REDISCOVERING JAPANESE BUSINESS LEADERSHIP

Japanese business has changed tremendously in the past decade. Once sacred institutions such as lifetime employment and seniority - based promotion in the workplace have increasingly been replaced by “ temp ” contracts and performance - based pay. During Japan ’ s miracle growth years in the two decades following the end of World War II, the nation ’ s schools churned out a veritable “ soldier ” class of white - collared sarariman (salaried men) and OLs (offi ce ladies) dedicated to building their country into an economic superpower. And they succeeded. They toiled long hours with little complaint until their identities became nearly inseparable from those of their companies. In exchange for this loyalty, companies provided them with lifetime job security and benefi ts, lifelong drinking buddies and access to company retreats. People were indeed the country ’ s richest natural resource. Under the protection of the US – Japan Security Treaty, the entire country could concentrate its energies on making things. The government encouraged key industries, facilitated exports, built a modern national infrastructure, and engendered the rise of a consumer - based middle - class society.

ffirs.indd iiffirs.indd ii 1/25/10 4:22:48 PM1/25/10 4:22:48 PM REDISCOVERING JAPANESE BUSINESS LEADERSHIP 15 JAPANESE MANAGERS AND THE COMPANIES THEY’RE LEADING TO NEW GROWTH ffirs.indd iffirs.indd i 1/25/10 4:22:48 PM1/25/10 4:22:48 PM ffirs.indd iiffirs.indd ii 1/25/10 4:22:48 PM1/25/10 4:22:48 PM REDISCOVERING JAPANESE BUSINESS LEADERSHIP 15 JAPANESE MANAGERS AND THE COMPANIES THEY’RE LEADING TO NEW GROWTH YOZO HASEGAWA TRANSLATED BY TONY KIMM John Wiley & Sons (Asia) Pte. Ltd. ffirs.indd iiiffirs.indd iii 1/25/10 4:22:48 PM1/25/10 4:22:48 PM Copyright © 2010 John Wiley & Sons (Asia) Pte. Ltd. Published in 2010 by John Wiley & Sons (Asia) Pte. Ltd. 2 Clementi Loop, #02-01, Singapore 129809 All rights reserved. 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Ltd. 10 9 8 7 6 5 4 3 2 1 ffirs.indd ivffirs.indd iv 1/25/10 4:22:49 PM1/25/10 4:22:49 PM v CONTENTS Preface vii 1 Succeeding by Destroying a Growth Model 1 Kanemasa Haraguchi, Secom Co., Ltd. (Service) 2 In the Right Place, Good Things Sell Themselves 17 Toshifumi Suzuki, Seven & i Holdings Co., Ltd. (Retail) 3 Is Something Holding You Back? 31 Shinzo Maeda, Shiseido Co., Ltd. (Cosmetics) 4 The Customer Always Trumps Legacy 43 Satoru Iwata, Nintendo Co., Ltd. (Video Games) 5 Standing with Consumers on Deregulated Ground 57 Kaoru Seto, Yamato Holdings Co., Ltd. (Land Transport) 6 From Japan to the World’s Dinner Tables 69 Yuzaburo Mogi, Kikkoman Corp. (Food) 7 Matching Brick-and-Mortar Innovation with the IT Revolution 79 Tadashi Yanai, Fast Retailing Co., Ltd. (Clothing) 8 Growing in a World of Change 95 Kazuyasu Kato, Kirin Holdings Co., Ltd. (Food) 9 Reviving the Engine of Japan Inc. 109 Akio Mimura, Nippon Steel Corp. (Steel) 10 Adversity is a Reversal of Fortune Opportunity 119 Fumio Ohtsubo, Panasonic Corp. (Electrical Machinery) ftoc.indd vftoc.indd v 1/15/10 2:04:04 PM1/15/10 2:04:04 PM 11 When Business Must Not Come First 133 Yasuchika Hasegawa, Takeda Pharmaceutical Co., Ltd. (Pharmaceutical) 12 Winning in the New Workplace 145 Masahiro Sakane, Komatsu Ltd. (Machinery) 13 Increasing Management Quality 157 Fujio Mitarai, Canon Inc. (Electrical Machinery) 14 Returning to One’s Roots 173 Akio Toyoda, Toyota Motor Corp. (Automobiles) 15 Work Steadily Toward Objectives, Don’t Rush Results 187 Sadayuki Sakakibara, Toray Industries Inc. (Textiles) Epilogue 205 Bibliography 207 Index 209 vi contents ftoc.indd viftoc.indd vi 1/15/10 2:04:04 PM1/15/10 2:04:04 PM vii PREFACE J apanese business has changed tremendously in the past decade. Once sacred institutions such as lifetime employment and seniority - based promotion in the workplace have increasingly been replaced by “ temp ” contracts and performance - based pay. During Japan ’ s miracle growth years in the two decades following the end of World War II, the nation ’ s schools churned out a veritable “ soldier ” class of white - collared sarariman (salaried men) and OLs (offi ce ladies) dedicated to building their country into an economic superpower. And they succeeded. They toiled long hours with little complaint until their identities became nearly inseparable from those of