Tokyo Damage Report

Japan book review 4 :INSIDE THE KAISHA by Noboru and Anderson

Picture me reading one of those “How to Do Business The Japanese Way” books! Not only did I read it, I fuckin’ enjoyed the hell out of it. What the hell, man?


Their method is straight-up balls to the wall : You know the old saying, “You don’t really know your own country and culture until you go somewhere else”? Well, Yoshimura and Anderson interviewed TONS of Japanese businessmen who had come to the USA to get  business degrees. These guys all have a) experience in Japanese companies, and b) live in America and so they understand how Japan looks to foreigners, and can therefore articulate point "a".

 Yoshimura is a former businessman turned corporate anthropologist, so (unlike the usual authors of these kinds of books) he knows what kinds of questions to ask the businessmen. Most white writers would start with “Why are you people so hard to deal with?”, but Yoshimura starts with “OK, so what are the top misunderstandings you have when dealing with gaijin, and what would you prefer them to do in those situations?”

 And Yoshimura acknowledges that their answers vary widely, it’s not like all Japanese think the same way. But he tries to take their answers of “At MY company we do it like this,” “Well at MY company we rock it like THAT” and look for common ground, or what he insists on calling “deeper behaviorial mechanisms.”


 Also – as you can guess from how positive my review is – a surprising amount of their findings apply in everyday situations outside of the office.


They don’t care if their conclusions make other American “Doing Business The Japanese Way” books look like incorrect jerkwads. They don’t care if their conclusions make Japanese companies look like psycho brainwashing camps. They don’t care if their book is taken seriously by academic anthropology people. They don’t care about the “tea ceremonies/ flower arranging/ rice-growing agricultural” cultural roots of Japanese culture . . .

All they want to do is make it easier to communicate and lessen the misunderstandings. They often warn the reader, “Look, I know it is tempting to just dismiss this custom as racist or hypocritical, but if you dismiss it without understanding it, you won’t learn how to predict how a Japanese person will act in that situation. Which is why you bought the book, buddy.”


In other words, it's like they have the same attitude I had when I made KANJIDAMAGE. They’re like, “Later for all the bullshit, we just want to solve the readers’ everyday problems.”

 I'll try to summarize their conclusions (at least the conclusions that probably apply in general Japanese society)



SITUATIONAL MORALITY

 

When it comes to behavior, Japanese learn inductively, not deductively.


Which is to say, instead of starting with a set of core principles that apply in all cases (think Ten Commandments!), they start by bonding deeply with a boss or upper-classperson and imitating that person’s behavior.


For example, instead of “OK given that I have a core belief of ‘don’t ever steal’, should I download an MP3? Using logic, I will deduce how the core belief applies in this situation.” Japanese is like, “What would my mentor do in this context?”

This east/west, induction/deduction distinction has all sorts of other effects: a public education where you aren’t taught how to think critically or answer open-ended questions, a culture where superiors aren’t supposed to explain the reasons for their decisions, and so forth.

This concept comes up so often in every book on Japan, there’s a name for it: SITUATIONAL MORALITY. What might be polite in one situation is rude in another, and this drives westerners crazy.


But even though the “situational morality” is kind of a cliché, this book is the first book that actually explains it from the Japanese point of view: the first book where I said to myself, “Oh, maybe if I was raised in that environment I’d do that, too!” instead of “Man, you guys are nuts.”

 To start with, situations have at least three components: reference group, rank, and context.


#1: REFERENCE GROUP

Reference group is basically what Noboru and Anderson call the “insider/outsider” thing. But again, this book takes a cliché and makes it interesting by dealing with nuances:  REFERENCE GROUP CHANGES DEPENDING ON CONTEXT.

For example, inside the company (let's call it Hirohito Footgear), the accounting team  views each other as insiders, and fuck the other departments. But if you’re talking about the industry in general, the accountant will switch his reference group to: I’m on the side of my Hirohito vs. those other rival companies. And of course if you’re talking about international matters, they’ll widen their reference group appropriately: all us Japanese shoe-makers vs. the foreign shoe-makers.

