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Kobe Steel vs. Japanese Culture

Bloomberg invited me to discuss the current situation with Kobe Steel and my take on Japanese culture and the role it plays (or does not) with respect to what is happening inside of corporations in Japan.  

If you’d prefer to read this interview, the following transcript has been provided by Bloomberg:

Sophie Kamaruddin

Well, with Kobe Steel being the latest Japanese company hit by scandal we wonder if there a wider problem with the country’s corporate governance. Here to speak on that is Steven Bleistein, CEO of Tokyo based consulting firm Relansa.

Now, Steve, you’re an expert on rapid business growth, organizational change, quite a mouthful there, and you’re making the claim that there’s no such thing as Japanese corporate culture. What do you mean by this? 

Steven Bleistein

Well, that’s exactly right. And that’s something that I cover in a bit more depth in my book, Rapid Organizational Change. What I mean by that is that there is no monolithic Japanese corporate culture. A company like say Cyberdyne or a company like Rakuten, has a culture that’s completely different from say a company like Mitsubishi Trading. And they are both just as Japanese.

This is true in other countries as well such as in the United States. A company like Google has a completely different culture from say a company like Sears Roebuck, even though both are very American. 

Sophie Kamaruddin

So we have the sense then there’s no corporate culture to be had in Japan. Where then is the leadership responsibility placed? 

Steven Bleistein

Well, what you really need to look at is what is going on inside each individual company. In countries, corporate culture always trumps the country’s culture. And so the leader is capable of imposing the culture that he or she wants on his or her own company. And that’s exactly where we need to look and focus.

Sophie Kamaruddin

Do you mean idiosyncratic corporate culture unique to an individual company that you don’t see across the Japan corporate world? 

Steven Bleistein

Well, you may see patterns just as you do in any country, but you can never say that something that may be ailing a company would…the cause of which or the root cause would be because of the country’s culture. You have to look deeper than that. It’s always something else. And always something within the leader’s control.

Sophie Kamaruddin

But could there be something more here given how many scandals there have been in Japan? 

Rishaad Salamat

Let me pick you up on that actually because, Steven, you say that there’s no such thing as corporate…why have there been so many of these scandals taking place in Japan? I mean we can look at Takata, we can look at Toyota, recently Nissan, on top of that Olympus, Toshiba, the list is a long one here. Is this something which is rotten in the heart and the core of Japan? That’s the problem, isn’t it? 

Steven Bleistein

I don’t believe that you can say that the problem at the core is something with Japanese culture. There’s nothing in Japanese culture that would encourage people to do anything that’s illicit or illegal. But I think what may be going on is a pattern in terms of a leadership deficit that we might be seeing. Like I say, this is always because of leadership. The core is not actually Japanese culture.

And I would also point out that even in countries like the United States, even in countries like Germany we have seen Wells Fargo, we have Volkswagen, and we wouldn’t be looking at saying that this is because of American culture or because of German culture.

Rishaad Salamat

Well, the thing is there’s very few of them. I mean I’ve just reeled off about six just from the top of my head here. Now, there is, of course, this phrase “sore ga nioi ga shitara, soreni futa o suru”, my Japanese pronunciation is terrible, which means put a lid on it effectively. And that’s something which goes down to perhaps the essence of what we’re talking about with accountancy problems. I mean faking your steel, your copper, etc and putting people’s lives at risk is, well, quite frankly criminally negligent. 

Steven Bleistein

Yes, it is. And that same guest, he was also talking about are we seeing this as something that’s negative or positive? After all, we’re catching all of these things, whereas maybe in other countries we’re not. The media is picking up on it here because it is so shocking in Japan. Whereas maybe in other countries it is not. 

Sophie Kamaruddin

So there are more of these issues coming to light, does the rot go deeper? We have seen fallout with issues being dealt…with fines being dealt rather, and head honchos losing their jobs. But is that enough to really push corporate Japan to clean up their act? 

