Spirit of the samurai — That’s what it’ll take for Japan’s economic success

Business Opinions - December 6th, 2002

by  Henry Scott Stokes

Samurai spirit, that’s what is missing today,” remarked a Japanese businessman I called on the other day. I don’t want to give his name here, but let’s consider his point.

“Samurai spirit,” he continued, “is the equivalent of knightly chivalry in Europe in the Middle Ages.” It barely exists any more, he went on, and he regretted that fact.

Then this man expanded on his theme. “Globalization?” he said. “Now we’ve seen what happened with Enron, with World.Com and a few others, do we need to see more?” he asked. It helps a compa­ny to have roots, he went on. He deplored the western practice, now spreading in Japan, of laying off staff, if times are tough.

To him this was exactly the wrong way ’round. “The tougher the times,” he said, “the more important it is to find work for everyone on the payroll—to share work, if necessary.” But not to chop heads; that was immoral.

Among Japanese companies, he said, he liked Toyota. They did­n’t fire people, he noted. That company achieved its excellent results without having to resort to laying off people. If there was insufficient work in one part of the group, then management looked for opportunities to employ the people elsewhere within the com­pany or within the group. There was no question of putting them out on the street.

The staff, knowing this, worked all the harder. That, in essence, was how Toyota ended up with rates of profit five times the average in Detroit.

By contrast, my informant— himself the chairman of a billion-dollar-sales Japanese company— was less keen on Nissan, and its management style under the fabled Mr. Ghosn. Big bosses who slashed down their staffs—moguls like Jack Welch of General Electric (“Neutron Jack,” they used to call him 20 years ago, when he took over)—did not appeal to this per­son one whit.

Ultimately, it was a question of values, he thought. Were human beings expendable or not? Or could they be considered a compa­ny’s ultimate treasure?

I know what I think. I agree with this unnamed kaicho that its staff are a company’s zaisan. I heard words to this effect from two company chairmen I met with recently. One was Hiroshi Aoki of Air Water Inc., an oxygen compa­ny in the Kansai; another was Kingo Iwabe of a Tokyo company called Bunka Shutter. Both firms are Tokyo Stock Exchange first section companies, and both have sales in the ¥100 billion class—they are not small—and both are hard­ly known to the general public; their customers are mostly other companies, though they also sup­ply consumers with their products.

What united these two men was a passion for keeping their people on board. The more I heard from them, the clearer it became to me that, far from paying a heavy price for keeping their people on staff, they felt good about it, and that helped to inspire the top men themselves to try still harder.

They were not going to work thinking of themselves, but of their employees. These were no mere shibboleths. They were not paying lip service, while funding little ways for dumping people. No, they were sincere in what they said.

One of the two companies, Air Water, was created largely by mergers—Mr. Aoki grew the com­pany that way, which is unusual in Japan. Generally, mergers do not work in Japan, it is said, because it is hard or impossible to combine firms with different histories, dif­ferent personnel departments and different CEOs. Something has to give; someone has to be the boss, and the one who gives way to that person has to make a sacrifice.

True, but all the same Mr. Aoki—I visited him in Osaka on behalf of The East, a Tokyo cultural magazine—had managed.

Apparently, it is untrue, then, that mergers cannot work out in this country. It is a generalization that doesn’t apply. To carry out a merger, Mr. Aoki told me, you have to study the move in detail, to consider every little thing. That way, clashes can be avoided. Certainly, the unions have to be consulted, he said, mentioning the obvious, but he made it clear that the responsibility had to lie with the boss. There was no avoiding that fact.

He is a tall, forceful person who looks one straight in the eye. That’s how he made a success of AWI.

I considered the cases of these two companies that prize their employees, and I found that both of them had strong balance sheets. Bunka Shutter—one of the nation’s leading companies in this unusual specialty of making doors and shutters—is currently building a head office not far from the Korakuen complex in Tokyo.

Mr. Iwabe mentioned to me that the entire expense of the proj­ect—getting the land, putting up the building—could be met out of current resources, without bor­rowing one yen. There are compa­nies with strong cash positions.

It’s not as if—to repeat the obvious—the world is coming to an end. Far from it. In the current business year to end in March 2003, some 80% of Japanese man­ufacturing and service industry companies will see their profits rise, according to a research find­ing by Shinko Research Institute, an offshoot of Mizuho Bank. Sales will change little, mostly they will go flat, but profits are on the rise, if not by huge amounts, but still the end-result this financial year will be an improvement.

This is not what you would expect reading the papers, with their inspissated gloom and doom.

Does this bring one any closer to defining what is meant by a samurai spirit in management? I think it does. One of the original samurai notions is that benefits should be spread around. Visit, I suggest, the open-air shrine to the memory of Taira no Masakado in Otemachi. It is just at the back of the Palace Hotel, close by the Mitsui Bussan headquarters.

There is a notice board in there, with a bit of history in Japanese, to explain who Masakado was and when he died (941 AD). He is credited with hav­ing put the cause of ordinary citizens first.

Was he indeed “the first samu­rai,” as the notice claims? We don’t know. But it is an impressive little site to visit. There are a couple of ancient rocks and some guardian stone toads—the toad is an auspi­cious creature in these parts. It all looks very plain and simple, and perhaps hardly worth the trouble.

But I wouldn’t underrate the tradition involved. Japan is not leading the world in its ability to “project economic power abroad”—to take a phrase of Eamonn Fingleton—for nothing. That was made possible only by an ethic of hard work.

henryss@gol.com