 The most common example in the book of how context changes reference groups: GETTING CAUGHT! Company A and government ministry B are insiders together UNTIL THEY GET CAUGHT DOING SOMETHING ILLEGAL, at which point ministry B says, “Huh? Company A? Never heard of ‘em. Fuck those jerkwads! !” What most of the world would call “being a backstabbing cowardly fuck”, in the Japanese corporate mindset, is simply called “getting caught changes the context. Situational morality, in your face!”

 So in any given situation, you could pick one of several reference groups to belong to- your department, your company, your gender, your country, etc. And “thinking like a Japanese” means knowing which one to pick.

 As a bonus, Noboru and Anderson throw in THE TRUE MEANING OF INSIDER/OUTSIDER: Once a salaryman knows who is is reference group in a given situation, he knows whose expectations he must meet to avoid social embarrassment.


“So deeply ingrained is this need to meet social expectations that the salaryman habitually asks himself what a person in his position is supposed to do, not what he thinks or how he feels.”

Deeyamn!

In other words, you don't have one single "real" identity, your shit is in a constant state of flux, depending on the context. You get your identity based on your role relative to the people around you.


#2: RANK

 Rank is just like America, but formalized in the language: Nihongo forces you to choose whether you are talking up or down to someone – do you speak informally, slightly formal or super formal. and if super formal, do you use the humble or arrogant form of formal? You can't not choose! One particular story illustrates this point in the most aggravating manner possible:

 “I was assigned to be the deputy branch manager in London. Where the branch manager was one year younger than I, but he’d just been promoted ahead of me. Our families had known each other for a long time, but when my wife happened to meet his wife on the street in London, my wife started to talk to her as she always had. The wife of the branch manager replied, “In our company,does seniority prevail over positions?””


In other words, "Why are you not using the humble, formal grammar, you peasant?"

Japanese are obsessed with rank!  They rank companies, universities, ministries, baseball teams, hosts, prostitutes, everything. But at the same time, they really frown upon people who flaunt their wealth or superior rank, since that is regarded as making the lower-ranking people feel inferior ON PURPOSE.  Class distinctions – ornate offices, special parking spots, executive cafetearias – are rare. The gap between highest and lowest paid employees is far narrower.


Why? because of the odd Japanese belief that  the lower people have the same vested interests as the bosses (not something we believe in America!). The bosses use their superior power to make sure things go well for the little people, Daddy taking care of the kids-style. This is supposed to make the lower people feel good about being low, and make’em not rebel, make ‘em try their best.


But flaunting one’s prestige fucks up this whole deal by saying "My vested interests are NOT yours – you're working for the good of the firm, I'm working for my yacht and mercedes." This is a great example of how this book takes two seemingly contradictory things and shows clearly how they are actually part of a single deeper cultural, uh, cultural. . . thingy.

 Hierarchy breeds conflict in America, but in Japan hierarchy EASES conflict: if everyone knows their place, there’s no need to fight. But if two people come at each other like “I’m the boss!” “No, me!” Then there’s trouble.

  Also: your rank, your prestige, depends on what group you are in, much more so than what you personally have accomplished. Like if you were last in your class at a prestigious university, you’ll get your ass kissed, but if you invented cold fusion at community college, it’s like *pfft* whatever man.

 Japanese salarymen tend to trust their boss the most – since he’s the model for appropriate behavior, like a mentor. They tend to be most competitive with their co-workers, since they are all competing for promotions, and trying to out-work each other. Trust is vertical, not horizontal.


#3: CONTEXT.

