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March, 2002
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Facing the
New Prospects
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Japan seems to have spent a whole year, trying just to keep abreast with a mosaic of occurring problems. However, we will hopefully make a breakthrough this year, clearing this sense of blockade lingering over our society and opening up some bright prospects toward a bolder future. The latest output of the 2001 World Competitiveness Scoreboard issued by Switzerland's International Institute for Management Development (IMD) may have strong impression on you. In it, Japan was ranked 26th overall, down from 24th last year. While leading the world in patent application numbers, Japan sagged to the 15th when it came to incorporating such technologies into management and business strategy. What does this discrepancy mean? During the 20th century, Japan promoted production efficiency and quality control as methods to enrich society, to improve our quality of life. It succeeded, and Japan became the world's second largest economy. However, now we're facing gridlock and in an urgent need to find the way out, to strike out in a new direction. Hints for such new direction are already in evidence. One is a customer-driven product development. Another can be stepping aside from hardware-centric stance. An effective combination of hardware and software, system, and services will increase value and help to create a completely new product. To continue this cycle, it is important that Japanese companies will put even greater importance on "Management of Technology," a philosophy which stresses the development process. Every company must integrate business strategy and technology strategy, and commit to improve productivity, speed up the processes, pursue more creativity and originality in the field of research and development. Installing strategic and powerful Chief Technology Officers (CTO) will be the key in this situation. Next, let's turn our eyes to the reform of corporate culture. The issue here is to shake off conventional standardized mass production style, and to adopt structures that are more development oriented. This means less internal orientation and more external orientation, from risk avoidance to risk taking, less indifference and more curiosity for latencies (valuing foresight and conceptualizing skill), from failure-bashing to more willingness to try again, less shelving of intellectual property and more implementation, less "me-tooism" and more respect for originality and creativity. In short, it is a dramatically reshaping of the traditional values and subconscious behavior in conducting business. The recurring mantra here is innovative management. Quick adaptation to changing environment is important, but without being swept away in change. You must implement management reform in an alert, agile manner that reflects a thorough understanding of key management policy. Identify your core competency and point new avenues for growth. "Creative construction heralded by creative destruction" is a famous phrase. The speed and the willpower to achieve will be the determinant for whether a company survives or not. We cannot let resources such as people, material, money, and information stagnate and atrophy without ever having the chance to demonstrate their potential. Use these hidden gems to drive new business models, new products, and new technological development that can lead to the emerging of new markets and new types of demand. Japan has a prospect. Our quality and production prowess make a strong foundation, and when the top executives concentrate their intellects on developing new technologies and products, in other words, when you promote development-oriented management, new roads will open for Japan and its industry. |
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Shifting from Finance & Cost Conscious
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New Business & Product Development |
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Survey of Current Corporate Management Issues
Identifies Priorities Facing Japanese Corporations |
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The results are in on Japan Management Associations (JMA) most recent Survey of Current Corporate Management Issues. The survey was conducted from September to October of 2001 and respondents were corporate planners at listed Japanese companies and JMA councilors. This survey is a continued JMA project to manifest current realities of Japan. This installment focused on corporate planning section to identify strategically important areas for Japanese companies in the future. |
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| ●Current and Future Issues | |
| Current issues at 2001 and issues that expected to appear in the future (around
2004) given by the respondents are shown in the following chart. Strengthening the financial status is regarded as a primary concern of today. Financial standing (44.8%), lower-cost structure (37.0%), and sales (36.4%) were the three issues that companies feel an urgent need to address for their survival. Every company must commit to improve profitability, cost structure and global competitiveness of existing businesses, before talking about the future. As for future issues, "new businesses and products (32.8%)" and "corporate vision and business strategy (25.9%)" came to the fore. "Financial standing (23.8%)," "lower-cost structure (13.5%) and the "reinforcing existing businesses (7.7%)" are still there, but expected to receive much lower priority. Once attaining a solid balance sheet and internal system, then a company can promote more aggressive strategies to create new business opportunities. In addition, "business alliance (13.1%)" and "corporate governance (10.9%)" are thought to be becoming substantially more important. Japan industry is entering a period in which the style of management practices will be questioned. Focusing on new businesses development based on vision and strategy is sound. Certainly it would represent a new tack that could free up Japan's long stagnant economy. However, will all the companies truly be able to put the current problems behind them by 2004 and put the creation of new business as their foremost priority? |
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Then, what are their observations for the future issues? With the above survey results, JMA interviewed the members of the Corporate Management Issues Survey Advisory Panel, a committee consisting of 41 individuals in charge of business planning at major corporations. The panel was asked what are the expected results if the same survey was repeated in 2004. That is, what issues would be of concern at that point, and how would the companies be seeing the future of 2008. A discussion of three scenarios offered by the panel follows. |
