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

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

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

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

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

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

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

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

    1. Softbank
    2. Fast Retailing* (Uniqlo) (Yanai, the founder and also board member of Softbank is quick to throw this back in the face of those who have termed Fast Retailing a “black company”)
    3. Keyence
    4. Fanuc (the current target of shareholder activist Daniel Loeb)
    5. Yahoo
    6. Aeon Mall
    7. Rakuten
    8. Mani (medical devices)
    9. Japan Tobacco
    10. Takeda Pharma *
    11. Central Japan Railway
    12. KDDI
    13. ABC-MART
    14. Sumitomo Real Estate
    15. USS　(car auctions)
    16. Astellas Pharma*
    17. Toyota*
    18. SMC (automatic control equipment)
    19. Nakanishi (motor spindles, micro grinders)
    20. Trend Micro (security solutions, founded in the USA, HQ in Japan)
    21. Sysmex (healthcare)
    22. Hisamitsu Pharma
    23. Komatsu*
    24. Terumo
    25. Canon*
    26. Honda*
    27. Makita
    28. Nitori Holdings (furniture)
    29. Shimano
    30. J Trust

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

    • Bridgestone #41
    • Denso #46
    • Sumitomo Electric Group #51

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

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

  • Why Japanese minimalism does not apply to Japanese management

    Why Japanese minimalism does not apply to Japanese management

    Following on from her article on why Germans work less hours than Japanese employees, Professor Ulrike Schaede takes a look in a second article at the need for a German “golden middle path” in Japanese management style.  She describes how Germans who know that the Bauhaus minimalist architectural style was influenced by Japanese minimalism are surprised by how Japanese presentations are so overcomplicated, or there are so many Japanese people on a team, who don’t seem to have clear roles and responsibilities, and how many meetings seem to be needed to make a decision.

    In terms of the right balance on team numbers she cites Amazon’s 2 pizza rule – that team members should be no greater than 5 or 6, the number that can be fed adequately by 2 (American size) pizzas.  Individual responsibilities should be made clear, in order to improve a sense of ownership and motivation.  It has certainly been our experience at Japan Intercultural Consulting  in facilitating cross cultural sessions for teams which are multi-site (eg the Netherlands, Japan and USA) that the Europeans in particular know that teams are not going to function effectively if roles are not clearly defined.  The American “just do it” attitude and the Japanese “all pull together” approach do not work across borders.

    As for too many meetings, she jokes that Japanese salarymen eat too much spinach – horenso in Japanese.  We often talk about horenso in our Japan Intercultural Consulting training sessions – it’s a mnemonic for HOkoku-RENraku-SOdan – reporting, updating and discussing, meaning “keep everyone in the loop”.  It’s true that it can lead to a lot of meetings – but in my opinion is also a basis for thinking about the kind of processes that might be needed to keep risk averse Japanese colleagues and customers happy.  Often the hokoku/report is not done via a meeting but as a one pager of bullet points about what happened once a week, for example.

    But as Schaede points out, Japanese want to feel that everyone has been involved in a decision – she recommends that it is made more explicit which discussions everyone needs to be involved in and which decisions could be settled in smaller meetings.  A detailed agenda is also helpful, to keep meetings short and to the point.

    She also makes a plea, as a university professor, for ‘less is more’ in terms of lecture load.  Japanese students are notorious for not studying very hard once they get to university, but as she points out, they are expected to attend many more seminars and lectures than their Western counterparts.  As a result, lecturers have a lot of their time taken up with preparing lectures, when in fact they could be spending that time on individual student needs, thereby perhaps encouraging more self study.

    Schede has also noticed something that many foreigners new to Japan find it hard to get used to – “overcommunication” – the way there are constant announcements tor remind you not to leave things on trains or that the end of the escalator is coming, or that a lift is going up.  She claims not to mind this herself, saying it is a legacy of Japan’s wonderful customer service, to make customers feel looked after.

    Her final contrast on “less is more” is between the minimalist business cards of Japan’s traditional elite – often showing the name only, and an increasing trend amongst the newer elite in Japan of having multiple cards, with different websites, email addresses and job titles.

    So how many meetings, slides, lectures, team members and reports are enough, if cutting completely is going too far?  Professor Schaede says she often says to her students that their work could easily be cut by 10% and up to 20% if they try, and that this would sharpen their point, without losing much.

  • Does having more women managers help Japanese companies globalise?

    Does having more women managers help Japanese companies globalise?

    The question of whether having more women managers would help Japanese companies to globalise was raised, but not discussed in depth due to time constraints, at a dinner I attended, hosted by a delegation to the UK from Japan Women’s Innovative Network – a Japanese non profit organisation.  An impressively large number of younger women (70) had been sponsored by their companies to come to the UK for a week, visiting various UK companies such as British Telecom and AON, to study global leadership and diversity.

    My view is yes, it does help Japanese companies to globalise if they have more (Japanese) women managers, for a couple of reasons.  Firstly, it helps Japanese companies and corporate culture seem less “alien” to Western companies if there are more women in management positions in the headquarters, and secondly, because the adjustments Japanese companies will have to make in order to incorporate a more diverse Japanese workforce (gender or other diversity) will help them be more inclusive of “non-Japanese” diverse groups.  Attitudes to overtime and working from home would be a couple of areas needing adjustment I would suggest.

