NY Forum on Japanese Culture and Business Globalization in the IT Revolution
Date: October 2, 2000
Place: Japan Society in New York
Organized by GLOCOM (GLOCOM Platform)
Co-sponsored by Japan Foundation and Japan Society
Mr. Yotaro KOBAYASHI (Chairman of the Board, Fuji Xerox Co., Ltd.)
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Yotaro KOBAYASHI (Chairman of the Board, Fuji Xerox Co., Ltd.)
"Implications of Globalization and the IT Revolution on Japanese Corporate Culture--The Essentials for Managers in the 21st Century"
Good afternoon, ladies and gentlemen. I am happy to be back here, because I am someone who has respected the Japan Society for a long time. I am also happy to be part of this program, because I have been closely connected with GLOCOM and the International University of Japan.
I will talk about the impact of globalization and the IT revolution on the corporate culture in Japan. My main interest is in their impact on the Japanese business model. At the very beginning, let me make myself very clear about my stance on this issue.
Currently the most popular Japanese business model is the "global" model, with the IT revolution playing an important part. Here, as many people say, what is popular and dominant is the American model in most cases. In my perception, unfortunately, there has been a very serious misunderstanding in Japan as to what is the representative business model in the U.S., a misunderstanding in the sense that, at least in the past several years, there has been a very strong view in Japan that the leading model of this time and maybe in many years to come in the 21st century would be the American model, which is a model to maximize "shareholder values," and maybe other stakeholders' values would follow in a very humble way. Typical Japanese thinking is that it's not a question of whether you like it or not, but this is the mainstream model, dominating the world, and unless you play along with this model you will be gone. I think this is a serious misunderstanding because we have been misled by what I consider to be "excessive shareholder activism" in the U.S., which started in the late 1980s. We still see some of it.
But I also see two things: the continuing basic model of balancing shareholder values and the values of other stakeholders, and also the trend of reflecting upon extreme shareholder activism in the U.S. For example, at the 50th anniversary of the Aspen Institute I recognized that the origin of the Aspen Institute started from its stark realization that by 1950 American society and other leading modern societies had become too specialized, not caring about more important values. It is interesting to note that at the Aspen Institute's 50th anniversary we returned to the spirit of the Institute from an extreme state of specialization, such as the extreme state of market value capitalization that has a tremendous bubbling effect in many parts of the society. A couple of years ago some people said that this is no bubble. Clearly, this is a bubble. And yet it's not the whole society. I think an interesting thing about America today, different from the Japanese bubble in the 80s, is that America still maintains a very sober sense in some parts of this society, even in the business society. And you still see a very healthy business model being pursued, which is a combination of a very aggressive pursuit of shareholder values and giving very high value to other stakeholders.
Now because of this feeling, I'll speak about, first, the importance of talking to the market, facing the market with one's own vision, conviction and belief, because in Japan there is even a sense of being afraid of the market. Although we don't want to do it, we will have to restructure and undersize. Of course, we have to improve our profitability. There is no question about it. But that's not everything. If you really have a strong belief or vision and begin to implement it, a vision still comes out of whatever the balance you think is right. There's no golden rule: the balance differs from company to company, from industry to industry, or from time to time. It's a question about management and a question about the organization and its own behavior, letting the market believe that what you are doing is right, benefiting shareholders as well as other stakeholders in the long run. So my first message is more to Japanese managers: don't be afraid of the market. The market will understand.
Second, with respect to IT and the Internet, we are in the age of speed management and speed decisions, eliminating mid-levels. Thirty years ago or so we started talking about ways to make organizations more efficient and flatter, and communications more direct, but at that time you could not handle more than 200 people directly reporting to you. With the IT revolution, now you can. Or can you? I don't know. I don't think anybody can do that even in the age of the Internet. There is too much information for one person to absorb, analyze, and select. This is where the question of trust comes in. If speed is the key, often you have to eliminate the time that's usually necessary for you to evaluate the information. You have to take in information on its face value. But you cannot do that unless you have absolute trust in those people who are sending the information to you. This is where a very important question of renewal of corporate governance comes into play in Japan. I believe this will require management to be open, transparent and accountable to the members of the organization.
And there is a question of trust between the organization and other stakeholders, including consumers and the market. We have not been particularly good at establishing explicit ways by which we ensure trust, but somehow we have depended upon some kind of "passive trust," that is to say "they will understand." This is something that management typically should be responsible for, as the market is different, people are different, and gender and generations are different. So I think the question of transparency and accountability has become a very important issue, not just as a board matter for the internal organization, but for the organization vis-a-vis society. This is becoming more important and more pressing, again by the IT revolution, as the Internet and IT devices are giving consumers and people in general much more power to judge what the company is doing and take action. So the trust element becomes doubly important. Trust is not passive trust, but explicit trust, and that is becoming much more important as corporate operation becomes global. When Japanese companies operate outside of Japan, it is very important and challenging to have a system that will work in the multi-cultural environment.
Finally, I would like to talk about the importance of people over technology. We cannot have a situation where technology dominates human behavior. We cannot have a situation where technology dominates our thinking, changing our set of values. We have to remain human. We have to be the master. But today, I don't know. In Japan, Prime Minister Mori is anxious to utilize IT to strengthen the Japanese economy in the next few years. So some public money will be spent to push the IT revolution, and there will be discussions as to where to invest in order to reach the "critical mass" as quickly as possible. But the main point is that Japanese corporate culture will be greatly affected in the process, but we will keep our mind cool, as the main business model in the U.S. has been, and will remain to be, balancing shareholder values and other stakeholders' values, that is, balancing economic values and social values. That is going to be a must for the new business model that Japan will have in the years to come.