Globalization

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.

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Branding without egotism

Another survey on the top 100 global brands has just come out, and yet again Japanese brands are not punching their weight, considering the size of their revenues and the Japanese economy. How you measure brand value is of course a contentious point. It’s often an attempt to quantify how much it would cost to buy the brand, based on some kind of residual figure from the value of the company – having subtracted all the other assets – as well as qualitative research on customer evaluations.

Some of the Japanese corporate names missing from the list would come nearer the top if only Japanese customers were surveyed. But even then, I’m guessing the monetary value that could be attached to the brand would still not be as high as for some Western companies, due to the fact that Japanese companies don’t focus so much on profitability, or even “branding”.

Discussions about brand with Japanese executives seem to indicate that they see a “brand” as mostly about advertising and visible forms of identity such as logo and image.

To compete on a global basis, Japanese companies need to understand better what Western customers expect from a strong brand. But there is a danger as well in becoming too focused on brand, to the extent that it becomes a form of egotism, and prevents collaboration.

It’s been over 15 years since NTT DoCoMo Inc launched its i-mode service, putting Japan far ahead of any other nation, even the US, in terms of customers using sophisticated mobile phones to purchase applications and content on the internet. The rest of the world wondered ho to replicate Japan’s success, and many speculated this could never be reproduced outside of Japan because of some kind of special cultural characteristics of Japanese consumers and society. Now, looking at the global success of the iPhone and other mobile technologies, there is no doubt that consumers across the world will buy applications and content for their phones, given the opportunity.

My view is that took the rest of the world so long to catch up because non-Japanese network providers and mobile phone handset manufacturers were so busy protecting the profitability of their brands, that they were unable to replicate the mutually beneficial supply chain ecosystem that DoCoMo built up in Japan.

When I went to Japan in 2002, assisting a British mobile phone application developer, DoCoMo refused to take the credit for a particular image recognition application that it was offering, saying they were only a network provider, and we should talk to the application developers. The application developers said they just provided applications for whatever features handset manufacturers were incorporating. The handset manufacturers said they were simply humble suppliers to the network operators.

Now, with the advent of cloud computing, and an increasingly networked society, Japanese companies are wondering how to compete against the likes of U.S. online titans like Amazon and Google. Strengthening their global brands will help, but they should not lose sight of the fact that a key element of many Japanese companies’ brands is their ability to collaborate, without egotism.

This article originally appeared in the Nikkei Weekly

Japanese companies need to pull up younger burdock roots if they really want to grow globally

Along with “tako tsubo” (octopus pot), another Japanese concept “gobou nuki” (plucking out burdock roots) used in HR has been deemed harmful to corporate Japan’s global prospects.

The term has been used frequently in the Japanese media recently, according to Masahiro Kotosaka, an ex McKinsey consultant now at Ritsumeikan University. In a recent article in Nikkei Business Online he points out that the recent appointments as President of Takuya Hirano at Microsoft Japan, Tatsuo Yasunaga at Mitsui & Co, Koji Arima at Denso, Tatsuya Tanaka at Fujitsu and Takahiro Hachigo at Honda have all been described as plucking burdock roots, as they are in their 40s or 50s, younger than normal for Presidents in corporate Japan. The average age of Japanese Presidents was 62 in 2014 (up from 61 in 2013), around 10 years higher than the global average.

The older age is of course partly explained by the continuation of seniority based pay and promotion in Japan – although Panasonic, Sony and Hitachi have all recently announced they are abolishing or looking to abolish this system.

The average age in Japan for a “kacho” (section head, the first managerial position in Japanese companies) is 38.6 and 44 for a “bucho” (department head, or General Manager) according to Recruitworks. In India, China or Thailand, the average is 9 years lower for kacho and 10 years lower for bucho. Even the US average is 5 years lower for both positions.

Kotosaka asserts that Japanese companies need to start pulling out younger burdock roots, people who might be future executives, and making sure they have early leadership experience. If this does not happen, the younger generations of Japanese will soon feel a big gap with their overseas peers.

Already Kotosaka has heard (as I have) from Japanese companies that they feel the utilisation of non-Japanese or external executives has increased and the presence of Japanese executives has faded.

The most notable example is of course Christophe Weber, President of Takeda Pharma, and his team of 16 executives, of whom 8 are non-Japanese and have come from outside the company and two are non-Japanese who joined through being executives in a Takeda acquisition. Weber had his first leadership experience at the age of 29 when he became a country manager at GSK. Carlos Ghosn of Nissan also became head of a factory at the age of 27.

