Japanese Business Blog – Page 43

More thoughts on Olympus – the role of the press in Japan and the West

I went to see Michael Woodford, former CEO and President of Olympus Corp, talk at the Daiwa Anglo-Japanese Foundation last month. It was packed out with a mix of Japanese residents and British Japan specialists. Woodford gave a rivetting, very intense and emotional account of his experiences at Olympus, repeatedly emphasising that he loved Japan, and wished no harm to Japan or Olympus by what he did.

I have posted previously on some aspects of this case but what struck me this time – and also now I have read some chapters of his book in English, to add to what I have read in his book in Japanese – was how he was so surprised that the Japanese press stayed silent after the Facta magazine articles originally broke the story. He was almost expecting the media to come to his rescue, by busting open the cover-up and thereby forcing the Japanese executives to account for themselves, without Woodford himself having to confront them.

I suppose this would be the case in the West, but to anyone who knows how the Japanese press works (and I recommend my friend Jochen Legewie’s booklet on this subject if you do want to know more), it was completely unsurprising that they closed ranks and stayed quiet.

After all, Shigeo Abe, the publisher and editor of Facta, is a Nikkei exile (who was banished to the UK by the Nikkei when his attempt to expose Yamaichi Securities’ problems failed), outside of the press club system, and easy to dismiss as just another sokaiya or anti establishment grudge bearer.

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Whistle blowing in Japan – some thoughts on the Olympus Case

A significant factor that affects corporate governance in Japanese companies, particularly when it comes to whistle-blowing, is the sempai/kohai (senior/junior) dynamic. These relationships are particularly prevalent in large Japanese companies that retain lifetime employment systems.

Typically, when a Japanese graduate joins a domestic blue-chip firm fresh out of school, he or she will already have acquired a few sempai – literally, “person in front” – who are senior to them in the company hierarchy. There is also an implication, it seems to me, that a kohai comes from or has ended up in the same place as the sempai.

So these sempai may include the person who recruited the graduate on campus, and therefore hails from the same university, or the person who the graduate first shadows in their new team. Or perhaps it could be someone in another part of the company who is linked to the graduate via shared family, friends or neighborhood. Sempai often become mentors, and even more often, strong factions develop among sempai and kohai in a particular department or business unit.

Executive-level appointments are usually negotiated through factional horse-trading and strong sponsorship from sempai. Conversely, it can be very hard to remove someone or shunt them out of the way in the organization, however incompetent, if they have a strong faction backing them.

Strong ties of loyalty and also obligation therefore join sempai and kohai together, cemented over the roughly 30-year career life span of each employee.

It is thus easy to see why it’s so hard for anyone to blow the whistle on corporate malpractice, or even to point out damaging mistakes. In general, Japanese and other Asian cultures avoid causing other people in their group to publicly lose face; causing a sempai to lose face is almost unthinkable. When it does happen, you can be sure there has been irreparable damage to the sempai/kohai relationship and an emotionally explosive situation has developed.

In this world, it’s tough to be a professional services firm – such as a management consultancy, law firm or auditor – advising from the outside. You may diagnose problems that are clearly damaging and need to be fixed according to your professional code of practice, but you will be warned by the client that you are in danger of fraying the delicate web of intra-company relationships with your prescriptions.

I have even heard of one young auditor who was told by a client that if he refused to sign off on an audit because of a long-standing misrepresentation on the books, then he was going against his own sempai in his auditing firm. In the past, the sempai had happily signed off on the discrepancies.

Taking a stand as a matter of principle, or in the pursuit of what you believe to be the truth, is a hugely brave – some would say downright stupid – thing to do when it harms the people you are completely dependent on.

This article originally appeared in the 31st October 2011 edition of the Nikkei Weekly

A fresh look at governance lessons from the Olympus case

The Olympus Corp. trial has started and Tsuyoshi Kikukawa, the former chairman, pleaded guilty to covering up financial losses. Sony Corp. has agreed to take a roughly 11% stake in Olympus, securing the company’s future. So, the worst outcome, which Kikukawa himself feared – that the company would be destroyed, and the livelihoods of many employees lost – has not transpired and it would seem justice is being served.

