Japan: Then and Now

I first arrived in Japan in the late 80′s during the time of the “economic miracle.” Cash was everywhere, Japan Inc. was buying up the world, and it seemed like Japanese companies had a magic formula based on their culture that no one, especially the Americans, was going to beat. I talk more about this in my book, “Once Upon a Time in Japan.”

Well, that was then, and this is now, and things are obviously different.
So what happened? Basically, I believe, the same factors that rocketed Japan to economic superpower status in the 80′s are now holding it back. Most believe that it was the popping of the real estate bubble that did it, but there’s much more to the story. (Yes, Japan’s bubble popped many years before America’s. How many American’s knew what was coming?)
I hate wordy blogs so here’s a nice table that shows what happened:

Area 80′s (Miracle) 2010′s (Recession)
Competition from overseas is blocked; companies compete domestically. The ones that win are super strong, and known as “world beaters” The domestic winners like Panasonic, Sony, Toyota, and Yamaha use their domestic profits and efficient way of doing business to pound competitors overseas. Domestically, weak companies have either gone under or have been absorbed by the big boys, ex. Toyota’s purchase of Daihatsu. Less competition at home means less pressure to innovate. The overseas competition, namely, Korea, have learned the Japanese way well and now produces competitive quality products at a lower price.
Company ‘stars’ push their companies to develop new and exciting products. During the 80′s Japanese companies were challenged by their leaders to be innovative and creative. The perfect example is Mr. Akio Morita, the Sony Chairman who pushed development for the walkman. Large companies like Sony have become comfortable and bureaucratic. Leaders are afraid of risk; they avoid responsibility and squash those that suggest new ways.
Export, Export, Export The yen in cheap (in 1985, 1$ = 239yen). Japan is completely focused on exports, mostly to the U.S. which is rich with cash. Japan’s primary export market, U.S.A. is broke, and prefers cheap products from China as opposed to high quality ones from Japan
Life time employment Part of the “Japanese Way” is life time employment. Employees dedicate their life to the company and the company dedicates itself to keeping them employed. The top Japanese graduates line up to get into big, multi-national corporations. Labor is by far the biggest cost for Japanese companies. They struggle to downsize, but because of their commitments to employees they are unable to cut the area that needs it most: labor. This almost wiped out Nissan Motor Company which had to be saved by an alliance with Renault whose CEO is also the CEO of Nissan. One of the first things he did was fire a lot of people. This was something that could only be done by a foreigner, in this case, a Brazilian born Frenchman.
Savings  The Japanese love to save. They put their savings into CDs which are invested in companies like Panasonic who are expanding domestically and overseas. The Japanese still save, but they need to spend. Low consumption is stifling growth. Also, they are not rewarded for their savings. Interest paid on savings accounts is basically 0, and some banks even charge customers to have saving accounts.
The nail that sticks up gets hammered down.  It’s all about the team. Workers are focused on the mission. They need to beat companies like GM and Ford, and they are dead set on getting the job done. They easily invent processes that are better than their overseas competition (especially Detroit’s) GM and Ford are now in the rear view mirror, but where to go from here? The mission is not so clear anymore. Japanese companies need to discover new stars in their ranks because the old ones like Akio Morita have retired. But, the stars are often nails that stick up. Instead of giving them the room and need, they are hammered down. Companies that are number one need risk to ensure their dominance. However, Japanese executive avoid risk at all costs. Failure is still frowned on in Japan.
The all mighty Zaibatsu  Zaibatsu, large groups of companies that own each other and agree to do business only in the group use their economies of scale and ability to control the supply chain to rapidly implement improved products. The Zaibatsu are tied to their fellow group companies so they can’t outsource to China or India as easily as companies in the U.S. Where as they once prowled the earth for opportunities, now they are dependent on controlling the domestic market to ensure their existence. They easily flex their muscle to keep foreign products out of Japan. For example, all American cars must be bought via one dealership chain called Yanase which makes more on the cars than the manufacturers do. Just think if every Japanese car in the U.S. had to be bought via one dealership chain and that chain was a monopoly.

