquired knowledge and skills and handing them on to the next generation.
I’m not sure the initiatives taken in Japan since the 1990s to deal with this – such as kata tataki (literally "shoulder tapping" where employees in their late 40s are forcefully offered very early retirement) and madogiwazoku (the window tribe – people who have been given a seat by the window and no real job to do) really worked. It was not only disheartening for those directly impacted, but also for the younger generation, who have reacted by becoming more risk averse. They want lifetime employment, but don’t see the point of being ambitious or taking risks such as working abroad.
A better way might be to help people in the second half of their working life find ways of capturing their accumulated knowledge and skills and transmitting them to the younger generation in Japan – through teaching rather than as a manager.
Locally hired employees and managers in overseas acquisitions would also welcome having an appointed mentor to help them feel more connected to Japan headquarters and understand the corporate culture and processes. If Japan could refresh its traditions of sempai/kohai (mentoring of juniors by seniors) and apprenticeship for the 21st century, I believe it could be a pioneer in developing a humane but productive ageing society.
(This article by Pernille Rudlin originally appeared in the Teikoku Databank News in Japanese on February 12th 2014)
There has been a succession of thought provoking articles in the Financial Times and the Economist on the “soul” of multinationals, in part triggered by the debate over whether to welcome Pfizer’s now aborted wish to transfer its headquarters to the UK through acquiring AstraZeneca and also the “Inclusive Capitalism” conference which took place last week, at which various FT and Economist writers spoke.
The Economist has provided some research which helps illuminate the Japanese angle on this debate, which is largely focused on Western companies. According to their “domestic density” index, Toyota is just as Japanese (57%), as IBM (53%), General Electric (63%) or Coca Cola (62%) are American. The truly global companies tend to be European (Nestle – ony 5% Swiss, Vodafone – only 15% British). AstraZeneca, Pfizer’s erstwhile acquisition target, is actually only 12% “British” in terms of where its sales, employees and shareholders are based and its CEO is from.
Nonetheless, as AstraZeneca is in the process of making a further commitment to the UK, by investing $500m in a new headquarters and R&D site in Cambridge, there was a strong consensus across various stakeholders in the UK that it would be better for the country and the Cambridge scientific cluster if it continued as planned, without possible interference from Pfizer, whose track record in the UK has included building up a significant R&D community around its site in Sandwich in Kent, only to close it after 50 years.
There are plenty of arguments from industry insiders that the future of pharmaceutical R&D lies more with small start ups than large multinationals. Nonetheless, I personally feel large companies in all industries have a responsibility to maintain communities that they have helped build up. These communities give people the respect, status and stability that they need in the face of destabilising, centrifugal, globalising forces.
For Japanese companies more than most, employees have non-transferable firm specific skills – and as Martin Wolf put it in the Financial Times last month, this means the employees end up being the major risk bearers in company restructurings, not the shareholders.
The second excellent article in the FT on this was from Andrew Hill, pointing out that being too closely tied or defined by the original nationality of the company is not desirable, however if a multinational company becomes a “globally integrated enterprise” as is the current fashion, if “they use this model merely to relocate operations more frequently, based on considerations of tax, cost and efficiency, they will never build the local links that underpin long-term success.”
Turning back to Japanese companies, and which ones should take most note of the words of Professor Roger Martin of Toronto’s Rotman School of Management, that a clever modern company “has to fall in love with every jurisdiction in which it has a disproportionate amount of resources”, The Economist has a useful table of which Asian firms have the largest foreign sales and therefore resources outside Japan, one assumes – Toyota, Honda, Nissan, Sony, Hitachi, Panasonic, Toshiba, Bridgestone and Canon are all in the top 15.
I wondered which of these companies has a disproportionate amount of resources in Europe. So I took a look at our Top 30 Japanese companies list, and realised Bridgestone needed to be included, which knocks Bank of Tokyo-Mitsubishi UFJ out of the Top 30. The revised list is as below, this time I have sorted the data according to which companies have the highest proportion of employees in Europe, and therefore need to be “clever modern companies” by falling in love with Europe. 11% is the average. NSG is way above average, thanks to its acquisition of Pilkington, ditto Horiba and ABX/Schenck, Takeda and Nycomed, Fujitsu and ICL/Fujitsu Siemens, Ricoh/Gestetner, Olympus/Keymed. I hope to compile more country specific analysis next.
