Japanese Business Blog - Rudlin Consulting

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.

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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.

The most popular location for a European HQ

I’ve just been updating our Customer Relationship Management (CRM) database of Japanese companies and their suppliers in Europe. I recently shifted the database to a new cloud-based provider, which enables me to cross reference our customer data with social networking sites such as LinkedIn – a very popular business networking site across Europe and the USA. The way our new CRM interface works has also forced me to focus much more on how our Japanese corporate clients are organising their operations across Europe, including where they have placed their headquarters.

My conclusions are not entirely scientific, as my own business is based in the UK and therefore biased towards UK based Japanese companies, but it does seem that the UK is the most popular base for European headquarters of Japanese companies. Of the 96 European headquarter companies I have identified in my database, 53 are in the UK, 24 in Germany, 10 in the Netherlands, 5 in Belgium, 2 in France, 1 in Switzerland and 1 in Poland.

Of course there are many Japanese companies who do not have a European headquarters, but the trend among those who have been in Europe for a longer period is unmistakably towards consolidating across Europe in terms of functional areas such as purchasing or HR or finance. This seems to be to the benefit of the UK, which is the undoubted European if not world capital of professional services – with many globally capable financial, marketing, legal, consulting and HR firms in London.

The UK has long been a favourite destination for Japanese foreign direct investment, for various reasons ranging from the English language, to golf to the UK’s open economy. Germany has also been very popular, particularly with Japanese engineering companies who feel an affinity with German process orientation and risk aversion, as well as having historical ties such as Fujitsu with Siemens or Denso with Bosch. The North Rhine Westphalia region was particularly active since the 1960s in encouraging Japanese companies to set up there, although Sony decided initially to set up in Berlin, largely, it was rumoured, because of Norio Ohga’s love of the Berlin Philharmonic.

More recently, the Netherlands became popular because of the tax advantages offered, and also, along with Belgium, was an obvious logistical centre for Europe. Lately, however, there seems to be a shift of these headquarters to the UK. Canon has moved from the Netherlands to Uxbridge, near London. Denso and Bosch recently announced their break up, and although Denso continues to be headquartered in the Netherlands, there seem to be several senior managers with European roles based in the UK. Fujitsu and Siemens parted ways in 2009, with the Fujitsu European operations being split between Continental Europe, the Nordics, and UK and Ireland.

Sony sold its Berlin headquarter building in 2008 and is currently in the process of consolidating its sales and marketing across Europe, to be based in Weybridge, a few kilometres south west of London. However, it seems to be shifting towards a “virtual” European structure, with shared HR services now set up in Turkey, and individual senior executives with European remits being based in whatever location they prefer. This pattern has also become evident in other IT and telecoms companies such as NTT Data.

Even this virtual European company structure seems to benefit the UK the most, as senior executives of all nationalities are can be found in, or seem relatively happy to relocate to, London and its suburbs. With more than 40% of London’s population were born outside the UK, London has truly become a global capital and a place to develop global careers.

This article by Pernille Rudlin originally appeared in Japanese in the 10th April 2013 edition of Teikoku Databank News and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.

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.

Power harassment in foreign owned companies in Japan – “irresponsible egotism”?

‘Power harassment’ is a term that has been coined in Japan, in English (as ‘pawahara’ for short), to describe the kind of psychological bullying that may happen to junior staff in Japanese companies, primarily because they do not have the protection of a clear job description that outlines their duties and working hours.

Consequently, you would not expect to find it in Western owned companies (known in Japan as gaishi) where there is supposed to be a clearer set of expectations, job descriptions and performance based evaluations.

According to Diamond Online, however, there are cases of power harassment in foreign owned companies in Japan. Diamond journalist Norifumi Yoshida interviews a 50 year old IT manager, Mr A, who left his foreign owned finance company through power harassment arising from being caught in a battle between a Japanese and an American executive officer (director).

Mr A joined the finance company at the age of 45, having worked for four other foreign owned companies in the past. The first few years went by without incident, but then he found himself the target of attack by the Japanese director. Apparently this director had failed in his original intention to become an actor and was bullied by the troupe he had entered. Then thanks to his politician father’s connections he was able to join a financial services company, but was teased there too for having reached middle age without any competencies and left that too. Again through his father’s connections he found a post in the foreign owned company. Through assiduous sycophancy he managed to jump from team leader to director without going through the usual route of General Manager (GM).

Mr A was GM of the IT department and reported into an American director so should not have had to cross paths with the failed actor, who was responsible for 15 staff in PR, HR and General Affairs. However there were overlaps between the departments, so whenever Mr A’s work affected the payroll or accounting systems, the failed actor would complain in front of everyone that he had not been informed and Mr A was ‘out of order’. In fact Mr A was just doing what he was told by his American boss, but clearly the American boss had not gained consensus from the failed actor.

The American boss was more concerned with doing what he had been asked to do by the President of the company. When Mr A was scolded, 10 or more times a week, for 20 minutes at a time in front of 30 or so employees, and made to apologise, for petty things he had no recollection of doing such as not greeting the director properly, he did not intervene.