So does this mean you’re giving up on Japan, J.R.? Absolutely not. In fact, I’m very bullish on Japan. Everything Japan needs is still there:

  • A super work ethic. Regardless of the economy, hard work ads value. And it’s getting Japan through the tough times.
  • A focus on quality. The Japanese still make first class products with some of the highest quality standards in the world. Quality is also a value added activity.
  • Education. Japan is perhaps the most educated country on Earth, boasting 100% literacy. Young Japanese have a much better understanding of English than their parents. They may become the first nation to become 100% bi-lingual.
  • Creativity. The world is gaga for Japanese manga, Anime, Hello Kitty, and the likes. This is a hugh bright spot in the economy and opportunity for Japan capitalize on these types products.
  • Low military activity and spending. (8/8/14 update: unfortunately it looks like this may change.)

Ok, so where do we go from here? Here’s my two cents. It’s coming from a gaijin so I doubt it will get much attention, but I’ll throw it out there,

  • Crush the “Old Boy Club.” Tokyo is awash with cozy relationships. When the government releases a bailout package, the money goes to the OBs. The rich get richer, the poor linger.
  • Promote based on merit and potential, not years servered. Somewhere in Sony is the next Akio Morita (it’s certainly not the current CEO). Sony needs to give him(or her!) the room and opportunity to grow.
  • Embrace Risk. Failure is still seen as a source of shame in Japan. Investors shy away from anything seen as risky and companies rarely take big risks. This is why Japanese companies are masters at catch up, but have trouble staying out in front. Toyota is a perfect example. It is mastering the skills needed to be the world’s number one automotive manufacturing company (Distributions, Production, Marketing), but it’s conservative culture makes in inherently opposed to risk. Even Toyota’s successful Prius is a project started by Chief Engineer Kenya Nakamura who lead production of their first passenger car, the 1966 Crown, and has since retired and past away. See appendix A below.
  • Utilize women more. Japanese woman have the same work ethic as the men and are just as educated yet are still often denied opportunities in the work place. The next Akio Morita, Soichiro Honda, or Taichi Ono (inventor of the Toyota Production System) may very well be female.
  • Get over the ‘race’ thing. Laws and prejudices based on race need to go; afterall, this is the 21st century. Did you know that Korean decent Japanese who have been in Japan for generations still cannot get a Japanese passport unless they change their names to a Japanese style name. This would be like the U.S. Citizenship and Immigration Services telling Chinese immigrants that they can have a U.S. passport provide they change their name to David Jones (nothing personal David Jones!).