I recently attended a dinner hosted by a delegation to the UK from J-WIN (Japan Women’s Innovative Network, a non profit organisation) where the question of whether having more women managers would help Japanese companies to globalise was raised, but not discussed in depth due to time constraints.
An impressively large number of younger Japanese women (70) had been sponsored by their companies to come to the UK for a week, visiting various UK companies such as British Telecom and Aon Insurance, to study global leadership and diversity.
My view is yes, it does help Japanese companies to globalise if they have more (Japanese) women managers, for a couple of reasons. Firstly, it helps Japanese companies and corporate culture seem less “alien” to Western companies if there are more women in management positions in the headquarters, and secondly, because the adjustments Japanese companies will have to make in order to incorporate a more diverse Japanese workforce will help them be more inclusive of “non-Japanese” diverse groups. Attitudes to overtime and working from home would be a couple of areas needing adjustment I would suggest.
Most companies in Europe allow much more flexible working than was accepted even ten years ago. Men have taken advantage of these new ways of working too – one senior British male manager I know works from home at least three days a week so that he can take his children to and from school. It helps that many senior global jobs involve communicating by phone or web conferences and email, managing dispersed teams, which can be done from anywhere, at any time.
Many Japanese companies have announced targets for percentages of women in management positions. Some European countries such as Norway have taken this a step further by putting regulations in place to enforce quotas of how many women should be on the boards of listed companies. However many companies resist imposing quotas, fearing that it will only isolate women further if they are seen to have been promoted merely because of their gender rather than ability.
Instead of quotas, many European companies have set up mentoring schemes, to encourage men to network with and promote women. This is something that I think Japanese companies can benefit from adopting, not just for women, but for their non-Japanese employees, by using the existing sempai/kohai (senior/junior) concept. Mentoring in a Western sense tends to be very focused on developing the mentee’s career. I like the more all encompassing sempai/kohai relationship, which is informal, and more about accessing each other’s networks across the company, to help the mentee feel “part of the family”.
I talked about mentoring with a couple of the J-WIN women. One, from a gaishi (foreign owned firm in Japan), said she found being mentored by an American man far more effective than being mentored by a Japanese man, as the American mentor had no preconceptions about Japanese women’s roles and behaviour. I suspect non-Japanese employees will find it equally helpful to have a mentor who can explain Japanese corporate culture from the inside.
(This article by Pernille Rudlin originally appeared in the Teikoku Databank News in Japanese on January 15th 2014)
This is the twelfth year that the Nikkei publishing group have announced their rankings for the best companies in Japan in terms of supporting women. This year they highlight two retailers – Seven & I Holdings (7- Eleven convenience store chain) and Aeon (supermarket chain strong across Asia), who are ranked 7th and 9th respectively. Companies are scored on how many women are in management positions, work/life balance, utilisation of women and the balance between males and females in the workforce.
Those people not so familiar with the Japanese corporate landscape may wonder why life insurers score so highly (Sumitomo Life at #2, Daiichi Life at #5, Meiji Yasuda Life at #8, Nissay at #15, Sompo at #19) – but those who have worked in Japan will be familiar with the life insurance sales ladies who used to roam the offices dispensing sweets and namecards. Other less surprising entries are Shiseido (cosmetics and skincare) at number 1 and All Nippon Airways (#6).
Foreign companies also usually do well – Japan IBM at #3 (although down from #1 last year), Johnson & Johnson, Eli Lilly and HP are all in the top 20.
Other Japanese companies in the top 20 from rather more male dominated industries are Daiwa Securities (#13) and Sony (#17).
Prime Minister Abe made a short, punchy speech at the “Invest in Japan” event I attended yesterday in London. Perhaps not quite as passionate as his longer speech at the Guildhall last year, but his key message was clear, that Foreign Direct Investment was an important pillar of his growth strategy and that he was aiming, with Abenomics, to make Japan a more market friendly, more exciting destination for foreign companies.