Context is like, are you talking in the office, or at the bar afterwards? At the bar it’s appropriate to be vulgar, sexist, to wear one’s tie as a headband, to complain at length about your hooker or mistress, to sing along with the guitar solo from Stairway to Heaven . . .as well as to talk about the important corporate secrets that it would be un-professional to divulge in the office. Whereas Americans are more like, “You’re schizophrenic, and plus WTF you’re not supposed to cheat on your wife.”

quoting from the book:  “Many Japanese profess an honest belief in free trade while backing import restrictions on rice. What could seem more duplicitous to the outsider? To the Japanese it is perfectly understandable that rice should constitute a special case, because self-sufficiceny in the staple of the Japanese diet is a matter of national policy.”

 A popular phrase describes this behavior: soron-sansei, kakuron-hantai. “ in general , yes, in this case, no.” 


OK, so much for situational morality and context.


ANOTHER THREE central themes of the book:


1 –  Don’t generalize about the “Japanese mentality” or think the way Japanese people act is because of their personality: Japanese guys don’t want to work until midnight any more than you do. They don’t want to obey their superiors blindly because they are soul-less robots. It’s just the culture: there’s a lot more penalties for breaking taboos in Japan. But if you start a new company that lets guys come to work naked and leave at 2 PM, without penalties, then guys will take advantage of it. Samurai spirit has nothing to do with it.

2 –  the most important thing is : meeting expectations of reference group. And – put another way – avoiding surprises, which are almost as embarrassing as outright failure! That's why Japanese take a comparatively long time to make friends or corporate partners: they want the "trial period" to be suuuuper long to test if you FOR SURE are not going to surprise them (and then ensure that after you ARE friends/partners, you've put in so much effort / time already that you can't possibly back out, thus ensuring your mutual dependence, and preventing those pesky surprises!)  Put another way, To Japanese,  the American attitude towards friendship is crazy: Americans share too much with strangers and are only a bit more forthcoming with their closest friends.

3 –  Appropriate spirit and correct process is more important than results and profits.And a related point:  Winning is less important than not losing! Embarrassment and all that.

Once again, Noboru and Anderson take  semi-racist clichés like “Japanese favor the group-over-individual” and lend substance to them by explaining the context AND listing plenty of specific examples.

 “A slaryman won’t have his bonus doubled for successfully increasing his kaisha’s market share. On the other hand, if the firm loses market share, it can adversely affect his career.”

 “Those who carry out a process are not blamed for unexpectedly poor results. Conversely those who get results do not automatically receive accolades.”



KATA AND PROCESS

 

In contrast to morality (situational), the way of doing things is fucking set in stone.

 “There seems to be a kata (correct form) for everything – even for actions like eating, reading, and writing. You learn by emulating your sensei in all things. The archetypal example is martial arts training. In the west, martial arts books and videos often break karate or judo moves into a series of steps, describing in great detail how to combine them properly. In contrast, the Japanese approach is holistic. A novice is expected to imitate the movement of the sensei exactly, though the sensei seldom explains in detail what he is doing. The student does not study diagrams or follow a checklist- he or she simply tries to behave exactly like the model.”

 That paragraph just explained why my Japanese school sucked so bad!

 Here's another great quote, about a hypothetical bank (a composite of many interviewees' banks)

“ Ringo bank’s training program is designed to mold subordinates who follow a process that their superiors can trust – that is, to be predictable. If outcomes were all that mattered, Japanese firms would simply hire the most capbable people. Instead, they use social networks based on school ties to identify people with appropriate attitudes, paying more attention to extracurricular activities than academic performance. Then they pass down a company way to do things- ecahange business s cards, talk over the elephone, conduct business with customers, and so forth. This emphasis on doing eveyrhitng the company way often seems Orwellian to westerners.”

 “This mode of learning frequently produces dysfunctional results. For example, third-rate American baseball player often star in the Japanese professional leagues. One reason is that they find Japanese hitting and pitching completely predicable and easy to defeat, if one is willing to be a little unorthodox. Japanese players learn how to throw catch and bat through tens of thousands of repetitions, striving faithfully to imitate the style of their coaches. More than one American player has bemusedly reported that coaches will tell a batter who is leading the team in hitting that his form is all wrong and must be changed.”

