Corporate culture

“Japanese companies are too scared to touch their overseas acquisitions” – Nidec’s Nagamori

Shigenobu Nagamori, the billionaire founder of the world’s biggest manufacturer of micro-motors for hard disks and optical drives, Nidec, has acquired more than 40 companies in Japan and overseas. He comments in a Nikkei Business article that “you cannot just leave foreign acquisitions alone to get on with things by themselves. You need thorough mutual understanding and to even replace management if necessary.”

“Although you no longer hear about Japanese companies sending lots of managers over to their overseas subsidiaries who end up issuing all sorts of misguided directions, you now hear of companies who say ‘we think the same way as the counterpart management’ and so decide to buy the company and then just leave the management as is.”

“This is an illusion. Actually they are being left alone because the Japanese company doesn’t really understand what they are doing. It ends up with compromising on the necessary management reforms and profit targets.”

“I have regrets myself. We acquired 10 or so companies in Europe and North America from about 2010. We were warned by various companies who had M&A experience and financial institutions that we couldn’t restructure foreign companies the way we would Japanese acquisitions and that it was best to ‘leave it up to the foreigners’ otherwise they will quit”

“I thought that was true at the time. I also took on board the advice that Japanese managers needed to be people with Harvard degrees and a network amongst foreign executives.”

“However one company did not make any improvement no matter how often I set profit targets. I thought there must be something wrong with the company management as such a company should as a matter of course achieve profit margins over 15% but I was told that it was the limit for their industry.”

“In Japan you would try to persuade the management to adopt our “kaizen” knowhow (knowledge of how to improve) but we hit a wall with this in the West. So in 2012 we changed the management of the acquired company. But you can’t do it like pulling a trigger. I make a point of visiting each company at least once a year and have dinner not just with the executives but also the managers and discuss things with them. I also encourage them to send emails directly to me and I respond to them. I am trying to understand all the ideas people have for improving profitability.”

“It’s important that people in the company understand my thinking and I understand whether they are capable of understanding. If they are then it doesn’t matter if the CEO is changed. ”

“It’s the same in Japan. Communication is important. If you just cut back costs and improve profit, the company will not survive in the long term. Where is there waste, how can we make the most profitable products – the basics are the same in Japan or elsewhere. If this is understood, then overseas companies can be reformed too.”

“I think Japanese companies are too scared to touch their overseas subsidiaries. They overthink the differences. I used to be like that, but there is no need. The basics of management are the same everywhere.”

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Octopus balls to Tokyo – why it matters where your company is from in Japan

Most countries have rival cities – usually the official capital city versus other cities which consider themselves to be the real business, historical or cultural heart of the country – think London versus Manchester or Birmingham, Berlin versus Dusseldorf or Frankfurt, Rome versus Milan, Madrid versus Barcelona. Japan is no exception and the rivalries go way back into history.

Kyoto used to be the capital of Japan, before Tokyo (or Edo as it was then) began to usurp it in the 17th century. If you ask Japanese people today about Kyoto, they joke that Kyotoites still think Kyoto is the real capital of Japan, and the Emperor is just temporarily visiting Tokyo (he moved there in 1868, when Tokyo became the official capital) – and will return one day.

Tokyo literally means the Eastern Capital and is part of the Kanto region, where the ruling feudal Tokugawa shogunate was based from the 17th century. Kanto means East of the Barrier (usually considered to be the Hakone checkpoint) and Kansai – the region where Osaka, Kobe and Kyoto are based – means the West of the Barrier (originally the Osaka Tollgate).

Before Kyoto’s reign as capital for a 1000 years, Nara (also in the Kansai region) was the capital and seat of the Emperor but is now a quiet backwater, more visited by tourists than business people. Kobe is the other main city in the Kansai region – a port with a strongly cosmopolitan feel and very close to Osaka geographically. Whilst Kyoto remains aloof and quietly superior (and has some very successful high tech companies of its own such as Kyocera and Nidec), the real battle now in business culture is between Osaka and Tokyo.

Osakans see Tokyo as standardizing, dull and full of bureaucrats and view Osaka (which historically had very few samurai but plenty of merchants) as the real money maker, with vastly superior food. Many of Japan’s celebrities, comedians and musicians come from the Kansai region too.