My former employer Mitsubishi Corporation is mentioned as an honourable exception to the lack of experience given to juniors, along with gaishi (foreign owned) consulting companies and private equity firms. For such companies, people are the main asset, and it’s true I suppose that trading companies such as Mitsubishi that have now moved more towards acquisitions rather than trading, do afford ample opportunity for younger Japanese to take up management positions abroad. In practice though, I have seen many instances where the acquisition is left to manage itself, and the Japanese expat director mostly stays in the regional headquarters, processing paperwork to send back to Japan HQ, rather than hands on managing the business.

Why Japanese companies don’t use LinkedIn (but should)

I read in the Nikkei newspaper recently that Panasonic, Mitsubishi Estate and Rakuten are planning to make use of social networking site LinkedIn for recruitment outside Japan, including Europe. LinkedIn is the world’s largest professional networking site, based in California, with more than 270 million users worldwide, so it certainly represents an effective way to identify and attract new recruits.

I have been a member for more than 10 years, not to find a job, but to network with my European contacts in Japanese companies. It has been noticeable, however, that Japanese employees and Japanese companies in general are not very active on LinkedIn, even though LinkedIn launched a Japanese version and set up an office in Tokyo in 2011.

I assume this is primarily because LinkedIn is used for mid-career hiring and job seeking, which is still not a popular activity in Japan. Indeed, many Europeans dislike to display their skills and experience publicly, and signal thereby that they may be “for hire”. Based on my own analysis, the British and Dutch are not so cautious, whereas the privacy conscious (and possibly less comfortable in English) Germans and French hold back.

Many of my German contacts use Xing, a Germany based social networking site instead. However all Europeans (and people in multinationals in emerging markets such as Turkey) are aware of LinkedIn, and will take a look at it when they are considering moving to another company.

In other words, from an employer perspective, LinkedIn is a tool not just for searching for recruits based on skills and experience, but also for the company to present an attractive profile.

I recommend that any Japanese company reviewing their LinkedIn presence first of all ensure that the “official” company LinkedIn page is clearly labelled as official (to distinguish it from an alumnus site page run by an individual), and employees are encouraged to link their personal LinkedIn profiles to this official page.

More often than not, there are several pages already existing for the Japanese company. This needs to be tidied up, so that there is a headquarters page (in English), and any regional company pages are clearly identified as such. It is possible to interlink the regional company pages to the headquarters page, to show they all belong to the same company family.

These official pages need to be managed by someone either in marketing or HR at the headquarters and regional subsidiaries. They need a description of the company, including size, activities and a link to the correct website. The pages also need to be “branded” to look visually appealing and reflect the company image. Use should be made of the facility to add descriptions of products and services and add news about the company.

If this is done correctly, then “followers” of company will swiftly increase, both from potential recruits and also current employees, who will feel much happier now their employer has a clear and attractive LinkedIn presence they can associate themselves with.

(This article was originally written in Japanese for the 9th April 2014 Teikoku Databank News, and appears in Shinrai: Japanese Corporate Integrity in a Disintegrating Europe, available as a paperback and e-book on Amazon.)

Japanese companies demand too much perfection

Okada Hyogo, senior manager at Microsoft in Singapore, sports what is known in Japanese as the ‘Regent style’ hairdo – apparently named after Regent Street in London, but usually known in the UK as a DA. He is photographed with his quiff, leather jacket and sunglasses for a recent interview with Diamond Online. He has written various articles for the magazine, including one entitled ‘60% is good enough’. The impact of Microsoft on his thinking is clear, in the way he recommends Japanese companies also adopt the “patch” mentality he saw in software development. “Aim for what is feasible, not the best”, was his lesson from his time working for Accenture in the USA.

He echoes a point I often make in my seminars about the Japanese pursuit of perfectionism, which is that the 80/20 rule kicks in when it comes to costs of making an effort. It can take 80% of effort, resources and time to achieve the final 10 or 20% to reach 100% perfection.

This might work in Japan where it is normal to work through the night to achieve “the best” but of course this kind of behaviour is not so well accepted outside of Japan. As Okada says, in some cultures a person who works late is regarded as someone who is not self disciplined. “They have a much stronger sense of priorities than the Japanese do.”