The current fashion is to say that Abenomics is losing steam, because of the lack of progress with what Abe has termed the third arrow – deregulation and structural reform. My view on this is that the Japanese government can deregulate and pass new, more liberal laws all it likes, but without significant support and action from major Japanese companies, not much will happen.
So foreign investment might be a way to stimulate action and change, if foreign competition is able to enter the Japanese market more aggressively. There is something of a chicken and egg situation, however, in that foreign investors often say they need to see deregulation and structural reform implemented before they will invest in Japan.
There is also a concern, voiced by ex ambassador Sir David Wright at the event, that foreign companies are still seen as “foreign” and may not get equal access to the benefits of any reforms or incentives. The mayor of Kobe was quick to pick up on this point – “foreign companies in Kobe will be seen as Kobe companies” he said, which is no doubt a legacy of Kobe’s long standing history as an international port. Certainly we felt very at ease when we lived in Kobe, as long ago as the 1970s, despite not being members of the rather snobby expat Kobe Club.
So Abe gave concrete examples of where there had been deregulation, in the energy sector and pharmaceutical sectors and also a strengthening of corporate governance, based on British standards. The rest of the morning was given over to presentations by the mayors of Fukuoka and Kobe, and the governors of Mie and Hiroshima prefectures, who were keen to emphasise another area of reform – the new national strategic special zones, where regulations will have a lighter touch, to enable innovation.
It seems Japan’s mayors and governors have more autonomy than in the UK, so many of them were able to showcase particular initiatives and tax breaks they had introduced to encourage investment into their regions. I had been dreading these presentations, expecting a succession of grey men explaining word for word, dreary, text box heavy powerpoint slides in incomprehensible or badly interpreted English, but to the audience’s great delight, the 4 regional leaders wowed us all with their youthful energy, dynamism and sometimes excellent, but always bravely and strongly delivered English, which seemed to come from the heart rather than a script written by someone else.
These men (there was supposed to be one woman too, the mayor of Yokohama, but she was unwell) could be Abe’s fourth arrow – if they can make a convincing case for a Japan as an Asian hub, beyond the bureacracy and vested interests of Tokyo – but I think a bit more strategic thinking behind the marketing is needed. Some sectors in the UK are already aware of Japan’s potential – I was delighted to see Paul Alger of the UK Fashion and Textile Association steer Hawick Knitwear towards Japan as a basis for entry into China, in the recent BBC programme The New Troubleshooter.
The Fukuoka mayor got some way there, with his eyecatching map showing that Fukuoka was equidistant to Shanghai, Seoul and Tokyo. Not to mention the fact that KLM has just started flights from Amsterdam to Fukuoka – a point that caught my attention, as we are about to move to Norwich, and I am looking forward to using Norwich International (sic) Airport to get to Japan, as it has several KLM flights to Amsterdam a day.
There was rather too much emphasis on the nice lifestyle to be had in Japan’s cities (and it made me very nostalgic for the lovely times I had living in Hiroshima and Kobe) and not quite enough hard headed business appeal, particularly along the lines of the point that Steve Crane, of Business Link Japan, made in the final presentation of the day, that it is important to move near your ecosystem and supply chain, when considering location.
The leaders did note the various industries or specialist zones that they were focusing on regionally, but it’s possible that they took it too much for granted that we would understand how industrial clustering works in Japan. Actually, as most of the audience were the usual Japan gang, this kind of marketing would have been wasted on us anyway.
Which brings me to my biggest constructive criticism – the government bodies that organised this seminar, Ministry of Economy, Trade and Industry, Embassy of Japan in the UK, the Japan Local Government Centre and JETRO, really need to network more with the various regions, cities and companies in the UK, so that more representatives of UK companies come to these seminars. JETRO is apparently about to hire some industry sector specialists in Europe as consultants – I presume to help with that. The JLGC head told me that twinning Japanese cities with regional governments in the UK has proved difficult, as no British politician or bureaucrat in this current climate of austerity wants to be seen to be jetting off to Japan on a sushi and sake junket.