So what does this mean for corporate cultures? Osaka companies often have merchant roots – the joke goes, when you meet an Osakan, you don’t ask “how are you” (ogenki desuka) but “how’s business” (moukarimakka). To which the correct response is “bochi bochi denna” – a wonderfully vague way of giving nothing away, like saying “plodding along nicely thank you”. Osaka companies are brash, tough negotiators and mean with the money. “They’d skin the fleece off a gnat” said one British engineer to me, describing his colleagues in the Osaka HQ of a consumer electronics company.

Tokyo companies are gentlemanly but at the same time highly political. You need to have a good understanding of their organisation, the factions and the individual relationships to understand how to get things done. Mitsui and Mitsubishi, both Tokyo based corporate groups, are distinguished by the saying “Mitsui is people – Mitsubishi is the organisation”. It’s hard sometimes to understand how exactly this is different, but it seems to boil down to the idea that if an individual is powerful enough at a Mitsui group company, they can get things done, whereas at a Mitsubishi group company, the whole organisation has to support an action.

The other main corporate groups, Sumitomo and Itochu, are Kansai based companies. Both have strong “mercantile” roots – Sumitomo in metals trading, hard-nut, conservative and domestically focused and Itochu – strong in fashion and consumer goods, and seen as the more maverick, progressive and international in outlook. The regional cultural differences don’t seem to have been that strong between Sumitomo and Mitsui as various mergers have taken place between their respective member companies, particularly in financial services. However regional cultural differences have definitely had an impact on Astellas Pharma, the product of a merger between Yamanouchi (Tokyo) and Fujisawa (Osaka). Apparently many Fujisawa employees were horrified that Yamanouchi was going to be the dominant partner in the merger. Fujisawa had a strong tradition of innovation and had regarded Yamanouchi as “Mane-nouchi” (Mane = imitation) – a bunch of play-safe Tokyo bureaucrats.

Those who know Japan well will have spotted that there is an important region missing from this analysis – Chubu. Literally and metaphorically this is the midlands of Japan. Just like the Midlands in the UK it is the historic heart of the car industry. Nagoya is the main city, and teased just as Birmingham in the UK is for being ugly and soullessly modern. The area has the last laugh though, as it is the most wealthy in Japan – thanks to the enduring success of Toyota (so mighty their home town was renamed Toyota City) and its corporate group of suppliers such as Denso.

So, where are the top 30 Japanese companies in Europe from?

Kanto/Tokyo based companies:

• Asahi Glass
• Astellas (but Fujisawa originally Osaka)
• Canon
• Daiichi Sankyo
• Fujifilm
• Fujitsu
• Hitachi
• Honda
• Kao Corporation
• Mitsubishi group
• Mitsui group
• Nissan
• Nomura (but was Osaka originally)
• NTT group
• NYK group
• Olympus
• Ricoh
• Sony
• Toshiba

Kansai based companies:
• Horiba (Kyoto)
• Nidec (Kyoto)
• Nippon Sheet Glass (Sumitomo Group)
• Omron (Kyoto)
• Panasonic (Osaka)
• Sharp (Osaka)
• Sumitomo group (Osaka)
• Takeda Pharma (Osaka)

Chubu based companies:
• Denso
• Seiko Epson
• Toyota

Chugoku (Hiroshima etc) based companies:

• Fast Retailing/Uniqlo

Top 30 Japanese companies in Europe 2021

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Hitachi – we’re not heavy, dull or ugly outside Japan

Hitachi is seen as inward looking, conservative and lacking in commercial sense by business people in Japan, but outside Japan it is seen as a motivating place to work, exciting and cool by employees of Hitachi’s overseas subsidiaries such as Hitachi Rail Europe and Hitachi Data Systems, according to Nikkei Business magazine.

Could this help change Hitachi domestically? Currently Hitachi has over 1000 employees with PhDs working for them in Japan, generating many patents, but this technical strength does not seem to be translating into sales. The improvement in profits is largely due to withdrawing from unprofitable businesses such as mobile phones and LCD screens and also the contributions from social innovation business overseas. It is not due to any ground breaking innovation in products or services. It is also seen as being self centred, and not often forming alliances with other companies.

