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I’m one of the interviewees at the Japan Intercultural Consulting “Succeeding in a Japanese Company Telesummit” – a series of interviews broadcast over the internet over March 4th-20th.
It’s free to register and listen during that period, and downloads can also be bought as a package later,
More details here.
My topic is “Profitable Relationship Building with External and Internal Japanese Customers” and the other topics are:
- Working with Your Japanese Boss
- Understanding and Influencing Decision Makers in Your Japanese Company
- Becoming Part of the Team in Your Japanese Workplace
- Relationship Building with Japanese — in Person and From Afar
- Skillfully Interfacing with the Parent Company in Japan
- The Influence of Cultural Differences on Business Processes and How to Improve Your Performance
- How to Keep Japanese From Falling Asleep in Your Presentation
- How to Give and Receive Feedback with Japanese
- How to Avoid Meeting Madness in Your Japanese Company
- Same Words, Different Meanings — Effective Communication with Japanese
- Getting on the Same Page in Your Japanese Company
Diamond magazine has countered Nikkei Business’s report on the “Great Places to Work” survey with its own report, in conjunction with Vorkers, a Japanese site similar to Glassdoor, which collects employee’s ratings (48,000 of them so far) on their employers in areas such as motivation, remuneration, corporate culture, career development and work life balance.
Despite the different methodology, the surveys share the same conclusion, that foreign owned firms in Japan seem to have happier employees than Japan-owned firms. Magazine publisher Recruit Marketing Partners is the top rated company, followed by Google Japan, then the US measurement instrument company Agilent is at #3 and US automated test equipment company Japan National Instruments is at #4.
Diamond adds some interesting analysis of its own, grouping the top ranking companies into several categories. Firstly the “Recruit” group, Recruit being a major Japanese recruitment company which has diversified into all sorts of areas including publishing.
Secondly the “Carnivore group” – up or out type companies such as Goldman Sachs, Boston Consulting Group, McKinsey, GE Healthcare and P&G.
Then comes the “go-go” group – rapidly expanding companies such as CyberAgent and Softbank.
The herbivore group (dull but “feel at home”) include Agilent, Japan National Instruments and Boehringer Ingelheim.
Finally, the “old school” but “unexpectedly global” group which include Komatsu, Idemitsu, Chiyoda, Teijin and Mitsui OSK.
Actually I had fun at lunch last week with one Japanese executive from Mitsui OSK (shipping company) and Mitsui Shipbuilding – teasing them as to how close the Mitsui keiretsu relationship was. They were adamant they were far less in each other’s pockets than their Mitsubishi equivalents. The Mitsui group is definitely “old school” in ethos, but has been global for over a century now.
Yasuo Masumoto, President of the $12.6bn tractor and heavy equipment maker Kubota Corporation, said in a recent interview (in Japanese, subscription only) that he was “thinking of appointing a foreign director”. More than 50% of Kubota’s turnover is overseas and Masumoto reckons that in 4-5 years there will no longer be any Japanese senior executives in overseas subsidiaries – currently 80% of the overseas heads are Japanese, but in each case the number two is non-Japanese. “I’m beginning to tell the Japanese to come home” says Masuda.
“It’s true that non-Japanese are not the types to totally devote themselves to the company, but actually, maybe because we let them be autonomous, mysteriously, they tend not to leave.”
In Europe, Kubota is headquartered in France, with a tractor production line in Argenteuil. Europe represents around 10-12% of total revenues, helped by the acquisition of Norwegian company Kverneland, in 2012. The £130m UK operation is now headed by a British Managing Director (Dave Roberts, an alumnus of our Japan Intercultural Consulting open seminars), for the first time, as of 2013.
Foreign owned companies in Japan dominate the 2014 ranking of Great Places to Work in companies with over 1000 employees, with Microsoft Japan taking the top spot, American Express at #3, Prudential Life Insurance at #5, Eli Lilly at #6, DHL at #8, and Morgan Stanley at #10. (Report in Japanese, subscription only, here)
The Japanese companies in the top 10 were more of the “non-traditional”, start up type - Works Applications (a software company) at #2, Cyber Agent (internet advertising, globally active but not in Europe) at #4, Disco (recruitment) at #7 and Nikken Sekkei (architectural firm, established 1900, so the granddaddy of the group)
You could argue that Western companies and non-traditional Japanese companies are bound to do best against a set of criteria developed by a Western company like the Great Place to Work Institute. The criteria include whether the employees trust the management of the company, are proud of the work they do and feel a sense of unity with their colleagues, as well as various questions about male/female diversity, benefits, and corporate culture.
