Steven's Blog

Mitsubishi vs. Japanese Culture

In light of the recent Mitsubishi scandal, Bloomberg invited me back to discuss Japanese corporate culture and whether or not Japan is to blame for the recent scandal.

You can watch our discussion in the video above.

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

Rishaad Salamat

Well, Japan Inc. is reeling from another blow to its reputation for manufacturing prowess. Mitsubishi Materials this time admitting to falsifying data. Leaving clients including Boeing and Airbus scrambling to confirm whether safety had been compromised. Is there a question of cultural problems in corporate Japan?

Well, Steven Bleistein is CEO of Relansa. He’s an expert on organizational change in companies in Japan and joins us now. Steve, great to see you. We were talking a few months ago, it’s just changing the name of the company here, aren’t we? I mean you’re still saying that it’s not about Japan and it’s about individual corporate cultures. But all these corporate cultures do exist seemingly in one country it would seem right now. 

Steven Bleistein

Well, as I write in my book, it is not about Japanese culture, it is about company culture. In my book, Rapid Organizational Change, I talk about exactly how it is that a CEO or the leader of the business is able to impose the culture he wants on his company. So when we see different companies, where you see malfeasance in Japan, you really need to be looking at the leader and not so much at the company itself.

Rishaad Salamat

Well, that brings me back to the question again, which is there have been so many of these corporate scandals that surely Japan and the culture of Japan must also be questioned even though you deny that?

Steven Bleistein

Well, this is not a Japan problem. It is a Mitsubishi problem, and for example, in the United States we’re seeing a whole raft of scandals related to sexual harassment. That does not mean that sexual harassment is an American problem and not a Japanese problem simply because we’re not seeing as many of these coming to light in Japan. That is simply not the case.

This is a Mitsubishi problem, it is not so much a Japan problem. In the same way as when we talked last month it was a Kobe Steel problem, not a Japan problem.

Rishaad Salamat

Well, absolutely, Steven. And the danger of blaming Japanese corporate culture has other implications, does it not? Because what it does do then is perhaps prevent us from questioning some of these companies. 

Steven Bleistein

Yes, that’s exactly right. Because there is no way that a single person or a single leader can singlehandedly change a country’s corporate culture. But a leader can change the culture in his company and many leaders have done so successfully.

Rishaad Salamat

But tell me something, very few of these top executives have really been called to account properly, haven’t they?

Steven Bleistein

Well, it seems to be accelerating in Japan, there seems to be a lot less tolerance for this kind of thing. And it seems that company employees internally are speaking up. 

Rishaad Salamat

And that is a change is it not? 

Steven Bleistein

It is a change and I think it’s going in the right direction. But when it comes to calling leaders to account, this is really critical. For example, I do not believe that Mitsubishi Materials President Takeuchi can stay in a position of leadership and credibly lead an investigation or ultimate reform. I believe the same is true of the CEO of Mitsubishi Cable, Mr. Murata. He has said even that he allowed the malfeasance to continue, even after he knew, for months. These people cannot remain in leadership positions with any kind of credibility.

Rishaad Salamat

But what are the chances that they actually do in the end?

Steven Bleistein

Well, that really depends on the board of these companies. And I think it’s incumbent upon them to do the right thing. If they don’t, I believe that this type of malfeasance is going to continue in these companies, as it has up to now. This is not the first time we’ve seen this kind of thing in Mitsubishi until the leaders are held to account. And if I might say, I think that this has to go all the way down to the mid-level managers as well. You cannot retain mid-level managers who are managing staff in positions of leadership without compromising the next generation of leadership bench. You have to ask yourself if you were a cyclist, would you want Lance Armstrong as a coach? Would you want that kind of leader as your boss? And if you were owning a company would you want that type of leader cultivating the next generation of leaders for the business?

Rishaad Salamat

Steve, this brings us to one other thing which has been about board structures in Japan, etc. And I’m going to bring up a chart, it says 1510 on the Bloomberg terminal, it’s a valuation comparison. And is this one of the reasons why we do see the SNP in turquoise, we’re looking at P/E multiples of about 19 and a half or thereabouts. And actually price earnings ratios in Japan are way, way below that on the white line. Is that one of the reasons why we have that? And in spite of the massive rally that we’ve seen on the Nikkei 225 so far this year?

Steven Bleistein

I think that it is one of the reasons. I think that board reform in Japan could change that, and I think there are still a number of companies in Japan where that type of reform hasn’t taken place that is weighing the valuations down. 

Rishaad Salamat

And Steve, let’s turn the interview into something positive. Have you seen companies instituting change from the top to make them better run and is that top-down approach working?

Steven Bleistein

Yes, I think a good example of that would be Shiseido Japan, under the leadership of Mr. Uotani. He is endeavoring to change the company culture to a more global type of business and starting with imposing using English as the lingua franca inside the business which is quite controversial in Japan. 

Rishaad Salamat

Well, absolutely. And do you hold out more hope for corporate governance reforms in Japan which would make people more confident about investing there?

Steven Bleistein

Well, yes. However, I have to say that I do not believe that governance is a solution in the first instance. Governance is only the last defence. This really has to come from the top. It has to come from current leaders of boards and current leaders of businesses to ensure that this type of poor leadership and malfeasance doesn’t occur in the future in their businesses.

Rishaad Salamat

Steve, thank you so much for joining us. Steven Bleistein there from Relansa.

Tell me in the comments, what are your thoughts on this topic?


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