The precis below is from an article written by Chieko Matsuda (Executive Director of Booz Allen Hamilton in Japan) for Nikkei Business Online’s “Corporate Governance for Everyone” series, in Japanese, but I felt as I translated it, that it was my own words, so completely do I agree with what she is saying:
Japanese companies often have an “overseas business development unit” to carry out their global M&A. However the mission of this organisation should change depending on the stage reached in expanding overseas. Even if it starts as “business development”, it often turns out that it has to manage the subsidiaries as well. So at the same time as stepping on the accelerator to grow the business, it is supposed to press on the brake, as a shareholder and auditor. When it comes up with solutions to this dilemma, nobody will help the unit out, claiming that “overseas business is your specialist area”, and “nobody speaks English in our unit”
The audit function needs to be strengthened – Japanese companies are far too weak when it comes to risk management with regard to their overseas operations. It is necessary, if expanding overseas, to “control through structure” and review rules, processes and formats. Japanese style management through telepathy will not work for overseas M&A.
In order to design the structure in detail, it is necessary to decide on the direction. What the company should not do, and what it should preserve. If this is left vague, then it will lead to a sense that “we have no idea what the parent company is thinking”.
The top priority therefore is to set the corporate mission and values. What are we trying to do, how will we do it, which way are we facing – it is control through corporate culture as well as through structure.
The corporate vision needs to be concrete, and something that can be translated in an understandable way into many languages. It should be a base for making decisions – to go left or right – not just pretty words.
If the corporate vision and culture is not secure, then it is difficult for diversity to take root. WIthout diversity, the company will not be competitive. A homogenous workforce was efficient for labour intensive production, but we are now in an era of competition of ideas and innovation. New ideas and innovation require a diverse workforce, and what will unite a diverse workforce is common corporate culture and vision.
It is of course partly up to the top management to communicate this corporate culture and vision, but middle management must also be able to use it within their teams. It can’t just be about “reading the air” in the traditional Japanese Ninja way. What do you do if there is a claim from a customer? It cannot be resolved through kiai (“fighting spirit”) and konjou (“guts”). Wouldn’t it be convenient if you had a touchstone, for when there was a problem to be solved?
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