The Cause of Japan’s Low Productivity

In the Nikkei Business series on how to “wake up Japan, Senior Chairman and former CEO of Japanese leasing and financial services company Orix Yoshihiko Miyauchi sees three mistakes that have led to  Japan’s “lost three decades”:

  • Allowing an asset bubble to develop in Japan the first place
  • Not stabilising the economy after the asset price crash
  • Not restructuring the Japanese banking system quicker – real restructuring did not happen until the 2000s, 10 years after the crash.

As a result, Japanese companies were “like tiny boats on a big ocean, using all their energy to avoid large waves. Rather than innovate or grow, they focused on cost cutting”, says Miyauchi.

Miyauchi rates Japanese employees very highly – “they have a strong sense of responsibility, and do all they can to fulfil their obligations. But there is a lack of creative thinkers.  There is a problem in the way we develop people – Japanese companies are always developing generalists, when in the future we need to focus intensively on supporting the development of specialists. If you don’t have specialists who are the complete experts, then you cannot achieve high performance. Japanese companies end up having 5 ‘semi professionals’ doing one specialist’s job. ”

“It would be a big shock to change this immediately, so probably Japanese companies will need a hybrid development system with a specialist track and a generalist track.”  I agree, but I have seen that in the past when this is done in Japanese companies, the specialist track is seen as a demotion away from line management.  Japan may need to introduce specialist, professional organisations such as the various chartered institutes we have in the UK, which certify qualifications  and support continuing professional development, to ensure that specialists are less reliant on the prejudices of their company’s HR system for their careers.

Rudlin Consulting helps organizations to connect with Japanese companies operating in Europe and Japanese companies to connect with European partners. Pernille Rudlin’s latest book (available in Japanese and English) on the challenges facing Japanese companies in Europe is available on Amazon.com

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