 Another example of "process and predictability over profits" (again, set at the hypothetical Ringo bank):

 One February morning, the departmental controller called Hiro , whose job was trading American stocks, into his office. “What the hell did you do yesterday?” he screamed at Hiro. “I made some trades and lost some money,” Hiro replied. The controller was far more irritated than the actual loss seemed to justify.

It turned out that, two days previously, the controller had negotiated with the department manager a revised budget that could be achieved if the department sat tightly on its present positions. Hiro’s loss had damaged the plan. The controller said to Hiro, “Meeting the budget is our top priority. The budget of each department aggregates to the budget of the bank. You’d better understand that you’re ruining this process.”


Hiro replied, “As a trader, my job is to go into the market and try to make money. We still have almost two months before our fiscal year ends. Are you saying that I shouldn’t even make money because it will affect the budget?”

Yes,” answered the controller, “that’s exactly what I’m saying!”

(actually this is the example that made me buy the book in the first place!)


Here’s one reason proper procedure is more important than success:

Liefetime employment.

The kaisha cannot punish an employee for one bad year, or five bad years, if it expects the person to be part of the organization fo three decades. On the other hand, the kaisha doesn’t want to reward someone for great success in wone eyar because it doesn't know if he will be successful over 25 years.

 Incidentally, lifetime employment is a practice initiated after the second world war by Japan’s American occupiers!!! Not some samurai, traditional thing. Who knew? I’m telling you, this book is genius!

 



LOGIC IS A WESTERN CONSPIRACY!


“follow the model, don’t ask why”


 “In business, though, Americans . . . want clear and simple reasons why a particular decision was reached. Unfortunately, Japanese managers have difficulty explaining why, because they are following a model (kata), not reasoning through a justification. Junior Japanese salarymen encounter the same problem: they never learn why a particular authorization is needed, or why a document has to be prepared a particular way. In fact, Yoshio Suzuki, president of the prestigious Nomura Research Institute, concluded that the concept of accountability in Japan is a serious defect in the system, because it means only willingness to accept blame, not providing an explanation for one’s behavior.”

 (See above, Japanese reason inductively, not deductively)

   A worker at the Japanese branch of an American company:

“We receive numerous proposals and suggestions from headquarters, and many of them don’t make sense because headquarters doesn't understand Japanese markets. The problem Japanese managers have in responding to those suggestions is they are not good at logically arguing, or coming up with alternatives to dodge nonsensical ideas. Consequently, two types of Japanese managers emerge. One rejects almost everything coming from the USA. This type of manager becomes isolated. The other type blindly accepts whatever comes from America. Managers of this type are well accepted by headquarters, but Tokyo people have to waste a lot of time on ideas that make nonsense in the Japanese market. I have seldom sen a Japanese manager who can handle this efficiently and properly.”


another salariman:

 “One of the junior executives we interviewed recalled an occasion on which his office’s paper shredder overheated. Concerned about the possibility of fire in a building full of paper, senior managers put out the word that all electrical plugs should be disconnected before the employees went home. When the salaryman’s boss told him to pull the plug of his PC, he asked why, because PCs never overheat. Only an inexperienced salaryman would have bothered to question in the first place whether the directive applied to PCs. The junior reasoned that there had to be logical purpose behind unplugging everything, that purpose being to avoid fires, and this clearly did not apply to PCs. His boss, whoever was conditioned to follow the model, regardless of whether the original reason for an action still applied. Once a model is established, the basis for evaluating correct behavior is simply whether or not an employee is following the model (kata).”