“Japanese are lacking individual ‘core values’. At Microsoft we have 6 core values upon which we base our daily work. They are ‘Willingness to take on big challenges’,’Integrity’, ‘Openness’, ‘Constructive self criticism’, ‘Accountability’ and ‘Passion’.” Akiyama Susumu, the interviewer and President of Principle Consulting Group responds that it helps to define your own core values if you interact with people who are different to you.

As for being able to speak English, Okada believes it’s not enough by itself – an open and forward looking mindset is needed. “You need to be interested in the other person, and be prepared to engage in discussion.” Akiyama says it’s tempting to become silent if someone else in the meeting speaks better English than you do”. Okada responds that he got over his own English complex when his boss said “you already speak English. What’s important is knowing what you want to say, and how you want to progress the discussion.” Okada’s recommendation, to those who are not confident about their English is to get to a meeting 10 minutes early and greet the other participants as they arrive with “nice to meet you!” or “Good morning!” – that way you get warmed up for communicating and also you ensure that you have a presence at the meeting.

Even in teleconferences he recommends getting a question in early like “when can I expect to finish this meeting?” as a warm up, otherwise you end up not saying anything. For presentations he uses physical warm ups like a few squat thrusts and also practicing his “Rs”.

Another tip for meetings is to get near the whiteboard and offer to write up the agenda and minutes on it. “That way you look intelligent and hardworking!”

He also recommends saying “Let me finish” and using your hands to signal this. “Japanese tend to preface their requests too much”.

He finishes by saying that Japanese companies don’t have a very good image in Singapore as employers, and this has an effect on the brand too. Japanese employers are seen as only promoting Japanese people, and demanding a lot of unpaid overtime. Products have too many unnecessary features which only appeal to Japanese, rather as Japanese companies unthinkingly promote uniquely Japanese ways of working – such as chourei (daily morning team meetings). There is not one Japanese company in the Singapore Top 100 employers chosen by students.

“Locally hired Japanese don’t last long. After 6 years I felt I was turning into an idiot, so I left”

A new employment category, the ‘limited permanent employee’ has emerged in locations such as Singapore, where there are many locally hired Japanese employees, according to Diamond Online. They feature an interview with an anonymous former ‘limited permanent employee’, Mr A, of a major Japanese securities house’s Singapore subsidiary. According to Mr A, the category was somewhere between a contract worker and a permanent employee, and involved being treated in a way that resulted in him leaving.

Diamond journalist Norifumi Yoshida believes this category looks like to catch on in Japan too, to keep a cap on the ever expanding, insecure and badly paid “contract staff” category, in accordance with the government strategy for revitalising economic growth, while at the same time being easier to lay off than the traditional permanent, lifetime employee.

Mr A had been working for a major Japanese manufacturer, and was posted to their Singapore operation. He left the company while still in Singapore. He tried to start up his own IT company, but that failed. Then he heard that the Japanese securities company was looking for an new IT manager so interviewed for the position and was appointed. He was 35 when he joined the company, on around Y3.5m (US$28K) which was at the higher end for Singapore. However the Japanese expatriate IT manager, also 35, was earning around 3 times this.

There were around 150 expatriates from the Japan headquarters, including around 20 general managers who were in charge of the front and back offices, aged around 35 to late 40s.

These 20 had graduated from Japanese universities and joined the securities house straight after graduation. They had worked in Japan for 10 or more years and spoke good English. They initiated sales of securities or bonds and negotiated with local Singaporeans. They were also in IT or accounting or finance. They were good all round players but not professionals or specialists.

There was a second group of people amongst the 150 or so ‘permanent staff’, the front office people – 40 or so traders. They were ‘Anglo Saxon’, types who had worked for American or British firms previously, usually having been transferred to Singapore with those firms. They frequently changed employers, in some cases up to 10 different employers. There were a few Japanese traders, but most of them were not, and they were mostly rewarded through commissions and were often paid more than the Japanese expatriates – several hundred thousand dollars on average.

Mr A is not against this as such – in fact he points out that without these kinds of salaries, it would not be possible to hire highly skilled people, and if the company tried to stick to old ways of equal pay for all, it would surely collapse. Yoshida wondered whether Japanese companies aren’t using this as an experiment, and soon this system will be imported back into Japan.

