5 Chapter 4: Culture

Japanese companies that are successfully operating in the domestic market are increasingly having difficulty expanding their business globally (Iwatani, Orr & Salsberg, 2011). Chapter 4 highlights some of the observations Third Way Forum participants see as limiting Japanese company success when expanding their business internationally.

The major reason Japanese companies have difficulty in expanding internationally is that they follow the domestic business culture rather than the global business culture. This phenomenon, known as organizational bias, prevents companies from seeing the reality of how global business organizations function successfully and miss information critical to success.

Organizational Bias

When a group of like-minded people gather they often have similar backgrounds, values, information and ways of seeing the world, which they create into an organization and regarded as the only ‘correct’ way to operate. (Verna Meyers, 2016)

1. Corporate Culture Continues to Focus on Conservative Traditions

In Japan, it is not so much what you study at university that is important to the corporate hiring team but your self-determination to pass the difficult entrance exam! Often times the entrance exam is purposely made more difficult than the final exams at the university!  The amount of societal pressure felt by young Japanese people to attain post-secondary education takes up their late teenage years so that they have no other opportunities to develop other skill sets, such as English conversation or STEM skills. Once having completed university, the place of employment that the alumni goes to, will typically be his or her place of employment for an extended period of time, and often, for their lifetime or if women, until they marry.  The ‘lifelong employment system”, devised by Matsushita Konosuke, (founder of Matsushita Electric /Panasonic) to address unemployment of the 1930s depression, has been shown to be good for stabilizing unemployment during times of economic growth, but limits the incentive to take risks and for adapting to global changes (Sakaiya, 2003).

Japanese employees feel a strong sense of responsibility and perfection towards their employer which is ingrained from a young age through the education system and social structures within the culture. This sense of responsibility and viewing of the company as a family produces very loyal employees on the path towards “lifetime employment” but obscures new ways of seeing the world and its changes.

The company is the group or box you belong to now, and as long as you are participating, you are adding value. Generalists who are good at relationships in the company are valued more than skills in the lifelong employment system (Ito, 2006). Managers feel by adding value to the company, the company adds value to society. At some point, your path may go apart from that company but many of our Japanese colleagues do not see things this way. For them, the company is the parent supplying sustainability. It is permanently there to take care of them. The sense of belonging is astonishingly strong and different in Japan as opposed to international corporations where the company is there to improve shareholder value.

This attachment to the company is a factor that supports the hierarchy in the workplace with a “wakarimashita” attitude (i.e., a no questions asked mentality of subordinates), further limits the creation of new ideas and ways of seeing the world. Japanese corporate culture is similar to golf, while Western corporate culture resembles rugby. This communication and cultural analogy highlights the key differences between international corporate organization culture and Japanese corporate culture. Both are competitive with their own advantages and disadvantages. The Japanese golfing structure allows for systems to work in a fluid manner and create a climate for correctness, while the rugby structure allows for more direct forms of communication and contact. The fundamental expectation to communicate exists in both structures however the dialogue between both systems is misaligned.  Communication in Japan is considered high context, with many people, have a shared understanding so it is not necessary to provide a lot of information. Communication internationally requires more requires clearer communication. (Griffith, 2002)

How can product development teams understand the needs of customers in other countries without talking to them as many companies do in Japan? A typical response is to ask the overseas offices for their feedback, but can this information be interpreted correctly by Japanese staff in the head office that has different cultural views? What is needed is non-Japanese staff located in head office that can explain the situation and cultural nuances?

2: Globalization Strategies of Japanese Companies

Realities & Current Challenges

Third Way participants mention a general unwillingness of Japanese companies to make changes. There seems to be an unwritten rule in Japan that there are other issues such as respecting the hierarchy and fear of making that affects decision making in Japan. The fear of failure or a blame culture is taught from an early age in the education system. Japan’s education system develops a blame culture rather than a just culture that nurtures innovation and change.  Kahlmann (2020) describes just culture, as ” an organization culture where people…feel safe to speak about mistakes made by them or others, and…are not named, shamed and blamed for making wrong decisions or mistakes commensurate with their training and experience”.

Just Culture In Practice

A just culture is where a debriefing, report or investigation is about 3 questions.

  • What? Why? How?

A just culture does not ask the question Who?