In the rail business however, Hitachi has taken the biggest share of rolling stock orders through to 2019 in the UK. Hitachi first opened an office in the UK for its rail business in 1999, with just one expatriate staffing it. It is now seen as the most powerful train supplier in Europe, according to an executive from Virgin Trains. It has had to completely overhaul its designs however, to cope with the UK’s old fragile railway bridges. Procurement specs for everything from engines, radiators and pumps were reviewed and the body used as much aluminium as possible to lighten the weight. “We were able to use all the expertise we had developed in Japan” says Koji Wagatsuma of Hitachi Rail Europe. “Hitachi’s strength is not just IT, but that we know the operational side of various industries really well”, says Shinya Mitsudomi, CSO of Hitachi Rail Europe.

The other secret of Hitachi Rail’s success is “true delegation”, says the Nikkei. Instead of relying on history and performance within the company, Hitachi has given responsibility to those who know the market best. There is a big difference between the UK and Japanese rail markets, in that the risks taken by the supplier in bids are much greater. It is necessary to guarantee how many people would be needed to run the system per year, and what the lifecycle cost will be.

Alistair Dormer, the CEO, has clearly been a driving force in Hitachi Rail’s success. He likes to hold regular town hall meetings, where he consistently promotes the company’s mission and vision. Ted Yamada, head of HR at Hitachi Rail Europe says “to hire the best people, it’s not just about the remuneration, but to make sure they can get a feel of the kind of company they are working for.” Not only the CEO but also the chairman of Hitachi in Japan, Hiroaki Nakanishi, is a good story teller. As I repeatedly point out in my training sessions, because most Japanese companies are the “family” type, storytelling and parent figures are far more important in giving direction than targets or strategies or policies or structures.

A further feature that Nikkei Business picks up on, is that Hitachi is beginning to pull together virtual company structures, most notably for Hitachi Data Systems. We were moving towards that when I was at Fujitsu – I think IT companies are probably best suited to this kind of organisation – where services have to be provided globally so it makes sense to have teams and hierarchies which span several regions. It does mean a lot of travel to work well – one Hitachi Data Systems director says he has 56 Japan entry stamps on his American passport. Conversely, Japanese engineers travel regularly to the UK and the US.

The feature finishes with an interview with Hiroaki Nakanishi, who comes up with a few punchy quotes. Asked about the impact of Hitachi putting non-Japanese at the top of various regions, he says it has an instant effect on the mindset of the Japanese employees, who now realise that they have to persuade a foreigner of their ideas, so all the “Japanese only” methods they have used in the past will not work. Consequently, decision making and execution have speeded up. Everything in the value chain from marketing to sales, development to production and after sales service have to be overseas. So it’s not possible for Japanese to be seconded abroad and manage everything. Most of the executives are local, non-Japanese. “Before now, Japanese companies would build a factory overseas, but just transfer manufacturing knowhow, and then when it was completed, the head of manufacturing in Japan would fly over and play lots of golf. That’s just no longer feasible.” Since Jack Domme took over at HDS, objectives have been set for individual employees and decision making has become more transparent. HDS is now well regarded by others as a company which would be an enjoyable challenge to work for. “Starting small and growing big is just fooling yourself – there are no dreams or hope in that. People with ambitions will not join such a company” says Nakanishi. “We are still a Japanese company, and so there will be some parts which are difficult for non-Japanese to understand, so not being Japanese might be a bit of a handicap” but maybe no more than Siemens is a German company, or GE is American, Nakanishi adds.

What I think about Japanese employee engagement – it’s all in the family

Somebody writing a white paper on the reason for low engagement amongst Japanese workers contacted me this week with some questions, which I answered (possibly in more detail than was helpful!) as follows:

As you may have gathered from the articles I have written, I am cautious about applying Western standards, using surveys which are basically translations of (usually American) methodologies and materials, to Japanese companies.

Whenever I find something that is puzzling about Japanese companies – in this case that employees in Japanese companies have consistently lower engagement levels than companies with other countries of origin – then I use the framework developed by Fons Trompenaars and Charles Hampden-Turner, in Riding the Waves of Culture, which classifies Japanese companies as “Family” type companies, as distinct from Missile type companies or Eiffel Tower type companies or Incubator companies. Please see http://changingminds.org/explanations/culture/trompenaars_four_cultures.htm for a summary.