Reading former Olympus President Michael Woodford’s autobiographical account of the whole incident, I can’t help wondering if there might have been a less nerve wracking way of resolving the firm’s problems. A key moment in the book for me is where Kikukawa, Woodford’s sponsor, realizing that Woodford is in effect asking him to resign and accept responsibility for the cover up, asks “do you hate me Michael?”

The question is incomprehensible to Woodford, who does not see his accusations as personal, but part of his fiduciary duty as a director of the company to make transparent what has happened and ensure the guilty take responsibility.

To Kikukawa, I can imagine the cover up was a desperate attempt to save the company, with no personal gain involved. He is unable to disentangle his own fate and duty as a director with the company’s fate and his responsibility for its employees. An attack on his behavior seems like an attack on his person, by someone who does not seem to care whether the company lives or dies.

Woodford makes it very clear that he does indeed care whether Olympus lives or dies, but believes that the process of exposure, punishment and redemption will allow the company to be reborn. Many executives bred in the Anglo Saxon capitalist world are of a similar mindset – able to distance themselves from the company they manage, and to examine it objectively.

There is a less admirable side to this – a tendency to march into a company, believing that a bold reorganization, a sweep with a new broom, brushing out some of the people associated with the past, and putting in your own men (and it always does seem to be men) will get the results needed. So long as the numbers are good, the shareholders are happy. Casualties fall by the wayside, but can pick themselves up and start again elsewhere.

This is still not the case in Japan, and simply marking this down as a case of inadequate corporate governance ignores the fact that Japan does have corporate governance standards, which can and should be enforced. Furthermore, the Japanese corporate environment has become as tricky as that of the US or Europe. There are regulations governing overtime, diversity and “power harassment” that new foreign bosses ignores at their peril.

There have been too many cases of failure of foreign bosses in Japan for it to be wise for Japanese companies to continue to appoint foreign executives in the hope that this will somehow magically globalize the company. Foreign executives need intensive support and guidance, such as training in the workings of Japanese boards and coaching from those experienced in managing Japanese employees, if they are to make a difference without destruction.

This article originally appeared in the October 8th 2012 edition of the Nikkei Weekly

Thought leaders can help Japan win the global communication war

Comparing the volume of visits to our Japan Intercultural Consulting website in 2011 to 2010, I was struck by a sudden step change in visits in the final quarter of 2011. We have been active for a couple of years’ now in promoting our website content via Twitter, Linkedin, Facebook and Mixi, so to understand what has changed, I did some further analysis. It seems the ramp up is due to the recent popularity of smartphones and slates, giving people the ability to access these social networks while on the move.

It’s nothing new in Japan of course, to kill time while waiting or travelling (“jikan tsubushi”) by accessing social networks on mobile phones. However, the technology and understanding of how to launch such a service never made it outside Japan, allowing Apple and device manufacturers such as Samsung who use Google’s Android operating system, to gain the edge.

A couple of years’ after iMode, the first Japanese mobile internet service, was launched in 1999 by NTT DoCoMo, I was invited to speak to a group of British political bloggers about what was then being termed “moblogging”. My talk did not go down very well, thanks to the cynicism of the audience that anything useful could be communicated via moblogging, which I tried to counter by pointing out a key driver for people using the internet is to connect to other like minded people and thereby gain information relevant to them. It may well be impossible to convey complex political arguments via mobile phones, I admitted, but I pointed out there was evidence that people in Hong Kong used their mobile phones to organise pro-democracy protests.

Ten years’ later, assertions about the Facebook Revolution, and the use of Twitter and mobile phones during the Arab Spring have become unremarkable. Facebook has overtaken Mixi in terms of subscriber numbers in Japan, and Twitter is even more popular than Facebook.

It must be galling for Japanese mobile technology companies, but, undaunted, they are looking to promote their technology, services and content into the global market once more in 2012. Based on my experience ten years’ ago, I would say this cannot be done through nifty technology and fancy features alone. Japanese companies must learn how to communicate their leadership and vision for these technologies, both in business to business and business to consumer marketing.

