JAPAN

1. JAPAN FRANCIS PIRON Ph.D., 2013

2. PRELIMINARY THOUGHTS LONG & INDEPENDENT HISTORY UNIQUE HERITAGE • HIGHLY DISCIPLINED PEOPLE • 1st “WESTERN” STATE IN ASIA • CONFUCIAN-GROUNDED DEMOCRACY

3. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN “MIRACULOUS TRANSFORMATION” FROM A FEUDAL The Samurai Class: Warriors, 10% of pop. The farmers & peasants: superior to artisans & merchants because they produce food. The artisans: lived in segregated areas/ The merchants: considered as “parasites.” lived in separate areas and upper classes were forbidden to interact with them. Ainu: Japanese aborigenes & descendants of slaves 1868: end of the “Floating World” – Meiji Restoration, dissolution of samurais, creation of modern military force • “MIRACULOUS TRANSFORMATION” FROM A FEUDAL TO A MODERN, DEMOCRATIC STATE • “MIRACULOUS TRANSFORMATION” FROM A FEUDAL TO A MODERN, DEMOCRATIC STATE • TRADITION OF PRODUCING THROUGH MODIFICATION OF EXISTING CONSTRAINTS • ABILITY TO ABSORB WESTERN KNOWLEDGE INTO ITS CULTURE, APPLY IT AND EXPORT IT IN AN ENHANCED FORMAT

4. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN FOUNDATION OF JAPANESE SOCIO-CULTURAL HERITAGE ETHICS ARE ABSENT IN EARLY JAPANESE MYTHOLOGY GODS & GODDESSES ARE GOOD, BAD, RECKLESS, … EARLY CULTURAL RATIONALE IS CONTEXTUAL => RELATIVISTIC SOCIO-CULTURAL SYSTEMS ANCIENT CULTURAL LOGIC IN SUPPORT OF EMPEROR’S DIVINE RULE (UNBROKEN LINE OF 125 EMPERORS) => STRENGTH OF SOCIO-CULTURAL IDENTITY SHINTO, THE NATIONAL RELIGION, BASED ON ANCESTORS WORSHIP & ANIMISM AS A RESPONSE TO BUDDHISM EMPEROR’S ROLE & INFLUENCE HAVE DECLINED, BUT ARE THE BASIS OF SOCIO-CULTURAL DEVELOPMENT PATH

5. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN REGIONAL INFLUENCE OF CHINA JAPANESE MIGRATED FROM CHINA OR KOREA CHINESE INSTITUTIONS WERE INSTRUMENTAL IN JAPAN’S EARLY DEVELOPMENT SINCE SUCH INSTITUTIONS WERE NOT IMPOSED (I.E., WAR, OCCUPATION), THEY REMAINED BECAUSE OF THEIR USEFULNESS AND WERE ADAPTED • “JAPANIZATION”/NIPPONIZATION OF CHINESE RELIGIONS & PHILOSOPHIES • CONFUCIANISM PRODUCED LOYALTY • TAOISM DEVELOPED INTO SHINTO • BHUDDISM DEVELOPPED INTO ZEN BUDDHISM • THE 3 PRODUCED BUSHIDO

6. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN BUSHIDO: IDEOLOGICAL FOUNDATION FOR A NATION MORAL FRAMEWORK TOWARD LIFELONG COMMITMENT TO ENRICH VALUES & MASTER MARTIAL ARTS, BASED ON 7 PRINCIPLES: CHUGI …...DUTY, LOYALTY GI …………RIGHTEOUSNESS YU………….SPIRIT OF DARING, BEARING IN…………. BENEVOLENCE MEIYO……. HONOR REI……….. POLITENESS SEI ………..SINCERITY SERVING PUBLIC INTERESTS BY REPRESSING SELF-INTERESTS THROUGH SELF-SACRIFICE :MESSHI HOKO

7. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN BUSHIDO: IDEOLOGICAL FOUNDATION FOR A NATION BUSHIDOVALUES WERE FURTHER REFINED & INCORPORATED IN THE WIDER JAPANESE SOCIETY (SIMILAR TO WESTERN CHIVALRY) EVENTUALLY BUSHIDOVALUES WERE DISSEMINATED TO COMMONERS & BECAME THE MORAL IDEAL

8. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN NEW INFRASTRUCTURE SYSTEM FUKOKU - KYOHEI – RICH COUNTRY, STRONG MILITARY OITSUKE OYTSUKE CATCH UP & OVERTAKE WESTERN INSTITUTIONS WERE COPIED & LOCALIZED TO INCORPORATE TRADITIONAL JAPANESE SOCIO-CULTURAL VALUES • EDUCATION – KEY STRAT. VALUE FOR NAT’L DEVT • KEY OF RAPID MODERNIZATION • INCORPORATED NATIONALIST, CONFUCIAN & SHINTO VALUES TO COUNTER WESTERN VALUES • LINKED TO BUSHIDO

9. CHANGING THE COMMERCIAL ETHOS WITH THE ABSENCE OF COMMERCIAL INFRASTRUCTURE, THE STATE TOOK ON A CAPITALISTIC ROLE EVENTUALLY, STATE TURNED OVER BUSINESS ASSETS TO LOCAL ELITE & ENTREPRENEURS THESE WERE TO PURSUE SUCCESS FOR THE COLLECTIVE GOOD OF THE NATION EMERGENT PATERN OF CLOSE WORKING RELATIONSHIPS BETWEEN POLITICIANS, BUREAUCRATS AND BUSINESS JAPAN INC. (THE NEW & IMPROVED JAPAN INC.) LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN

10. “THE NEW & IMPROVED JAPAN INC.” HYPERCOMPETITIVENESS: AGGRESSIVE INVESTMENT IN R&D IN WHOLE SPECTRUM OF CONSUMER & CAPITAL GOODS COST CONTROL: GREAT IMPROVEMENT IN SUPPLY-CHAIN MANAGEMENT END OF DECADE OF DEFLATION – IT WAS ACTUALLY RATIONAL TO SAVE MONEY AS PRICES WERE GOING DOWN => HUGE AMOUNT OF PERSONAL SAVINGS READY TO BE SPENT LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN

11. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN MGMT OF JAPANESE INSTITUTIONAL INFRASTRUCTURE POWERFUL INDUSTRIAL CONGLOMERATES WITH BANKS AT THE CORE – ZAIBATSU (“MONEY CLIQUE”, “WEALTH GROUP” OR CONGLOMERATE) MITSUBISHI, MITSUI, SUMITOMO & YASUDA BECAME KNOW AS KEIRETSU AFTER WWII DEVELOPMENT OF HR MGMT MODELS EXISTING PATERNALISTIC LONG-TERM APPROACHES 3 SACRED TREASURES: SHUSHIN KOYO ………………. LIFETIME EMPLOYMENT NENKO JORETSU ……………. SENIORITY-BASED WAGES KIGYOBETSU KUMIAI ……….COMPANY-BASED UNIONS SEARCH FOR MGMT MODELS THAT INCORPORATE HUMANITY INTO ECONOMIC RATIONALITY INTEGRATION OFBUSHIDOINTO BUSINESS WHICH LED TO OUCHI’S “THEORY Z.”

12. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN MGMT OF JAPANESE INSTITUTIONAL INFRASTRUCTURE POST-WAR PERIOD: DEMILITARIZATION & DEMOCRATIZATION INDUSTRIAL, LAND & LABOR SYSTEMS WERE DEMOCRATIZED BUSHIDO VALUES ARE REPLACED WITH IMPORTED, DEMOCRATIC VALUES KEIRETSU – MODERN INDUSTRY STRUCTURE LARGE BANKS & TRADING COMPANIES AT THE CORE CORPORATE CAPITALISM GROUP-ENTERPRISE CAPITALISM ALLIANCE CAPITALISM MAINTAIN THEIR EXISTENCE THROUGH MUTUAL CROSS-SHARE HOLDINGS: BANK PROVIDES FINANCING BANK HOLDS SHARES IN TRADING COMPANY Big Six Japanese business groups are all examples of classical keiretsu: Fuyo/Fuji Group, Sumitomo, Sanwa, Mitsui, Mitsubishi, and Daiichi-Kangyo Gin

13. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN MGMT OF JAPANESE INSTITUTIONAL INFRASTRUCTURE CORPORATE MGMT & HRM SYSTEM REFORM YOUNGER MANAGERS => REJUVENATION JAPANESE HUMANISM IS EXPRESSED IN TERMS OF GROUP WELFARE & MAINTENANCE OF HARMONY GOVERNMENT INFLUENCE : IN TERMS OF GUIDANCE, RATHER THAN DIRECT INTERVENTION OR COERCION

14. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN RESPECT FOR PEOPLE - THEORY Z • There are a number of facets to the Japanese respect for & treatment of workers. One of the most prominent is lifetime employment, which gained notoriety from William Ouchi's book "Theory Z". When many Japanese workers are hired for permanent positions in major industrial firms, they can generally consider it a job for life. However, this kind of benefit applies only to permanent workers, about 1/3 of the Japanese workforce. It is felt that if workers can stay with one firm for life, they more easily identify with the firm's goals and objectives. • Workers who are members of Japanese labor unions identify more with the company than the type of work they are doing. Also, Japanese unions tend to share the management's view. The better the company performs, the more the worker benefits. As a result, Japanese management believes in giving the workers more opportunity to expand their job boundaries rather than waiting until the worker proves himself. • The Japanese also spend more on education & training, for all levels, than any other industrial nation. Also, because the Japanese believe that robots free people for more important tasks, they have invested heavily in robotics & automated equipment, making theirs perhaps the most automated manufacturing sector in the world. • Another area in which Japanese management has successfully tapped into worker potential is in the use of small group improvement activities (SGIA). One example is quality circles, a small group of volunteer employees who meet once a week, on a scheduled basis, to discuss their functions and the problems they are encountering. They then propose solutions and make a sincere attempt to implement real change. • Finally, the Japanese believe in what they call "bottom round" management. This concept, sometimes called consensus management or committee management, is an innate part of Japanese culture. It involves a slow decision-making process that attempts to reach a true consensus rather than a compromise. While the decision-making process is slow the implementation process is quite fast.

15. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN ELIMINATION OF WASTE • When the Japanese say elimination of waste they mean anything other than the absolutely essential minimum amount of workers, equipment, and materials necessary to meet demand. => no safety stock, no inventory stored for use in smoothing production requirements, ETC.. • If it can't be used right now it is considered waste. • A number of concepts are central to this idea of waste elimination. Instead of building a large manufacturing plant that does everything, the Japanese tend to build small plants that are highly specialized and form them into focused factory networks. It is difficult to manage a large facility; the bigger it is the more bureaucratic it tends to be. Bureaucracy is not conducive to the Japanese style of management. Also, a specialized plant can be more economically constructed and operated. • Along with the idea of smaller plants, the Japanese make considerable use of group technology. Japanese engineers examine each operation required to make a part and attempt to group dissimilar machines into clusters designed to be work centers for a given part or family of parts, thus eliminating or at least greatly shortening the time necessary for set-up and changeover. • Just-in-time (JIT) productionis an important part of waste elimination. In fact, JIT has often been defined as the elimination of waste. JIT is the production of precisely the necessary unit in the correct quantity at the correct time in order to maintain perfect performance to schedule. Over producing is considered just as bad as under producing since unnecessary inventory would be wasteful.

16. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN JUST-IN-TIME (JIT) • For JIT to work effectively, production must flow smoothly. Any changes can cause disturbances in the flow, which can be amplified throughout the supply chain, causing disruptions and delays. In order to ensure a more uniform flow, the Japanese adopt a uniform plant load. This means that they simply plan to build the same mix of products each day. If you run some of everything you need each day, it only takes one day before you have more (as opposed to large lot sizes which tie up capacity for lengthy periods, causing delays in shipping). • Uniform plant loading requires that everything be produced in small lot sizes, implying that the number of set-ups required will increase. The principle of economic order quantity (EOQ) states that as lot sizes increase set-up costs decrease but as lot sizes decrease set-up costs increase. Therefore, this emphasis on small lots requires that set-up times be minimized. Instead of taking established set-up times as a given, the Japanese have managed to reduce set-up times tremendously, often to the point of single digits (i.e., less than ten minutes). • The Japanese also use a self-regulating system for production control known as kanban. It uses dedicated containers and recycles traveling requisitions/cards (often known as kanbans themselves) to regulate the system. It is also referred to as a "pull" system since the authority to produce or supply comes from downstream operations. • Finally, the Japanese utilize a number of quality control techniquesto ensure maximized quality and minimized waste. Among these are jidoka, bakayoke, and poka-yoke.

17. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN • Jidoka is a quality concept that means "stop everything" whenever an error occurs. It is controlling quality at the source. Instead of using inspectors to find problems someone else created, the Japanese worker is his own inspector, responsible for his/her own quality. When an error or defect is discovered, the worker has the authority and the responsibility to halt the production process. Usually, this is controlled by some mechanism such as push buttons. When the line stops, lights flash, bell ring, and flags wave as all attention is directed at the problem. • The Japanese also believe that, whenever possible, inspection should be performed by a machine, for the sake of speed and accuracy. A technique known as bakayoke is used for this purpose. Bakayokes are devices that are attached to machines to automatically check for abnormalities in the process, such as malfunction or tool wear, as well as measuring dimensions and warning when tolerances are close to being exceeded. For manual assembly, the Japanese utilize poka-yoke or mistake proofing. • Today, all these Japanese techniques have been repackaged and are now known as "Lean" management techniques. Even though JIT, kanban, and other tools have not changed in their application, the new "lean" label has removed some of the Japanese stigma and has made the tools more palatable. With the introduction of the lean label has also come a broader application of these principles to where they are now being used in the service sector and in the front office, with the same high degree of success.

18. LOCAL ISSUES & EXTERNAL FORCES INFLUENCING THE MGMT CONTEXT OF JAPAN NEGATIVES OF JAPANESE MANAGEMENT • Despite their success, some do not see Japanese management techniques as the panacea others credit them as being. Even though research has shown that management techniques developed in Japan can be successfully applied in other countries with remarkable results, critics claim that their success comes not from catering to intrinsic values but to an array of stifling constraints unlikely to be tolerated in the West. Rather than a carefully nurtured atmosphere of trust and common enterprise, they see a restrictive system of internal controls. Much of this criticism has come from labor unions. It has been noted that workers in JIT systems have more stress than their counterparts in more traditional systems. Stress is seen to originate not only from additional authority and responsibility, but also from the fast-paced system where there is little slack and a continual push to improve. Apparently, some see the authority and responsibility delegated to the worker as a way for management to further burden the worker without a comparable increase in take-home pay. Constant improvement through use of kaizen, just-in-time, and Total Quality Management is felt to be within the purview of management not the worker. • There is really no mystery to the success attributed to Japanese management. The Japanese were convinced that a shift, caused by natural competitive forces, was taking place worldwide. They then rode this change, which was international in scope, to financial success by becoming the premier producer of products known for quality. They were prepared to sacrifice short-term financial results in order to invest for the long-term in superior quality; a variable consumers would soon demand. • Consumers are still showing their confidence in Japanese goods by purchasing what they see as commensurate quality at a fair price. Japanese produced television sets, for example, have an average life span that is twice that of similar sets produced in North America. Any country that can manage to achieve this kind of quality and parlay it into a strategic weapon should continue to have a competitive position within the markets in which it competes.

