The great Peter Drucker wrote the following about Japanese management culture in 1971:

"If there is one point on which all authorities on Japan are in agreement, it is that Japanese institutions, whether businesses or government agencies, make decisions by "consensus." The Japanese, we are told, debate a proposed decision throughout the organization until there is agreement on it. And only then do they make the decision."

Contrast this with the management culture at many American startups. In startup world, people are urged to "take risks and fail fast," make decisions, move on and "get shit done." It's a culture that values velocity over longevity. It's given rise to many of the innovations we now take for granted, but has also left in its wake a long list of ideas that never went anywhere and an even longer list of burnt out people.

The belief is that these values help companies innovate. Often, for companies in the scrappy startup phase working on complex issues, this message is needed to avoid "paralysis by analysis." That's why so many, if not most, start-up founders - myself included - tout these ideas as critical to taking a company forward as quickly as possible.

But there's a downside to this approach. Over time, excessive focus on innovation and speed at the expense of the people that are supposed to make it all happen has a way of catching up to us. Uber's recent woes are a prime example. Emphasis on growth helped them scale, but it caught up to them with bad press about its "dude-bro" culture: one where sexual harassment became commonplace, drivers were treated unfairly and riders were put at risk.

So, if you want to build a culture that lasts, maybe there's something to learn from the Japanese approach after all?

Put People First

I was reminded of this juxtaposition in a recent conversation with leaders at Hitachi Data Systems and Hitachi Insight Group. They were telling me of a recent culture transformation their organization experienced and how they've updated the hundred year old core values of the company to last into their second century.

Scott Kelly, Chief Human Resource Officer of Hitachi Data Systems and Hitachi Insight Group says, "Our guiding values are harmony, sincerity and pioneering spirit. These core values were created when the company was founded and are now over 107 years old. They've been with us through all the ebbs and flows of the organization."

These values are similar to some that we see in American corporations, but there's a twist. These values are about togetherness and collaboration, rather than individualism. There's none of the "fail forward" aggressiveness that's often noted in core values of American firms.

Drucker wrote that collaboration and consensus was key to the Japanese approach. He detailed the Japanese decision-making process, which begins with people - usually groups of people. These people take time to consider the question from all the angles. Only then, would a decision be made. But once it was, things moved quickly because everyone that needed to be on board already was.

One argument that's always been levied against this collaborative type of approach - in Drucker's time and now - is that it slows decision making, which hampers innovation. But at Hitachi, that hasn't happened. Innovation is at the core of what they do: the company's social innovation business and Lumada platform are at the forefront of leveraging big data, the Internet of Things and AI to, among other things, improve public safety and transportation efficiency, conserve natural resources like water and energy, and even improve healthcare.

It also hasn't been true of Japanese culture more broadly. According to the World Economic Forum, Japan is second in the world in terms of the number of world-leading innovative companies that call it home. That puts it ahead of China and India, both considered innovation leaders.

Elevate Teams Over Individuals

Hitachi's word choice tells us something else important about culture. "For us, harmony is about how we work together and get the job done," explains Rich Rogers, Senior Vice President of Engineering and Product Management at Hitachi Insight Group. "It's not about hierarchy; it's groups of people coming together to solve problems."

That lack of hierarchy is surprisingly characteristic of the Japanese approach to management, which is often thought of as being a hierarchical culture. Yet, this isn't how it manages its people. Unlike the United States where CEO salaries are, on average, 357 times that of their employees, in Japan the average CEO salary is just 67 times higher.

These statistics belie a different approach to the relationship between executives, managers and employees. At Hitachi, this shows up in relationships between managers and employees. "We have leaders who have taken wage reductions to stop layoffs," says Rogers. "For us, the management role is more about having mentors, people who pull you up. It's a higher value relationship. Once you've learned from one mentor, you move to a new one to learn new things."

Build a Culture of Believers

Hitachi does all this because it believes that people are the most important resource the company has. Building a people-positive culture where people can believe in their ability to make a difference is the key to getting the most from them.

This too, is a very Japanese value; as a small, island nation, Japan has long realized that its people are its most important natural resource.

"We want to build a culture that breeds confidence, not a culture that breeds anxiety," says Kelly. "It's our goal to eliminate those 'brilliant jerks,' not to elevate them the way some companies do in the name of getting things done. Because, in 100 years, or even ten, you're going to forget the projects and the products - but you won't forget the teammates you worked with. Helping each individual contribute their best helps to make the whole team stronger."

I'd posit that the reason these three values have lasted for more than 100 years at Hitachi - and will likely last for 100 more - is because of the emphasis they place on human relationships. Longevity comes when you put people and relationships first: relationships between man and machine, between workers and managers, and between the company and the rest of the marketplace.

Published on: Jul 12, 2017