For Family type companies, the primary motivation is to put food on the table and look after the members of the family, and secondarily the long term survival, and therefore the reputation of the family and its acceptance by the community in which it is based. In Missile type companies motivation is more about success – personal and the company’s and therefore being materially rewarded and recognised for your contribution to that success. Eiffel Tower companies are about believing in and executing the strategy and being rewarded through promotion/status. In an Incubator company, your motivation is self fulfilment – to have a job which makes the most of your skills and interests, and make a difference or do something new.

If you think of Japanese employees as members of a family, and replace “company/employer” with the word “family” then you can quickly see that they will have trouble answering questions in employee engagement surveys which are more suited to Missile, Eiffel Tower or Incubator companies. For example, “would you recommend your family to others/are you proud to tell people you belong to/work for your family” – when it would be seen as boastful to tell others what a great family you have, particularly for modest Japanese people – and traditionally it’s been very difficult for people to join big Japanese family style companies later in their careers, so why would you recommend it to your friends? You wouldn’t say – hey why don’t you leave your family and be adopted by mine?

Families all pull together, nobody expects to be rewarded individually, and if they were this would cause big arguments and accusations of favouritism. So again, there is likely to be a negative to neutral response about being rewarded or recognised or able to make an individual contribution/impact.

Families don’t have strategies, mission and purpose other than, as I said above, long term survival and protection of their reputation. So questions about whether you understand the mission and purpose and strategy will be tough to answer. Japanese employees are used to doing what they are told by mum and dad, and the mission of the family is implicit, not explicitly explained.

So if you asked Japanese employees different questions about their motivation, like “do you feel confident or secure that your company will look after you and your family in the long term” or “do you believe your company acts in the best interests of the community and therefore gives you the opportunity to contribute to the community too” then they might be much more positive.

Even questions about teamwork are tough to answer for Japanese employees – you would expect your family to be supportive and work well together because you know each other so well, so Japanese companies don’t spend much time thinking consciously about teams and individual roles within those teams. They are also, like families, very well aware of each others’ flaws and also the flaws of their seniors – mum and dad – who are the leaders but also just ordinary people who happen to be older – you didn’t choose for them to be your parents.

So Japanese do tend to be highly critical of each other and their companies in general – but just like families, are extremely defensive if someone outside the company/family tries to criticise it.

Overall, I would say, even if you asked more culturally sensitive questions in an employee engagement survey, (by the way, even the word ‘engagement’ has no direct translation into Japanese), you would probably still uncover a motivational problem. Japanese companies have gone through a very tough 20 years. Many of them are still struggling to find their “raison d’etre”, and are having to make unpleasant decisions about axing businesses, which means that their employees do not feel as secure and protected as they used to, nor do they feel that their company is making the contribution to society it used to. Plus the number of “contract” staff has increased to over 30% of the workforce now – these are not members of the family, and have none of the benefits the family members do.

Even the family members are being forced into taking very early retirement (basically redundancy) and the younger family members are wondering whether staying inside the family until retirement is quite as attractive as it used to be – as so many are not getting married or having children, they have less need for a secure and protective employer.

What we did at Fujitsu was to refresh the values and vision, to try to come up with something that made sense inside and outside Japan. We communicated them internally and externally, with a new visual identity and some very emotionally driven advertising about contributing to society through supercomputers etc. Interestingly, the Japan side of Fujitsu were not so keen to have workshops about the values and vision but the one thing they did do was to compile a book of stories of individual employees, – called something like “the power to challenge” in Japanese, translated into “Fortune Favours the Brave – the Fujitsu Way”. So it was celebrating individuals, but again in a very family type way, which is to create some new inspiring family myths/stories.

I think this is what Japanese companies have to do – they usually have some great stories about what the founding fathers did – they need to revisit these, but also develop some new stories about the younger generations. That should help employees feel more motivated – about their ability to contribute individually but also that the company/family can do great things as a whole – in the future, not just the past.

Families like to tell good stories!