There’s also an element of self-selection – this survey is relatively new to Japan (indeed, we often have problems trying to explain the concept of “employee engagement” to Japanese managers) so only 209 companies actually applied to be rated. Those companies confident of doing well, or who have already been through the process in other countries, would be more likely to apply it seems to me.
Kao the $14bn beauty, household and chemicals company has been active in overseas acquisitions for more than a decade now, acquiring John Frieda in 2002 and Molton Brown in 2005, but is better known in Japan for its domestic acquisiton of cosmetics, pharmaceuticals and textiles company Kanebo in 2006. This followed the near collapse of Kanebo after a “window dressing” financial scandal in which senior Kanebo executives collaborated with the auditors PwC to falsify accounts.
Domestic acquisitions in Japan are often not entirely initiated by the acquirer, and often follow government pressure to rescue lame ducks, for the good of the nation. It can be imagined that Kao, in many ways a competitor to Kanebo, had several barriers to overcome in successfully integrating Kanebo. And indeed, last year’s “skin whitening” recall by Kanebo and the slowness of Kao to make any public statement on this, prompted many to think Kao really had not yet got a grip on Kanebo.
In an interview last year in the Nikkei Business (in Japanese, subscription only), Michitaka Sawada, President of Kao, was at pains to describe Kanebo as a “superb, adult company” that takes responsibility for its own mistakes. As the parent company, Kao will of course support them he said, and not leave things at that level. “We will apologise all we can, but what is important is to focus on what we need to do next”.
It’s interesting to note the “family” analogy there, so common in Japanese companies, and also the distinct flavour of “hansei” (which we describe in our Japan Intercultural Consulting seminars) – a process of apology, reflection and redress in what he says.
Apparently information flows stopped above a certain level, and there was not the right atmosphere for disclosing problems. There was not a problem in product development, he asserts, more that after sales follow up was not sufficient. The consolidation of Kanebo and Kao’s R&D functions in October 2013 was not related to the skin whitening scandal. All of Kanebo’s functions such as sales, marketing, production had been left independent after the acquisition, but Sawada questions whether that is now the correct strategy, when thinking about future growth.
“We said at the time we were acquiring Kao in order to lead Japan’s cosmetics market and expand globally, but although we do have the biggest market share, I am not sure we can say our brands have responded to the changing environment, nor that we have expanded globally as much as we intended”.
When asked if he intended other acquisitions such as Molton Brown to stay independent, he says the beauty care division is also reviewing the reasons for acquiring and working out how they can contribute to the growth of Kao’s beauty care business. “We can learn new tastes from Molton Brown, and use each other’s technology to grow the business. We may have to do something more to grow. If we do not reach our targets we have to ask whether we continue to support the business. We were too lenient in the way we conducted M&A in the past and did not do enough reviewing.”
Koichi Ikegami, head of corporate communications at Nomura, visited Nomura’s London office last year and wrote of his impressions in the Nikkei Business Online (article in Japanese). He had worked in Nomura’s London offices for 2.5 years some thirty years ago, as a graduate trainee. What struck him as different now, on meeting some of the former Lehman Brothers people who became part of Nomura in 2008, was that they referred to themselves as EMEA (Europe, Middle East and Africa), which made him feel Nomura had become a truly global company, and that London was not just the UK market, but was the core of Europe, Middle East and Africa.
He points out that plenty of effort has gone into realising this, and that it is a logical strategy, given that the USA represents 40% of the global equity market, whereas Japan is only 8% and the UK only 7%. Not only has the City of London deregulated itself, but has tried to make the accounting and disclosure rules, which differ from country to country, as easy to understand as possible for investors.