their companies. In exchange for this loyalty, companies provided them with lifetime job security and benefi ts, lifelong drinking bud- dies and access to company retreats. People were indeed the coun- try ’ s richest natural resource. Under the protection of the US – Japan Security Treaty, the entire country could concentrate its energies on making things. The govern- ment encouraged key industries, facilitated exports, built a modern national infrastructure, and engendered the rise of a consumer - based middle - class society. Within a generation of its devastating defeat in World War II, Japan had risen from shambles into the second - largest economy on the planet. But then came the oil crises of the 1970s, followed by higher valuation of the yen in the early 1980s and the tremendous burst of an asset price bubble at the dawn of the 1990s. The age of limitless expansion had come to an end. As the world entered into the twenty - fi rst century, newly emerging economic powerhouses such as China and India looked to replace advanced industrialized countries of the West, among whom Japan was included, as the new manufacturing centers and drivers of global growth. Confronting an aging population and shrinking demand at home, Japan seemed to be headed back toward a more middling ranking fpref.indd viifpref.indd vii 1/15/10 10:00:10 AM1/15/10 10:00:10 AM among world powers. Yet Japan still boasted some of the largest, most advanced and well - recognized companies the world had ever known; companies whose technological sophistication and business practices continued to serve as models and mentors to newly emerg- ing nations. Leading Japanese businesses had in short outgrown their home market, and not simply in the manufacturing sector. They needed a bigger pond to swim in, and saw renewed opportunities in the advancement of information technology (IT), the globalization of markets, and increasing pressures for global society to meet environ- mental and sustainability challenges. Japanese companies are regaining some of their past spotlight and discovering a new swagger amid structural changes taking place in the global economic landscape. Although the large automotive and electronics manufacturers, long the primary drivers of Japan ’ s export - led growth, have all been hit hard by shrinking demand and stiffer competition around the world, those very same conditions have also allowed the rise of a new group of business leaders and companies, hailing from broader segments of the economy, includ- ing entertainment, apparel, and food. Out of both necessity and ambition, a greater variety of Japanese companies are now eagerly looking to contribute more to the world than sophisticated but face- less mechanical devices, seeking instead to capitalize on the growing universal appeal for different lifestyle aesthetics and values. Meanwhile, the country ’ s key manufacturing industries — automo- tive, machinery, electronics, and steel — continue working to reinvent themselves and strengthen their relevance in the world by churning out value - added products and cutting - edge technologies. They have also begun to capitalize on their early presence in the emerging markets of Asia. Nearly all the companies treated in this book have recalibrated their global expansion initiatives to focus on, if not begin in, the East. If they can make the most of their know - how and technologi- cal strengths, Japanese companies should fi nd ways to grow and evolve alongside these emerging economies as cooperative partners in what has become the growth center of the world. My primary aim for this book, therefore, is to expound on some of the key strategies, philosophies, and principles at work among top managers at 15 of Japan ’ s most promising — and enduring — companies as they seek to reach new plateaus of growth and global leadership in the twenty - fi rst century. Through direct interviews I have had with many of the business leaders featured in this book, viii preface fpref.indd viiifpref.indd viii 1/15/10 10:00:10 AM1/15/10 10:00:10 AM . iiffirs.indd ii 1/25/10 4:22:48 PM1/25/10 4:22:48 PM REDISCOVERING JAPANESE BUSINESS LEADERSHIP 15 JAPANESE MANAGERS AND THE COMPANIES THEY’RE LEADING TO. iiffirs.indd ii 1/25/10 4:22:48 PM1/25/10 4:22:48 PM REDISCOVERING JAPANESE BUSINESS LEADERSHIP 15 JAPANESE MANAGERS AND THE COMPANIES THEY’RE LEADING TO