There was a time when you couldn’t say ‘consumer electronics’ without including the name of a Japanese firm in the same sentence. Now, you would be hard pressed to find Sony, Panasonic or Sharp products among the popular items people are lining up to buy this Christmas season.

The Japanese companies are hardest hit in smart phones. While Apple and Samsung battle it out in the courts on patents and in the market place for customers, the Japanese are nowhere to be seen. This is ironic. Before the rest of the world even understood the potential of mobile phones, the Japanese were using digital money on their phones to make purchases, using their phones as monthly pass for trains and buses, and could exchange contact information with the press of a button.

But the Japanese phones operated on a telecom standard that was only used in Japan. Their phones were designed for the local market, and when the smart phone wave hit the rest of the world, they were slow to respond. The smart phones have now reached into many different business sectors to grab customers — from digital cameras, and portable game machines to portable digital assistants (PDAs), all areas in which Japanese companies had a lead.

But their falling behind in the phone fight is only symptomatic of a general virus that has afflicted their companies.

DECLINE OF JAPAN

In the heyday of the success of Japanese products, the Japanese style of management (JSM) was all the rage in Western business circles. American management was down in the dumps and many authors wrote books extolling JSM. And JSM made many people sit up and think of very different ways of organising work, decision making, and human resource practices. Just-in-time methods and quality circles made a big impact in production management.

Japanese companies were dominating in several fields around the world including, prominently, consumer electronics (Sony, Toshiba, Panasonic) and automobiles (Toyota, Honda, etc.).

And then began the lost decade of the 90s when Japanese growth sputtered and stalled, and became the lost two decades. Japanese companies were in trouble. Sony was not the leader in innovative products anymore and an Englishman was trying to turn it around. Nissan was successfully turned around by a Brazilian. The Japanese board of Olympus was fighting the efforts of an Englishman CEO trying to expose the problems in the company such as hiding losses. What went wrong?

I wandered into a session on Japanese management during a scholarly management conference hoping to get some answers. In a room meant for about 350, I noticed about 20 people scattered about. Not only had the importance of Japanese management nosedived, but few people cared! (The crowds were in sessions on Chinese businesses!)

One Japanese scholar put the blame on what he called ‘organisational deadweight’. In plain terms, this meant that some aspects of JSM were inhibiting growth and performance.

For instance, the desire for consensus in decision making was causing irrational behaviour and lack of decisiveness; over-emphasis on harmony was slowing down decision-making due to a single dissenter, and so on.

When a decision seemed risky or was objected to, it was evaded and avoided. In fast changing industries (think smart phones), this can be a disaster. Also practices such as the lifetime employment guarantee had discouraged innovation.

CUSTOMER PREFERENCE

Did you know that a year before Apple introduced the iPhone, a Japanese could watch television on his phone. Before Amazon’s Kindle e-reader, Sony had launched the Librie, an e-book reader.

But the Japanese companies were focused on hardware, and their style was making them inflexible in adapting to changing market conditions, and they were not reading consumer preferences right.

While they led with technological breakthroughs in flat panel televisions and advanced mobile phones, they lagged in the software that translates the technology to products that are easy to use. The software and Internet-driven ecosystem today has Amazon, Apple, Google, Samsung and so on. Even Nokia has been left behind.

News reports suggest that the big leaders of yesterday have made changes in their thinking about themselves and the market. Sony’s chief strategy officer is quoted as saying that they do not want to take the lead and be first movers in some areas. They are willing to fall behind and let the Samsungs of the world push ahead and take the risks with technology leaps.

But let’s not put all the blame on the JMS. The global economy has taken a beating and the Japanese have also been unfortunate in suffering from very dysfunctional politics which has prevented hard decisions being taken about many structural problems in their economy. The last two decades have seen the economy grow barely above one percent per annum.

Meanwhile, as one presenter in the conference noted, some things were changing. Many mid-size companies and those not in the consumer limelight have learnt their lessons looking at the tarnished icons, and have tweaked the practices. There has been a shift from lifetime to long-term employment, and there is more performance-based pay.

So perhaps it is too soon to write off the Japanese management style.

(The author is professor of International Business and Strategic Management at Suffolk University, Boston, US. >blfeedback@thehindu.co.in )

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