When you put the KATA thing together with the DON'T ASK WHY thing plus the LACK OF RESPONSIBILITY AT THE TOP thing together with the PROCESS IS MORE IMPORTANT THAN RESULTS thing, you get a very Japanese phenomenon:


LAYERS AND LAYERS OF TRADITIONS/ OFFICE PROCEDURES / ACTUAL LAYERS (kimono, wrapping of food) that NOBODY KNOWS THE REASONS FOR ANYMORE, but, better safe than sorry, right? 


This phenomenon is,  as most things in this book a headache, but can sometimes be good: the famous Japanese youth fashions and pop culture, which "layer" tons of things, both foreign and domestic, in a bewildering array of montages.


Japanese can seem cautious because they are bound by kata and layers upon layers of process. But they are actually much more willing to take risks, if the risks are framed the right way (Winning is less important than not losing!). If you tell them, there’s a small chance that a competitor will invent XXX and make a gagillion dollars, they’ll jump on XXX headfirst, just because the risk of being left behind is so scary.

 This  way of arguing is an example of Kankyo-seibi: Literally  “shaping the environment.” Or as we say, framing the debate.

Because Japanese reasoning is so context-driven, she who controls the context, controls the debate. That’s one way to influence your Japanese pals or bosses. Explain the situation in terms of “You’ll stand out from the crowd if. . . ! You’ll let your team down if. . . ! you’ll risk falling behind your competitors if. . . .”

 


CALLING BULLSHIT ON WA

 

Everyone knows that Japanese are into “harmony” and all decisions are made by “consensus” which sounds really sweet. But in fact:

Consensus doesn’t really mean people agree under the surface. The salaryman will – before the big meeting- go to all the other guys and sort of ask which way they want to vote. Then he’ll vote accordingly. So ‘consensus’ might well mean that maybe 40% of the people think the decision is bullshit! But those 40% also know they’re in the minority and therefore to fight would be to lose. Losing is more embarrassing than turning your back on your principles. And universal principles are a western concept anyway.

Harmony doesn’t mean trust. It just means the absence of fighting.  Actually people at a company might only trust one or two other employees. Foreigners who trust Japanese are going to get burned. Or, as the authors put it: “Those who behave as if trust in is an emotional value instead of a by-product of social controls usually end up feeling violated by by the Japanese.”  Doing the right thing is just a by-product of social controls and context, and contexts change. Like if someone gets caught (see above!).

Therefore, harmony is just a side-effect of a system that punishes minority opinion and arguing. It’s not like Japanese LIKE harmony, it’s not like they lack their own opinions, compared to Westerners.

 

Here's another example of harmony-gone-wrong:

Flat Rock (a Mazda plant run by Japanese in America) was run as a lean, just-in-time operation. There was no one to pick up slack. If a team member were sick or had a family emergency, no temporary help would be sent to replace him or her, the team would have to find a way to pick up the extra load. And if YOUR team slowed down due to Jimmy’s kid having cancer, the whole assembly line slowed down, affecting everyone else at the whole plant. That’s how Americans found out why Japanese work such long hours. Everyone gets punished if one person doesn’t show up for work. Hey Jimmy! Your cancer kid is fucking up everyone else on your team!

 And on the other hand: a team who finds a way to work more efficiently ALSO fucks up everyone else, by sending TOO MANY cars down the production line. The other teams either have to streamline their OWN processes, or else work longer hours to match the production of the first team.



 

AMBIGUOUS GOALS ARE CONTROL MECHANISMS

 

Meaning, Japanese aren’t just ambiguous out of politeness. They do it on purpose. And not just to mess with gaijin’s heads. They do it to mess with each others’ heads!

 In the case of the company, the boss will just hint vaguely about wanting to invest in plastic, knowing that the underlings have a responsibility to research and prepare 100 reports about every possible plastic and every possible market for selling it in. And THAT’S why Japanese businessmen work so late!

Turns out it’s not just,  “I have to work until the boss leaves the office to keep up appearances.” They’re there working on these bullshit reports.

