Doing business the Japanese way

JASTECA panel urges Government to invite more foreign investment into the country

By Cassandra Mascarenhas

Furthering corporate ties between Japan and Sri Lanka, the Japan Sri Lanka Technical and Cultural Association (JASTECA) hosted a seminar on Japanese style of management earlier this week featuring a panel of renowned Japanese businessmen who shared their knowledge and expertise and clarified and dismissed various stereotypes associated with the Japanese way of doing business.

The panel consisted of Kumagal Gumi Co Deputy General Manager – Sri Lanka Office Minoru Tsutsui, ITOCHU Corporation Colombo Liaison Office General Manager Takashi Yoshino, Colombo Dockyard Chairman Akihiko Nakauchi, Chairman and Managing Director of the Midaya Group Dayasiri Warnakulasooriya and the session was moderated by EAM Maliban Textiles Ltd. Former Director/CEO Athula Edirisinghe.

Q: Japanese management examines the big picture and long term when decision making. In contrast, American businesses make quick decisions for immediate resolution or rapid return on investment. What do you have to say about this?

Yoshino: This question consists of two issues – long term trend and the decision making process. Starting with the latter, Japan was known for a strong decision making process but it took a very long time and we sometimes lost the opportunity to make big profits.

After the IT revolution, we couldn’t spend much time on the decision making process so we divided up the decision process according to investment. Smaller decisions are now made by the general manager and big investment decisions are made at a board meeting level.

A big project will require more time but with smaller, medium-sized projects, we make decisions as soon as possible. Compared to the US system, the process is still top down. The second issue on long term view planning, in Japan until the 1990s, we made five to 10 year plans because at the time there weren’t many uncertainty factors. We mainly considered the market in US and Europe but today’s global economy means we have to consider far more markets, especially India and China.

We now draw up three year plans at most and because of the new financial systems in place, we have to disclose our financial activities every quarter. Time is of the essence when building a business. If you waste time, your chance to do business goes away so the process of decision making needs to be very efficient. We make two to three year plans and at ever quarter, reveal all of what has been done.

Q: There is a school of thought that in general, American workers are unwilling to work unless they are economically motivated and Japanese workers are motivated to work and seek rewards other than money. What do you think is more relevant to Sri Lanka?

Nakauchi: American and Japanese ways are quite different. Japanese ways are based on common sense, value, local community and family – we live in a community bound by a common faith. Americans have to rely on themselves. Sri Lanka too is also based on a long traditional, culture, history and ethos and therefore I don’t think they will be motivated by only economic considerations.

Q: Japanese managers are looked after by the firm, their jobs are ensured, salaries are guaranteed. American management on the other hand let go of their staff when the company runs onto trouble. However they produce entrepreneurs like Jack Welsh, Steve Jobs and Mark Zuckerberg but we do not hear of such great personalities coming from Japan – what do you have to say about this?

Tsutsui: Japan has also produced great leaders such as the founder of Panasonic, the founder of Honda and the founder of Mitsubishi to name a few. These companies are already big. In such big companies, staff is secure unlike in American companies. Japanese people are our priority and are the stability of our lives. With this cover of stability, the staff will evolve. I think this is our Japanese character.

As of late, some companies in Japan have started following the American style but Japanese companies tend to still keep their own style with some modifications. The focus is more on the workers than the company itself.

Q: Even though Japan has not produced world leaders like the US, Japanese products have conquered the world – what is your secret?

Yoshino: Compared with the American style, it seems that it is only the Japanese companies that are famous but there are many excellent presidents and CEOs behind these companies. I think it is a difference in the culture. It’s true that there are many Japanese products out there now but if we look back at 1955, 10 years after the Second World War, Japan exported many products at the time but they were considered cheap and of low quality.

It was then that Japan felt it should upgrade. Engineers did their best every single day to make better quality products. It still took about 20 years for Japanese products to gain and obtain a reputation for high quality. The secret is to work hard. This process of continuous improvement has to be followed every day but it takes time. People who wanted to build up a reputation for themselves were told that they would have to work hard to get there and I think that is the secret to success.

Q: If I say that Japan believes in copying technology from other countries and improving on it, would you agree?

Yoshino: After the war, Japanese manufacturing facilities were damaged – we had nothing. All Japanese manufacturers started receiving stuff from EU and the US and based on these, they tried to copy them and tried to include quality to the products. Japan was finally able to overcome the original quality of the imported machinery. We even had a slogan: “Catch up to the West and overtake the US.”

Q: In Japanese management systems, the manager always looks up to someone better. The problem is that when he gets to the top, he has to become more creative on his own. This is a challenge. How have you coped with this situation?

Nakauchi: Generally people have personalities that they look up to but I haven’t had that. My mission is to make my company better – more efficient, profitable and productive for the stakeholders. The shipping business is facing severe recessions and so my immediate vision is to sustain our company for the future. Right now our company is very busy thankfully and we are focusing on staying afloat for the next two to three years.

Q: There is a conformist mentality in Japanese management: ‘hammering down the nail that sticks out.’ – do you agree that this still exists?

Tsutsui: Although there are such cases in older companies, these cases have been reduced and will be further reduced in the future. Every manager knows they now have to get many kinds of opinions to make a decision. They know that vast opinion is very important.

