When looking at big business in Japan, it can be difficult to extrapolate commonalities among their practices. But according to Santiago Iñiguez, Rector of IE University, there are some trends which have made the business practices of Japanese companies more effective — and they are behind a Japanese comeback in recent years.
IE University recently organized the enlightED conference on technology and education in Madrid, between October 2 and 4.
“One example is the long-term vision,” Iñiguez said, identifying features that matter. This one is of particular importance in education, health, the pharmaceutical, and research-intensive industries, where investments yield returns in the medium and long term, he said.
In Iñiguez’s opinion, “the Japanese are patient, they understand when to wait,” compared to their Western counterparts.
“There is a second item — the respect you give to time at the company, and to loyalty and seniority,” he said. He observed that, until recently, Japanese worked for one company for life. In contrast, it has been more common to switch jobs or even industries in Western culture.
“That is not necessarily something good…. One piece of research published by one of our professors at IE University, Monica Hamori (an expert in human resources and organizational behavior), shows that, on statistical terms, those managers who stayed at the same company had a better chance of getting to the CEO position than those who changed companies and industries,” he said.
The third point: “the culture of quality,” Iñiguez said.
“We need to recover that same spirit of quality about products and services, the way they are delivered, because often times recently we have lost that very essential idea that companies are here not just to serve their shareholders, but also to serve their customers and produce high quality products and services,” he said.
He listed several examples, ranging from Uniqlo in the world of fashion, to materials, design, urban planning, and architecture. He pointed to Japan’s typical attention to detail, saying, “It’s not a coincidence that Japan has the highest number of Pritzker Architecture Prize winners.” Then he acknowledged the sheer capability required to design the biggest city in the world, Tokyo.
“I guess there is a renaissance of Japanese management style to some extent,” Iñiguez concluded.
The Nissan Case Study: ‘A Lack of Transparency’
We asked what his thoughts were about some of the biggest news coming out of Japan.
The case of Nissan and its executive Carlos Ghosn, for example. Ghosn was arrested in Japan in November 2018 on suspicion of using Nissan funds for his personal gain. He has since been accused of multiple financial misconduct charges, re-arrested and released again on bail on strict conditions, including restricted internet access, and confined to Tokyo while he awaits trial.
Iñiguez cited the difficulties faced by joint ventures generally: “At first there was not much clarity, there was very little information about what was going on. Once we started to see the leaks of news, it was very clear that managing joint ventures is very challenging. It happens elsewhere. Joint ventures are a phenomena subject to more turbulence because there is a need for a shared vision, which actually, in this case, there was. But also there was a need for full confidence. I think probably what happened at some stage is that confidence was lost.”
In his view, a key aspect in the Ghosn case was the lack of transparency. “The case of Nissan and Renault has been a very clear example of how companies need to be much more transparent and communicative in terms of being able to release and explain what is going on,” he said.
This situation highlighted the difficulty in balancing the secrecy many companies want to preserve in their design and creative process, but at the same time needing to be held accountable to their stakeholders and customers.
In conclusion, he said of Ghosn’s style of corporate governance: “There is another lesson, that CEOs are not emperors. CEOs are at the service of their companies, and sometimes some CEOs forget about this.”
Uniqlo Case Study: The Power of the Demanding Consumer
With global sales of around ¥2.13 trillion JPY (almost $20 million USD) for the 2018 fiscal year, Uniqlo is the most important brand of the Japanese clothing retail giant Fast Retailing Group. It is also a hot topic in the business world after having just opened a flagship branch in Milan in mid-September.
We asked Iñiguez what he thought was the secret to Uniqlo’s success. The rector of IE attributed part of the success to effective management, in some ways similar to Zara, the Spanish fashion giant that is especially popular in Europe.
“Uniqlo has a very distinctive aspect, which is producing things of quality at a very reasonable price, with lots of fashion, which fit the tastes of the big population. It’s not entirely a new idea, because, for example, Zara has implemented this before — they have an integrated system of supply chains which allows them to be very effective. Uniqlo is actually replicating some of those things,” Iñiguez said.
However, Iñiguez also paid tribute to the Japanese company’s uniqueness, namely the power of Japanese design. At the same time, he attributed part of this success to the demanding consumer: “Japanese consumers are very demanding in terms of design and taste. It’s a very good test in terms of any fashion company. According to what I know, Zara used to test many of their collections in Japan because they realize it’s a very demanding customer with a very progressive and advanced sort of taste.”
Iñiguez predicted more positive results for Uniqlo, betting on the success of the company, which is now expanding into Spain.
A Look to the Olympics, and The Future of Japanese Business
Where does he think is the Japanese business world headed? After all, the Olympics are just around the corner.
He didn’t hesitate in his response: the Olympics, when they happen, will put Japan in the spotlight.
“It will be very positive for the country, for the image and reputation [of Japan]. Japanese logistics work like clockwork, and what I am sure is that everything is going to work very smoothly, so you will probably project an image of efficacy and efficiency and good design and a very positive image,” he said.
Iñiguez even voiced the potentially unpopular opinion that recent Olympics haven’t helped the host country’s reputation, and therefore Japan has a unique opportunity to take full advantage and show how it can be done well. In particular, Iñiguez gave the examples of the Brazil Olympics, and the UK, now-split over its Brexit vote.
He thoughtfully summed up his view of Japan’s prospects: “We need to learn more about Japan, we need to open up to Japanese culture, and not just at the clichés. [We need to] know things on a much deeper level and understand better what are the rules. Not just the etiquette, but the rules and the principles that guide the way you do business, in order to increase trade and opportunities to do business between Japan and the rest of the world.”
About Santiago Iñiguez
Santiago Iñiguez de Onzoño is the 2019 recipient of the “Thinkers50 Founders Award,” which recognizes “individuals in the world of business ideas who provide industry leadership and inspiration.” The organization seeks to identify, recogniz, and promote the sharing of “extraordinary management and business thinking” by bringing international attention to their ideas.
With a multinational education and a background in law, he has researched, taught, and published extensively in the field of business since 1987. Appointed Rector of IE University in 2008, he is currently the Dean of IE Business School, professor of Strategic Management at IE University, chairman of the European Quality Link (EQUAL), and a member of the International Advisory Board of the Association of MBA’s, U.K. His books include The Learning Curve. How Business Schools are Reinventing Education (Palgrave MacMillan, 2011). His most recent is an e-book co-authored with Kazuo Ichijo, titled Business Without Borders: Companies in the Age of Populists Anti-Globalization (Palgrave Macmillan, 2019).
Author: Arielle Busetto