 In other words, the ambiguity has 2 benefits for the bosses: it maximizes the work that they get out of their employees, and it doesn’t commit them to a specific action until the final meeting, which reduces the risk of them making a blunder. If the boss were to tell the salryman, “Specifically make a plan for selling Tupperware in Belize, and nothing else!”, and then it turns out that Belizians (Belizoids?) hate Tupperware,the boss is gonna look like a tool in front of everyone.

 And not looking like a tool is more important than efficiency.

 There is , of course, a saying for this: IF THE BOSS SAYS ONE, THE SALARYMAN HEARS TEN. As in, 2,3,4,5. and so on.

"Salarimen survive by anticipating contingencies.  Overpreparation is one of the major reasons why Jaapanes work such long hours".

 

 


GOVERNMENT AND BUISNESS

 

Now I’m going to switch focus. The stuff above was “stuff that can help you understand your Japanese friends better.”

 The quotes below are just random examples of the whole “Japan’s wild capitalist-communist, iron-triangle" thing, to help you understand politics better.

 

“Focusing on attitude or process has occasionally proven disasterous for the nation.” In order to illustrate this, Noboru and Anderson describe a Japanese book about WWII:

 “The authors uncover some obvious tactical mistakes, and ask why they were repeated again and again. Their conclusion is that the leadership of the military evaluated the spirit of officers when deciding whom to promote, ignoring whether they possessed the skills or an objective understanding of the situation. Although Japan had been at war with china for 10 years before pearl harbor, there was no objective evaluation of combat performance, no mechanism to evaluate what worked and what did not. Consequently the military failed to learn from its mistakes. If a general met defeat, what mattered is that he died well. The leadership simply sent out more generals and more soldiers with the right attitude, relying on their samurai spirit to prevail despite the fact that the tactics had proved disasterous time and again.” 

 ***

Moving to post-war times, industries are ranked like this: the TOP 5 companies, and then THE REST OF THE LITTLE COMPANIES.

Regular Japanese know who the top 5 companies (or 4 or 6 or whatever) in any given field the way Americans know sports teams.

The top companies are based on market share, which is why Japanese companies obsess over market share more than profits.

The TOP 5 are insiders not just with each other (they don’t try to force each other out of business, they don’t have price wars etc) but more importantly, they are insiders WITH THE GOVERNMENT MINISTRY IN CHARGE OF THAT INDUSTRY. They get to advise the ministry of what rules to make, the ministry gives  the TOP 5 (but not little companies or consumers) insider information: what plans it has for next year. And the ministry will basically form a little cartel along with the top 5 to regulate competition and prices. Plus: hookers for everyone at the "business meetings"!

 ***

“The key to understanding when one may trust a Japanese company and when one may not, lies in knowing what would cause the firm social embarrassment. When the context shifts, a company is perfectly capable of behaving in ways that westerners would consider perfidous.


"To take one illustration, the Ministry of International Trade and Industry guided oil industry pricing. The ministry provided an estimate of production which became a target. Individual oil companies were supposed to pro-rate their output according to MITI’s forecaset. MITI encouraged the coil companies to form a cartel without asking directly, forging a formal agreement, or documenting its action. The entire system eventually became a public scandal. The fair trade commission indicted oil companies for price fixing. Members of the oil industry were deeply upset because they felt they had only been carrying out MITI’s wishes. MITI refused to accept responsibility.”

 ***

 Japaense cartels are not designed to maximize profits, but to prevent competition which would lead to everyone going bankrupt:


“In the 1970s, competition among paint manufacturers became so intense that the entire industry was worn out by price wars. Competitors began meeting and forming a reference group, and the ten largest started meeting to fix the price of paint.”

***

The government’s role as a mediator of competition is illustrated in this incident with the chemical industry.

 “At the time of the second “oil shock” in 1979, the chemical industry over-invested, leaving it with huge excess capacity. By ordinary market logic, someone should have gone bankrupt. However, MITI stepped in an allocated capacity among the firms. The chemical manufacturers simply depreciated the excess capacity. Every company had to write down investments, taking huge losses. Because all other competitors were doing the same thing and the losses were not fatal for any company, this was acceptable.”

