| Mohan Joshi |
Japan has amply demonstrated its lack of interest in the emerging markets of the world. Its focus has been on Japan, Europe and the US – the developed economies; its eyes always on the top rungs of the consumer pyramid. This strategy paid off for Japan in the Western world. But what it did not see coming was the sluggish growth in these markets. Despite this, Japan turned a Nelson’s eye to the emerging markets (BRIC) – Brazil, Russia India and China. And as they would soon learn, they were in for shocks that devastated portions of their business world, like the tsunami of 2011.
Japanese companies led markets in the West – names like Hitachi, Panasonic, Sony, Toyota always won consumer confidence and respect. But in the emerging markets, they went somewhat cold. What did them in, in the emerging markets? Let’s go over the chinks in the armour of Japan’s management practices.
The weak areas in Japanese management practices
- Using the one-size-fits-all model all over the world: Japan used the same high-end product model from their developed markets in emerging markets and failed miserably, unlike counterparts that used low-end models for the emerging markets and ended up as market leaders. Typical examples are the consumer electronics markets where Koreans (LG) lead and the automobile markets where Hyundai and Volkswagen lead the emerging markets with their competitive pricing model; whereas, the high-end Panasonic and Toyota from Japan are struggling among the lower ranks in brand successes.
- Going for a closed-fisted model of operations and human resources even in emerging markets: The Japanese do not invest in native human talent. They believe it is in their best interests to keep all the top management positions to themselves. Local competency is doubted. This has led to situations where the Japanese do not know enough about native needs, wants, tradition and culture – strategies are thus masterminded with the seed of failure sown in its depths.
- The Japanese companies are averse to mergers and acquisitions (M&A): Leveraging the equity of home-grown businesses in native markets is a good strategy for success; but the averseness of the Japanese to M&As puts them miles behind in the race to the top. If they follow the Maruti-Suzuki example, they will succeed. Even today, after the Maruti and Suzuki split, Suzuki is doing well in India. The credit goes to Suzuki’s strategy of partnering with a local Indian automobile company – Maruti, who knew the market, consumer behaviour and Indian culture like the back of its hand.
- Lack of investment in new markets: Japanese companies have never taken investing in new markets seriously. As part of their global strategy, their presence is more often than not, restricted to having branches of Japanese companies outside Japan. Investing in fixed assets like land and plants in new markets has never been their cup of tea.
Japan is changing – seeing the emerging markets with new eyes
Today, however, Japan is changing. Companies there are learning from past mistakes and focusing on emerging markets with an open mind. There are Japanese companies like Unicharm, a personal care products company which leads in Indonesia, Thailand and China in diapers and Daikin, an air-conditioner manufacturer which is fast making inroads in the emerging markets of India and China. Hitachi, Japan’s largest industrial power and electronics conglomerate has formulated a ‘India business strategy 2015’ plan to make the country one of its top markets and has announced $800 million expansion plans that include building five manufacturing plants. Panasonic too has lined up more than $200 million investments in a new plant at Haryana and targets $4 billion revenues by 2014-15.
Let’s now take a look at what has made the successful Japanese companies successful in the emerging markets. What are those management practices of the Japanese, the Indians and others can learn from?
What can Indian managers learn from Japan?
- Adherence to seniority: This point is better explained with the way Indians follow this practice. The Indians too demonstrate respect for seniority with a regard for age and designation. But what is missing is teamwork. Whereas, the Japanese respect seniority and adhere to it completely by following it up with total teamwork. In Japan, individual contribution does not count; it is always the teamwork that counts. In India, it is exactly the opposite. E.g.: An American delegation had gone to a Japanese company in Japan. There was a Japanese girl co-coordinating and arranging meetings etc. for three to four days that the delegation was there. The Americans were happy with her work and at the end of the meeting publicly acknowledged her contribution. It led to a very embarrassing situation, as in Japan, it is always teamwork that gets recognised and no one publicly acknowledges individual contribution.
- A decision once taken is abided by: The Japanese are known for the long periods taken for decision making. But a decision once taken is always abided by every person involved or affected. On the contrary, Indians also take a long time for decision-making, but there is no guarantee that the decision thus taken may not be challenged – Indians may challenge the decision taken at any point in time just to prove a point or establish their individuality.
- Total commitment to a cause /company/work: The Japanese are a committed lot. Whether it’s a cause, work or their company or their country, they are totally committed and go about their duty with 100 per cent attention not leaving any gaps in performance. This is best explained with two examples. E.g: Outside Tokyo Metro Station; below the escalator, you will find senior citizens, retired Japanese people, who ask you to watch your step just as you get off the escalator. They look in your eyes and voice the same lines to each and every person with equal interest and concern. Such is their commitment. Whereas, if we got Indians in their place, you would find them talking with their friends on phone or listening to music while going about their task. If you got the Germans here, they would automate the whole exercise, so that there is no need of any human interface anywhere. What we can learn from the Japanese is that given a job, they will deliver it to their best, whatever the level of difficulty or trouble.
- Polite communication: For the Japanese, silence is the new language of communication. Japanese manager will not immediately voice his opinion, views or decision. He will take his time and till then remain silent. What he is really saying is, “I am thinking, give me some time to think it over.” Whatever the decision, however, unpleasant to any party, the Japanese will never ever lose their polite demeanor, unlike the Germans who prefer to say a blunt ‘No’.
Japan has been improvising on its weak areas and Japanese businesses and managers are learning from past failures; they are looking at the Asian tigers and other emerging markets with new eyes.
Now it’s the turn of the Indian managers to learn from Japan’s success stories, to imbibe the good management practices, improve the weak areas and truly ready themselves to take on the mantle of a Global Manager.
The author can be contacted at mohan.joshi@global-alliances.in