How Japanese business ended its obsession with GDP
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By measuring itself on more than just the bottom line, the country is better positioned for the future than its many detractors understand
In his powder blue kimono, decorated with patterns of pink cherry blossoms, and plugged into his iPod, the sumo wrestler caused quite a stir as he strode through a crowded waiting room at Kyoto station, flanked by his entourage. One of his loyal retainers was dispatched to Starbucks and, a few minutes later, listening to music on his headphones, he surveyed the waiting room with a proprietary air as he sipped his latte.
It was the kind of incongruous sight you come to expect in Japan, a country whose national slogan should probably be French novelist Andre Gidé’s remark: “Please don’t understand me too quickly.”
Contrasts and contradictions abound. Robot baristas are welcomed into the nation’s cafés yet, when you catch the train from Narita airport into Japan’s capital, you are likely to see someone whose job it is to hoover the platform – not sweep, actually hoover.
One of Tokyo’s essential sights is Shibuya Crossing, the world’s busiest intersection where, at peak times, 45,000 pedestrians scramble from one side to the other, like two armies squaring up for battle. Yet 20 minutes away by Metro, in the suburb of Setagaya, where the streets are the preserve of pedestrians, cyclists and cats, life feels as slow as in rural Japan in the 1950s, as portrayed in Hayao Miyazaki’s film My Neighbour Totoro.
Foreign and Japanese analysts have diagnosed the country’s ills as ‘Galapagos Island syndrome’. Just as Charles Darwin discovered that animals evolved differently in the Galapagos’s isolated environment, the theory is that the Japanese market is so insular and different it is hard for its companies to create products that appeal to the rest of the world. While Japan Inc has
developed fewer global hits since the 1980s, Piko Taro’s irritatingly contagious ‘Pen-Pineapple-Apple-Pen’ (PPAP) ditty became an instant worldwide phenomenon last year.
Japan’s economic miracle was driven by the most effective industrial strategy in history. Bureaucrats at the legendary Ministry of International Trade and Industry (MITI) picked – and backed – winners with such astonishing consistency that aspiring prime ministers were obliged to serve there until the 1980s.
The fact that MITI and Japan Inc were accused of taking unfair advantage of globalisation by some American politicians is ironic. The US had bullied Japan into entering the global economic system in the 1850s. The country reluctantly opened up to international trade after a spot of gunboat diplomacy by Commodore Perry, who sailed his squadron into Tokyo harbour. (The Japanese paid Perry back: the most famous woodprints of him depict him with a large nose, referring to the size of his penis and, by extension, the size of his brain.)
Yet the transformation MITI’s experts had laboured so effectively to create was finally undone, in part, by a clairvoyant called Nui Onoue, who interpreted the ‘wishes’ of a brownish ceramic toad, to offer investment advice to industrialists, financiers and officials from the Industrial Bank of Japan. Toads are traditionally associated with wealth in Japan and this particular bit of porcelain’s reputation for infallibility meant that, by the late 1980s, it was indirectly controlling a portfolio of shares worth $20bn.
Alas, Onoue and her toad – in reality, an executive at Yamaichi Securities who was giving her inside information – failed to predict the bursting of Tokyo’s stock market bubble or the bruising recession that followed. At first economists referred to this as Japan’s ‘lost decade’ but, when it became clear that economic stagnation was going to be prolonged, ‘decade’ became ‘decades’.
Yet, as David Pilling, the long-time Financial Times correspondent in Tokyo, asks in his book Bending Adversity: Japan and the Art of Survival, what does ‘lost’ really mean? One surprising aspect of Japanese society for the gaijin (foreigner) is how much time people spend queuing – for trains, tickets to the cinema, Kentucky Fried Chicken takeaways and Krispy Kreme doughnuts (where a wait of two hours is considered normal). The joke in Tokyo is that some queues are so long because passers-by assume people must be waiting for something special and join them.
None of this consumer clamour squares with the negative stereotype of Japan Inc that Pilling describes: “In the 1980s, Japan was said to be taking over the world with its unstoppable economic machine. Today, the default position is to see a glass not so much half empty, as one cracked on the bottom with the remaining contents draining away.” In this dystopian view, “Japan must continue to sink. Its industry is dying, its women are suppressed, its people suicidal, its society closed and its debt unpayable.” There is some truth in all these criticisms but they do not tell the truth about contemporary Japan.