 

***

 “One salaryman talked to us about the structure of his industry, in which trading companies buy a product from manufacturers and resell it to their customers.


They have established an unwritten custom that a single representative company from the group buys the product from the manufacturers and distributes it to the other insiders at a negotiated price that is the same for all.


Once, a firm in this reference group violated the model and underbid the agreed-upon industry representative. 


The insiders punished the firm the next year by excluding it from the redistribution agreement, costing the renegade its entire business for a year.


One obvious question is why manufacturers support the buyers’ practice. If the manufacturers rewarded defectors, this arrangement would collapse quickly.  

The answer: the buyers give the manufacturers predictability, placing bids even if they cannot find enough customers for the prrduct.


The price is set only after resale: if the trading companies can find buyers, prices will be set to divide the profits: if not, prices will be set to split the losses.

In this case, the manufacturers valued predicatabilty enough to help the buyers punish the defector, even though the defector’s crime was to offer the manufacturers a higher price.”

 

 ***

“Japanese firms view their direct rivals as insiders only when operating overseas or when coordinated by a government ministry. A good example of the latter case is a scandal that recently broke concerning government construction contracts.

Such jobs are awarded through competitive bidding. Although there are many construction companies in Japan, the ministry of Construction decides who can participate in the bid. Naturally once a reference group is created, social expectations take hold and firms are anxious to model their behavior on what they think others expect. Within the chosen circle of bidders, they talk among themselves ang agree who will bid what amount. The winning bid is pegged to the sponsoring ministry’s budget for the project.

 

“In the west, if bids always exactly equaled government expectations, watchdog groups would suspect corruption. In Japan, minimizing the possibility of embarrassment is paramount. Recall that such embarrassment stems from failing to meet the expectations of a reference group.

A bid below the budgeted amount would embarrass the bureaucrat who estimated the project cost, by signalling that he had made a mistake. Consequently government officials communicated what they have budgeted for the project and discouraged from bidding below this figure. The winner subcontracts out parts of the job to its rivals, sharing part of the profit.”

 

***


“For many years, Nomura, the world’s largest brokerage firm, was a favorite of the Ministry of Finance. When the economy was bad, Nomura leaned on its clients saying, “If you don’t buy these government bonds that you don’t want, we will (fuck you up)!” By doing favors, Nomura was able to influence administrative policy and use the ministry’s information-gathering resources to gain a vital edge on its rivals.”

But!

“When the Tokyo stock exchange dropped after the bubble burst, Nomura found itself losing money for its key clients, other Japanese companies. Among other things, these important customers had accepted those (bullshit government bonds).

In consultation with the Ministry, Nomura and other major Japanese securities dealers , Nomura and other major Japanese securities dealers decided to make up their largest customers’ losses. (see here how the crisis caused the reference group to widen from (nomura+ministry) to (top 5 companies + ministry))

The ministry worried that if these losses were not made good, Japan’s largest firms might liquidate their holdings and drive the market down further. When the policy became public knowledge, a scandal ensued because the losses of smaller customers were not covered. The scandal was compounded because one of the large customers helped out in this was was clearly controlled by the yakuza.”

 

Doh!


***

Prestige over profit:

“if Hino, Japan’s largest truck maker, were to lose 5 percent of the Japanese market to a Euro rival, it would be stinging defeat, even if Hino simultaneously gained 5 percent of the much larger Euro market.”


***

 “Often, corporate rivalry becomes myopic, as firms strive so hard to achieve slight superiority that they disregard consumers! For instance, during the bubble economy, many manufacturers producing goods such as cars or appliances kept adding new functions to their products to differentiate themselves from rivals. Prices increased accordingly, and as the economy entered a recession, these products didn’t sell well. It turned out that customers didnt really value all of these features. The recession laid bare the extent to which these firms simply tried to match or surpass their rivals’ new features without listening closely to customer needs.”