Mr A felt the unfairness was more around how the third group of ‘permanent staff’, the ‘limited’ permanent staff, were treated. These people were mostly locally hired Singaporeans, on low level jobs, and accordingly paid low wages, with no prospect of promotion or transfer. At such low wages, it was not possible to hire high quality local staff anyway. The head of the IT department was Singaporean, and of the 12 staff in the department, 2 were Japanese expatriate staff and of the remaining 10, Mr A was the only locally hired Japanese. “Locally hired Japanese don’t last long. After 6 years I felt I was turning into an idiot, so I left”.

Both Mr A and the interviewer agree that treating all limited permanent staff the same way, without opening up any opportunities or pay rises to the more high potential or high performing staff will result in more dissatisfied and overworked locally hired specialists, who will keep quitting their Japanese companies. Mr A clearly feels very bitterly about generalist lifetime employees, who have no specialist knowledge of IT, being paid three times as much as him, plus expatriate allowances. “Globalization means the company has to become more focused on competency.”

Personally, I’m not so sure this is a new thing for Japanese companies in the global financial services sector. I remember a friend of mine from university being warned after he joined a Japanese securities house in London in the late 1980s, that locally hired staff were either “whores” or “coolies”. And locally hired staff in Japanese companies in quite a few sectors will ruefully recognise the “no prospect of promotion or transfer” limited permanent staff category.

Famous in Japan, utterly unknown in Europe

25 years ago I became one of the first ever graduate trainees at the London office of the US public relations consultancy Burson Marsteller. Burson Marsteller told me they were starting various joint ventures with Dentsu in Europe, so it seemed like a great opportunity to use my interest in Japan and my communication skills to support Japanese companies who had been arriving in Europe in increasing numbers in the past decade.

PR in Europe at the time was mostly staffed by ex journalists, focused on producing press releases, and wining and dining journalist contacts so they would write favourably about clients. Changes were in the air, however, which is why major PR consultancies like Burson Marsteller were starting to hire and train new graduates to be “communications professionals”.

In the late Eighties, the Big Bang revolutionised the City of London’s investment banks and stock market, and nationalised industries were being privatised. I was assigned to a corporate PR team, looking after British Gas (which later became Centrica) and a building society, which was thinking of floating on the stock exchange.

They were both facing the new pressures on companies to communicate to stakeholders. Not just to their new shareholders, but also to the communities in which they operated. They needed to show they could still be trusted, even if they weren’t owned by the state, or by account holders. There was also a need to polish their reputation so they could attract high potential graduates.

Japanese companies in Europe have the same needs – now as they did then – but unfortunately I do not think much progress has been made these past 25 years. There are so many companies which are famous in Japan but are either utterly unknown in Europe, or the name is familiar, but there is no notion of what they do, or whether they are good corporate citizens.

Nothing came of the Dentsu joint venture twenty five years ago, but I see now that Dentsu itself has started acquiring companies in Europe and other Japanese PR and advertising companies are strengthening their presence here.

Not only do Japanese companies have foreign shareholders to keep happy, but if they are to succeed in overseas social infrastructure projects, they must ensure that the communities affected are informed and welcoming, and that the best overseas graduates view them as a prestigious place to work.

This is not just a Japanese problem – I recently participated in a survey which I assume was commissioned by Siemens. The survey asked whether I knew that Siemens had been in the UK since 1843, was one of the largest graduate employers in the UK, with 12 factories, and involved with all kinds of sustainable energy and infrastructure projects. I was ashamed of my own ignorance of this, but amused to see that one of the competitors they were benchmarking themselves against was my old client, Centrica.

This article was originally written in Japanese for Teikoku Databank News and also appears in Pernille Rudlin’s book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.

April 1 brings new beginnings, but beware of the undertow

The biggest date on the Japanese corporate calendar is about to hit us. Naturally, it is April 1. Not only it is the start of the new financial year for almost every Japanese company, but it is also when all the major announcements of promotions and restructurings happen, as well as the first day of “proper” work as a bona fide salaryman or salarywoman for thousands of shiny faced graduates.

This means that March is a month of great paranoia, as speculation mounts and information is leaked about who is up and who is down, what will please the new president and which faction is winning which battle.

I try not to be too cynical when Europeans in my training sessions tell me how refreshing it is that Japanese companies seem to have far less politics than European companies. It is of course very easy to be blissfully unaware of the undercurrents ebbing and flowing in March (and indeed other times of the year) but veterans of Japanese companies know well that the undertow may pull you under in April, if you are not paying attention.