As Sir David Warren, former ambassador to Japan, succinctly put it, “it needs to be proved that Japan can be more than a profitable niche”.
My old employer Fujitsu’s latest attempt to resolve the “European regional headquarters” conundrum that many multinationals face is to create a region called EMEIA – Europe, Middle East, India and Africa. This is partly a reflection of the IT industry (having large outsourcing desktop support operations in India, which in Fujitsu’s case had actually been managed out of the USA operation previously) and also the legacy of the former Fujitsu Siemens global HQ in Germany selling hardware into India.
The EMEIA region will be headed up by Duncan Tait, CEO of Fujitsu UK & Ireland, who has also been made Corporate Senior Vice President in Fujitsu HQ’s new global matrix structure, so this represents a tipping of power back to the UK, having tipped over to Germany previously, with the previous tripartite European structure of C(ontinental) EMEA, UK & Ireland and the Nordics.
I had mentioned previously that there seemed to be a shift towards Japanese companies basing their European or EMEA headquarters in the UK. Some say this could be due to the relative tax structures in the UK being more favourable now than the Netherlands or Germany. My view is that Japanese companies are not quite as hard headed as that, and it is more to do with the favourable business climate (diverse, flexible workforce) and global infrastructure and support services that the UK offers.
I have big worries, therefore, on how any British exit from the EU might ultimately impact Japan’s investment in the UK. UKIP leader Nigel Farage and the Labour Party’s shadow chancellor Ed Balls recently had an exchange on this, with Farage (rightly alas) pointing out that Nissan were very negative on the impact of the UK not joining the euro and yet their factory is still in Sunderland.
For sure, Nissan will not be closing that factory down any time soon – it’s too efficient and the UK market is too important for that. But what I would be worried about if I was in government would be the more hidden ripple effect of headquarter location. It is true for all industries, not just the automotive industry, that the location of a major company’s regional headquarters will also affect its procurement, marketing, financing behaviours and therefore the suppliers around it. Furthermore, the roles needed to run these consolidated functions are the most senior and well paid jobs in an organisation. The economic impact is therefore not just about the size of the directly employed workforce in a factory. If the UK were no longer in the EU, I wonder whether we might not see a slow drift of headquarter functions, and supporting services and people, back to Germany or the Netherlands or Belgium.
Nissan’s European HQ is actually in Switzerland – unusually for a Japanese company – 18 out of the Top 30 Japanese employers in Europe have their regional headquarters or part of their regional headquarters in the UK. Official location may be only half the story however – I know that many Japanese companies are moving towards a more “virtual” regional structure, with top jobs and functions located across Europe. I will examine this further in future postings.
I was very sorry to hear of the death of Wally Olins on Monday. Although he was 83, and had recently undergone an operation, it seemed he was recovering well, and I was looking forward to his postponed book launch for Brand New: The Shape of Brands to Come and maybe catching up with him before then as he had said he had wanted to chat further with me about Japan – which was typical of Wally, that despite his immense expertise and experience, he was always curious to know more and very generous and open to relative newcomers to his field.
We had worked together both when I was at Fujitsu for their new brand promise “shaping tomorrow with you” and after that with his company Saffron on another corporate vision project for a Japanese owned subsidiary. As Ian Stephens, principal of Saffron, has said in their statement about his death, Wally was infectiously charming but also famously impatient – he sometimes sought reassurance from me that his straight talking style was not going to upset Japanese executives.
Although he was impatient with Japanese companies’ caution, indecisiveness and inarticulacy, I sensed Wally was approving of Japanese companies because they instinctively “get” (and had been practicing, at least in Japan) the concept he had been preaching, that a company’s brand is about nurturing its collective identity, giving it an emotional connection to its customers.
I understand his impatience now, as he did seem, despite his four score years and more, like a man who still had a lot more he wanted to give and achieve. The best compliment we can pay him therefore is to buy his new book, and keep the flag flying for his work and ideas.