Exchange Rate and Talent Shortage (5)

Because of the backgrounds summarized in the last two articles, Japanese companies are advocating “survival” and “continuation” in chorus. The former word “survival” might also be described as more enhanced “winning.” The latter word “continuation” means not just continuing companies but also inheriting their own technologies and skills, while aiming higher.

There of course are differences between large companies and small and medium-sized companies. In these two months, large companies tend to buy out foreign companies more actively again, thanks to the advantage from strong yen. They also seem to reconsider their basic strategy for overseas expansion itself. Here, I would like to focus on small and medium-sized companies, which account for more than 90% of Japanese companies.

In and after the 1970s, what Japanese companies first aimed at was “improving efficiency.” They thoroughly eliminated waste, unevenness, and unreasonableness in order to improve quality of products and productivity. This activity made Japanese companies exactly “Japan as No.1” in various fields in the 1980s. However, in and after the 1980s, the focus gradually changed to vitalization. Vitalization means working actively. The representative examples are TQC and TQM activities.

Bottom-up activities participated by all workers of a workplace especially improved quality and productivity of Japanese products remarkably, and made Japanese products’ excellence and Japanese-style management as its background widely known in the world. Japanese-style management had three key elements: lifetime employment, seniority-oriented (wage systems), and in-company labor unions. The management system made human resources career enhancement inside a company easier, and as a result led to the improvement of product quality and technical revolution at the corporate level.

However, after the collapse of the bubble economy in the 90s, Japanese economy faced to a long lasting difficult situation called the “lost” decade or two decades. During this period, the U.S. and Europe brought prosperity back through the IT revolution and financial reform, while Japanese economy entered upon a period of disappointment. Even at present, the country might be an extension of the period.

At that time, a lot of Japanese companies pursued “improving creativity,” in other words, “being Only 1,” aiming at having technologies, businesses, or products that other companies could not copy. If a company has a product what other companies cannot reproduce, of course the company can make profits.

Representative examples were blue LEDs and hybrid electric vehicles. However, the “only our company’s” technologies and profits did not last for long as initially expected. A lot of countries have caught them up at present.

The last half century can be reviewed as above. Then what do Japanese companies in the 21st century, especially small and medium-sized companies, aim at and how are they willing to be? Their visions are not clear. Since the end of the 20th century, the tendency of globalization is certainly getting stronger. It is becoming a serious problem that how they can increase their existence not only in the domestic market but also in a new market where countries all over the world are united.

At least, allowing for isolationism or taking advantages independently by caring only about Japan do not conform to the order of the day on all accounts. Moreover, industries that Japan has advantages are already limited. The starting point is to clarify our position, or Japan with all over the world.

What should we do concretely? The first thing is to clarify our visions to coexist with other global and local players. For which target does our company provide products and services? Is our product development only for the domestic market, or for markets all over the world? These points should be clarified. It is necessary to make the attitudes toward working on their businesses and visions for human resource clear in order to get favorable response from a lot of stakeholders.

Japan apparently lacks human resources. It does not only mean that Japan lacks number of staff. For example, for managerial positions, human resources who are qualified enough cannot be secured in the present situation. We may have to accept incoming of people including foreign people into Japan during next 10 years in order to secure various human resources. It seems that it is an era we have to benefit from foreign people in aspects of product development, production, sales and management.

For that purpose, good ideas and means are necessary. According to circumstances, many types of human resource systems based on the conventional long-term employment (the most striking ones are lifetime employment systems) may have to be reviewed. Otherwise, not only foreign people but also even Japanese people cannot be retained in some ways.

Conventional in-house human resources development for Japanese staff is also becoming difficult. However, the in-house human resources development based on relatively long-term employment has been the origin that has supported strength of Japanese companies. This is a common problem between large companies and small and medium-sized companies.

To solve this problem, superiors and subordinates discuss well aiming at executing operations properly, clarify problems, and agree on standards for achievement. They set appropriate goals, properly agree on target figures, and communicate well about related matters (enough two-way communication). Only with these systematic approaches, execution of operations at proper standards may be realized.