If you want a different perspective on this, you may want to speak to my US colleague, Rochelle Kopp, the founder of Japan Intercultural Consulting – she has just published a book in Japanese on why Japanese employee motivation is so low, and I think an English version is due soon. She takes a more HR systems approach – her basic point is that “jinji idou” – the rotating staff system whereby employees have no say in where they are posted – is a key demotivator.

Japanese corporate vision – pointing at the moon or a finger in air?

We are coming to the end of the final quarter of the financial year for most Japanese companies. There will be a greater sense of urgency than in previous quarters, not only to make the numbers, but also to find tangible proof that the strategies in place are the right ones, or if they are not, to draft some radical proposals for the President to make at the end of April, when the year’s results must be declared.

It’s a predictable part of the annual cycle, but I sense that in recent years, the feeling of crisis is stronger than ever. So many Japanese companies understand that their very existence on the global stage is under question and the cheaper yen will only provide temporary respite from this.

The usual bottom up accumulation of midterm plans, based on projections of the previous years’ sales, a chat with customers and ”putting a finger in the air”, all jammed into several A3 sized sheets of paper, won’t do this time.

Some companies will announce, or already have announced, radical restructuring plans, but behind such plans is still the huge question of why the company exists at all – a question that most Japanese companies take very seriously, as so many believe that contributing to society, not just by keeping people in employment, but by making a positive impact on the future shape of the world, is at the core of their being.

This means they have to venture into the touchy feely territory of vision, values and corporate culture. Something which I believe they are pretty good at communicating to customers and employees in Japanese, but not outside Japan.

Words and numbers are not enough – there need to be stories, heroes and artifacts. Japanese companies have plenty of these, the question is how to communicate them globally.

One example is Alpine Electronics, the Japanese car audio manufacturer. The current chairman, Seizo Ishiguro, talks of how when he headed up the US operation, a cassette deck was returned to the company riddled with bullet holes by an unhappy American customer. The cassette deck is now in Alpine’s museum, as a reminder of how the key to Alpine’s survival in global markets is the highest possible quality and customer satisfaction.

This is a very tangible artifact, and a great story. Somewhat gentler is the brush painting bought by Sazo Idemitsu, the founder of the Idemitsu petroleum company, when he was 19, at an auction, of Hotei (often known as the Laughing Buddha) pointing to the moon. Apparently he often told employees to “look at the moon” (the big picture) not at Hotei’s finger (the details). In other words that Idemitsu was in the petroleum industry not just to make money, but to benefit society.

Intriguingly, in the painting Idemitsu bought, the moon is not depicted at all. It’s as if the artist is telling us to go and look for the moon for ourselves. The challenge Japanese companies face is ensuring that this kind of subtlety does not get lost in translation.

This article by Pernille Rudlin originally appeared in the Nikkei Weekly in January 2013 and also appears in Shinrai: Japanese Corporate Integrity in a Disintegrating Europe, available as a paperback and e-book on Amazon.)

A truly global HQ, where Japan is just one of the regions?

I mentioned in a previous article in this series that Japanese companies such as Fast Retailing and Rakuten are adopting English as their corporate language. In reaction to this, various surveys of Japanese employees’ attitudes to speaking English appeared in the media, including one that showed that 73% of Japanese are reluctant to have English as a corporate language.

Adding to this, another survey just released by the Sanno Institute of Management found that 67% of the businesspeople it questioned did not want to work abroad. The conclusion drawn by many Japanese commentators is that this is all part of Japan’s withdrawal from the globalized world. In particular there is a worry, shared by the Japanese government, that the younger generation have become more inward looking and cautious, and this will have a negative impact on the economy. My personal conclusion is that these reactions show that Japanese people rather enjoy agonising over surveys about themselves, particularly if the results show how different Japan is or are in some way a cause for gloom.

It seems to me any such trends are more related to economic factors than anything peculiar to Japanese society. There is not the urgency to rebuild the Japanese economy through export led growth that there was in the post-war decades. The slow death of lifetime employment means that younger people are less loyal to their companies and therefore less willing to go wherever their employers tell them.

Japanese companies have adapted over the past twenty years to the changing global environment. They expatriate fewer staff to the expensive developed world, relying on local managers instead, and have turned their attention to investment of capital and personnel in emerging markets.

