October 01, 2015 What Japanese companies can learn from Silicon Valley about speed and nimbleness
In my work as a consultant to the American operations of Japanese firms, one of the most frequent concerns I hear voiced by Americans employees is that the company acts too slowly. Decisions take a long time, and there is a lot of bureaucracy and busywork that gums things up. While multitudes of people are being consulted and thorough analysis is being done, windows of opportunity are closing and more nimble competitors get the edge. American employees, who often experienced more efficient ways of doing business in previous employees and are in vantage point to see close-up how differently local competitors are behaving, tend to feel particularly strongly about how their Japanese employers need to get more nimble.
How to retain the good aspects of traditional Japanese management techniques while moving quickly and keeping up with today’s rapidly changing markets and instant flow of information I believe is one of the most important questions facing Japanese firms today. I hear about this dilemma from my clients across a wide variety of industries – from electronics companies to car manufacturers to pharmaceutical firms. It seems that Japanese firms are all wondering, how can we keep up and keep from being left behind, without sacrificing our souls? How can we respond to increasing demands from customers to bring out new models and designs quickly, while still retaining the approaches that made us successful in the first place? While trying to answer these questions, too many Japanese firms continue to muddle along doing things the same old, slow ways.
From the standpoint of where I am in Silicon Valley, the contrast between how Japanese firms and their American competitors typically approach things is particularly stark. Firms here talk about “failing fast” and getting Minimum Viable Products out the door as quickly as possible even if they are not perfect. Rapid iteration is the name of the game and “blitzscaling” – the ability to grow a business at lightning speed – is the latest hot concept. Silicon Valley seems to have mastered the art of rapid innovation and change.
Recently, I have come to believe that a potential source of salvation for Japanese firms lies in the very thing that threatens them most – the management techniques that enable Silicon Valley firms to move fast. Silicon Valley companies have become extremely adept at creating and building new products and getting them in the hands of customers quickly. And then rapidly gathering customer reactions and using it to improve the product. Firms using these techniques are disrupting markets, and if they don’t watch out Japanese companies are going to be among those that lose out.
What most people don’t realize is that the techniques used by Silicon Valley firms – including scrum, kamban and The Lean Startup – have their roots in Japan. The difference is that Japanese firms don’t use these methods, or if they do it’s limited to manufacturing settings. What Silicon Valley firms have figured out is how to apply these productivity tools to the white collar knowledge work that is the key source of competitive advantage for most firms today – areas such as software development, product design, project management, and marketing.
As I discussed in length in my book published in Japan earlier this year Creating Engaged Employees in Japan (coming out in English soon), Japanese firms are experiencing a crisis in productivity. I believe that Japanese firms can improve both their efficiency and their innovativeness by bringing things full circle and applying the approaches that Silicon Valley learned from Japan. Japanese firms desperately need to free their employees from the hierarchy and red tape that weigh them down, and enable them to apply their talents in a productive atmosphere.
In trying to make changes, many Japanese companies are quick to look at American models, and often hire big American consulting firms to put in place “typical” American systems. But just adopting what many American companies do might not be the best choice for Japanese firms. Instead, it might make more sense for Japanese firms to look at America’s most competitive and cutting-edge firms, many of which are in Silicon Valley. These firms, which include Apple, Google, Facebook, and Netflix, demonstrate that it is possible to create organizational cultures and ways of working that are radically different from traditional American firms, and particularly different from traditional Japanese models. They show that progressive approaches, which tap into the power of motivation and engagement and effectively leverage the talents of white collar knowledge workers, lead to excellent corporate performance. I believe that these kinds of successful Silicon Valley firms are the ones that Japanese companies need to be looking to as models as they strive to revitalize the way they do business.
As an analogy, consider the situation of many developing countries when they wanted to make phone services available to a wide population. Because they had never put in traditional wired telephone systems, they were able skip that stage to move directly to the most technically advanced mobile approach. This approach of skipping inferior, less efficient, or more expensive systems and moving directly to a more advanced one is referred to as leapfrogging, and that may indeed be the best approach for Japanese firms to take – rather than emulate the “typical” American firm, instead strive to incorporate elements learned from the very best examples.
In an attempt to support Japanese companies in learning from Silicon Valley, in addition to my hands-on work as a human resource management and organizational consultant to Japanese firms doing business in Silicon Valley and throughout the U.S. as well as globally, I’m trying to help in other ways also. I’ve just published a book that explains the unique culture and business practices of Silicon Valley in Japanese. And this fall, collaborating with two other consultants I am presenting a seminar (both in Silicon Valley and Tokyo) for Japanese on how to apply Silicon Valley techniques like agile development and Lean Startup in the Japanese company context to achieve greater efficiency and swiftness.
It’s been fascinating for me to talk with Japanese companies about how using Silicon Valley techniques can lead to changes in their organization. It’s not just about how the programmers write their code – it’s a whole different way of connecting with the customer and creating products that they will be delighted with. It’s about how co-workers communicate with each other (freely and openly), and how managers manage (lots of empowerment and no micromanagement). It’s about how different departments work together as one team.
I’m excited to see what can happen when Japanese firms bring home techniques that had their start in Japan. Since the original concepts were Japanese, it stands to reason that Japanese firms should be able to apply them more effectively than anyone else. If so, in the hands of Japanese companies, the techniques of Silicon Valley could become very powerful competitive weapons indeed.