Kahlmann, J.P. (2020, September 15). What if Healthcare Embraces Just Culture? [Video]. YouTube.

Story C: Software Development

I worked in the software industry in Japan for many years, and while it is prudent to be cautious with software upgrades, many customers demanded that we certify the upgrade is safe and not cause problems. Software development is not a fixed science and is dependent on the client’s system configuration, so there are always variables and no guarantees. The only way is to test the software by the client. Many customers could not get the idea that we need to test with their environment and could not understand they have a responsibility to test the software as well.  Software development is not a perfect science.  I spent many hours debating this topic with Japanese sales and support staff. 

 

Lacking in Overall Know-how to Develop Overseas Business

With the domestic market stagnating, many companies in Japan are being forced to look for opportunities in other markets for survival. Third-way forum members noted that Japanese companies successful in expanding their business internationally treat their domestic market very differently from international markets. In addition to focusing on a product strategy, intercultural communication generates additional challenges in managing overseas businesses and must not be ignored.  Often management feels that customizing the management strategies in foreign markets is too much trouble or unnecessary. After all, the product sells well in Japan so it must also sell well in other countries if consumers have access. This idea may be true for some products. To be confident of the strategy, the need to talk and interact in the market, international teams in Japan need to have a global mindset.

Japanese companies who merge or takeover international companies take a regional approach and stay very hands-off so long as the company delivers revenue back to Japan. Consider a “regional approach” with an “orchestra” mindset. Japan is only one of the many markets and must be seen as such.

Uniqlo’s Regional Approach in Canada

Uniqlo, Japan’s highly successful fast fashion clothing brand’s entry into the Canadian market is an excellent example of the importance of listening regional staff concerns and not assume a standardized global approach is a correct strategy. Rather than using the standard, “From Tokyo to [insert city name] in other markets, Uniqlo found that:

  1. 41% of Torontonians surveyed did not find the story of Japanese heritage and values compelling, nor did it motivate them to shop vs. other brands.
  2. Only 6% of people surveyed indicated that they felt the brand understood their lifestyle vs. other retail brands they shop.
  3. Only 11% of people felt the clothes Uniqlo designed were different vs. other brands they currently are familiar with

Leo Agency OMNIBUS Survey, 2016

The survey showed the Uniqlo brand and its Japanese story would not inspire Torontonians to visit or shop at Uniqlo. (Leo Burnett, 2017)  Uniqlo, commissioned another survey, of going out and talking to the change-makers of the city (from top chefs and stylists to notable filmmakers, entrepreneurs and activists). This second survey found that while Toronto is a diverse, open-minded city and acceptance of people’s differences, cultural cliques and class divides were growing. Uniqlo changed their global tagline “From Tokyo to XXX, to quality, stylish and affordable clothing for everyone” regardless of socio-economic status, religion, ethnicity, age or sexual orientation.

The result was that the store opening in Toronto exceeded expectations and became one of the top North American launches. There were 2,100 waiting in line for the Uniqlo Eaton Centre in downtown Toronto to open.

In changing the store launch strategy, Uniqlo could connect with Torontonians, and demonstrate the power of creating a regional strategy with input from local partners.

Uniqlo opened its first two stores in Toronto’s premier shopping malls, the Eaton Center (downtown) and Yorkdale in 2016 at a time retail merchandise sales were declining. Long-standing domestic and international brands such as The Gap, Mexx, Jean Machine and Target mega-brand closed. Uniqlo had competition from established brands like H&M, Zara and Old Navy.  (Leo Burnett, 2017)

3. Japan is Special……Really?

Japanese business and Japanese society are often regarded as ‘special’ in being different from the rest of the world. Of course, every country differs from the rest of the world. However, in this context Japanese and the Japanese market is considered as very different. While among all the differences between countries, most business processes and practices are applied more or less to all countries. Often with good reasons but sometimes as an excuse, it is stressed within a corporation that the Japanese subsidiary needs to be treated differently.

Cultures can be compared in terms of how “relationships” are seen as important or the extent to which “contracts” are seen as important. Asian cultures have a stronger focus on relationships, and Socratic-based cultures focus on contracts (lots more lawyers). That is why personal networks are so much more important in Asian cultures than in the United States, for example, which focuses on individual abilities and skills defined in a contract (a job description).

