The Best Decision Making is…SLOW

At the Japan meeting of the World Economic Forum in 2015, I found something that Kathy Matsui, chief Japan equity strategist at Goldman Sachs, said extremely striking.

“People say that it takes time for the Japanese to make decisions. They’re wrong: it doesn’t take time, it takes FOREVER!

Listen, though, to her follow-up.

“But once the Japanese have reached a decision,” she added, “they move unbelievably fast.”

I think Ms. Matsui is right.

Take the concept of “Womenomics”—the idea that Japan can dramatically boost growth by tapping into one of its most underutilized resources, women—as an example.

Matsui and her colleagues at Goldman Sachs formulated this concept in 1999… And absolutely nothing happened until 2013.

That was when Prime Minister Shinzo Abe decided to put boosting women’s workforce participation, raising women’s earning capacity and getting more women onto company boards at the very center of his growth strategy.

He reiterated his ideas at WAW! (World Assembly for Women) in both 2014 and 2015.

This model—where nothing happens for a long time, then everything changes all at once—is typically Japanese.

It comes from a tradition of building consensus before making decisions. It takes time (or, indeed, forever!) to get everyone to agree to a new policy. Once consensus has been achieved, implementation is astonishingly swift because everyone feels fully invested.

We take this sort of consensus-based approach at my firm, GLOBIS.

The CEO (that’s me) cannot take decisions alone. There needs to be consensus (or at least a majority plus the CEO) on the Executive Committee, which is made up of the CEO and nine managing directors.

To get the Executive Committee to accept my plans, I need to take time to explain why I want to do anything and overcome their objections by outlining my vision, marshaling my facts, and presenting my analysis.

In theory, if someone on the Executive Committee cannot be persuaded about a new policy, then they can opt not to take part in its implementation. In reality, though, I am under so much pressure to make a good case that I usually win all the members around.

The introduction of our online MBA provides a good example of our consensus-based decision-making system in action,

The Executive Committee voiced five objections to the initiative.

1.Can we sort out the technology? Does the right video-conferencing software exist for large-scale remote classes?

2.Can we get the marketing right? Will we be able to attract students to our new online offering?

3.Won’t we be cannibalizing ourselves? Won’t the online MBA simply take students away from our existing programs?

4.Can we maintain our traditional level of quality online? How can we apply quality control in the more dispersed arena of distance learning?

5.Do we need to move so fast? Can’t we adopt a “wait-and-see” posture and learn from our competitors as they make all the first mover’s mistakes for us?

The objections were reasonable enough. And easy to deal with.

The right technology did exist. Pre-marketing proved the existence of demand. Our target would be a new demographic—people too geographically far from campus to attend our normal courses. With the competitive landscape changing so fast—the rise of MOOCs, competitors moving online—a “wait-and-see” approach would be far riskier than failing fast…

I addressed all the Executive Committee’s objections methodically and precisely. As a result, I was able to win their full support after three months which included me personally road-testing the new system and teaching online classes.

Had I been free to make the decision alone, I could have done so in three seconds.

Having to spend three months winning my colleagues around was frustrating, but the time we spent reaching consensus meant that when we got around to launching the online MBA they were all fully committed to it, and the launch went quickly and smoothly.

When I can’t get a majority on the Executive Committee, I take the issue up with the board. Our board consists entirely of external directors, each with their own area of expertise, and me. The CEO cannot override a board majority decision.

In 23 years, the board has only rejected my proposals on two or three occasions. Case in point: They denied me the right to sit on the board of any of the companies in our VC portfolio. This keeps me further from the action than I like, but they were worried that if any of the startups we invested in went bankrupt in Japan, the reputational damage could taint me, the CEO, and, through me, the whole company.

In hindsight, I accept that they made the right decision.

People talk about life being “lonely at the top” for CEOs. With our system, I have to consult so intensively with my fellow executives, that loneliness is the last thing I suffer from!

I think this typically Japanese approach, for all its slowness, has two clear benefits: First, it stops egomaniacal leaders running amok; second, it gets strong buy-in at all levels of the organization, something that ultimately leads to better results.

What’s your take on effective decision-making?

Do you believe in strong, solo leadership, a more consensus-based approach, or a hybrid of the two?

Do you believe, in other words, in “I,” “We” or “Wii” (i.e. “we” + “i”)?

Let me know.

Author

Mr. Yoshito Hori established GLOBIS Management School in 1992 and GLOBIS Capital Partners in 1996. In 2003, GLOBIS started its original MBA program which, in 2006, received accreditation from the Japanese Ministry of Education and gained “university” status. GLOBIS started a part-time MBA program in English in 2009 and a full-time MBA program in English in 2012.

A Harvard MBA graduate and former Sumitomo Corporation employee, Mr. Hori founded the Entrepreneurs’ Organization (EO) Japan Chapter in 1995 and became the first board member from Asia in charge of Asia Pacific region in 1996. He also served on the World Economic Forum (WEF)’s New Asian Leaders Executive Committee and Global Agenda Council on New Models of Leadership, as well as the Harvard Business School Alumni Board from 2005 to 2008. Currently, Mr. Hori is a board member of the Keizai Doyukai (Japan Association of Corporate Executives), and serves as co-chair of WEF’s Global Growth Companies.

In 2008, he launched the G1 Summit – a Japanese version of the WEF’s annual Davos forum. This led to the foundation of G1 Summit Institute in 2013, which Mr. Hori serves as Representative Director.

Just days after a huge earthquake struck northeast Japan in March 2011, Mr. Hori launched Project KIBOW to support the rebuilding of the disaster-affected areas. The following year Project KIBOW was incorporated as the KIBOW Foundation, which Mr. Hori serves as Representative Director.

An avid enthusiast of the Japanese game Go since age 40, Mr. Hori has been Director of the Nihon Ki-in (Japan Go Association) since June 2013.

Since October 2013, Mr. Hori has hosted a weekly TV program in Japan called Nippon Mirai Kaigi (Japan Future Conference). He has authored several books including Visionary Leaders who Create and Innovate Societies, Six Dimensions of Life, and My Personal Mission Statement.

Mr. Hori received his BS in Engineering from Kyoto University and his MBA from Harvard Business School.

He is an avid swimmer and enjoys spending time with his family, especially his five sons.

Follow him on
LinkedIn, Facebook, or Twitter.

PAGE
TOP