Talent Management In Japan: A Different Perspective

This week I had the opportunity to spend a few days in Tokyo, speaking at the BizReach (a fast-growing recruitment platform in Japan) Future of Work Summit. As I met with a variety of CHROs and other business leaders, I walked away reminding myself that all talent strategies are local, and Japan, one of the world’s largest economies, has some very unique challenges of its own.

First, it’s important to understand that Japan is an enormously important country – it has the fourth largest GDP in the world, and delivers this with a very small population (the population of Japan is only 127 million people). This illustrates the country’s tremendous manufacturing expertise and its tremendous focus on efficiency and productivity. While the country’s economic productivity has been flat for many years (and its population is actually shrinking), it continues to be a vibrant economy undergoing a slow but steady transformation into the digital age.

Remember, by the way, that Japan has an entrepreneurial business culture. The Toyota Manufacturing System, which pioneered ideas like real-time logistics and empowered employees, was developed in the 1950s and 1960s and is actually the original roots of Agile which has become so popular today. Sakichi Toyoda, who was an engineer, conceived these new management practices and they were built on the original idea that the collective can only thrive when every individual has a voice. It was far ahead of its time.

Today Japanese business innovators like Kazuo Inamori, who pioneered a model called Amoeba Management, are developing a new manifesto for leadership, one I see being adopted all over the world. The Amoeba Management System has been implemented at more than 700 companies, including Kyocera, KDDI and Japan Airlines (JAL), where Inamori led the successful turnaround initiative. I strongly recommend you look its basic principles (see below.)

For those of you who have been to Japan, you probably marveled at how orderly and well maintained it is. Trains run on time; the roads are well paved and clean; people receive excellent healthcare and there is a young population who acts and looks just like young people in other countries of the world. Soichiro Swimmy Minami, the CEO of BizReach, and I talked extensively and he is a young entrepreneur (educated in the US) who runs his company just like the startups I meet in San Francisco. His team is energized, engaged, and creative.

That all said, business and HR leaders in Japan have some unique challenges.

I spent some time with the CHRO of one of Japan’s largest companies and he shared some startling statistics with me:

• Because of the low birth rate and shrinking population, his company is expected to be short 50,000 mechanical engineers in the next ten years, so they are starting to source in Vietnam and consider moving core engineering to other countries.
• Their transition from traditional manufacturing to fully digital products is going too slowly, so they are struggling to create a more innovative culture through experimentation. This topic came up throughout the conference and I strongly urged the HR teams to experiment with their own organizational models. Concepts like transparent goals, small teams, and empowerment are well known in Japan, but many managers tell me “people are not always bold enough” to innovate. This is a culture issue which can only addressed by top leadership.
• Careers and learning are core to Japanese culture, but programs are immature. Everyone I met in Japan values learning and education, but the market for social learning and continuous learning solutions is still very young. New products like Learning Experience Platforms, Workday, and collaborative systems like Workplace by Facebook are still new to Japan, so this market will grow quickly.
• People work a bit too hard. I showed the audience some very interesting data on employee engagement, and it clearly shows that Japan’s economic productivity has come at a price. There appears to be a big focus on fixing this, so the market for wellbeing and engagement solutions is growing.

Fig 1: Global Engagement Trends, source AON Hewitt 2018 Engagement Survey 

Talent Strategies Must Be Local

What does this tell us about HR and talent strategies? The simple answer is that they must be local. While today we read a lot about Japan’s low birth rate and lack of focus on work-life balance, my experience tells me this is a country that will transform itself in the next decade. The country’s focus on manufacturing expertise, management, and collective thinking in the 1960s and 1970s is likely to lead to a new culture of growth and innovation in the decade ahead. 

Today there are still far too few women leaders in Japan (only 5% of senior leaders, compared to 23% across Asia), but the Prime Minister has set a goal to reach 30% by 2020. This is an aggressive target, but as the population continues to stagnate in size, I actually see no other choice if Japanese companies want to grow. The country has an enormous untapped labor pool among women, and companies like Nissan are aggressively pushing women into leadership.

One of my business contacts in Japan is the ex-CEO of one of Japan’s largest companies, and he gave me another perspective. While Japan is not as diverse and inclusive as many countries, the country has a low crime rate, low levels of poverty and unemployment, and continues to take care of its elder citizens. 

I believe Japan has many lessons for us all to learn, and I’m sure Japanese companies will transform themselves rapidly in the years ahead.

(And by the way, I was thrilled to see Naomi Osaka’s victory in the US Open.)

The Amoeba Management Principles: Note How Similar They Are to Agile