Around a third [actually more like 40% these days] of London’s 7.5 million population are foreign born. Unsurprisingly, the participants who came to his seminars therefore had Arab, African and Asian origins as well as European. He also discovered that when he asked the participants about their “identity”, very few simply stated their nationalities – most of them had parents of different nationalities or were brought up in another country or educated outside their home country.
He contrasted this to his visit to New York in 2010. He felt that although New York is equally diverse ethnically, “American” as a nationality dominates and there is a strong sense of “USA is the world” as he put it. Most of Nomura New York employees are American, and the market is sufficiently large that they do not have to look elsewhere for profitable growth.
Ikegami is promoting Nomura’s “Diversity and Integration” initiative – which has three themes – “Life and Family”, “Women in Nomura” and “Multicultural Values” – and this very much includes Nomura in Japan. As Ikegami says – for the three arrows of Abenomics to succeed, Japanese people themselves have to play a major part.
Judging by an interview last year (Nikkei Business – in Japanese) with Terumo’s Chairman Koji Nakao, Nakao’s attitude is one of the reasons Terumo has been more successful than most Japanese companies in managing its overseas acquisitions (as previously blogged). 50% of Terumo’s sales and 40% of its production are overseas, with about 75% of its employees being non-Japanese.
Nakao states that since 2012 he has been trying to change the behaviours of his senior executives, encouraging them to take the initiative to have conversations with their subordinates and also undergo 360 degree appraisals (past participants of our Japan Intercultural Consulting seminars will be amused to know that one of the feedback items Nakao got from his 360 degree appraisals was that he had a habit of closing his eyes in meetings which made him look like he was asleep). “I want to change the culture of the company to a more “free and easy” one, where many discussions take place… the changes have to come from the top, including myself”.
He lived for some time in the USA, where he was known as Koji, and got used to being able to discuss freely with his employees, and have them challenge his ideas. “Yet when I returned to Japan, I was addressed as “Chairman”". He believes this strong hierarchical sensitivity in Japan in some senses makes life easier. If there is a gap in seniority amongst meeting participants, then tough discussions and conflict can be avoided, as noone wants to contradict their seniors.
“But if this goes too far, you end up doing things, not for the company, but for the boss….It also has the result that Japanese are not as convincing as Westerners in negotiations, because they are not used to having to convince their bosses.”
As outlined in a previous blog, NTT, the partly state owned Japanese telecoms company, is undergoing a major global shift. Nikkei Business interviewed the president of the NTT group, Hiroo Unoura, about how he has been trying to change NTT since he became president in 2012.
In June 2013 he announced to the top executives of the group companies that “we should not leave any homework for future generations”, by focusing on what kind of services would be needed for the era of cloud computing, and that NTT must no longer regard itself as the main player, but simply “one of them” due to the diversification and globalization of the telecoms services and applications market. He is reshaping the organisation globally, using North America as a starting point for global expansion.
NTT has set up a 100 strong cloud research center in Silicon Valley. Unoura believes that businesses in the USA are far more inclined to see shifting to the cloud as a life or death matter, whereas the Japanese market is still hampered by regulation.
Unoura was involved in cleaning up the mess after the major losses made by NTT in the early 2000s from overseas investments. Those acquisitions were not about increasing turnover, he points out, rather about acquiring 3G technology from AT&T Wireless or building a global internet network in the case of Verio. The current acquisitions are about expanding the business. As Dimension Data is a specialist in cloud, by acquiring them, NTT is hoping they will find further candidates for NTT to acquire in the cloud business.
Acquisitions such as the recent purchase of Spanish IT company Everis are all discussed with NTT overseas operations such as NTT Com, NTT Data and Dimension Data first. However NTT has no intention to abandon Japan – the idea is to learn from overseas, and bring that knowledge back to Japan once Japan’s own industrial structure has changed.
NTT is of course putting itself into direct competition with the very Japanese companies who used to rely on NTT as a key customer, such as Fujitsu and NEC, by focusing on cloud and global markets. Fujitsu in particular already expanded overseas decades ago through purchases of European and North American companies, although it took many years before it then tried to integrate them into “One Fujitsu”. Time is not on NTT’s side, and trying to integrate strong and distinctive companies such as South African Dimension Data into “One NTT” may need all of Unoura’s apparent boldness and courage and then some to push through.