Beyond the Paradox: Understanding the Secrets of Japanese Business (Part 1)

For people new to Japan (but certainly not limited to them), it can a challenge to understand how to do business. Many concepts seem “mysterious” at first, or, even if understood, remain paradoxical at best. And yet, many people claim that if you can do business here, you can do it anywhere. For the GLOBIS JMEx program, our faculty shared their hints on the local business culture with our overseas students.

Expectations of Leaders: More Parent than Boss

One piece of “conventional” (=Western) business knowledge that students around the world take for granted is that top business leaders motivate their employees with financial incentives; the bottom line dominates all. However, expectations of general managers in Japan can be different. A "good" general manager in Japan does not give orders based on operation manuals. Rather, they roll up their sleeves, go down to the "shop floor" (the gemba) and get things done together with their staff. At the same time, they build one-on-one, human relationships with their team members, as the principal of the company, which is in itself a social community. Ideally, this person is the hypothetical parent to the staff.

In the JMEx program, GLOBIS Dean Tomoya Nakamura demonstrated this idea using the HBS case “Trouble at Tessei,” an example of how a change in leadership style can help revive a company. The now-famous custodians of the “seven-minute miracle,” who clean the Shinkansen bullet trains in such a short turnaround time, did not always take pride in their work. Suffice it to say, morale was low. When Teruo Yabe took over and revitalized the company, his incentives went beyond financial. The lesson, based on expectations of Japanese leaders, is that you can draw out the best from your people (even those neglected by society), if the leader can logically and emotionally understand and do the work; recognize and evaluate good work by his/her people, and, most importantly, instill a sense of pride within them. The sensitivity and the maturity of great leaders in this role in Japan are extremely high. (See more from Dean Nakamura: “Who becomes and Who doesn’t become a leader.”)

Responsibilities to Stakeholders: Social Entrepreneurs and the 2011 Tsunami

After Great East Japan Earthquake and tsunami in March 2011, the world was inspired by how local survivors helped each other out. Many were perhaps surprised by the relative organization and despite the widespread destruction of infrastructure. Meanwhile, the business leaders in these communities, who wanted to help the region recover and further develop, faced challenges balancing the needs of their stakeholders.

Reiji Yamanaka, who teaches Social Entrepreneurship, told the story of the case of "Ishinomaki Kobo and Herman Miller" to demonstrate the challenges leaders face when confronted with satisfying various stakeholders. Ishinomaki was a region devastated by the Great East Japan Earthquake and subsequent tsunami. Keiji Ashizawa, an entrepreneur, with the help of Herman Miller, started a furniture manufacturing business to create local jobs and to assist residents in rebuilding their homes. The case highlights the management's conflict between international expansion (financial growth) and local contribution (to the recovery).

Historically, Japan has experienced many earthquakes which have reinforced a “communitarian” mindset in the local community. Companies in the region are therefore expected to be harmonized with the local community. The question is how management should prioritize their business when the local community's expectations conflict with other management goals. 

This is an important challenge for managers, not only in the disaster-affected areas but for social entrepreneurs everywhere. Social-purpose companies have to simultaneously manage expectations from various stakeholders: funders, beneficiaries, volunteer staff, paid staff, and other founders and partners. Through this lesson, Mr. Yamanaka hopes that students can practice how to manage this tension, and think about their own management priorities.

Top image copyright: imtmphoto / 123RF Stock Photo

At GLOBIS, Mr. Nakamura teaches subjects in the leadership area and has conducted various global training programs to GLOBIS' corporate clients. Prior to GLOBIS, Mr. Nakamura joined Marubeni Corporation and while seconded to Advantage Partners, worked on the reorganizations of invested companies. As General Manager of Fuji Machinery Mfg. & Electronics Corporation, he contributed in the rapid reorganization of the company. As Senior Managing Director at Sun-Life Corporation, he introduced a progressive ESOP for more than 250 employees, including part-time workers. Mr. Nakamura also writes a column, "Ki and Management" periodically on GLOBIS Insights. Mr. Nakamura earned his MBA from Harvard Business School and a BA from Hitotsubashi University.

Mr. Yamanaka teaches entrepreneurship-related courses, namely the Tohoku Social Venture Program, Venture Capital & Finance, and Venture Management at the Graduate School of Management, GLOBIS University. He also serves as the impact investment officer at the KIBOW Foundation, which was established after the Great East-Japan Earthquake in 2011.

Previously, he held important positions at early-stage ventures, including business development of SMS Co., Ltd. (publicly listed since 2008) and COO at Health Solution, Inc. He also worked at GLOBIS Capital Partners, and led the investment in IT, service, animation and healthcare area, and was appointed as a board member of three startups.

Before entering into the venture world, he worked at Canon, and engaged in business development, mainly alliance building with foreign ventures.

He earned an MBA at Harvard Business School, and a BA in Economics at Hitotsubashi University.

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