Steven Bleistein

Well, what I would say is this, it’s very dangerous to ascribe root cause to a country’s culture like Japan’s because culture is not something that any one person can change single-handedly. You end up resolving simply to live with the problem and tolerate it. Whereas that’s neither necessary nor optimal. You need to go further, you need to identify root cause and usually the root cause is something that can be affected. 

Sophie Kamaruddin

Thank you so much, Steve, for that. Stay with us for now. We’re going to get more with Steve Bleistein of Relansa just after this break. 

Rishaad Salamat

You’re back with Bloomberg Markets as we continue our discussion with Steven Bleistein on corporate culture in Japan. He’s the CEO of a Tokyo based consulting firm – Relansa. And Steven, we’ve been discussing what has been going on in a corporate culture sense. But because we see all these companies that I reeled off earlier coming to the fore and admitting that they have done things wrong what’s changed? Has there been a shift in attitudes? Is it Abenomics? Is it the press?

Steven Bleistein

Look, I think those are both reasonable conjectures. What we’re seeing in Japan right now is a change of attitude towards what’s proper in business and what types of businesses people want to run. Also in terms of what people want from their own society. And I think this is happening at all levels from staff down below, all the way up to the leadership. I think there are higher expectations of leaders running businesses today than before. 

Sophie Kamaruddin

And Steven, what role does regulation perhaps have to play here. We have the 2006 whistle-blower protection act for example, in 2015 the Japanese corporate governance code took effect. Should there be more or is there enough? Is it just about helping the environment get used to these types of regulations?

Steven Bleistein

I believe in every country you should be revisiting governance rules and regulations. But they will never be enough, no matter how good the governance is there will always be malfeasance. If you really want to change this – what you need to focus on is improving leadership capability. And in Japan there are ways that the government can help effect that through Keidanren.

Sophie Kamaruddin

And part of the governance reforms that are also involving investors, shareholder activism that has been improving somewhat, is there room for more? Are you observing this?

Steven Bleistein

Yes, a bit. We’d like to see that move a little bit faster. But I think what we’re seeing is a convergence towards a kind of global standard of behaviour as markets become much more integrated and much more international.

Sophie Kamaruddin

We haven’t really seen that yet when it comes to Japanese corporates perhaps meeting the standards of global governance on those types of standards once more. But what else can be done in your view to help individual business leaders at corporates deal with this?

Steven Bleistein

Well, in terms of individual business leaders, if they want to ensure that the next generation of leaders in their business don’t do this kind of thing they need to run the business by example. And the way I define character is it’s about doing what’s neither convenient nor immediately profitable, because those are your principles, and not comprising that. The more that leaders can do that in their own business…

Rishaad Salamat

Steven…

Steven Bleistein

Yes? 

Rishaad Salamat

Steven, very quickly, we’ve only got about 30 seconds. Four practices in common that successful leaders in Japan have? Very, very quickly.

Steven Bleistein

There’s only one. They impose their own culture on their company.

Rishaad Salamat

And that’s good enough. Right, thank you so much for that. Steven, have a great day. Steven Bleistein there with the consultancy firm Relansa based in Tokyo.


5 thoughts on “Kobe Steel vs. Japanese Culture

  1. There is a bad Japanese culture in business which runs through the whole Japanese social system, it is the lack of respect of the individual employee. Karoshi, for example, is one of the symptoms. I wonder to what degree this issue affects the moral of the corporation as a whole.

    • I would imagine karoshi or death from overwork of an employee would be devastating to the morale of all in a company, and indicate a raft of problems in that company. However, Raphael, you cannot say that this “bad culture in business runs though the whole Japanese social system.” That simply isn’t true. All of my Japanese clients have tremendous respect for individuals. Some have forbidden calling meetings after 6:00 PM, and discourage habitual late night drinking both with customers and staff. One of my client companies allows any employee to take six-months paid leave to study English in the United States, all expenses covered. Several offer maternity leave. In these companies, there is far more respect for individuals than I have seen in many American, Australian, French and even some German companies.

  2. Pingback: The Art of the Stomach and Pitfalls in Communicating with the Japanese - Steven Bleistein - Relansa CorporationSteven Bleistein – Relansa Corporation

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