  • Stop killing whales. Even if the Japanese whaling industry is only killing 50 whales, and, I understand, the Japanese don’t like foreigners telling them what to do, killing whales is just bad public relations and any financial gains achieved for the whalers is far out weighed by the damage in reputation.
So there it is, my two cents. がんばろう日本!
Japanese translation 日本語版:
私は、80年代後半に最初に日本に到着しました。 「経済奇跡」の時間でした。 現金は至る所でそうでした、
打ちそうでなかった彼らの文化に基礎をおいておいたように、それは思われました。 私は、私の本
(「Once Upon a Time in Japan」)で、よりこれについて話します。
それで、何がありましたか? 基本的に ― 私が、思っている ― 80年代に経済超大国ステータスに日本を
ロケットで打ち上げた同じ要因は、現在それをためらわせています。 ほとんどはそれがそれをした不動産泡を
急に置くことであったと思っています、しかし、より多くが非常に物語にあります。 (はい、日本の泡は
、アメリカのものの前に長年を急に置きました。 多くのアメリカ人が新しいように、何が来ていましたか?)
Area 80′s (Miracle) 2010′s (Recession)
外国からの競争は、妨害されます; 会社は、国内で競争します。 勝つものは、非常に強くて、「第一人者」として知られています パナソニック、ソニー、トヨタとヤマハのような国内の勝者は、競争者を海外で強打するために取引することによる彼らの国内の利益と効率的な方法を使用します。 国内で、弱い会社は破産もしたか、大きい男の子(X)によっても吸収されました。ダイハツのトヨタの購入。 自宅のより少ない競争は、より少ない圧力を革新すると定めます。 海外競争相手、すなわち、韓国はよくあっちへ、そして、現在日本語が低い価格で競争的優良製品を生産するということを知りました。
会社『スター』は、新しくて刺激的な製品を開発するために、彼らの会社を押します。 80年代の間に、日本企業は彼らのリーダーによって革新的で、創造的であるよう要求されました。 完全な例は、盛田昭夫氏(発展にウォークマンを強要したソニー会長)です。 野生のタカのような大企業ソニーは、快適で官僚的になります。 リーダーは危険が怖いです;彼らは責任を避けて、新しい方法を提案するものを押しつぶします。
輸出、輸出、輸出 安く中で円。(1985(1$ = 239円)年に) 大部分は現金が豊富である米国に、日本は輸出に完全に集中します。 日本の主要な輸出市場、米国は壊れていて、日本から高品質ものと対照的に中国から安い製品を好みます
Life time employment 「Japanese Way」の一部は、寿命仕事です。 従業員は彼らの人生を会社に捧げます、そして、同社は彼らを雇用しておくことに専念します。 最高の日本の卒業生は、大手の、多国籍会社に入るために一列に並びます。 労働党は、断然日本企業のために最も大きいコストです。 彼らは小型化するのに苦労します、しかし、従業員の彼らの確約のため、彼らは最もそれを必要とする地域を切ることができません: 働いてください。 これは、ほとんど、CEOが日産のCEOでもあるルノーとの同盟によって救われなければならなかった日産自動車社をふき取りました。 彼がした最初のことの1つは、多くの人々を焼くことでした。 これは、この場合、外国人によってされることができるだけだった何かでした、ブラジルの生まれながらのフランス人。
Savings 日本人は、節約するのが好きです。 彼らは、国内で、そして、海外で拡大しているパナソニックなどの会社につぎ込まれるCDに、彼らの貯金を注ぎ込みました。 彼らが費やす必要があるが、日本人はまだ節約します。 低い消費は、成長を抑えています。 また、彼らは彼らの貯金に対して報いられません。 預金口座で払われる利息は基本的に0です、そして、一部の銀行は口座を保存することを持つために顧客さえ起訴します。
The nail that sticks up gets hammered down.
 チームについてのすべてです。 労働者は、任務に集中します。 彼らはGMとフォードなどの会社を負かす必要があります、そして、彼らはとても仕事をしてもらう決心です。 彼らは、簡単に、彼らの海外競争(特にデトロイトのもの)よりよいプロセスを発明します GMとフォードは現在バックミラーです、しかし、試みへのどこでここから? 任務は、もうそれほど明白でありません。 盛田昭夫のような古いものが引退したので、日本企業は彼らのランクで新星を発見する必要があります。 しかし、星はしばしば、突き出る釘です。 彼らに部屋と必要を与える代わりに、彼らは下に打たれます。 一番である会社は、彼らの優位を確実にするために、危険を必要とします。 しかし、日本の役員は、ぜひとも危険を避けます。 失敗は、日本でまだ顰蹙を買います。
The all mighty Zaibatsu
 財閥(互いを所有する会社の大きなグループ)、そして、グループだけで取引することがスケールの彼らの節減を使う、そして、速く実行するサプライチェーンを支配する能力が製品を改善した認めます。 彼らが彼らの存在を確実にするために国内の市場をコントロールすることに依存している今、彼らがかつて機会のために地球をうろついたので彼らが米国の会社ほど簡単に中国またはインドにWhereを外注化することができないように、Zaibatsuは彼らの仲間のグループ会社と結びつきます。 彼らは、外国の製品を日本の中に入れないために、簡単に彼らの筋肉を曲げます。 たとえば、すべてのアメリカ車はメーカーがそうするより車で多くのようにするヤナセと呼ばれている1つのディーラー鎖を通して買われなければなりません。Justは米国のあらゆる日本車が1つのディーラー鎖とそのチェーンによって買われなければならなかったかどうかは独占であったと思います。
それで、これはあなたが日本をあきらめていることを意味しますか、J.R.? いいえ。 実際、私は日本について非常に楽観的です。