The exaggerated death of Japanese industry reflects, in part, a remarkable succession of corporate scandals. The rap sheet is extraordinary: Mitsubishi and Suzuki have misstated fuel economy data; Takata has had faulty airbags; Mizuho Bank made hundreds of illegal loans to gangsters; the Tokyo Electric Power Company was accused of ignoring safety warnings before the Fukushima disaster (it has since been nationalised); Olympus has been exposed as fiddling its accounts, as has Toshiba, which has also put its very existence on the line by mismanaging its Westinghouse nuclear power business.
In 2015-16, 58 cases of improper accounting were exposed in Japan, twice as many as in the previous year. No wonder Japanese prime minister Shinzo Abe has talked about the need for better corporate governance. No wonder, either, that R Taggart Murphy, professor at the University of Tsukuba, suggested that “the Japanese leadership class has become so incompetent as to be dangerous”.
For the record, Japan Inc is still producing successful businesses: high-precision measuring group Keyence, telecoms group SoftBank and retail pioneer Rakuten being the most obvious examples. The country has also begun, albeit belatedly, to discover the virtues of the sharing economy.
Yet the recent scandal that has resonated most in Japanese society has to do with a very different kind of fraud. On 28 December, Tadashi Ishii, president of Dentsu, the country’s largest advertising agency, resigned after 24-year-old employee Matsuri Takahashi committed suicide, jumping to her death from a company dormitory. She had tweeted about the strain she was under – she worked more than 100 hours of unpaid overtime in the month before her death – saying: “They’re making me work Saturdays and Sundays again. I want to end it all.” To make things worse, supervisors harassed her about her “messy hair and bloodshot eyes”, saying she had “no femininity”.
The investigation into her suicide by the Ministry of Health, Labour and Welfare found evidence that Dentsu had under-reported overtime hours worked by several dozen employees, presumably to circumvent regulations that are supposed to ensure that staff don’t work more than 48 hours a week without an agreement with unions. The prevailing ethos at Dentsu before Takahashi died is best illustrated by a quote, in its training materials, from a former president to complete tasks and satisfy clients “even if it kills you”. (This exhortation has since been removed.)
The fact that the Japanese language even has a word for death from overwork – karoshi – indicates how bad this problem is. The first government report into this issue said that one in five companies had staff who worked at least 80 hours of overtime a month. Part of the difficulty, as Japan Times columnist Hifumi Okunuki says, is that “mouretsu shain”, the word Abe has used to describe workaholics, “are the workers who slaved morning to night during the country’s three decades of economic growth in the 1960s, 1970s and 1980s. In exchange for giving up their private lives, they enjoyed nearly guaranteed employment through to retirement, only ever at risk of getting fired over a particularly grave offence.”
Yet today, Okunuki says, “mouretsu shain are now treated more like war criminals, depicted as middle-aged wage thieves with little ability and low productivity”. Companies pit them against each other – or against younger colleagues – because they are so expensive. It is far cheaper to replace them with younger staff or irregular workers, the latter now account for 40 per cent of the workforce.
Abe’s latest budget offered tax incentives to encourage firms to turn temporary staff into permanent. Yet the causes of karoshi are far too deep rooted to be blamed on any particular politician or economic system. As Ian Buruma writes in A Japanese Mirror: “Power in Japan has never rested so much on the letter of the law as on a type of social totalitarianism. People were often made to behave according to imported codes that they didn’t really share.” These codes, enforced by the Tokugawa shoguns in the Edo era (1615-1867), were reinforced by a brand of Confucianism that emphasised duty to one’s parents, the state and society.
As Buruma says: “Now that western culture has reached even the simplest Japanese home, the surface of Japanese life has changed beyond recognition – yet it remains a deeply traditional country.” The desire not to disturb wa – harmony – is one reason so many Japanese (especially men) work such long hours. It also explains why conflicts are so rare in Japanese corporate culture as staff are schooled to handle the distinction between tatemae (the official version of reality to which everyone pays lip service) and honne (what is really happening).
The emphasis on social duty is especially striking on Tokyo’s efficient Metro service. On a typical daily commute, workers may be urged: to turn their mobile phones to silent (and not to talk on them if someone calls); to adopt the best posture when sitting; to wear their backpacks on their chest; and to be careful with wet umbrellas and pushchairs. These messages are reinforced by social conventions that it is rude to talk too loudly even to fellow passengers – a taboo usually ignored only by drunken businessmen on their way home from nijikai (after-party drinks at the end of an office night out) – or eat food on the trains.
In such a social climate, the only way to end systemic karoshi is to create a new harmony in the workplace that encourages staff to seek some kind of work-life balance. Some companies are doing this: Tokyo healthcare firm Saint-Works Corp actually tapes departure times to employees’ uniforms when they plan to work late; trading house Itochu has banned work after 10pm; and IT developer SCSK gives staff a bonus if they take more holidays and work less overtime. Even Dentsu now turns off the office lights at 10pm and has appointed a former government minister to advise them on complying with labour laws.