Q: It has been said that Japanese managers should learn to confront problems right away instead of hoping they would go away. Is this a valid statement in today’s context?

Yoshino: No, time is of the essence for the success of a business today. If you don’t want to solve a problem right now, that could cause problems for companies. Most Japanese companies try to solve problems on the spot now. Problems must be solved as soon as they crop up and this is therefore not a valid statement.

Q: Large Japanese companies usually would not hire executives who have left another large firm. Therefore it could be due to fear and not loyalty that the Japanese executives stick with their firms for life. Is this statement valid?

Nakauchi: It is very seldom that Japanese companies invite executives from larger companies. The reason for that could be because of fear in some sense, but in most cases, the management feels that the talent should be selected from our own resources and not acquired from outside. We train our employees and expect them to be our successors. We also expect our employees to have a sense of loyalty to the company.  

Q: Advancement by seniority in Japanese companies often means the existence of frustrated workers whose talents are wasted during promotions. Is this true?

Tsutsui: It was very common in Japan about 20 years ago. Obviously it is still prevalent in older, smaller companies, maybe because it is difficult for them to change it as their operations are small. Large companies operate differently. In the case of new, smaller companies, their founder or manager tends to be from a younger generation. Seniority is not bad in general; after all they have wide knowledge and plenty of experience. They are very important to run a company.

Q: Japanese companies are regimented, almost feudal and hierarchical. They offer their workers little personal freedom, choice or enlightenment and Japanese companies succeed at the expense of Japanese individuals in the financial chess game Japanese call business – do you agree?

Yoshino: There are many types of Japanese companies. Some are still old fashioned but now the new way of employment is not based on seniority and employees get no special lifetime guarantee on the job. While some companies that have the old system in place resist, this is not the case with new companies. For instance, when an employee gets an overseas posting, he can now say no which was not the case earlier. Things are definitely changing.

Nakauchi: At one point, if someone made a mistake, the mistake was not forgotten and was held over him but now it is different. One mistake shouldn’t be held against people for life, we must give them second chances and this is a new tendency in Japan.

Warnakulasooriya: There were times when we did very well and vice versa. I run a ceramic company and we have been managing without closing down. This has been something very important to us because there have been good times and bad times but we always expect the future to be good. Right now the economy is not too well globally so we are marking time for when things will go back to being better and we are carrying on. It’s important to carry on even at a loss, expecting the future to be bright. In our company if someone makes a mistake, the action taken depends on the type of mistake the person makes. I don’t think we have sacked anyone for making a mistake.

Q: Japanese managers place their companies first, themselves second and their families third. Do you agree?

Nakauchi: Yes, it’s true.  

Member of the audience: Looking at Sri Lanka, in the early years I think people put the company first but once you get married, you are not allowed to do that. I think it is very difficult to generalise in Sri Lanka. I’ve seen people who give equal priority to the company and family and yet there are people who regret not being able to give more to their families. We need to find a balance so that there will be no regrets. Overall, Japanese people are highly dedicated and disciplined and I’ve noticed this even in the younger generations.

Q: The West today is allowing many executives to work from home – can this work in a Japanese management system?

Tsutsui: For most companies, no it won’t work. To consider only efficiency of work, to work from home would be all right but team work does not grow that way. I don’t think this will be adopted as a common way in Japan.

Member of the audience: I don’t think it would work in Sri Lanka. I don’t think we can trust employees to that extent right now although it is done wonderfully in other countries. Although some companies may have a different culture, in general it won’t work here.

Q: The Japanese are hard working – does this mean that Sri Lankans would be successful if we work hard?

Yoshino: My answer is definitely yes. In Japan, we think working is a very good thing. We are encouraged to work hard from our childhood and we believe that working hard is good for everyone. So if you also work hard, everyone can get success going without fail. Without working hard, things are difficult to achieve.

Q: Why is it that women are invisible in senior positions in Japanese managed enterprises?

Nakauchi: This is unfortunately true. Women are considered to be there to run households and are not expected to earn the wages for the households. Generally, we see many brilliant women in Japan right now in many industries but we need to have more opportunities and positions for women and I hope this will be so.

Q: Do you think Japanese management will continue to grow in corporate Sri Lanka?

Tsutsui: Of course, yes. Your economy is growing, infrastructure is getting better and tourist arrivals are increasing. The civil war is over and I think Sri Lankans’ minds have changed and they are striving to make this a better country.  

Q: There is a rapid flow of Japanese businesses going to India for joint ventures hardly any to Sri Lanka – why?

Yoshino: Several companies want to set up here and operate but most of these operations are based on service industries. Japanese companies focus on domestic demand – the main purpose is to supply to a domestic market. There is also a difference in the populations of India and Sri Lanka but depending on the products, there is still a great chance for Japanese companies setting up here.

One reason for the slow investment here is the market size and the Sri Lankan Government needs to invite more foreign investment. There are still some Japanese companies that do not know of Sri Lanka’s current situation. The Government needs to emphasise the country’s strong points. The manufacturing sector might come in here on a small scale.

Nakauchi: Production and consumption – the scale is so different between the two countries so you should not seek the same amount of investment here. Some people still think of Sri Lanka, which they think of as Ceylon, as being a very dangerous place.



Pix by Upul Abayasekara