素晴らしい労働観。 経済に関係なく、激務広告価値。 そして、それは日本を厳しい時間に通じさせています。
品質に対する関心。 日本人は、世界で最も高品質標準のいくらかで、まだ第一級製品を製造します。 品質は、付加価値活動でもあります。
教育。 日本はおそらく地球で最も教養のある国です。そして、100%のリテラシーを誇ります。 若い日本人には、彼らの両親より非常に
良い英語の理解があります。 彼らは、100%バイリンガルになる最初の国になるかもしれません。
創造力。 世界は、日本の疥癬、Anime、ハロー・キティと好みのために頭の変です。 これは、経済の明るい

オクラホマので、ここで、我々はここから行くのですか?ここに私の忠告はこうだ。 、そこを通って私はそれが多くの注目を得ることになります疑うようにそれは外人から来て、私はよ


Appendix A: Kenya Nakamura
Toyota’s first Chief Engineer, who led the development of the company’s first true passenger car, the 1966 Crown, was a remarkable man named Kenya Nakamura. By all counts, he was as irascible and demanding as the much more famous Taiichi Ohno was in manufacturing. Also like Ohno, he was sponsored by Eiji Toyoda – both Ohno and Nakamura stated on numerous occasions that they never would have been successful without Eiji’s full support. Also, like Ohno, others around him were not necessarily so enamored with his demanding and unconventional ideas. Nakamura once angered a board member so greatly (accusing the executive, in front of other board members, of having “no dreams” for the company) that he was demoted, which made him a member of the union. As a union member he promptly accused union leadership of trying to destroy the company because “all you do is complain”. The union leaders responded by ordering membership to refuse to talk to Nakamura, so for a time no one in the company was even sure if Nakamura was union or management! A passionate leader, to be sure.

But, it was his lieutenant Tatsuro Hasegawa who codified the behaviors, the leadership characteristics and practices that make a good Chief Engineer, the enabling x-factor of a system in which the leader has no real power, no “authority.”

Hasegawa had joined Toyota from the aerospace industry, where he had learned a “chief engineer” process that was similar to that which Toyota eventually adopted (though he observed that Toyota eventually took the process even further than did the aerospace companies). From a combination of his previous experience combined with his observations of Nakamura’s success (and, I hazard a guess, his failings), Hasegawa gives us yet another list of what we might call “management principles” or traits (my translation from old Toyota Japanese language documents):

1. Gain broad knowledge and point of view

2. Develop a clear vision

3. Conduct research that is broad and deep

4. Apply knowledge and skill toward achieving concrete results 

5. Persistently repeat each task as necessary – never give up 

6. Have confidence, believe in yourself

7. Never delegate responsibility

8. Create alignment with lieutenants and other key people

9. Never take the easy route to make it easy for yourself

10. And possess these characteristics: i. have right knowledge, skill experience; ii. be decisive with good judgment, iii. have generous spirit and think big, iv. be composed, not overly emotional, v. be vigorous, vi. be tenacious, vii. be a leader who others wish to follow, viii. possess strong skills of communication and persuasion, ix. be flexible, x. exhibit unselfish dedication to success.


2 comments for “Japan: Then and Now

  1. gator
    September 23, 2011 at 12:42 am

    J.R. for PRESIDENT OF JAPAN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    • J.R. Maroney
      September 23, 2011 at 2:01 pm

      Unfortunately, Japan doesn’t have a President ;-(
      But thanks for the support!

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