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Opinion here is that companies will attain solid financial ground by 2004, as currently predicted, and will focus more proactively on new business and product development, increasing profitability, refining corporate vision and strategy. This is based on an assumption that social values and the position of Japanese companies will not significantly change only in three years. Therefore accordingly, corporate perceptions would not change much in this relevantly short period. When seeing 2008, a significant shift in overall values is expected. Example of this paradigm shift is "US-style capitalism will no lead the global economy." Other example is environment that will directly impact the human being, thus necessitating more onerous regulation on environment conservation. In addition, corporate alliance, work sharing, biotechnology and nano-technology, etc. will be closely woven into corporate management. Another assumption was that shareholder-oriented management would become firmly rooted. At the same time however, some suggested that the US-style shareholder capitalism is an extreme and a disproportionate emphasis on shareholders would hinder companiesﾕ full commitment to establish their core technologies. |
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| Many pointed that, though individual company may vary, from the overall stance
such differences are relatively minor. The short-term issue will remain as strengthening
internal structures, and the mid-term objective will be the development of new
businesses and products that will boost up sales. They also said that in a sluggish
economy, pressing issues of the moment tend to remain the same, especially over
the short term of two to three years. It was noted however, that under the following conditions, new issues might be introduced for 2008. These are: hollowing out of Japan's manufacturing industry, radical modification of HR policy, and attainment of lower cost structure. |
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| There are several groups here. One said that Japan's economic recovery will
be kicking in around the latter half of 2002 and 2003, and will lead to accelerating
rates of change. Other pointed that ever-quickening change in economy and business
will demand equally fast response. In such situation, companies that only made
utmost exertions will survive and blossom. In either case, the key word is "speed". Then, how will the priorities change? Issues now expected as middling importance for 2004 (i.e. ranked 10th to 15th in the current survey) would move towards the top. These are corporate alliance, corporate image, corporate governance, management agility, risk management, and construction and IT & network utilization. |
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| ●Meeting future challenges | |
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All these results can be concluded that a greater social, international, macroeconomic,
and technological change are likely to happen, and companies must cope them with
speed. The willingness to step forward will well determine future. Many of "future"
issues can be, in fact, already traced in present concerns. The change in priority
is only derived from todayﾕs sluggish economy, which stresses the firmer financial
standing and low-cost structure. |
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 (By Kiyoshi Nakazawa,
Director of the Institute forManagement Innovation, JMA) |
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Recent Tokyo and Osaka Exhibitions
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| Japan Management Association (JMA) was delighted to hold several specialty
trade shows in Tokyo and Osaka during the autumn of 2001. HOTERES & FOODEX KANSAI 2001 took place at Intex Osaka between October 23-26 and attracted 286 exhibiting companies. Exhibitors came from 10 countries and one region and occupied 622 booths. HOTERES & FOODEX KANSAI focuses on the food and accommodation industries and is tailored to the Kansai area, which includes Osaka, Kobe, and Kyoto. Convening for the ninth time in 2001, displays at the show ran the gamut from kitchen, food service, and sanitation equipment to information systems. Of course, both domestic and international food and beverage products were also represented. It was attended by 44,000 visitors. Tokyo, on the other hand, played host to Japan Home Show 2001 and JAPAN STONE FAIR INTERNATIONAL 2001. The two shows ran concurrently at Tokyo Big Sight between October 30 and November 2. The Japan Home Show is Japan's largest housing-related show and consisted of four themed segments: BUILDING MATERIALS, REFORM & MAINTENANCE, EQUIPMENT & SYSTEMS, and HOME HEALTH CARE. Convening for the 23rd time, the show hosted 519 exhibiting companies from 20 countries and one region with a total of 770 booths. It was attended by 101,000 visitors. JAPAN STONE FAIR INTERNATIONAL was a showcase of stone-related products and technologies, including natural stone, grave and tombstones, building and architectural stone, and stone processing machinery. It was the fifth time the show has been held, and by presenting the many ways in which stone can be utilized, the show succeeded in portraying stone as a traditional, yet new, material. Two hundred and thirty-two companies from 12 countries and one region took 311 booths, and the show was attended by 38,000 visitors. Tokyo Big Sight also played host to another JMA-organized show-INCHEM TOKYO 2001-between November 27-30. Asia's most comprehensive trade show for the chemical industry, INCHEM TOKYO's exhibitor count rose from the previous convening to 354 companies from 10 countries and one region, and the booth count hit 1,104. It was attended by 85,000 visitors. In 2002, the Japan Home Show (http://www.jma.or.jp/JHS/) is scheduled to be held from November 19 to 22 at Tokyo Big Sight. The biennial HOTERES & FOODEX KANSAI (http://www.jma.or.jp/hfk/en/top.html), JAPAN STONE FAIR INTERNATIONAL (http://www.jma. or.jp/JSF/en/), and INCHEM TOKYO (http://www.jma.or.jp/INCHEM/en/) shows will next take place in 2003.
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Second Diploma in Company Direction
Examination Results Announced |
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| In 2001, JMA began organizing Japanﾕs first systematic corporate executive
training program in affiliation with England's Institute of Directors (IoD). A
Diploma in Company Direction marks the pinnacle of the program. On October 18,
2001, the second JMA/IoD Diploma in Company Direction Examination was administered.
One applicant, the president of one of Japan's listed companies, successfully
completed the examination. Together with four individuals that passed the first
exam in April, the number of diploma recipients now stands at five. In response to the growing need for corporate executive training, JMA has been offering a series of seven executive training courses since November 2000. Total of 181 executives have joined the course up to this date, and seven attendees have completed all seven courses, which makes them eligible to sit for the Diploma in Company Direction Examination. The next opportunity to join the elite five who have passed the exam will come on April 23, 2002 when the third JMA/IoD Diploma in Company Direction Examination is scheduled. |
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JMA GROUP
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| Japan Management Association（JMA） Activities: Survey, research and advisory services／Management education／ Technical conferences and conventions／Management system audit／Others 3-1-22 Shiba Koen, Minato-ku, Tokyo 1058522 Tel．+81-3-3434-1601 Fax．81-3-3434-1087 URL．http://www.jma.or.jp/indexeng.html |
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Japan Management Association
3-1-22 Shiba Koen, Minato-ku, Tokyo 1058522 Tel.+81-3-3434-1601 Fax.+81-3-3434-1087 URL : http://www.jma.or.jp/indexeng.htm London Office 109 Parkshot House,5 Kew Road Richmond, Surry, TW9 2PR United Kingdom Tel. +44-20-8334-8922&8923 Fax. +44-20-8334-8145 |