Workaholism is just one aspect of Japan’s business culture that hampers Abe’s drive to persuade more women to work. Women are, Pillings says, the country’s most “neglected resource”. Better educated than men, they are still given more menial jobs and are often advised by their boss, at a certain point in their lives, that it is time for them to go home and have a baby. In some companies, such sexism was incorporated into HR policy. In 1983, a leaked memo from the Kinokuniya bookstore revealed that managers were not to hire the following kinds of women: ugly, argumentative, tiny, divorcees or those who “respected passionate artists like Vincent van Gogh”.
As R Taggart Murphy notes, Japanese culture is changing, partly driven by women themselves, who have created different, less restrictive personas than okusan (wife) or kyaria ooman (career woman). In Tokyo’s bars, it is not uncommon to see groups of young women (joshi-kai, literally ‘women’s meeting’, because they have no intention of meeting male expectations) dressed to shock, subverting Japanese feminine stereotypes.
Pop star Matsuda Seiko was a harbinger of change, becoming a heroine, in the 1980s, for single Japanese women. The greatest female pop idol of the 1970s, Yamaguchi Momoe, retired relatively quickly to marry an actor and has publicly played the loyal okusan ever since. In contrast, Seiko dressed satirically in a schoolgirl’s uniform, gloried in her three marriages and flaunted her boyfriends.
Ironically, Abe’s expressed desire for women to take top roles may come to pass in politics. Three women have been hailed as his likely successors: defence minister Tomomi Inada, Yuriko Koike, the governor of Tokyo, and Renho Murata, leader of the Democrats, the main opposition party.
Getting more women to work will not help Japan’s demographic crisis. Last year, the number of births fell to 981,000, the lowest since 1899. This wouldn’t be so much of a worry if Japan wasn’t so good at keeping old people alive. By 2050, one million Japanese could be over 100 years old. The obvious ways to tackle an ageing population are to increase fertility (which Japan has failed to do), productivity (where its world-leading investments in automation may help) or participation in the workplace.
Yet Japan is ahead of the curve when it comes to helping the over-65s work. Sheet metal manufacturer KATO Mfg (which supplies Boeing) only hires workers who are 65 or older but keeps the production line going 24/7. Cosmetics maker Pola has no retirement age and estimates that 5,500 of its 50,000 sales staff are in their seventies (one employee has turned 100). For once, Japan’s much-maligned traditional culture may help. Respect for elders and superiors was one of the Tokugawa codes, and that attitude is reflected in Miyazaki’s movies: powerful old people are a recurring motif in Castle in the Sky, Kiki’s Delivery Service and Spirited Away. Many of the older staff still working in manufacturing are passing on their skills to younger employees.
For a society often typecast as too traditional for its own good, Japan has proved flexible in, to use Pilling’s phrase, bending adversity. A quarter of a century of little – or no – economic growth has left some asking whether a return to the high-speed growth Japan enjoyed from the 1960s to the 1980s would actually be good for the country. Haruki Murakami, Japan’s most famous novelist, is encouraged by such questioning, telling Pilling: “We are lost and we don’t know which way we should go, but that is a very natural thing, a very healthy thing.”
Although as a wealthy novelist, it is easy for Murakami to pontificate about what young people should do, he is encouraged by the willingness of many to ignore ‘the promised road’ (the conventional career path in which they go to university and then get hired, en masse, by one of the big companies) and enjoy a less pressured lifestyle akin to ‘slow living’ in the west. The term otaku refers to a more alienated version of this attitude, typically a young man whose obsession (usually an aspect of popular culture) is more meaningful than anything else in their life. In extreme cases, these men barely leave their bedrooms and are known as hikikomori (literally ‘pull-in and retire’).
A country full of joshi-kais, otakus and hikikomoris probably isn’t the Japan Abe wants to create, but it may well be what he ends up with. In some ways, Japan remains one of the world’s most cohesive societies – it is not irrevocably divided by ideology, religion or regionalism. Yet it is a more diverse place than it has ever been. It remains a land where consumers are enthralled by novelty – whether it be in the form of a backless and sideless sweater, a fad for hiding in Ikea stores overnight or Super Mario go-karts.
Anyone trying to understand this enigmatic society would do well to heed Oscar Wilde when he said: “The whole of Japan is pure invention.”
Words: Paul Simpson
This article first appeared in the Spring 2017 edition of Work., the magazine for senior members of the CIPD