19. CONTEMPORARY MICRO-LEVEL MANAGERIAL APPROACHES TO SUSTAIN NAT’L DEVT JAPAN CAUGHT BTW RISE OF CHINA (MANUFACTURING) AND INDIA (IT SECTORS) 3 MAJOR CHALLENGES: COMMUNITY SOCIO-CULTURAL VALUES CORPORATE BEHAVIOR HUMAN RESOURCES MANAGEMENT

20. COMMUNITY SOCIO-CULTURAL VALUES WORK FORCE IS AGING ALL EMPLOYEES MUST HAVE A SENSE OF OWNERSHIP ON (SUPERIOR-INFERIOR RELATIONSHIP) & KO (DUTY OF THE SUPERIOR) ARE INSTRUMENTAL TO HUMANISTIC MGMT MGMT APPLICATION OF IE CONCEPT(SMALL UNITS) SIMILAR TO ONE FOR ALL & ALL FOR ONE CONTEMPORARY MICRO-LEVEL MANAGERIAL APPROACHES TO SUSTAIN NAT’L DEVT • GENERATIONAL VALUE SHIFT

21. CONTEMPORARY MICRO-LEVEL MANAGERIAL APPROACHES TO SUSTAIN NAT’L DEVT • TRANSFORMING CORPORATE BEHAVIOR • ISSUES OF CORPORATE GOVERNANCE • CORPORATE SCANDALS • GROWING PUBLIC HOSTILITY AGAINST CORP. JAPAN • IMPORTANCE OF CULTURE IN MAINTAINING CONTROL MECHANISMS • COLLECTIVE PROMOTION OF CORPORATE INTEGRITY THROUGH KEIDANREN – JAPANESE BUSINESS FEDERATION • LONG WAY TO GO TO ASSIMILATE GLOBAL PERSPECTIVE • ADOPTION OF DECENTRALIZED, LEAN DECISION-MAKING SYSTEM • MAINTENANCE OF INTRA-COMPANY HARMONY • RINGI SYSTEM WHEREBY CHANGE IS BROUGHT THROUGH SERIES OF INFORMAL MEETINGS TO SEEK SUPPORT AND EVENTUAL FORMAL ANNOUNCEMENT AND IMPLEMENTATION

22. CONTEMPORARY MICRO-LEVEL MANAGERIAL APPROACHES TO SUSTAIN NAT’L DEVT • HUMAN RESOURCE MANAGEMENT REFORM • INTERNAL & EXTERNAL CHALLENGES TO THE SYSTEM • NO INTEREST IN WHOLESALE REFORMS … HUGE SOCIAL CONSEQUENCES • IN RESPONSE TO KAIZEN SYSTEM OF CONTINUOUS AND INCREMENTAL PROBLEM SOLVING • LIFETIME EMPLOYMENT ONLY TO “CORE” EMPLOYEES • WOMEN ARE NOT CONSIDERED “CORE” • “CORE” EMPLOYEES ARE NOW ONLYTHE ELITE EMPLOYEES • RETHINKING LIFETIME EMPLOYMENT NECESSARILY FORCES RETHINKING OF SENIORITY-BASED WAGE SYSTEM • EXPERIEMNTATION WITH THE MERIT-BASED SYSTEM

23. CULTURAL ISSUES & INDICES

24. CULTURAL ISSUES & INDICES • HUMAN DEVELOPMENT INDEX • .884 (#11) • FINLAND .871 (#16) • CHINA.663 (#89) • GINI INCOME INEQUALITY • 24.9/4.5/3.4 (R/P 10%/ R/P 20%) • FINLAND (26.9/5.6/3.8) • CHINA (46.9/21.6/12.2) • DEMOCARCY INDEX • 8.08 (FULL DEMOCRACY,#22) • FINLAND 9.19 #7 • CHINA 3.14 #136 (AUTHORITARIAN) • GENDER EMPOWERMENT • .567 #57 • FINLAND .902 #3 • CHINA .533 #72

25. JAPAN TODAY • DEMOGRAPHIC ISSUES • IN THE NEXT 40 YEARS, POPULATION, CURRENTLY AT 127 MILLION WILL FALL BY 38 MILLION • ONE OF THE HIGHEST DEBT-TO-GDP RATIOS IN THE WORLD • DEBT, DEFICIT, DEFLATION … STARTING IN 2010 • A TEST CASE FOR WESTERN COUTRIES WHERE AGEING IS ALSO COMING UP FAST • SOCIAL SECURITY BILL

26. JAPAN TODAY • JAPANESE MGMT VIDEO • PARODY BY A GROUP OF STUDENTS IN JAPAN JAPANESE ETIQUETTE