When a Japanese person joins a Japanese company, job descriptions (if they exist) are not so clear, precisely because “relationships” are so important. Being able to get on well with everyone and having a strong internal network is a compelling asset and essential if you want to succeed and make a difference – Making enemies is a real NO NO!

Conversely, in a more “contract” based environment – being good at something specific is more valued because that is the way the corporation is set up – It is an “I don’t have to like you, but if you are good at your job, I want to work with you” kind of thing.

There are strengths and weaknesses in both approaches – I personally think the world has a lot to learn from Japan and the Japanese approach to business – Remember, Japan has more companies that are over 100 years old than any other country in the world – This is precise because of the focus of relationship within the company and the relationship between the company and the wider society it serves.

Japan is a small country with earthquakes, typhoons and tsunamis, which creates an additional focus on relationships – “Win-win” has been part of Japan`s Business DNA decades before any business school professor in the USA coined the term.

A final thought in closing, global surveys that rank business executives from different countries see Japanese ex-pat leaders as consistently ranked very highly in terms of “trust” and “integrity.” I think this comes from the focus and importance on relationships and “wanting to do the right thing.” Being such a small country, if you do something wrong, cheat or deceive people, your reputation will soon be created, and many doors and opportunities will be permanently lost.

4. Innovative / Progressive / Unique Japanese Companies: What are Innovative Japanese Companies are doing differently? Why is it working?

In recent years, Japanese companies did not become global with innovations like Apple. But there are many progressive Japanese start-up companies or innovations internationally recognized, like

Limex, a substitute material for plastic and paper

Gatebox: AI/Hologram of anime characters

Cozen Matcha: A home Matcha maker machine for the global market

The Miura fold: Using Origami as solar panel etc

These companies have utilized uniquely Japanese items to create their own products for the global market. Miraikan is an example of an outstanding global working environment despite being a Japanese government organization. It is largely due to the personal leadership style and philosophy of Mr. Mouri, the Miraikan director, a former Japanese astronaut who worked at NASA for many years.

Japanese companies’ historical success-model was to import something from overseas and then make it better (Japanize) and export it to the whole world. E.g. cars, electronics, Chinese food! However, this successful model does not seem to be the case anymore. Since the end of the bubble economy in 1994, Sony and Panasonic have not yet made competitive items against the Apple iPhone. Still, Korean companies such as Samsung and Hyundai have been competing better globally. The speed of business and technological development has become so fast that the Japanese time-consuming effort of reaching perfection and best quality is finding it impossible to compete globally anymore. Global competitors put their products on the global market much faster.

Social & Corporate Values

Values are the cornerstone of creating a balanced and sustainable society as mentioned in the UNSDG 2030 Agenda for Sustainable Development.  As a people, each society recognizes a number of fundamental values that the nation aspires to reflect.

Social Values

Canada states its values as a society as a principle of “shared destiny”: that the society is best shaped through collective action; that there is a limit to how much can be achieved by individuals acting alone; that the sum of a good society and what it can achieve is greater than the remarkably diverse parts which constitute it.  (University of Waterloo)

Canadian values are:

fairness, diversity, equity, inclusion, health, safety, economic security, democracy, sustainability

Finland lists its values of Finnish society as

trust, individualism, own space, honesty and punctuality, modesty nature

Argentina

freedom, democracy, human rights, solidarity, multiculturalism, freedom of religion and gender equality

Think about Your Values:

5. The Miraikan Story

Within this section, we give some examples of how companies are implementing Third Way strategies. There is no general valid approach, the success depends on the willingness to realize a change. In fact, many companies fail or abort the transformation, which then in turn will increase the difficulties for a successful implementation in future.

Implementation of the Third Way: What, How and In Which Area?

Top management people of Japanese companies have to change but most of them seem to have no motivation to change. Some strong incentives and penalty should be arranged. Incentives can be a higher percentage of variable bonus based on their contribution.

As for penalties, Japanese executives seem to have no penalty and they can stay on power until their retirement even they don’t drive necessary changes for the future. To fix this problem, the Board should function more critically toward the top management team. If many board members are former executives of the same company, they would rather act as Sempai supporters rather than critical board of directors. More external/non-Japanese board members should be also recruited and provide proper pressure/penalty/governance to top executives.

