May 17, 2017 9:00 am JST
Steven Bleistein

'Japanese corporate culture' does not exist

Concept is a red herring that can mask a host of business problems

At Rakuten, employees speak English for all meetings and communications.

In my experience, "Japanese corporate culture" is often used as a scapegoat for a whole raft of business problems. As a consultant, I often hear CEOs in Japan, Japanese and non-Japanese, whether running Japanese companies or non-Japanese companies, blame some kind of problem or failure to achieve results on Japanese corporate culture. However, it is a red herring, because there is no such thing as a single Japanese corporate culture. It is not a supposedly different culture that is the problem, but the culture of the company itself.

When someone blames Japanese corporate culture for problems, often he or she is referring to behaviors and character traits like over-sensitivity to reasonable business risk, opaque communication, time-consuming decision-making processes, resistance to change, and passivity in a sales force. For example, the decline of such Japanese industrial giants as Sharp and Panasonic -- before current leader Kazuhiro Tsuga took the helm -- is often blamed on problems with Japanese corporate culture, as if by virtue of being Japanese, the culture of these companies were given. Yet successful companies like Rakuten, SoftBank Group, Fast Retailing, Cyberdyne, Fujifilm Holdings and Seven & i Holdings are just as Japanese, and their corporate cultures can hardly be said to be the same as those of Sharp and Panasonic.

The danger in blaming Japanese corporate culture is that doing so immediately becomes a justification for doing nothing and attempting no change. No one can single-handedly change a country's culture. All attempts at understanding the problem and coming up with possible solutions simply stop. While a business might not immediately fail because of this, it would also not grow.

Strategic objectives are subordinated to perceived cultural obstacles, often associated with exaggerated consequences for any attempt at change. For example, a CEO recently told me, "We cannot possibly implement a merit-based pay and promotion system in Japan because our staff would reject it and quit!" I have heard more than one CEO say this. I have never seen it actually happen in practice.

Leaders of successful companies who wish to achieve business growth and rapid organizational change use business strategy to shape company culture, regardless of what Japanese culture may or may not dictate as possible or practical. They create and even impose the corporate culture they want. They have a realistic sense of possible negative risks of doing so, and accept them.

For example, Rakuten CEO Hiroshi Mikitani, as part of his efforts to create a culture that supports global business, decided to make English the lingua franca of the company for all meetings and communications, a process he calls "Englishnization."He required all workers to become proficient in English within three years or face termination. In Japan, where a widespread aversion toward and lack of ability in English persists, Englishnization is culturally audacious, so much so that former Honda Motor CEO Takanobu Ito was prompted to ridicule Mikitani's initiative as "stupid."

Yet despite being so unconventional in Japanese culture, Mikitani made Englishnization part of Rakuten's culture, and boasts of an more than 80% adoption rate of the initiative. Other companies in Japan have since imitated and repeated Rakuten's success. Honda would likely benefit from an Englishnization initiative of its own.

While Ito was reacting to Rakuten's initiative in calling it "stupid," one has to wonder how he may have reacted to bold ideas in his own company that might have been culturally audacious. Have a look at Honda's business performance compared to Rakuten's during the same period.

Strategy-driven culture

Expat CEOs in Japan face the same business challenges as their Japanese peers as well as the same choices in dealing with those challenges. Many have achieved rapid growth and success in Japan by using strategy to drive corporate culture rather than the other way around.

For example, Mikado Kyowa Seed CEO Vincent Supiot transformed what was a traditional, largely domestic Japanese seed company in what is considered a conservative, flat-growth industry in Japan, into a rapid growth player integrated in the global French group Limagrain. Supiot executed an international strategy to create the international corporate culture he wanted. For example, Supiot reshaped the company's research and development priorities from a purely domestically focused agenda to one that deliberately seeks opportunities for highly differentiated products in the world market. He reformed the Japan-based sales processes to be in harmony with global best practices in the group to exploit new, emerging business models in Japan ahead of competitors.

There were expressions of fear, incidents of passive resistance, and claims from naysayers that "this will never work in Japan" from some managers and staff. Yet Supiot overcame these challenges by prioritizing execution over culture change, with resounding success. The company was recently recognized by the French Chamber of Commerce in Japan with the prestigious 2017 French Business Award.

Others have similarly achieved great business results in Japan. For example, adidas Japan CEO Paul Hardisty has achieved No. 1 market share consistently over the years for the company. Godiva Japan CEO Jerome Chouchan doubled company sales during a five-year period despite a declining market in his category. Neither of these leaders considers any so-called Japanese corporate culture as an obstacle to their success.

In my experience, the most successful business leaders in Japan have four practices in common.

  1. They never blame Japanese culture for their business problems or allow supposed cultural obstacles to drive strategic decision-making.
  2. They identify what they want to change in their businesses and focus on that unapologetically. 
  3. They have a penchant for action first, culture change later. They do not wait for culture to change before implementing strategic change. 
  4. They understand that it is not culturally insensitive to be culturally unconventional. Successful Japanese leaders like Fast Retailing's Tadashi Yanai and Cyberdyne's Yoshiyuki Sankai serve as their role models.

What of Sharp and Panasonic? Sharp's new leader Tai Jeng-wu and Panasonic's Kazuhiro Tsuga are both paying little heed to what would be considered traditional Japanese corporate culture in reforming their respective businesses. Tai is unapologetically replacing seniority-based promotion and remuneration systems with merit-based ones. He is on record as being unworried about staff who may wish to leave the company. Tsuga has largely bypassed consensus-based decision-making to accelerate speed to execution, and is ruthlessly weeding out poor-performing businesses, and the improved business results are already beginning to show.

Will Sharp and Panasonic succeed despite their culturally unconventional approaches? In my view, yes, as other companies in Japan have achieved success doing the same. 

Steven Bleistein is CEO of Tokyo-based consulting firm Relansa. His most recent book is "Rapid Organizational Change." (Wiley & Sons)

Sharp Corp.

Japan

Market(Ticker): TKS(6753)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 18,832.04M
Shares: 4,994.52M

Panasonic Corp.

Japan

Market(Ticker): TKS(6752)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 30,137.38M
Shares: 2,453.05M

Rakuten, Inc.

Japan

Market(Ticker): TKS(4755)
Sector:
Industry:
Consumer Services
Other Consumer Services
Market cap(USD): 16,801.22M
Shares: 1,432.99M

SoftBank Group Corp.

Japan

Market(Ticker): TKS(9984)
Sector:
Industry:
Technology Services
Information Technology Services
Market cap(USD): 84,335.52M
Shares: 1,100.66M

FAST RETAILING CO., LTD.

Japan

Market(Ticker): TKS(9983)
Sector:
Industry:
Retail Trade
Apparel/Footwear Retail
Market cap(USD): 35,576.89M
Shares: 106.07M

CYBERDYNE, Inc.

Japan

Market(Ticker): TKS(7779)
Sector:
Industry:
Health Technology
Medical Specialties
Market cap(USD): 2,942.20M
Shares: 215.04M

FUJIFILM Holdings Corp.

Japan

Market(Ticker): TKS(4901)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 18,983.71M
Shares: 514.62M

Seven & I Holdings Co., Ltd.

Japan

Market(Ticker): TKS(3382)
Sector:
Industry:
Retail Trade
Food Retail
Market cap(USD): 38,094.95M
Shares: 886.44M

Honda Motor Co., Ltd.

Japan

Market(Ticker): TKS(7267)
Sector:
Industry:
Consumer Durables
Motor Vehicles
Market cap(USD): 50,168.37M
Shares: 1,811.42M

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