Japanese culture: help or hindrance for business growth?

The Japanese culture of deference and respect to superiors suppresses proactivity. Nick
Thomson explains why companies should change for the sake of future adaptation and
growth

Over the course of the last two years I've been working with a major global Japanese
company. This has taken me around the world and to Japan on a number of occasions.
During this time I've become increasingly fascinated by Japanese culture, and how it is
perceived by other nations. In particular whether it would help or hinder Japanese
companies' chances to meet consumer needs and fend off the competition? The reaction
from operating companies inside and outside of Japan is painfully predictable – a once
great brand, living off past achievements with a potential to be great again, but there's a
question of if, and here's the big if, these brands are capable of adapting to change.

Sure there are other factors influencing the health of these Japanese companies: the high
cost of the Yen impacting export costs, the recent tragic natural disasters, maybe even the
unofficial embargo on Japanese goods from China following the ongoing diplomatic row
over sovereignty of the Senakaku islands (or Diaoyu islands, depending on which side you
subscribe to). All these factors will invariably play a part, but I was more interested in the
role of culture.

The Japanese are some of the most humble, noble, polite and proud people I have met.
They are calm, measured, respectful, detailed, conscientious, loyal, ordered, determined
and disciplined. They are people of contrast: conservative and reserved, yet outlandish
and extreme. Rich with heritage and tradition yet pioneers of technical innovation and ultra
modern. As a society they have kept hold of their traditions and beliefs yet managed to
adapt to the world around them, and on top of that, create devices and experiences no one
else would think of. They are known for pushing the boundaries, because they can and
have done, year after year.

Yet from a business perspective change is difficult, hindered by Japan's corporate culture.
I've come to learn that proactivity is a rare commodity in Japanese corporations. It's not
because people do not want to be proactive, it's more that the corporate culture
suppresses it in case someone does something that fails, creates shame or undermines
authority. And in a way, this is very respectful. If you are a subordinate, you wait until you
are told to do something from above. You do not question the rationale or logic, but accept
the integrity of the decision. Challenging authority and experience is not the done thing.
Deference rules. And from a societal perspective this approach appears to instil discipline
and order. However for corporations competing in a global economy, this creates a number
of fundamental restrictions:

1. What if as a subordinate you believe a decision from your superior is fundamentally

flawed. Malcolm Gladwell looked at this very point when considering Korean Air 801 crash
in 1997 which killed 228 of the 254 people on board. The situation, he believed, could
have been avoided had the co-pilot felt it within his ability to go against all that his Far East
culture had taught him and over-rule the captain's misjudgement. Suppressing a culture of
challenge surely means great ideas never flourish, or worse still, the potential for poor
decisions to rule.
2. No one takes responsibility or becomes accountable for decisions, therefore nothing
really happens. A state of inertia or corporate paralysis exists. The company just trundles
along on its natural well trodden path, with everyone bemoaning the lost opportunities and
blaming everyone else.
3. The potential to harness the collective intellectual capital, insights and ideas within an
organisation are missed.
I recently read an article in The Economist that said around two-thirds of all Japanese firms
do not earn a profit. More than a quarter of companies on the Tokyo Stock Exchange had
operating margins below 2% over the past decade. Bosses complain that younger
executives lack assertiveness; the media grouse about unambitious "grass-eating men".
The article talked about these companies as "Zombie Companies" — generating just about
enough cash to service their debt, so the bank is not obliged to pull the plug on the loan,
but not really going anywhere.

It is easy to see why in Japan, things take time. Bold, fast, and radical business decisions
seem rare. There is often a bottom up approach to decision making. That is to say that
those above tend to make a firm decision if there is a sufficient ground swell of opinion that
the decision is justified by the popular view. This means as a manager you mitigate the
need to raise your head above the parapet and come up with a different view that might
alter the equilibrium of the team or company. If the idea fails you save face by saying it
was never your idea, and thereby perpetuating the sentiment that those above know best.
However the pace of this approach means the competition have probably already
launched a better idea to market and are already onto their next initiative.

More worrying was a comment made only last month by the chairman of a leading
Japanese electronics company to the world's media — "why would we want to be first to
the market with a new device. If we did this our competitors would copy our product,
experience and programme and make it better. We should wait and copy our competition".
That is not the attitude that made Apple the most valuable company in the world despite
taking at £32bn hit for underwhelming Christmas iPhone sales.

If being first to market with a new idea is not a priority, then surely these companies must
be spending time ensuring their products are built off consumer insights. Sadly not at the
moment. My experience tells me that innovation comes from technical geniuses in the
splendid isolation of head offices of Tokyo, working out how to make things smaller, faster,
clearer, lighter, etc... and not by listening to what their consumers in individual markets are
wanting. They are almost pied-piperesque with a belief that if they make it people will
follow. After all this is what made them successful in the first place.

Having said that, Steve Jobs belief was that consumers don't know what they want
therefore he never believed in commissioning vast amounts of consumer research. But
that's fine if the products you create hit the mark. Japanese products are failing on this
front at present.

So I fear for the once great Japanese companies. The pioneers of electrical and technical
innovation. The companies that changed how we listen to music, game and entertain
ourselves and our friends.

The once great traits that drove the creation of such innovative and category defining
moments are now hindering progress as the rest of the world has caught up, overtaken
and left some of these Japanese companies washed up in their wake.

This view was painfully summarised by Kiyoshi Kurokawa, a professor emeritus at Tokyo
University, and chairman of an independent commission established by the Japanese
government to investigate the cause of the Fukushima nuclear meltdown following the
tragic earthquake and tsunami of 2011.

His introduction to the report was scathing — "What must be admitted – very painfully – is
that this was a disaster 'Made in Japan.' Its fundamental causes are to be found in the
ingrained conventions of Japanese culture: our reflexive obedience; our reluctance to
question authority; our devotion to 'sticking with the programme'; our groupism; and our
insularity. Had other Japanese been in the shoes of those who bear responsibility for this
accident, the result may well have been the same."

Employees I've spoken are acutely aware of these traits, want to do something about it,
yet appear powerless, or resigned to the satis. During meetings I've had with them when
they have asked what they need to do to change, I have bluntly told them their leaders
need to take a more prominent visible role to lead the change required. Their response is
resigned frustration that this is the Japanese way.

Time will tell who of the Japanese giants survive and fail. My view is that the ones who
survive will look very different to how we now see them. I imagine consolidation between
these companies as business and product lines change and sold off to each other, leaving
leaner more focused companies. The challenge will be whether this is enough to compete
with the speed of the South Koreans, let alone what China will have to offer.

By Nick Thomson, strategy director for engagement, The Brand Union.

3) Comprehension and analysis. Using the article answer the following questions.

a. What is the main premise of the article?

b. How are Japanese people’s attitudes and characters described?

c. Why is change difficult in Japanese businesses? Give examples and reasons?

d. How and why has the importance that is given to deference and respect suppressed
productivity in Japanese businesses?