A Japanese commentator lamented a few months ago that no Japanese city had made it into the top ten eco cities of the world, and yet Japanese patent numbers for eco technology far outstripped any other countries’. He put it down to Japan losing the communication war – an inability publicise what Japanese companies are doing – in English, inevitably.

Japanese companies will need the support of their employees overseas to win this war. They need to encourage thought leaders, who can generate white papers, podcasts, blogs, articles, speeches and interviews for their local markets. And the Japanese companies must support them by giving them as much material and insight as they can into the products and services they have.

This article originally appeared in the January 23rd 2012 edition of the Nikkei Weekly

The above article was highlighted by the Japanese Nikkei Weekly editorial team as well . The Nikkei editors commented that although there are more Japanese than before who are capable of expressing ideas globally, due to Japan’s relative economic decline, their influence is less than it once was.

An excerpt from the Japanese commentary is below:

今回は“thought leader”と手を組むことの重要性を訴えています。thought leaderとは、多くの人が耳を傾けるようなアイデアや主張を持つリーダーを指します。インターネット時代にあってはアクセス数の多いブロガーなども含まれるでしょう。筆者のパニラ・ラドリンさんは、日本企業にとって進出先でそんな影響力のある人を味方につけることが大切だと強調しています。

議論をさらに進めれば、日本の外にいるリーダーに頼るだけでなく、日本の経済界、個々の日本企業の中から世界に発信していく人を育てることも必要でしょう。科学技術や文化・芸術の分野では世界がその発言に注目する日本人が増えていますが、近年の経済界や政界は対外的な影響力が低下している印象が否めません。２５日から「ダボス会議」が始まります。対外発信力のある日本人エグゼクティブたちの活躍がまたれます。

From boiler suits to business suits, uniforms aren’t about conformity

In the photos of Australian Prime Minister Julia Gillard’s recent visit to disaster stricken Minamisanriku, Miyagi Prefecture, where she has her arm around the mayor, Jin Sato, I couldn’t help noting the contrast between her black trouser suit and high heeled boots and the mayor’s overalls, trainers and baseball cap.

Each, in their way, was wearing a uniform. She had to pick something that was formal enough for a prime minister, subdued and respectful, but which would not look ridiculous as she picked her way through the rubble. The mayor is still wearing the kind of manual worker’s boiler suit that was donned by Prime Minister Naoto Kan, government and TEPCO officials and various company presidents in the immediate aftermath of the March 11 earthquake. Kan has since reverted to a business suit, as have most of the company presidents.

The messages they are giving are clear – Kan and the company presidents are signalling that the immediate emergency and relief work which they were rolling their sleeves up to supervise is now over, and they must get back to formulating the longer term policies for recovery. The mayor is signalling that that there is still much immediate recovery work left to do and that, for his town, the threat of further crises has not yet receded.

Japan is famous for having strict uniforms for every occasion. Perhaps you don’t see quite as many white gloved taxi drivers and certainly far fewer office ladies in waistcoats, skirts and ribbon ties than in previous decades, but despite the best efforts of Japan’s teenage students, uniforms are prevalent and mostly worn neatly and with pride – even for personal hobbies such as hiking. The easy explanation is to say this shows how conformist and group oriented Japanese people are. Or in the case of company presidents, one could say that they are trying to show they are not putting themselves above the other employees.

Actually, having worn a traditional sailor uniform to a Japanese school for several years myself, I think that the Japanese attitude to clothes and uniforms is a lot more nuanced than simply being about conformity or egalitarianism. It is as much about the message you are sending to yourself as to others. By putting on overalls, trainers and a baseball cap in the morning, the mayor is readying himself for action. The ritual of dressing puts the person in the right frame of mind for the day ahead.

It’s related to the traditional way to learn in Japan, from the outside in or “minitsukeru” – which literally means “sticking onto the flesh”. By getting the externals right, the internal settings will adjust accordingly, until the action becomes instinctive.

