Business in Japan
Take a leaf out of his book
Aug 7th 2008
From The Economist print edition
Japanese bosses can learn from the country’s favourite businessman-even if he does not exist
Kenshi Hirokane-Kodansha Ltd
YAMATO, the ancient name of Japan, essentially means “big harmony”. To achieve such balance, Japanese society has refined a plethora of cultural traits: humility, loyalty, respect and consensus. In the field of business, however, this often results in a lack of leaders who are willing to stand out from the crowd, promote themselves and act decisively. “The nail that sticks up gets hammered down” is a common Japanese refrain; “the hawk with talent hides his talons” is another. Whereas American and European bosses like to appear on the covers of global business magazines, their Japanese counterparts are comfortable in their obscurity. Business in Japan is generally run as a group endeavour.
Such democratic virtues served the country well in the post-war period. But today they hold too many Japanese firms back. Japan boasts some of the best companies in the world: Toyota, Canon and Nintendo are the envy of their industries. But they operate on a global scale and have tentatively embraced some unconsensual American methods. In much of the Japanese economy-especially its huge domestic services sector-managers are in something of a funk. Firms do not give promising youngsters responsibility early on, but allocate jobs by age. Unnecessarily long working hours are the norm, sapping productivity. And there are few women and foreigners in senior roles, which narrows the talent pool.
So how pleasing it is to be able to report the success of a business leader who breaks the mould. Young, dynamic and clever, he is not afraid to push aside old, conservative know-nothings. He disdains corporate politics and promotes people based on merit rather than seniority. He can make mistakes (he got involved in a questionable takeover-defence scheme), but he is wildly popular with salarymen: his every move is chronicled weekly. In June he was given the top job at one of Japan’s biggest firms. Kosaku Shima of Hatsushiba Goyo Holdings has only one serious shortcoming: he is not a real person, but a manga, or cartoon, character (see article).
For many critics of Japan, that says it all: Mr Shima could exist only in fiction. In fact there is room for the country’s managers and even its politicians to learn from him.
Most of the lessons are for Japan’s managers. At present, bosses rarely say what they think because it might disrupt the harmony, or be seen as immodest. Their subordinates are reluctant to challenge ideas because that would cause the boss to lose face. So daft strategies fester rather than getting culled quickly. There is little risk-taking or initiative. The crux of the problem is Japanese companies’ culture of consensus-based decision-making. Called nemawashi (literally, “going around the roots”) or ringi (bottom-up decisions), it helped to establish an egalitarian workplace. In the 1980s Western management consultants cooed that it was the source of Japan’s competitive strength. Sometimes it can be, as in periods of crisis when an entire firm needs to accept new marching orders quickly. But most of the time it strangles a company.
Relying on consensus means that decisions are made slowly, if at all. With so many people to please, the result is often a mediocre morass of compromises. And with so many hands involved, there is no accountability; no reason for individuals to excel; no sanction against bad decisions so that there are fewer of them in future. Of course, sometimes the consensus of the Japanese workplace is just a veneer and decisions are still made from on high. But then why persist with the pretence, particularly if it drains a company’s efficiency?
Time to turn the page
If the onus is on Japanese managers to change, then it is fair to say that the government does not make it very easy for them to do so. The biggest problems lie in the labour market. Change jobs in mid-career and you risk losing your pension. The rigid seniority system also discriminates against women: if they get off the ladder to have children, they cannot get back on. And although there is no law against closing down loss-making businesses, most bosses and politicians act as if there were. If Japan’s leaders decide their country needs more people like Mr Shima-and it surely does-then they might reflect on all the ways that they prevent him from becoming a reality.