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Home > Opinions Last Updated: 15:02 03/09/2007
June 2000

Japanese Corporate Culture and Globalization

Yotaro KOBAYASHI (Chairman of Keizai Doyukai and Chairman of Fuji Xerox Co., Ltd.)

Rapid globalization and the dramatic rise in information technology (IT) are putting great pressure on Japanese companies to change their management concepts. What form should Japanese corporate culture take in the twenty-first century?

First, it is essential for managers to clearly convey their vision to the market. The capital markets appear to be emphasizing the maximization of market value as their highest priority. This is in addition to maximizing shareholders' profits, and above all, the effects of the rapid improvement of information technology on capital markets. In this environment, we in management must give more careful consideration to creating balance between stakeholders' interests and concerns related to capital markets over the long term and the short-term. We should not passively await the market's evaluation, but should take a proactive approach. It has become more important than ever for companies and their managers to create harmony between the market-oriented nature and the social nature of business corporations on a higher plane suited to the context of the time. Managers should have the courage to announce their ideas and goals to the market and to the world, in effect saying "This is what we see as the best balance for our company."

The second essential point is to build the necessary trust that organizations need to succeed in the era of information technology ("e-organizations"). The accelerating shift towards IT is beginning to increase the efficiency of organizations and, at the same time, arm individuals with more knowledge. The traditional concept of an organization is changing as individuals are being increasingly empowered through access to the Internet, resulting in the notion that even members of the same organization cannot be assumed to share an identical set of values. During such a time, the word "trust" takes on new importance.

While Japanese corporations, compared to their Western counterparts, may have a little more experience in management prioritizing trust within the organization, the traditional Japanese-style relationship of trust based on tacit knowledge is no longer enough. This traditional style is only good for a single organization. Today, it is vital to encourage the development of formalized, explicit trust-trust that can be passed on from one organization to another and form the basis of new values.

Although the value of face-to-face communication may be forgotten temporarily as the "e-transformation" progresses, before long the importance of mutual trust will be reaffirmed as we explore new ways of communicating. I am confident that the management model based on "e-trust" that is being developed in Japan will become the next-generation global standard.

The third essential issue is to recognize that it is people and organizations, not technologies, which hold the keys to success in management in the Internet economy. I would even go so far as to say that once the Internet is established as the infrastructure platform of e-commerce, and the technology necessary to do business on the platform becomes standardized and inexpensive, the playing field will be leveled in terms of technology. In other words, possessing a certain technology will no longer confer the competitive advantage that it does today. In the end, a company's competitive strength will still be determined by whether or not it has a strategy for creating products or services with a difference, in other words value-added products and services. As part of the ongoing "e-transformation," from the viewpoint of Business Process Reengineering (BPR) companies must first streamline areas of their operations for optimal efficiency. They must even be willing at times to form alliances with their competitors and to develop strategies focused on their core competence. Of course, it is people who will carry out these strategies. Japanese-style management has always been known for placing primary importance on personnel. However, when moving from management which simply places importance on the human element to management designed to better utilize human resources, we will arrive at a new Japanese corporate culture.

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