Steven Bleistein is a well-known expert in “rapid organizational growth and change” based in Tokyo. He is also a member of the Delphi Network.
With his new book, he has a written a provocative and useful business primer, mainly for foreign CEOs in Japan. But the lessons are applicable worldwide, or at least wherever CEOs may be tempted to use “culture” as an excuse for underperformance.
Management books are common, but this is the first one which extracts so many lessons from Japan. Many readers based here will be nodding their heads at the anecdotes. I especially liked the way Steve reproduced key conversations verbatim.
The title of the book is “Rapid Organizational Change”. The question Steve sets out to answer is how CEOs can achieve such speed in Japan, a country which has the reputation as a “CEO graveyard”.
Indeed, many foreign CEOs struggle to achieve good results in a country which is notorious for excessive risk aversion, passive employees, life-time employment, stifling labour practices, inflexibility, lack of innovation, and insistence that there is a “unique” (ie Japanese) way of doing things – to name just a few of the most common gripes.
These opening chapters, discussing the meaning and significance of “culture”, are central to the book’s message. Steve has worked in Hong Kong, France, the US and Japan and has come to the conclusion that human beings universally require approval, dignity, financial security and meaningful work.
But Steve is not arguing that business in Tokyo runs like it does in Paris or London. On the contrary, he perceives a logic in Japanese behaviour, shaped by the world in which Japanese operate. Eg firing staff is an awkward topic in Japanese firms partly because there is no simple, uniform mechanism to calculate severances packages – as there is in the US and the EU. Every dismissal has to be laboriously negotiated, often with Union involvement.
CEOs should thus make an effort to understand this Japanese logic – or at least hire Steve for guidance.
Here is one story to show how Steve identifies a major problem for foreign CEOs, explains it from the Japanese point of view, and then provides a pragmatic solution.
“Excessive risk aversion” is a classic complaint of foreign CEOs about their Japanese staff. Staff may refuse to try something different, even if the existing process is not working. Steve explains this not as risk avoidance but in a more sympathetic way, namely as the result of an over-developed sense of responsibility. Japanese managers will feel personally responsible for the failure of a new system, which makes them cautious. Steve adds that Japan is one of the few countries where suicide is an accepted (broadly speaking) way of taking responsibility for a bad decision.
Thus, trying to convince one reluctant sales manager to try something new, Steve did not try to explain modern concepts of risk or even to convince her the changes would work. With her boss’ consent, he simply changed her duties to include trying new things. Forced by her sense of responsibility to think about improvements, business success rapidly followed.
The lesson is that understanding the issues combined with proper leadership can be used to achieve change. Indeed, “company culture trumps national culture”, he writes, words that should inspire any CEO wondering if he will ever make his mark in a foreign market.
Steve pinpoints middle management as being the most important block to a CEO’s vision of doing things in a new way. (Remember that foreign CEOs are often leading organizations which are 99% Japanese). He writes “leadership starts at the top, but lives or dies in the middle”. This insights refers to firms focussing on setting a strategy and aligning leaders, and then assuming the roll-out will be smooth.
In fact, “leadership proximity trumps leadership rank”. This means junior managers are unable to take their cues from the distant CEO, even if they wanted to. In practice, they must conform to the dictates of their direct manager. CEOs need to deal with these influential long-termers, rather than trying to enthuse the most junior troops.
The blocking power of middle management in Japan is due to practices such as seniority and excessive labour protection. Steve explains well the problem of guaranteeing “life-time employment” in the modern era. A practice used to attract good staff in war-shattered 1950s Tokyo has now become an incubator of mediocrity. These days, star staff can – and do – move for more excitement and more money. All the system does today is protect under-performers.
Japanese middle managers are incentivized to “stay the course” until retirement. A foreign CEO keen to shake things up threatens the cozy status-quo. And to be fair, the foreign CEO will often have moved on by the time his policies have failed (Eg excessive cost cutting raises profitability in the short term, but harms the firm in the medium term).
The essence of the book then, is how to reach middle management and get them to change. The emphasis is on the CEO’s crucial role in driving this change.
One of his most interesting comments is that it is essential to hire managers who are interested in personal growth. Such people try many things, and fail at some of them. But the failures act both as a spur and as a lesson. Steve talks compellingly about some of his US immigrant friends: they have lost everything anyway, the status quo is unsustainable, and the potential upside of doing something far outweighs the downside.
If I may add a supporting comment to Steve’s observation, it is that I find many Japanese policy makers and academics pessimistic. An urban planner I spoke to could not see population shrinkage as an exciting opportunity to revitalize the inner city and depopulate the dreary suburbs. Almost all Japanese economists focuses only on the gloomiest aspects of Japanese business (inevitably the national debt), etc etc.
In conclusion, this carefully written book is a “must buy” for any CEO doing business outside his home market and especially DN members working in Japan.