It’s not about conforming, rather it is about accepting that we have many identities, and that sometimes wearing the correct clothes helps us fulfil those identities better or facilitates the switch from one identity to the other. It also signals the seriousness of our intent to others.

This article originally appeared in the May 9th 2011 edition of the Nikkei Weekly.

The hidden value of meetings

No manager, Japanese or otherwise, has ever said to me that they wish they had more meetings to go to. It may be, though, that Japanese business people are better at finding value in a seemingly pointless meeting than many Western business people. Admittedly, in some cases the value is simply in catching up on lost sleep.

In Japan, meetings are viewed as a necessary part of relationship building, and it’s implicitly accepted that the official reason for a meeting may not be the real objective at all. It does lead to mismatched expectations for international meetings, however.

One common meeting format is the aisatsu– (greetings) or kyaku- (customer) mawari (going around). Senior executives from Japan headquarters will request local operations to fix up meetings with their counterparts at key customer or partner companies. Unfortunately, if expectations are not managed, the Western counterparts end up wondering what on earth the meeting was for.

The Western side might have been anticipating that the Japanese company was on an acquisition hunt, or about to propose some kind of joint venture. But to the Japanese executive, it was simply about relationship building and information exchange, and if some kind of mutually advantageous new business proposition arises from it, in the years to come, so much the better.

Another meeting that is common internationally is the “getting to know you” meeting, where all players in a new project get together in the same room, and introduce themselves to each other, often in a quite personal, informal way.

This happened recently to a group of British engineering contractors – the Japanese lead contractor invited them all to a meeting to kick off the project and of course they all came armed with Gantt charts and schedules only to find themselves talking about which football team they supported. In the Japanese contractors’ mind, this was the moment for everyone to get to know and trust each other.

Japanese business people are quietly proactive in finding added value to meetings that they have been asked to attend. They realise that it is in the interstices that new ideas and deeper relationships form.

I recently arranged a meeting for a virtual team to come together for the first time in the Tokyo headquarters. The headquarters arranged the usual factory tour and visit to the corporate history museum followed by a series of presentations on what each function and region was doing.

The Western participants initially complained to me that they found the sessions dull and patronising, but then started to talk about how valuable it was nonetheless to see their colleagues face to face for the first time, and that quite a lot of planning had taken place on the train journey to the factory, and problems solved over a beer or two in the evening.

“Oh really” I responded, trying not to look like that was precisely the point of my instigating the event in the first place, “it’s good to hear you managed to get something out of it, nonetheless.”

This article by Pernille Rudlin originally appeared in the Nikkei Weekly. This and other articles are available as an e-book “Omoiyari: 6 Steps to Getting it Right with Japanese Customers”

Diverse societies have equally diverse ideas about good service

In the previous articles discussing differing customer service standards in the UK and Japan I concluded that there was one fundamental cultural difference which may make it impossible for the UK to replicate Japanese customer service levels, namely that Japanese people are so acutely sensitive to how they are seen by other people around them.

Why are the Japanese more considerate of other people compared to the British or indeed many other nationalities? Many cultural commentators like to talk about Japan’s history as a cooperative, “mura” based, rice growing nation, contrasting with Western individualistic, opportunistic hunter gatherers. This not only ignores the fact that Europeans also farmed collaboratively to grow crops, but denies any possibility that cultures may change in the face of industrialisation and urbanization.

The more obvious explanation, less to do with ancient national history, is to what extent a community is diverse and fluctuating. Politeness and consideration is distinctly worse in London than in other communities in the UK in which I have lived. 40% of Londoners were not born in the UK, and the population is constantly changing as even the original British come and go, for work, education or family reasons. There is no incentive to be considerate to the people around you, as you will probably never meet them again. Also, with an ethnically diverse population, you will find equally diverse ideas about what constitutes politeness.

Although Japanese people originally had diverse ancestry, this dates back thousands of years ago and since then there has not been much in the way of immigration. There are still distinct regional differences in culture, behaviour and etiquette within Japan of course but across the nation a strong idea prevails, it seems to me, of what standard politeness and decent behaviour should be.

