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 / First Quarter 1997 / Issue 6(originally published by Booz & Company)


The Art and Practice of Japanese Management

The trick of Japanese management is to marry this relentless incrementalism to a long-term strategy based on consensus. Mr. Ohmae points out that while Western companies modeled themselves on the military, with clear lines of command and a rigid distinction between the officers (who do the thinking) and the rest, Japanese firms are rooted in village communes.(3) "Grossly oversimplifying," Mr. Ohmae writes, "one could say that in Japan every member of the village is equal and a generalist." Rather than issuing orders from on high, Japanese companies prefer to put their emphasis on nemawashi (consensus building) and ringi (shared decision-making). The hope is that every decision will spring from tireless discussion, with managers obliged to gain the enthusiastic support of their workers.

This emphasis on communal decision-making means that the Japanese have an idiosyncratic approach to leadership. Where American bosses are brash and bullying, their Japanese counterparts are modest and retiring; and where Americans live to make decisions, the Japanese prefer to let decisions make themselves. They like to compare leadership to air -- necessary for life but invisible and insubstantial. They rise up the corporate ranks by out-conforming their colleagues, religiously putting the group before the individual, and, having reached the top job, lead by consensus rather than command. It is not unusual for leaders to sit in silence throughout much of a meeting, while their underlings debate the pros and cons of policy. The art of leadership is to divine the will of the group, not to electrify the organization with charisma.

It also means that the Japanese have an idiosyncratic approach to forming long-term strategy. In the West, strategy has traditionally been clear and definite, drawn up by professional strategists and written down in formal plans. In Japan, it is a much looser affair, generated by the whole organization and expressed in terms of visions and missions rather than precise plans.

To the Western mind, producing plans like this is a recipe for disaster. But, according to Mr. Ohmae, the Japanese can do it because it fits in with their general approach to employment. The system of lifetime employment means that core workers identify with the long-term future of the company. The habit of rotating people among different departments means that they soon come to think like strategists. And the convention that everybody must start on the shop floor means that senior managers know what is going on in the guts of their organizations.

The Sun Also Sets

The success of lean production, consensus and kaizen was extraordinary. By the early 80's, Japanese companies were beating the Americans ragged in everything from price to quality, and the skies of the Pacific were dark with aircraft carrying managers to Japan to study companies like Sony and Toyota. Bookstores were full of volumes with titles such as "The Art of Japanese Management" and "The Intelligent Person's Guide to Kaizen." In the late 80's, Americans looked on impotently as Japanese companies bought Rockefeller Center, Columbia Pictures and other totems of Americana. In "Rising Sun," a thriller about corporate skulduggery in Los Angeles, Michael Crichton even paid Japanese managers the ultimate compliment of demonizing them. Americans seemed obsessed by two racist stereotypes of the Japanese: they were either clever little Asians producing ever smarter gadgets or fiendish strategists cunningly working together toward the same unstated goal. Management books -- even those by Mr. Ohmae -- only reinforced these myths.

Yet by the mid-90's, all those books on the secrets of Japanese management were yellowing in the remainder bins and Mr. Ohmae was becoming better known as a critic of Japan rather than an apologist for it.

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