 



An interesting aside: SCIENCE IN JAPAN, and its relationship to the famous Japanese montage I talked about a minute ago!

 

(the concept of montage, or layering entire systems over one another, is something I’m really hip on these days: like how they have English words in katakana, and Japanese words in hiragana, AND Chinese words. Or how they have Buddhist funerals, Christians weddings, and Shinto seasonal rituals at the same time).


"Japan produces thousands of PhDs who are unable to find work that builds on their scientific training. This phenomenon is referred to in Japan as “overdoctoring”. Newly minted PhDs often work without pay in their thesis adviser’s lab, while their mentors try to help them find places in a comeptititive academic labor market. Japanese firms hire comparatively few of Japan’s PhDs, partly because they look with suspicion on the professional socialization of scientists, and partly because they do not have a model for taking in new employees approaching the age of thirty."

 MITI’s (ministry of technology's ) greatest successes have been short-term, focused programs aimed at catching up with the world leader in a parituclar tencnology. But their track record for inventing new stuff is terrible.

 Here's why Japanese science industry is all fucked up.

 All the different ministries have their own R&D groups working on the same shit, and because of insider/outsider rivalries, they don’t share information. They are primarily concerned with not falling behind the other groups (not losing is more important than winning!) rather than striking out on their own in new territories.

As a result, Japan’s government agencies have a track record of backing the wrong horse, spending millions to push Japanese science into isolated backwaters. Once they get an idea, they have to keep funding it, even if it’s outdated. Kata are great at producing swords and clay pots, but not so useful in the goal-changes-every-week cutting edge of science.


"The strength of Japan lies in synthesizing things that already exist. For example, a typically Japanese innovation is a coffeemaker with a grinder and timer built in. At a preset time it can grind the beans and brew the roast. Cordless telephones with answering machines. Combination micraowave and electric overns, watches with a video game built in, and a watches with an English dictionary built in."

 AKA. . . . the  montage!

 MITI issues a white paper in 1986 making this synthesis/montage official state policy:

"In this paper, MITI pblished what it called a “interindustry technology fusion index”, af our-by-four matrix showinghow four industry clusters – electrical, machinery, metal, chemical – were investing in research that might overlap. Miti announced that it would fund fusion projects."

 

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  1. Dave June 27th, 2011 1:09 am

    Great article.
    What year was the book published?

    There has been some changes in the Japanese business industry like Rakuten expanding worldwide, Square Enix purchasing Eidos and Uniqlo requiring its managers to pass an English test.
    Do note, that all these businesses are dealing with international expectations so they cannot do the Japanese way of business.

  2. Tzench June 27th, 2011 2:58 pm

    Does this mean the Totyota method of quality assurance is a katafication of more traditional methods in the same field?

  3. Sarah June 28th, 2011 5:24 pm

    This was extremely interesting!

  4. Miguel Sancho June 29th, 2011 3:14 pm

    Thank you for another great post! By sheer chance, yesterday I watched Takeshi Kitano's 'Outrage', and I couldn't help but notice how all the reference group/rank/context/ambiguous goals/etc. perfectly applied to almost every plot development (and never mind the shitty reviews it got at Cannes, it's one of his best).

  5. mooly June 30th, 2011 10:53 pm

    the bomb dude! gaijinpower!

  6. Tzench July 1st, 2011 9:08 am

    Has anyone read a book that explains Western society to the Japanese?

  7. redd July 2nd, 2011 7:27 am

    Seems like a book worth reading!
    @Tzench
    Western society? Ahh… Yes it is about time the Japanese got a book explain Romanian society to them.
    Or perhaps you were talking about the USA?

  8. François July 17th, 2011 11:30 am

    You sold it so well, I just bought the book. 1.18 euros on amazon ! A bargain for such knowledge.

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