    On the first point, the question of the role of women in Japanese companies is frequently raised in the cultural awareness sessions we conduct in Europe for Japanese companies.  Japan never does well in surveys of the position of women in society – see the most recent World Economic Forum Gender Gap report, placing Japan 114th out of 144 countries (updated for 2017).  While you can question the methodology of such surveys, then along comes another one, conducted amongst Japanese women, showing that 1/3 of them want to be full time housewives.

    Which leads me to point out in our training (and in the Advancing Gender Diversity day I spoke at for Hitachi’s European group companies – presentation on SlideShare here) that Confucian values remain strong in Japan – it’s not that women are seen as somehow less capable than men, more that there are expectations around the role they should fulfil in society.

    Prime Minister Abe is trying to square a circle with Abenomics, by trying to raise the birthrate but at the same time encourage women to go back to work – aiming to have 30% of senior positions in all parts of society, by 2020, through improving childcare and parental leave.  But with the amount of pressure on women to be good housewives and stalwarts of the Parent Teachers Association, no amount of improved childcare and leave is going to counteract this or compensate for both parents doing overtime until late at night.

    Although the Japanese government can directly change the economy with the first and second arrow of Abenomics, through fiscal and monetary actions, the third arrow of structural reform requires nudging, or even shaming Japanese companies into doing the right thing – legislation alone will be hard to push through and even harder to enforce.  So Abe launched in February the “Nadeshiko” * scheme, recognising firms which are making efforts to improve the working environment for women.

    Firms given the Nadeshiko “brand” in February of this year include Kao, Nissan, Fast Retailing (Uniqlo) and Daikin.  The scheme is not the only initiative taking place – various other surveys have been done of best places for women to work and the Hitachi Gender Diversity Day was partly inspired by the President of Hitachi, Hiroaki Nakanishi, declaring recently that the company aims to more than double the number of women managers by 2020.

    Other recent surveys have named Benesse (no coincidence that the founder of Benesse is also the founder of J-WIN) as the most career friendly for women and companies such as Toshiba, KDDI, Bank of Tokyo-Mitsubishi UFJ and NTT have all announced targets for women managers.  The Nikkei group has also jumped on the bandwagon, with a seminar series aimed at aspiring women managers (and even has a magazine “Nikkei Woman” ) and published its ranking last year of best places for women to work, which put foreign companies at the top (IBM Japan, Procter & Gamble) along with 2 life insurance companies, Takashimaya department store, Daiwa Securities, Sony, Panasonic, Bank of Tokyo Mitsubishi UFJ, Fujitsu and Sharp.

    * Nadeshiko is a type of pink danthius flower associated with women in Japan. It was adopted as a nickname by the women’s soccer team of Japan on its way to becoming the first Asian team to win the World Cup, in 2011.

    The original version of this article was published in Japanese in the Teikoku Databank News in 2014.  An English version of it appears in Pernille Rudlin’s new book  “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” is available as a paperback and Kindle ebook on  Amazon.

  • The man who turned around Hitachi part 2 – social innovation and restructuring

    The man who turned around Hitachi part 2 – social innovation and restructuring

    The first action Takashi Kawamura undertook on being appointed President of Hitachi in April 2009 was to reform the governance of the company, allowing more independence to the listed companies in the Hitachi group and also the internal companies.  Some restructuring and cutting loose of certain business lines also occurred.

    “But what was really important” says Kawamura, “was that we had a direction for the future”.  The key phrase he devised was “Social Innovation”.  Apparently some native English speakers pointed out that such a phrase did not really exist in English in the sense it was used by Hitachi – to connect social infrastructure and information technology.  But as it had meaning for Hitachi, Kawamura stuck with it.  “Hitachi began with motors and power systems for mining, and is strong in power plants and rail, but also IT.  It was often said inside Hitachi that they wanted to be “IBM+Siemens”.

    Hitachi’s two biggest independently listed companies, Hitachi Cable and Hitachi Metals, were initially resistant, saying they were not involved in social innovation, but Kawamura managed to persuade them that ultimately they were providing the foundations for social innovation businesses.

    Kawamura also followed a policy of focusing on upstream and downstream, and getting rid of “midstream” businesses.  For example assembly of digital components- investing in a joint venture with Mitsubishi Electric – Renesas, which then merged with NEC Electronics.  The mobile phone business was spun off into a joint venture with NEC.  The hard disk drive business was sold to Western Digital.

    “In other words, we were taking down our shop sign as a consolidated electricals company” says Kawamura. “Actually, I wish we had done it five years earlier, then we would not have made such big losses.”  As the Nikkei points out, actually Hitachi was quicker to restructure than Panasonic or Sharp.

    Kawamura believes that the best time to shut down a business line is just after the peak has been attained.  But he recognises this is hard to implement – there are many people who joined Hitachi in order to be in that business.  But Hitachi has had 100 years of moving from one peak to another, from motors for steel making to nuclear power stations to large scale computing, to hard disk drives.

    The worst time for Kawamura was having to raise capital from shareholders in 2009, when Hitachi’s shareholder equity ratio had fallen to 11.2%,  Hitachi normally guarantees whatever it sells – power plant efficiency, meeting deadlines etc, but of course dividends and share prices cannot be guaranteed.  The share price fell to Y200, but despite everything, our shareholders took up the offering.  “This really stiffened my resolve to carry out the reforms needed at Hitachi…. that is what being the manager of a company is about” Kawamura recollects.

    (Continues – Part 3 – trimming the three branches)

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