NY Forum on Japanese Culture and Business Globalization in the IT Revolution

Part 1: Japanse Business Culture and Globalization

Keynote Speaker:
Yotaro KOBAYASHI (Chairman, Fuji Xerox Co., Ltd.)
(See the "Opinions" page for the summary of his speech)

Panelists:
Katsuto MOMII (President and CEO, Mitsui & Co. USA, Inc.)
John BUSSEY (Foreign Editor, The Wall Street Journal)

Part 2: Japanese Network Culture and the IT Revolution

Discussions by:
Katsuto MOMII (President and CEO, Mitsui & Co., USA, Inc.), and
John BUSSEY (Foreign Editor, The Wall Street Journal)

Comments on Mr. Yotaro Kobayashi's keynote speech, "Implications of Globalization and the IT Revolution on Japanese Corporate Culture-The Essentials for Managers in the 21st Century," posted on the "Opinions" page.

Katsuto MOMII (President and CEO, Mitsui & Co., USA, Inc.)

Mr. Kobayashi's keynote speech was fantastic, and I am not really sure how I could comment on his speech. But I will try my best.

The first point Mr. Kobayashi emphasized is the need for top management's proactive and clear message to the capital market and to stakeholders. As globalization and E-transformation progress, Japanese companies are moving inevitably towards increased transparency and disclosure. In this context, I agree fully with Mr. Kobayashi. And for the target of management's message, I would add employees, too. In a typical Japanese company, management is elevated from the rank and file, and it is important that employees are well informed and guided in overall corporate goals and objectives, as well as in management's policies and strategies. IT empowered business units and employees may develop a "vertical divide," but close management-employee relationships are key to maintaining cohesive corporate culture.

Next, I share Mr. Kobayashi's observation about the trend of quickening decision-making. Information is flowing faster and wider, and "on-line, real-time" responses are becoming the norm. Slow decisions may mean lost opportunities and lost competition. Fast decision-making is the way to live and rise in an era of globalization with a far-reaching IT revolution.

The third point concerns a question of trust. Mr. Kobayashi emphasized a loss of the common values and trust held traditionally within a single organization. His suggestion is to search for new values to build "open" trust in a changing environment. However, I must insist that "traditional" trust remain a fundamental value, even in E-Commerce. Constant and stable supply, essential to all kinds of trade, is best assured by relationships of trust between manufactures and traders. Furthermore, the last leg of E-commerce is just like conventional trade: it calls for the efficient, reliable logistics service of physical merchandise delivery. Clearly, players with track records and long-standing "mutual trust" best execute this process.

Finally, Mr. Kobayashi mentioned the recognition of people, not technology, as a crucial factor for winning in the IT revolution. I cannot agree more with this proposition. People invent technology and develop IT strategies that enhance competitiveness. In our case, for example, IT does not overwhelm us. Rather, we incorporate IT into our traditional core competence, and formulate new value added services to offer.

Thank you.

John BUSSEY (Foreign Editor, The Wall Street Journal)

I always enjoy hearing Mr. Kobayashi speak because he is working in a company that is very much on the forefront of innovation and change. Tech companies are defining a lot about global corporate culture these days, because they are competing for talent in an intense way that a lot of other companies are just discovering, and also are dealing with extraordinary change not just within the company but with the outside world. They also are agents of that change. So it is always interesting to hear someone in the midst of it think about some of these more difficult issues.

I say that these companies are in the midst of change now because back in the 1980s auto companies and other big manufacturers were going through a really profound change. Then the United States was learning at the knee of Japan. This time around, I don't think Japan is learning at the knee of the United States. Frankly, U.S. and Japanese companies are learning at the knee of global companies. It really is the nature of globalization and the nature of global competition that are causing all these companies to compete with each other at a much higher standard than just across the board.

I think that the company should not be afraid of the market, but certainly should take heed of the market, which means occasionally being afraid. That's OK and that's healthy, because the market is not necessarily the financial analysts who are upgrading or downgrading your stock; the market is consumers, it's competitors, it's suppliers, it's the labor force, it's everything. We all have to take heed of it because its demands are changing and its demands are profound. So when I hear discussion at the IT strategy committee in Japan talking about "Japan-style IT," and when I hear other CEOs talking about integrating Japan-style corporate culture in the world of IT, I get a little worried. I get worried because I am not sure if there is a place in this world for Japan-style IT. I am not sure if there is any distinctive type of IT that can survive the globalizing culture in the Internet era.

This has been a discussion here in the U.S as well as in Japan and particularly in Europe; that is, companies really are not government agencies destined to provide social needs, but they are capitalist enterprises. They need to supply certain opportunities and certain services to their workers simply to attract the workers. If they don't, they will lose the best and brightest to other firms. They really focus less on creating trust in its purest sense, and focus more on creating opportunities within the company, including the opportunity to realize innovation and to realize individual opportunity, that in turn creates trust and bonds to the company. They don't necessarily need to be focused on short-term profits but need to be focused on profits as the market, shareholders, and stakeholders will increasingly require companies to be more transparent and actually post profits, unlike a lot of Japanese companies in the past.

Now there have been a lot of changes in Japan. You see foreign ownership in Japanese stocks accounting now for a larger percentage of Japan's total market capitalization than Japanese banks can control. And you have a large number of bankruptcies in Japan such that Japan Inc. is slowly dying. Probably over all this is a good thing, because it is getting to a more normal corporate culture. But this is a very slow process due to the government's effort to keep dying businesses alive. So far Japan has been in its period of malaise for ten years and counting. I wonder how much Japan-style culture remains. The idea of sustaining a Japan-style corporate culture will wane as time goes on, and it simply has to. Japanese management will have to move very quickly towards this globalized culture and its standards of responsibility for shareholders and transparency of activity.

The other area Japan will have to deal with in terms of making change is a much more lasting and a much more difficult one for Japan to undergo. It has to begin to consider the notion of opening its doors to immigrants and changing ideas of diversity in its home, markets, and companies. Or to avoid that, it has to increase productivity at a startling rate. That is what the IT revolution, I think, means to a lot of people in Japan; that is, the IT revolution to boost productivity to keep it like the way it is. I think the IT revolution is probably a misnomer like some other revolutions. This one will have its contributions to society and its changes to corporate culture, but it will not wholesale-remake it. In the long term, Japan has to go though very difficult decisions that the U.S. went through in the 1980s and that Europe is going through now. That is, creative destruction in the process of capitalism in which companies are closed down and people laid off. New enterprises have started to embrace some of the new standards that provide opportunity, resulting in a sort of trust; and trust is to realize one's expectations and aspirations.

Thank you.