The same trends can be found in the matured economies elsewhere in the world. The US used to have a mobile workforce, who would pack up and move state in search of a job, but apparently this is less true now, despite the persistent unemployment problem there. And although Europeans love pointing out how only 20% of Americans have passports, compared to 70% or so of the British population for example – it is noticeable how most of the migration within Europe is from Eastern Europe, rather than from Western Europe.

Rather than force reluctant Japanese employees to transfer abroad or adopt English as a corporate language, many Japanese companies are trying to globalise by encouraging employees from Asia to transfer to Japan or hiring Asian students who are studying in Japan. I suspect the expectation is that these employees will have to blend in as much as possible, however, so the impact on the Japanese staff in the headquarters will be minimal.

The worry then is that the non-Asian part of the business will become increasingly disconnected from Japan and Asia, with very little exchange of staff between the two regions. A radical solution might be to accept that the majority of Japanese staff prefer to focus on Japanese domestic sales, and split the Japanese domestic side from the global headquarters. This headquarters could be situated anywhere in the world, and yes, the working language will probably be English.

This article originally appeared in the Nikkei Weekly

“Japanese managers have been brainwashed by the West” and should aim to be ‘virtuous companies’ instead

An interview with George Hara, currently Chairman of Alliance Forum and former board member of various Silicon Valley start ups as a venture capitalist kicks off Nikkei Business’s attempt at finding a new standard for evaluating Japanese companies, beyond the shareholder capitalism model.

Instead of “Good/Best company”or “Great Place to Work” and all the other awards you can get, the Nikkei proposes ‘Yoi‘, which can be translated as ‘good’ but is probably better translated as ‘virtuous’. They even deliberately write the headline ‘Yoi kaisha‘ (‘Virtuous company’) in Japanese brush stroke calligraphy.

Hara doesn’t think the term ‘stakeholder capitalism’ quite covers what he and the Nikkei are getting at, even though he says the company should be measured on the benefit to employees, customers, partners and regional society as well as shareholders. He prefers ‘shachu‘ (which my dictionary translates as clique or troupe) or public benefit capitalism – meaning that all the concerned parties have a common objective.

He particularly criticises the way companies in the US – the home of full blooded shareholder capitalism – such as Hewlett Packard or Dupont find that putting shareholder interests first means firing people even when there are record breaking profits, or not being able to invest in long term projects to develop technologies which will benefit society.

Japanese corporate leaders used to be much more inclined to public benefit capitalism, and the cause is not lost yet, says Hara – citing that when he showed the great and the good of the IMF around Tokyo’s underground system recently they were full of praise for how clean, orderly and busy a city supposedly suffering from a 20 year recession was. Japan should be setting its own standard for the rest of the world, he feels.

Following on from this, Nikkei Business have come up with a Yoi company metric, based on profit, changes in employee numbers, corporate tax contribution and share price over the past 10 quarters for 3841 Tokyo stock exchange listed companies and the top 10 are:

Softbank
Fast Retailing* (Uniqlo) (Yanai, the founder and also board member of Softbank is quick to throw this back in the face of those who have termed Fast Retailing a “black company”)
Keyence
Fanuc (the current target of shareholder activist Daniel Loeb)
Yahoo
Aeon Mall
Rakuten
Mani (medical devices)
Japan Tobacco
Takeda Pharma *
Central Japan Railway
KDDI
ABC-MART
Sumitomo Real Estate
USS　(car auctions)
Astellas Pharma*
Toyota*
SMC (automatic control equipment)
Nakanishi (motor spindles, micro grinders)
Trend Micro (security solutions, founded in the USA, HQ in Japan)
Sysmex (healthcare)
Hisamitsu Pharma
Komatsu*
Terumo
Canon*
Honda*
Makita
Nitori Holdings (furniture)
Shimano
J Trust

Other of our Top 30 Japanese companies in Europe* in the top 100

Bridgestone #41
Denso #46
Sumitomo Electric Group #51

In our Top 30 in Europe but not in the Top 100 Yoi companies:

Fujitsu, Ricoh, Sony, Asahi Glass, NSG, Toshiba, Hitachi, Panasonic, NTT Data, NYK, Fujifilm, Olympus, Mitsubishi Chemical Holding, Nomura, Nidec, Sharp, Daiichi Sankyo, Kao, Seiko Epson