The American director probably wanted a quiet life says Mr A, and not to fight with the ‘pawahara machine’ as the Japanese director was known. The Japanese director was on good terms with the President, and was widely thought to be in line for promotion to managing director/board director in a few years, says Mr A.

The President was a Chinese American, who had been brought in by a foreign venture capital company to restructure the company. Mr A says he did not intervene because he preferred to back the winning horse when there was trouble and Mr A’s boss was somewhat of a yes man to him, and probably hoped to get on the board himself.

Yoshida comments that most Japanese would think Americans are open minded, frank and fair, but in his experience “Americans who come to work in Japan can often be rather cold and dry – egoists, to put the worst slant on it – in some ways almost scarily so”. Mr A says he has experienced plenty of upstanding American bosses in his career, but there is definitely a tendency towards egoism and a lack of compassion. “Many of my Japanese friends tell me Europeans are better. I think Japan was a bit brainwashed about America these past 60-70 years but now we have suddenly woken up.”

“Just being able to speak English is not going to be enough for Japanese people to succeed in a globalizing world” says Yoshida. “There are more wily foxes amongst Americans than amongst Japanese. Japanese are too trusting of people and do not know to be suspicious.”

Mr A points the finger at the executives of the company having no understanding of how to look after or create a structure that looks after mid career hires. “They have no sense of responsibility to the people below them, and just insult those employees who leave by saying that they ‘weren’t collaborative’ or ‘she was more suited to housework’ That way they can justify their own management style, if they say it was the fault of the people who leave. Performance based systems (seikashugi) are just a tatemae (a front) for an irresponsible egotism.”

Clearly Mr A is still very traumatised by his experience – still refusing to go anywhere near his old employer. To me, it seems less about whether the company is foreign owned or some difference in character between Americans or Japanese. I certainly recognise those kinds of selfish management behaviours, but usually they are kept in control by HR systems which result in negative consequences for those bosses who do not make efforts to develop a supportive environment for their employees. Western bosses often have employee engagement, retention and training and development targets as part of their annual evaluations. Also HR departments usually conduct exit interviews with staff who resign, to make sure there is not a major problem that had not been aired before. I suspect the foreign financial services company was actually too old-fashioned Japanese, not too American, in not having those mechanisms in place for its own management team. But as it was the ‘pawahara machine’ that was heading up HR, maybe that’s not surprising.

The two-way role of the Japanese expatriate employee

A French manager complained to us recently that when he attends meetings of the European management team (mostly Japanese expatriates based in the Netherlands, where the European headquarters is), he finds out that the decisions have already been made, without his input.

This is a comment we have received frequently over the past 12 years of working with Japanese companies in Europe. I hoped the situation would have improved, as Japanese affiliates localise, and more Europeans are in senior positions, but what seems to have happened is that the communication gap between the senior Europeans and the remaining Japanese expatriates has actually widened, and the senior Europeans feel very cut off from any decision making that happens in Japan headquarters.

I recommend to the European managers a three step plan to improve relations and communications: 1. People, 2. Process and 3. Particulars. For ‘People’, they need to build relationships with Japanese colleagues, in Europe and in Japan headquarters. There are obstacles to this – travel expense and rapid rotation of Japanese expatriates. But mutual trust is necessary if Europeans are to be including in the nemawashi process.

By ‘Process’, I mean the nemawashi (decision making) process needs to be made more explicit and transparent and the purpose of meetings (information exchange or discussion or decisions) needs to be clarified. And for ‘Particulars’, the European managers need understand the kind of detail and data needed to reassure risk averse executives in Japan.

But this is only half the picture. The Japanese expatriates must accept that their job is not simply to report back to Japan headquarters what is happening in the European subsidiaries. They need to communicate the Japan headquarters’ corporate culture, decisions and strategy, and find ways to get European staff feel involved and have a sense of belonging to the wider company.

For Japanese expatriate staff I recommend 1. Debate, 2.Distil and 3.Disseminate. Europeans love to debate – it makes them feel valued, and it is an opportunity to convince them of the direction the company must take, by explaining the background and logic to what is coming out of Japan.

‘Distil’ means to be clear, precise and concise about what the strategy, corporate culture or decision is. It must be “actionable” – so it can be the touchstone for deciding how to act in a business situation.

‘Disseminate’ means to take practical steps to make sure that the strategy, corporate culture or decision is communicated to all parts of the European network. This may need to be through cascading information through the correct chains of command if the company is a traditional hierarchical Continental European organisation. Or it could be through workshops, to enable people to have a sense of ownership, and understand how the strategy or corporate culture applies to their daily work. Or it could be through more meetings – but hopefully this time, if ‘debate’ and ‘distillation’ have already happened, the meeting attendees will feel more involved and accepting of the outcomes.

This article originally appeared in Japanese in the Teikoku Databank News

This article appears in Pernille Rudlin’s latest 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.