When you have diverse ideas about politeness coexisting, you get culture clashes, and people think the other person is being rude, even when the other person was trying to be polite. For example, in certain African cultures it is disrespectful to look a senior person in the eye when they are talking to you. This leads to British Afro-Caribbean youths getting into trouble with ethnically white British police who demand “look me in the eye when I am talking to you!”

When I was a student I took a summer job in a Kosher Chinese restaurant in London. I was pretty hopeless as a waitress. All the tricky stuff like cutting up and serving Peking Duck was left to the Chinese waitresses, but the Chinese idea of good service is to be efficient and expressionless, with no small talk. The Israeli owner of the restaurant hired me and an Iranian girl to provide the smiles and the chat and serve drinks. Our lack of skill did not matter so much as long as we were charming the customers. It was difficult to charm my way out of the time when I dropped a whole tray of iced Coca Cola in a male customer’s lap, however!

This article by Pernille Rudlin originally appeared in the Nikkei Weekly and in Japanese in the Eikoku News Digest. This and other articles are available as an e-book “Omoiyari: 6 Steps to Getting it Right with Japanese Customers”

When dealing with customers, a little omoiyari goes a long way

I explained in a previous article on customer service that British service sector staff are often hostile or resentful in their attitude to customers partly because of a lack of pride in their work and their company. This has arisen from their sense that they are being exploited by their employer, that their company only benefits shareholders, not society, and that “serving” people is somehow demeaning.

This could be counteracted to some extent by making sure employees do feel more positive about their employers, as seen with British companies which do have excellent customer service, such as the retailer John Lewis, whose employees are partners and owners of the company. Introducing Japanese concepts such as “gembashugi” (empowerment for the frontline staff) and “monozukuri” (a pride in craftsmanship, not just in manufacturing, but service skills too) could also help.

But as I was travelling and shopping both in Japan and the UK over the Christmas and New Year, I began to wonder whether British service standards could ever reach Japanese levels, because of a fundamental cultural difference that may just be too hard to reconcile. Japanese society is permeated by a strong concern for how what you say or do affects others, to a far greater extent than in the UK.

I realise that for many Japanese it is almost too much pressure, what one British writer on Japan has called “CCTV eyes”, where you can end up becoming paranoid about how other people might see or think about you. The positive side to it is “omoiyari”, what in English we would call “forethought” or “consideration”. It’s an ability to pre-empt what the other person might need, or how the other person might be feeling, and to do something about it, without being asked.

One British manager told me a funny story after I explained to him about omoiyari. He had been asked to pick up a Japanese colleague from Heathrow airport and take him to one of their company factories. The British manager was very busy, so he tried to drive as quickly as he could to the factory. En route, however, he was bemused by the way his Japanese colleague kept asking him about what his favourite soft drink was, and whether he thought Diet Seven Up was better than Diet Sprite. Only after hearing me describe “omoiyari” did the manager realise that his Japanese colleague was hinting that he was thirsty.

“What should I do next time if I want to show omoiyari?” the manager wondered. “Ask him if he would like to stop off to get some drinks?”

The problem with that, I responded, is that if the Japanese colleague is also practising omoiyari, he may notice that you are busy, and deny that he is thirsty, because he does not want to delay you.

The best thing would be to buy some drinks in advance and offer them to him in the car. This kind of behaviour is the ultimate in customer service.

The monozukuri of customer service

I mentioned in my previous article that there seems to be a monozukuri (literally “making things”) of customer service in Japan. This may seem an odd way of putting it, as monozukuri is often used to mean that manufacturing, and not the service sector, is given the most importance in society. In this case I am using “monozukuri” to mean “craftsmanship” – a pride in using ones hands to create something of high quality.

I remember when I was a little girl living in Sendai, coming home from school one day to find that the builders who were repairing our strange old ijinkan (purpose built for foreigners) house, had made tiny origami cranes out of some of my stamp collection. I was quite cross that my stamps had been ruined but my parents were delighted that these rough handed men could create something so delicate and fiddly.