I thought I had taken my “Kremlinology” a little too far in the Japanese company I used to work for. I kept a spreadsheet of all the people I had met, what year they entered the company, their current position and grade, and any remarks. I updated carefully every April 1, sending congratulatory emails to those who had done well.

But when I shared this secret with another British veteran of a Japanese firm, he revealed that the spreadsheet of contacts that he had compiled during the 20 years he had worked at his company had become so large, he had pinned it up on his garage wall at home!

When another senior British executive in a Japanese company asked me for my advice on who he should choose as his second-in-command, I’m afraid I went straight into Japanese political mode and immediately asked how old the various candidates were, whether they had been at the company all their career, who were their sponsors and mentors and what business groups they came from originally. He was unable to answer most of these questions, and indeed was not that interested in these aspects. His main criterion was whether they had performed well in the team.

Actually, this is quite refreshing. Too often in Japanese companies, if you come from the wrong department, or ally yourself with the wrong faction, or made a mistake, however well intentioned, you find there is no redemption. At least Western managers, ruthless though they are about firing people who underperform, reward those who do perform, often – but alas not always – regardless of their past career.

When Japanese companies truly globalise, allowing non-Japanese to make personnel decisions, life will become a lot less comfortable for the well connected but underperforming and a new lease of life may energise those who thought their careers were over.

This article originally appeared in The Nikkei Weekly

Takeda’s first year of global openness, after 230 years as a ‘closed country’

I proposed last August that “a charm offensive on the Nikkei group of publications might be advisable” to help new Takeda’s first ever non-Japanese President Christophe Weber gain support, and The Nikkei Business’s recent voluminous special features on Takeda Pharmaceuticals’ globalization in its online and print editions shows I was not the only one thinking this.

The Nikkei’s stance seems broadly favourable, and can be summed up as “this might happen to you too – so you might as well be positive about it”. There will be plenty more cases where a globalizing Japanese company realizes that to expand overseas, they will need executives who have produced results in doing business in other cultures, rather than executives who are well versed on the internal workings of the company but know nothing of the world outside, says the Nikkei.

The key point here is not just “overseas experience” but actually having produced results. And this is going to be a difficult requirement to fulfil for the current upcoming generation of Japanese executives in major Japanese corporations, many of whom, even if they have overseas experience, have mainly been in caretaker and liaison roles, rather than growing new businesses.

The special feature articles go into some interesting detail on the key personalities and what has actually happened at Takeda over the past few years. At the heart of it is Tachi Yamada, brought in by President Hasegawa in 2009 as a member of one of the executive committees and then to head up the R&D function. Tachi Yamada has dual US Japan citizenship and is a well known name in the pharmaceutical industry, latterly heading up the Global Health Program at the Bill & Melinda Gates Foundation. He has also been a board member at GlaxoSmithKline, and it is his network that led Hasegawa to Weber and others.

Yamada saw the need to find new drugs as the Takeda pipeline was thin and many of its drugs were going off patent. So he completely overhauled the structure of the organisation and embarked on some acquisitions. Another key person brought in by Hasegawa was Paul Chapman, also ex GSK, who has taken Japanese citizenship (and has a Japanese wife) and changed his name to Tetsuyuki Maruyama.

Maruyama interviewed each of the Japanese executives asking them why they thought they were suited to the role. As a result of this, 35 younger researchers were promoted to management, including 10 women where previously there had been none. 60 managers left the research function including one of the founding Takeda family members. Of the 6 Drug Discovery Units, 5 are headed by non-Japanese.

Yamada will retire this year at the age of 70 and his successor as Chief Scientific and Medical Officer will also be a non-Japanese outsider – Andrew Plump from Sanofi. Of course, this is causing disquiet amongst the Japanese staff – “Japanese can’t get promoted, if more and more foreigners are appointed. And they are earning many times our salary. It seems like just being Japanese is a minus in Takeda now”.

To counter this, one of the Japanese executives, Shinji Honda, who had been seen as a candidate for next president instead of Weber is now heading up a global leader programme for Japanese employees. “I want them to experience overseas business 5 or 10 years earlier than I did”, says Honda, “then they can be the next leader or the next leader after that, to succeed Weber. This is my last big job.”

But as Akie Iriyama of Waseda Business School points out, another area that will need to be addressed is for non-Japanese to join the company at middle management or lower levels too, and to bring more of the employees of overseas acquisitions to come and work in Japan, otherwise there will be too big a gulf between the non-Japanese executives and other levels of the organisation.

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.)

Category: Globalization