Clear targets should be set for cultural transformation, innovation, diversity and new ways of working etc and clearly embedded in executives’ objectives and linked with their bonus.

Japanese business people tend to be largely influenced by the US business models and practices. The United States economy was built by inviting a lot of immigrants and letting them swim or sink. In the USA,  people are very rich or very poor without so much support from the government. If Japan is an extreme model of collectivism, America is an extreme model of individualism. Japanese should pay more attention to other countries such as EU countries, Canada, etc., in search of The Third Way.

It takes government initiatives to drive change. For instance, Germany accepted Italian immigrants and Turkish immigrants in the 1970s, and they could not integrate for a while. Assimilation of foreigners takes time. Japan has just started.

Government can accelerate necessary social change by giving tax incentives. In Germany, houses with solar panels get a special tax cut.

The Third Way should be something that can enrich the Japanese society, not replace it. With a more global workforce and a new corporate culture, Japanese companies should find a third way to enrich what’s good about their company and Japan while addressing their issues.

Story D: Dr. Mohri, founding CEO, Miraikan

The National Museum of Emerging Science and Innovation, commonly known as Miraikan, is a government-sponsored science center dedicated to presenting and explaining the latest science and technology to the public. It opened in 2001 and over the last 19 years has earned a reputation of being one of the best, if not the best, science centers/museums in the world. Dr. Mamoru Mohri was asked to be Miraikan’s first and is its only Chief Executive Director. It is because of him and his leadership that Miraikan is a living example of what can be accomplished when the best practices and principles of Japanese and Western cultures are combined, resulting in a Third Way approach. How did this happen? To best understand, one must understand Dr. Mohri’s background.

At a very early age, Dr. Mohri was interested in science, the way the world worked and was fascinated with space travel. But when he was a boy, astronauts/cosmonauts were either from the USA or Russia and in the military. So he kept his dream of space in his heart and followed his passion for science, in particular, science about the sun. Raised in a traditional Japanese home, he learned the importance of tenacity, modesty, politely working with others, and being responsible as a representative of himself, his family, his community and his schools. His diligent work saw him acquiring his Master’s degree in material science, and he then embraced the challenge of going to Australia to acquire his Ph.D. at Flinders University…, with all the doctorate courses taught in his somewhat adequate second language, English. He resided in the international dormitory and has often said that prepared him to engage people from around the world. From his experiences, he quickly learned that quality is quality, excellence is excellence, no matter the nationality.

After earning his Ph.D., he returned to Japan to become an assistant professor, teaching and doing research on how to contain on Earth a miniature, artificial sun. His purpose was to help in providing an unlimited source of energy for people.

He then applied for and was selected by the Japanese government as one of the first of three to be Japanese astronauts, and went to NASA in the United States to receive training that proved to be very important in his career. NASA developed a policy that has two keywords, “tough” and “competent.” Here it is best to quote Gene Krantz, Flight Controller for the Apollo missions to the moon.

“From this day forward, Flight Control will be known by two words: “Tough” and “Competent.” Tough means we are forever accountable for what we do or what we fail to do. We will never again compromise our responsibilities. Every time we walk into Mission Control, we will know what we stand for. Competent means we will never take anything for granted. We will never be found short in our knowledge and in our skills. Mission Control will be perfect. When you leave this meeting today, you will go to your office, and the first thing you will do there is to write “Tough and Competent” on your blackboards. It will never be erased. Each day when you enter the room, these words will remind you of the price paid by Grissom, White, and Chaffee.(astronauts who died in a simulated Apollo launch). These words are the price of admission to the ranks of Mission Control.”

Dr. Mohri learned the importance of leadership (tough and competent) and of equal importance. He received training in “follower-ship.” Both served to insure high-quality teamwork within NASA at all levels.  NASA also taught him Crew Resource Management that put into practice those principles. He learned how to interact with the public, as NASA astronauts are accomplished, extraordinary people that are expected to be role models. His belief in quality and excellence was proven to be true through his interactions with scientists, engineers, and notable people all over the world as he prepared, flew, conducted experiments, and then reported on both his shuttle missions.

