The MNC’s guide to understanding Japan - Part 2

16 Aug 2018

The MNC’s guide to understanding Japan - Part 2

Disruption is a reality for all multinational companies, and Japan is no exception. Hidden cultural norms and a workforce that plays by different rules provide added complications. What then is the route to business success in the land of the tea ceremony?

In the second of our multi-part series on Japan, we focus on its unique culture and how it affects business.

We spoke to Japan-based executives from 20 multinational companies for our white paper ‘The Challenge for Multinationals in Japan’. We asked what they see as their biggest challenges and opportunities in the Japanese market. They shared their winning leadership strategies for the future in Japan, and a few cautionary tales of what to avoid.

Japan’s unique culture poses a number of challenges for multinational corporations. Hidden cultural rules on running a business and cultivating commercial relationships can trip up foreign businesses.

Global versus local

Interestingly, while most of the world, and Japan overall, is becoming more international, certain segments of the Japanese consumer market are actually becoming more local and insular.

A luxury automobile executive stated, “Unfortunately, nowadays among many Japanese, an increased shift to insularism (in some cases nationalism) can be seen. Even in radio programming, one can recently detect stronger emphasis on playing Japanese, rather than foreign tunes.”

There is another rapidly-growing “polarisation” in Japan. This is between dynamic, high-energy Tokyo, and, Osaka aside, the rest of Japan.

The former is, within the Japanese context, vibrant and forward-looking. The latter is generally static and more inclined to favour the status quo.

“The Japanese love the tea ceremony. Clear, concise rules that can be memorised and do not change.”

Most of those we spoke to echoed this sentiment. They noted that Japanese society values harmony, stability, peace and tranquillity, in both business and personal relationships.

A professional services executive explained that: “Japanese people prefer to use ‘us’ more than ‘me’.” As such, they are generally perceived as risk-averse, hierarchical and perfectionist.

Slow to change

Putting greater emphasis on safety and peace partially explain why change is difficult and takes a long time in Japan. An insurance executive put it this way: “The things that make Japanese culture wonderful also make running a business here very different.” Japanese executives know that they need to change faster but really struggle with this.

The Japanese employee

Japanese workers have a well-deserved reputation for being well-educated, reliable, disciplined, hardworking, loyal, and good team players.

According to a banking executive, they are known as “silent deliverers”, better at execution than strategy.

Japanese workers tend to prefer working within a clearly defined role and are not always comfortable taking on broader responsibilities.

As one FinTech executive commented, they “wait for orders and then execute really well.” An executive in an industrial MNC pointed out about this tendency, “following process strictly is not always good in a rapidly-changing workplace.”

According to a life sciences executive, Japanese over the age of 50 want to stay in their comfort zone and tend to be extremely brand and employer loyal. Those below the age of 30, however, are better at adapting to change and separating their work life from their private life.

Japanese employees may be seen as more introverted, less comfortable embracing change and less efficient than their Western counterparts.

Two of the executives we spoke to noted that they wished their Japanese workforce would speak up more and be more comfortable working outside of a strict hierarchical structure. One tech executive said, “Japanese workers tend to over-deliver on quality, which means slower speed.” An insurance executive concluded, “Once you understand how to have a better dialogue with the Japanese local team, you will get the most committed team in the world.”

In the final part of our focus on Japan, we will turn to the question of successful MNC leadership. What exactly is the right mix of Japanese and non-Japanese managers? And what does it take to lead successfully in a business culture that is so unique? You can read part one here.

Read our white paper ‘The Challenge for Multinationals in Japan':

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