Inventing the Organizations of the 21st Century

Perspectives from Japan

The need to reinvent is universal, as suggested by this report from Robert Russman Halperin. Under the auspices of the 21st Century Initiative, he and Professor Michael Scott Morton met with several senior executives in Tokyo, Osaka, and Kyoto.

One of the first and largest signs you see on arrival at Narita International Airport in Tokyo cautions: "Enjoy your stay, but please follow the rules." The average tourist has no trouble complying, but shaken by one of the worst economic downturns since World War II, executives and managers are reexamining even the most basic tenets of the Japanese business model. Many are now asking questions such as the following: 

  • Can we preserve the letter and spirit of kokomin kanjo (taking care of one's employees), while at the same time reducing high fixed costs, government regulation, and bureaucratic inefficiencies? Or is a Darwinian struggle on the horizon, with some companies left no choice but to abandon the system of lifetime employment?
  • How can both small and large companies attract and retain creative people, when singling out individuals for special rewards or incentives will threaten one of our key strengths, the ability to work as a team towards a common production goal? 
  • Will our elaborate, but effective practices of otsukiai (building and maintaining business and social relationships) and nemawashi (laying the groundwork and building consensus) translate into other languages and work across electronic networks, or will they result in risk averse and sluggish decision making? 
  • Should we "push back" our borders, taking our management style and our exports abroad, while remaining Japanese at heart? Or can and should we become truly global and borderless, overcoming differences of language, and decentralizing both production and management? Given the high value of the yen, do we have any choice?
  • Is the practice of extensive cross-ownership which allows weaker companies the time and flexibility to recover rather than be gobbled up by predators still the right path, or do we need to operate in a more open and riskier market, with a stronger venture fund network, employee stock ownership plans, and opportunities for R&D-focused companies to go public even before they show a profit?
  • Are our top executives prepared to consider new forms of corporate governance, even though they primarily rose through sales and manufacturing, and have tended to focus on operational, not strategic questions? 

  • Ironically, the very success of many large Japanese companies over the last several decades may make them more reluctant to reinvent themselves than troubled Western companies. But these questions are being raised and debated, and experiments in organizational innovation are evident, if not yet plentiful. A few examples:

  • The presidents of two relatively small companies are making stock ownership available to key employees by diverting their own personal holdings for this purpose.
  • An electronics company is combining the best of its intensely collaborative open office environment with western-style electronic mail to reduce meeting frequency and increase productivity.
  • A large automotive supplier has not only moved production offshore, but is also transforming its domestic organization to relate more effectively to its now remote manufacturing facilities.
  • With the aid of global telecommunications vendors based in Japan and elsewhere, financial services organizations are creating seamless, round-the-clock operations connecting Tokyo with other major financial centers.
Even those executives for whom all of this rule changing and reinvention is too much to bear can be relieved, at least for a few minutes! A major electronics vendor I visited will ship a virtual reality-equipped "relax and refresh" recliner chair later this year, complete with built-in massager and synchronized to the soothing images and sounds of waterfalls and soaring birds. Based on a personal trial, I recommend some time in the chair for all managers trying to chart a course towards the 21st Century.

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