Germans, Japanese and Americans work the way they drive

Ulrike Schaede (Professor of Japanese Business at the Graduate School of International Relations and Pacific Studies at the University of California, San Diego) confirms something that I had wondered about a few years ago when I facilitated management development seminars for Japanese and German managers, in her comparisons of Japanese and German driving styles. As is well known, there are no speed limits on German autobahns. At the same time there is another well known aspect of German culture, that rules are obeyed to the letter – perhaps due to a fear that without rules, mayhem results. Yet fatal car accidents are relatively few in Germany – particularly relative to the US, which has by far the highest number of fatalities on the roads.

Fortunately Germans obey other rules on the roads, such as no undertaking, which keeps the accident rates down, but Schaede confirms that generally speaking, Germans are impatient and aggressive drivers. Rather like Germans you might come across in the service industry she remarks. The Japanese managers in the management development seminar had also observed this when they undertook some field observations in Stuttgart. Why, they asked the German managers, when Germans are normally so orderly and obedient, was there pushing and shouting amongst a group of waiting people, about who should be served first? The Germans considered this for a while and then asked “Was there a sign anywhere explaining how to queue?” Apparently there wasn’t. So chaos ensued.

Japan has the lowest rate of fatalities (and the UK is not far off from this either), and like Germany and the UK, there are plenty of rules and regulations which have to be learnt in order to pass a test to obtain a driving license. In the USA however, it is possible to drive at the age of 16, without much knowledge of the rules and regulations of the road.

She draws parallels with American entrepreneurialism – anyone can start a company in the US if they have an idea. So some succeed but many fail too.

There are 4 other driving styles she believes relate to business approaches:

1. Safety First

Just as fatalities in road accidents are low in Japan because of the “safety first” mindset, so Japanese companies with any reputation to protect will be very reluctant to take any risks which will jeopardise their name. The downside is that, just like Japanese traffic, things move slowly.

2. Reverse parking

I’ve noticed too, that in Japan, almost everyone reverse parks their car, even into the narrowest of gaps. Schaede says this is indicative of a mentality that says put the hard work in first, so things are easier later. Japan is a nation of savers for a rainy day [although this is increasingly less true according to statistics I’ve seen]. Japanese companies also put as much effort as they can upfront, in case hard times are around the corner.

My aunt and uncle, veterans of an army life in Northern Ireland, teased me mercilessly about my dislike of reverse parking – it had become second nature to them, I suspect because of the need to make a quick getaway in a dangerous situation. So it is risk aversion at work again too I would say.

3. Shut that door!

Japanese have an expression “handoa”, meaning half door, or in other words, a door not closed properly. Japanese take great pains to shut doors firmly in cars, so as not to cause irritation to the driver. According to Schaede, one of her Japanese friends was told by an American driver that he would not be allowed to get in the American’s car again if he slammed the door so hard in future. In Germany, slamming a door so hard would be seen as a criticism of the car’s quality. It’s the Japanese need to “be sure” – as Schaede says, there are some untranslatable Japanese terms for this like “chan-to” – children are often told to “chan-to” – in the way that Western parents might say “behave”, “sit up straight” or “pull yourself together”. It also leads to over-specification in business – good enough is not enough.

4. Self service

As Schaede points out, it took a long time for the concept of self service petrol stations to be accepted in Japan. It was as if even the highly educated, skilled Japanese population could not be trusted as individuals to safely fill their own cars up by themselves. Schaede thinks this is like the current wave of Japanese deregulation – everyone has to move together, no one company should make the change by itself, so everyone moves at the pace of the slowest, to avoid one person being sacrificed. I am not sure this is entirely true – if you look at the actions of Hitachi, for instance.

“Japanese employees must become faithful to their profession, not company” – Hitachi’s Kawamura

Maybe he was being spurred on by Chinese consultant and Softbrain founder Song Wenzhou, but Takashi Kawamura, former President and Chairman of Hitachi makes some startlingly radical statements in a dialogue in the Nikkei Business magazine.