I had learnt origami at kindergarten in Japan although I was never very good at it, lacking the patience to be as precise in the folding as is necessary to get the best result. Nonetheless it has given me a great appreciation of the skill of the assistants wrapping my purchases in Japanese department stores – especially at this time of year, as I make such a terrible mess of wrapping Christmas presents!

I also learnt Japanese dance as a child. Along with origami and the many other arts widely taught in Japan such as tea ceremony and kendo, there was emphasis not only on the way the body moves but how objects are handled – learning to fold a kimono or open a fan – which I am sure influences the way customer service is so gracefully and skilfully delivered in Japan.

Equivalent skills are not widely taught in British schools, so not only is it rare in the UK for gift wrapping to be offered but when it is, it is done badly. Usually you have to ask, and sometimes there is a charge. The only shop I have been to recently where gift wrapping was free, and beautifully done, was Floris, a family owned traditional perfumers in Jermyn Street, London. The assistant was not one of the family, as far as I know, but seemed to have pride serving me well, and was very knowledgeable about the products on offer.

This pride in being knowledgeable about the products is true of another retail chain which is consistently praised for its good service – Majestic, the wine merchants. Majestic consciously emphasises customer service as being a key value of its brand, and supports this through plenty of training for its staff. It probably helps that the customers Majestic attracts are wine enthusiasts, and therefore more likely to appreciate the knowledge and service that Majestic offers.

Monozukuri needs to be two-way to work. Both the provider and the customer need to appreciate the craftsmanship and knowledge involved. British customers are not as well educated as Japanese customers in this appreciation and therefore British service providers do not feel much pride in what they do.

This article first appeared in the December 28th 2009 edition of The Nikkei Weekly

Why some Japanese people prefer British customer service!

I described in my previous article how when a customer in the UK is facing a service sector employee, he or she is usually facing 150 years of social class resentment, a loss of pride in manual labour and no sense that the company that person is working for has any care for employee well being or duty to the customer or society as a whole. Consequently, it is hard to inspire employees with a strong, positive customer service culture in the UK.

There are some exceptions to this. The most well known exception is the John Lewis Partnership, which includes the John Lewis department stores and Waitrose supermarket chain. As the name implies, the company is a partnership, which means that all 69,000 employees are also owners of the company, and are known as “Partners” rather than “employees” or “staff”. The founder, John Spedan Lewis’ vision was of employee co-ownership with “the happiness of Partners as the ultimate purpose”. Partners share in the profit of the company through bonuses – in 2007 this was 18% of total salary, for every person regardless of their position in the company. Five out of thirteen board directors are elected by the staff.

I am sure this company structure explains their ability to maintain high customer service standards and I would like to think it also explains why the company has weathered the current recession pretty well. The Partners do not feel demeaned by serving people, they believe in what the company is doing and feel they are equal in social status to the customers.

It is this inferiority complex that people in UK service sector jobs have that poisons the customer service they provide. If the customer is able to show that they do not hold themselves superior to the person providing the service, then it is possible to get friendly, if not always competent, service in the UK.

I noticed that when I discussed customer service in the UK with a group of Japanese residents recently, it was the youngest residents, who had been waiters or shop assistants in Japan and in the UK, who felt the most positive about British customer service culture, as they felt they were treated better by British customers than they had been in Japan when they had done similar jobs.

In Japan, historical Confucian influences mean that there is more acceptance of unequal power relationships and different status in society, without there being any implication that the person with the lower status is somehow a worse human being, worthy of contempt. It can mean that the person with the lower status is not treated in a very friendly or equal way, however, and is expected to be deferential and respectful.

Along with deference and respect , Confucianism also emphasises performing the correct rituals and observing etiquette, and this has a visibly positive impact on the conduct of customer service. This emphasis on etiquette links up with a “monozukuri” of customer service in Japan which seems to be lacking in the UK, as I will examine in the next article.

This article originally appeared in Japanese in the Eikoku News Digest