What Japan Has Lost and What It Is Trying to Regain

Recently, while thinking about employee training, career education, and work regulations, I arrived at a much larger theme.

When did we start thinking that
“a company exists to maximize profits”?
When did we start thinking that?

And was that really the way of thinking that Japan originally held?

Was Japanese-style management outdated?

Post-war Japanese companies were quite different from what they are today.

Lifetime employment.
Seniority-based promotion.
Enterprise unions.
Company trips.
Company housing.
Welfare benefits.

To young people today, this might look like a somewhat strange world.
Of course, there were problems.
However, a company was not just a device for generating profit.
It was also a community that supported the lives of employees and their families.

Nowadays, it might be called
“inefficient.”

But with that system, Japanese companies swept the world.
Automobiles.
Home appliances.
Semiconductors.
There was a time when the whole world was studying Japanese companies.

It's not Kenichi Ohmae's fault (laughs)

The 1990s.
The bubble bursts.
And globalization progresses.

Japanese companies end up competing in the global market.
From around this time, words like
selection and concentration,
meritocracy,
corporate value,
shareholder value,
and ROE
began to increase.

Kenichi Ohmae was also one of the leading commentators of that era.
So, I do have a slight feeling of wanting to say,
“It’s all Mr. Ohmae’s fault!” (laughs)

Of course, that’s not true.

The era itself was heading in that direction.
Japanese companies thought,
“We cannot survive unless we learn American-style management.”

And they studied hard.
Like the serious Japanese people they are.

The flow continuing from the East India Company

Looking at it from a broader historical perspective, we arrive at the East India Company, which is considered one of the prototypes of the joint-stock company.
The East India Company was an organization for maximizing the profits of the suzerain state and the investors.

Build an organization.
Move people.
Generate profit.
The purpose is clear.
It is the profit of the suzerain state and the capitalists.

Furthermore, in the latter half of the 20th century,
Milton Friedman argued that
“the social responsibility of business is to increase its profits.”
To put it quite crudely,

it is the philosophy that managers should not engage in social activities,

should not think about the happiness of employees,
and should increase the money entrusted to them by shareholders.

And shareholder capitalism spreads throughout the world.
A company belongs to the shareholders.
Managers exist to maximize the profits of the shareholders.

That is the way of thinking.

Did slaves become workers, and did suzerain states become shareholders?

To put it a bit extremely,
it looks as if slaves became workers in history,
and suzerain states became shareholders.

Of course, they are not the same.

Modern workers work of their own free will.
Shareholders are also not suzerain states.

However,
if you look only at the idea that "organizations exist to maximize someone's profit,"

you can feel some similarities.

In the past, it was for the benefit of the suzerain state.
After that, it was for the benefit of the capitalists.
And today, it is for the maximization of shareholder value.

For a long time,
we believed that was what a company was.

And the Japanese are particularly diligent.
They seriously learn theories born overseas.
They seriously put them into practice.
They work seriously.
That is why they also learned shareholder capitalism with all their might.

Sometimes, to the point of forgetting the values they originally held.

However, the world has started saying something else

This is the interesting part.
Japan spent 30 years learning American management studies.

However, recently,
the world has started saying something else.

Human capital management.
Purpose-driven management.
Stakeholder capitalism.
Empathy capitalism.
B Corp.
Circular local economy.
Small economy.

Profit alone is not sustainable.
You cannot be happy just by looking at shareholders.
Such discussions have been increasing.

It looks as if the world
has come full circle back from shareholder capitalism.

What Japan has lost

I do not mean to say that the Japan of the past was correct.

There were problems with lifetime employment.
There were also problems with the seniority system.

However,
nurturing employees,
taking a long-term view,
valuing relationships with the community,
and emphasizing trust between people—
was it necessary to discard even those values?

I have some doubts about that.

In the process of learning American management studies, Japan may have gained efficiency but lost something important.

What is Japan trying to regain?

Looking at recent trends like human capital management and stakeholder capitalism, I do not see them as new management theories.

Rather,

it seems to me that they are simply re-explaining the values that Japanese companies have held for a long time using modern terminology.

Valuing employees.
Valuing customers.
Valuing the community.
Valuing trust.

And profit is something that is born as a result of that.

Of course, there is no need to go back to the past.
Nor can we go back.

However, Japan is facing population decline and a shrinking, aging society faster than anywhere else in the world.

That is precisely why the systems based on mass production, mass consumption, and mass employment are no longer viable.

I actually think that Japan might be testing the next society ahead of the rest of the world.
A full-time, five-day work week is not the only way to be a regular employee.
The company is not the only place where one belongs.
There is also a place in the community.
It is not just about work, but also about taking on challenges.
The short-time regular employee system I am working on is one example.
The Shingu CoCo Square is another.

It is not so much a mechanism for maximizing profit, but a mechanism for increasing the places where people can thrive.

We are not returning to the Japan of the past.
I do not wish to deny American-style management either.

However,
in a society with a shrinking population,
how can people continue to work happily?

To that question,
it seems that Japan has begun to search for an answer a little earlier than the rest of the world.

Perhaps Japan is not trying to regain what it has lost.

It may be that it is trying to remember what is necessary for the next era a little earlier than the rest of the world.

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