All this experience Dr. Mohri brought with him to Miraikan. He understood the necessity of a clear, understandable purpose and posted the mission for Miraikan in the first days of its existence. He spoke at length with the entire staff to make sure they understood. Dr. Mohri leads by exampledemands quality, and welcomes complaints and concerns as long as they are accompanied by solution proposals. He showed through his actions his willingness to follow, which is a Japanese cultural trait when other’s expertise led the way. He continually challenges the entire staff to discover new, better methods or upgrades or updates for everything in Miraikan and then asks how they will implement their ideas and provides the support necessary to complete their projects. The heart of all activities was and is to better bring science to the public.

Dr. Mohri welcomes diversity through having a multi-national staff, welcomes cooperation between all science museums/centers, both locally, regionally and internationally, and actively seeks collaboration with the best in the field. This has included staff exchange, the creation of traveling exhibitions, and the interactive sharing of successful approaches in bringing science to the public.

Miraikan’s approach is to have Miraikan be considered the nucleus, with the electrons around that nucleus being business, government, scientists, education, the arts, visitors and society. Miraikan continually fosters ever-changing connections between these entities in order to discover novel ways to introduce science. Every exhibition is conceived, created, and overseen by active scientists in the field.

Miraikan has Science Communicators(SC) from different countries on the floor engaging the visitor in dialogue, not lecture, on science. Each SC must have at least a Master’s degree, many have Ph.D. degrees and all have a background in research. They are challenged to create new events that have resulted, for example, in hip-hop artists working with scientists to present a new medium to feature science, or visual artists and scientists collaborating for an artistic interpretation of science and displayed on the GeoCosmos — a 6-meter sphere covered with OLEDs with a pixel resolution of over 10 million pixels.

Following the disasters of the March 2011 earthquake, resultant tsunami, and the nuclear power plant meltdown, Dr. Mohri reviewed Miraikan’s approach and created  the Tsunagari Project. Tsunagari in Japanese means a connection, or link, or relationship over time. The Tsunagari Project states that “Our mission is to help each visitor to discover a personal relationship with this Planet of Life, and what each person can do to sustain the Earth’s environment. If we sustain the environment, we sustain the human species.”

As a result, leaders from all over the world have visited in support of Miraikan, such as Prince Charles of the United Kingdom, the King and Queen of Spain, US Ambassador Kennedy, President Obama of the United States, Chancellor Merkel of Germany, and President Macron of France to name a few. Nobel Laureates from around the world have joined Miraikan’s Honor Committee and have posted questions or comments to the visitors in a special exhibit.

Dr. Mohri successfully applied to be the venue for the Science Center World Summit 2017. Upon Miraikan’s selection, he made a public announcement to the world that Asia was the host, thereby including and gaining the support of Asian science museums/centers. The result was over 800 participants from 98 countries representing 6 continents.

Miraikan is successful in large part by combining the best approaches of the Japanese culture and the world’s cultures, the Third Way concept. Dr. Mohri presents clear visions and then challenges encourage and support the international staff to discover novel ways to work towards that vision. He insists on quality and excellence from himself and the entire Miraikan staff. He has consistently fostered and cultivated a sense of family and inclusiveness within Miraikan and has many times stepped in to assist someone in need or to herald someone deserving of recognition.

Miraikan’s impact can be easily seen by the teamwork and creative approaches shown by the staff. That impact is also evident by the continued cooperation with national and international science centers/museums in addition to the number of notable accomplished leaders, scientists, and artists from around the world who visit and work with Miraikan.

Miraikan is a living example of the successful combination of the best of Japanese cultural practices and non-Japanese cultural practices. In this case, a strong leader who has lived and trained in both cultures can employ, in a positive, productive manner, those practices.

How can businesses in Japan productively use Dr. Mohri’s approach? Consistent and ongoing training should be employed at all levels because training, like all pursuits of excellence, demands practice and coaching to master and apply concepts. The executives must be educated in first understanding the importance of having a company vision that embraces meaning and purpose in clear terms, followed by clear missions that are steps towards that vision. “Tough and Competent,” “Crew Resource Management,” “Leadership and Follower-ship” must also be taught and implemented by all staff. Build a working environment that is supportive and renders aid to those who need help and recognizes deserving actions. All employees should encourage and welcome diversity in staff, as new ideas and new approaches result in ever-evolving solutions. As Dr. Mohri says,

“Reach for the Stars,” with quality and excellence.

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Third Way Forum Insight 2021 by The Third Way Forum is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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