Ben M. Bensaou, professor of technology management and Asian business at INSEAD in France, and Michael Earl of Oxford have identified several organizational characteristics of Japanese firms that have helped them overcome the problems many Western companies have experienced in IT management. The most notable is that Japanese companies typically select technologies that fit their way of doing things, rather than force-fit technology into the organization or compel a successfully designed organization to reconfigure itself for the technology. They concentrate first on independently developing company-specific operational and management processes, and then on the incremental improvement of those processes, introducing IT when needed at the specific request of the front line.
Second, in Japan there is an intrinsic “partnership” between IT systems and their users, facilitated by open offices, where information systems (IS) personnel often share the same space with the users, and work together to diagnose problems and design applications.
The practice of job rotation also helps IS personnel and users build personal networks, which are instrumental in managing operational interdependencies. Job rotation also enables Japanese managers to gain experience in systems analysis, design, and implementation, making them sufficiently knowledgeable to exploit IT, and confident enough to champion IS projects. Finally, a tradition of consensus decision making ensures management and user buy-in for IT investments from the beginning.
Some companies have become quite advantaged from this approach to IT deployment. In 1999, after a decade of flat sales, Mitsubishi Motor Sales of America Inc. embarked on a painstaking shift to a customer focus by investing in CRM and call center systems that enabled it to significantly cut costs, improve service, and do target marketing. Following September 11, 2001, Mitsubishi was able to contact customers in the New York and Washington areas to waive late payment fees and provide additional flexibility on existing financing and leases. Now, Mitsubishi can determine profiles of customers who bought specific models, identify its best customers, target noncustomers for new business, and anticipate customers’ needs. The Kao Corporation’s cosmetics division has been able to lower prices and provide women with makeup suited to their individual body chemistry, thanks to computer systems accessible directly by saleswomen at cosmetics counters, cutting out two layers of middlemen. The company can now instantly track the buying habits of individual women; only a few years ago the best information it could get from distributors was month-old sales data.
To understand why these existing sources of advantage will benefit Japan as it continues its exit from the stagnant decade, it’s necessary to show their relevance to the five central competitive factors in the New Economy. These are:
Reach. The ability to attract a critical mass of customers by offering superior information, products, and services.
Richness. The quality of information and the large variety of products and services that can attract the customer.
Disintermediation. The ability to go directly to customers, bypassing the supply chain.
Deconstruction. The ability to destroy existing supply chains, company practices, and business structures to make it more convenient for the customer to make informed purchases.
Speed of Competition. The ability to constantly change, experiment, invent, innovate, and plan in the midst of unpredictability and change.
By overlaying the traditional Japanese sources of advantage against the framework of New Economy competitive dynamics, it’s possible to identify two areas in which Japanese multinational companies could pose a threat to Western companies. First, their historical ability to leverage customer loyalty is enhanced by new technologies that extend reach to the customer and enhance the richness of the customer experience. Second, new technologies allow Japanese companies to extend their robust alliance networks beyond Japan.