Bushido: The Soul of Japan (1900)”. I heard Junichi Endo express his desire to see Japan Rewire as he reflected on the decrease in Japanese representation in Wharton (1 student in 2015), a steep decline from an impressive 50 in 1993. From the Hand-Of-God, the hot springs, the incense and the cultural ethics that cleanse mind, body and soul; to the craziness galore; Japan is one of its kinds. This is a reflection on my current understanding of reasons behind Japan’s superpower leadership, its recent demise and its future potential.

Current Status

Bushido, the deeply embedded value system that once outlined the virtues of a Samurai, has influenced decisions at all levels and defined Japan as it stands today. From the polite sincerity in a stranger’s goodbye “Please have fun in Japan”, to the humbling experience of being served Asahi Beer by the plant-manager, trust, harmony and respect is innate in Japanese cultural fabric.

Employees live by simple company values like “Take pride in what you do”, “Create Harmony with environment” and “Customers first”. From gaining Nissan’s assembly-line-certification through repetitive training (3 screws in 10 seconds); engineer’s name carved on Nissan GTR’s engine, to the loyal management teams (20-30 years tenure) across industries; employee at all levels take deep pride in what they do with disproportionately low focus on promotion and growth.

I was specially taken aback by Nissan Yokohama plant head’s view on competition. “We don’t look at the competition; just on what our customers want”. Their benevolence toward customers and community governs business practice. Every firm has a “Green Initiative Day”, for Mayekawa it was the 26th of each month. Employees take pride in mentoring juniors, as did Endo in coaching us, and his professor in coaching him.  Nissan collects customer feedback onsite, in-site (co-located suppliers) and off-site; Mayekawa streamlined manual assembly-operations to deliver custom-solutions profitably; Seven&i publicly displays complaints and management response and Asahi launched “Freshness Campaign”.  They win by serving the customer rather than by beating the competition.

The focus on “frugal automation” (based on “Karakuri dolls”) is commendable. While Mayekawa is profitable with mostly manual efforts; Nissan’s battery plant runs with ~100% automation. This inward focus on quality and relentless pursuit of self-perfection possibly lead to the Japanese triggering a global revolution in operational effectiveness pioneering practices like Kanban, Total Quality Management (TQM), continuous improvement (Kaizen) and Monozukuri (making things); as a result of which they enjoyed striking success with substantial cost and quality advantages for many years.

Re-crossing the chasm

Operational effectiveness though necessary is not a long-term winning strategy. As the gap in operational effectiveness narrows, Japanese companies will have to learn strategy and product innovation alongside process innovation. For that they have to overcome some deep rooted cultural barriers. The harmony that mediated opinion-difference now needs to accentuate difference in thinking. Cultural binds from managerial-hierarchy to strict family expectations need to loosen up and channel next-gen energy into growth-driven value-creation; instead of their current ways of seeking freedom in video-games and in late night drinks.

Competitive agility needs to replace service-orientation. Nissan’s Zama plant claims their battery to be superior to Tesla’s; but they still run at 1/3rd capacity while Tesla takes over the EV World.

Japan is adapting. Nissan has sparked product revolution with Nissan Leaf. Mayekawa’s new technology “Newton” enables semi-standardized-semi-customized units. As Mother plants enable duplication of flexible-operations; Japan also needs to embrace creating custom-products suited for local needs. As Vincent Cobee said “People only want to pay for what they want, not what somebody in another country wants”. The re-launch of Datsun and its focus on creating stand-alone local products instead of trying to sell a cost-efficient global car in multiple markets, might enable Nissan to capture fast growing segments in India and china.

While Nippon steel manufacturing plant has sustained with short-term planning cycles favoring Japan’s consumption; they will need to take a global perspective as consumption for China and India grows. Industries like retail, software and financial need to drive rapid growth. Going online might not be a luxury but a requirement for Seven&i to retain market share in the global economy.

As Japan’s industries adapt to changes in global supply chain, Japan’s financial sector is also boosting competitiveness with ‘Abenomics’ (generate wealth through growth) through bold monetary policy, active fiscal stimulus and growth strategies.

Rewire

Japan has competed ferociously albeit internally and with themselves. To regain leadership they need to broaden their perspective. While the pride Japanese take in their profession is enviable; increasing their exposure to the external world will only help them compete effectively in the global economy. Reclaiming world-leadership for Japan, where workers take pride in publicly sharing their individual scorecards (Nissan Battery), and teams are committed to Kaizen is foreseeable; especially as the land of the rising sun adapts to the changing global trends.

The human desire for “future growth” needs to find harmony with “present reality”. Japan might be most suited to strike this Zen balance for the world. For that Japan needs to make its next generation comfortable with standing out and get their 50 students back in Wharton again!