Both agree that in 2015 major Japanese companies must grow for Japan to get back on its feet, particularly so they can pull Japan’s small-medium enterprises along in their wake. But although Kawamura maintains the traditional Japanese line that companies exist to add value to society by paying wages, taxes and dividends (in that order), he asserts that Japanese employees must learn to become “faithful to their profession” rather than faithful to their companies as they have been up until now.

This includes company Presidents, who can no longer be “the person who happens to be in the position of President” and use their status and personal influence to get things done, but instead must be judged on their results, and their professionalism as a manager. “Management has become more transparent, and the responsibility to explain has become greater” says Kawamura.

As blogged previously, Hitachi hit the headlines for abolishing seniority based promotion for its Japanese managers recently, with commentators speculating that this would spread to other companies, and may even mean the end of other sacred cows of Japanese corporate life, such as lifetime employment. Kawamura openly says other Japanese companies will have to adopt the same approach and that this will result in greater labour mobility – not just in the Japanese labour market, but also for swapping people across national borders within the company.

However “moving people is tough” and it will take time, with other aspects of Japanese society also having to change, such as education and social mores, Kawamura acknowledges. Hitachi itself is facing the challenge of ensuring it does not devolve back to a ‘village mentality’.

Song remarks that he tried to get a Japanese friend of his who was a General Manager in a major electronics firm to take up a better remunerated position at a start up but his friend refused, saying his daughter was getting married soon, and he wanted to be introduced at the wedding as “General Manager of XXX company” – the status he would lose if he joined a start up was too much to contemplate.

I hope the choice isn’t as stark as Kawamura and Song make out – an adapt or die dilemma between the mutual loyalty of the company and its employees resulting in stagnation, or ruthless professionalism and mobility, resulting in growth. Not everyone can or should want to work for GE.

Forcing English on workers won’t automatically solve the globalization puzzle

The management guru Peter Drucker once said that Japanese businesspeople have a tendency to get the problem right, even if they sometimes come up with the wrong answer – whereas Westerners usually get the answer right, even if it is sometimes to the wrong question. This was in reference to the amount of time Japanese people spend defining problems, before they move onto solutions, whereas Westerners are quick, maybe too quick, to try to fix whatever they perceive the problem to be.

In the case of corporate globalization, there has been a rash of initiatives by Japanese companies to ensure their Japanese employees are more global, mostly centered around the issue of speaking English. They have set minimum Test of English for International Communication (TOIEC) scores for promotion, or English is imposed as the common corporate language, or all employees at a certain level are sent abroad for English language training. There is no doubt in my mind they have analysed the problem correctly – Japanese multinationals need to globalize their business further if they wish to grow rather than stagnate, and to do so requires the ability to develop and manage businesses outside of Japan. This, ultimately, is a human resources development issue.

I am not sure that the ability to develop and manage businesses outside Japan rests so much on a blanket rule about making everyone speak English, however. Eiko Harada, president of McDonald’s Japan, said in an interview with Nikkei Business Online that “if you think in Japanese, speak in Japanese. If you think in English, speak in English. If you think in Japanese and speak in English or think in English and speak in Japanese you will not be understood”.

What he was pointing out, I believe, was that foreign language ability does not necessarily mean you have the bicultural understanding to communicate effectively. If you do not have bicultural understanding, it also means you are not going to be effective at marketing to overseas customers, nor will you know what information your headquarters needs to make the right decisions.

Yet Japanese companies are failing to hire the very Japanese graduates who have had the experience of living abroad needed for such bicultural understanding. And decreasing numbers of Japanese students are studying abroad, fearful in the current climate that by doing so they will miss out on the extensive process that has to be undergone to get a “naitei” agreement that they will join a major Japanese company on the graduate intake track.

One Japanese company I used to work for tried to overcome this by having a special entry process for those who had studied overseas. I am not sure this was the right approach either, as it meant these hires were seen as “special” and Japanese blue chip companies have a habit of sidelining people who are “specialist” in some way. Steps are being taken to delay the “naitei” deadline to allow more time for all students to study, overseas or otherwise, rather than chase jobs – a move in the right direction. Rather than blanket rules for conformity, flexibility and diversity should be the norm for global companies.

This article originally appeared in the Nikkei Weekly.

Category: Corporate culture