Episode #301: Why Does Everything Take So Long In Business In Japan?

“In our business, at our size, we have to be the speedboat, we cannot be the oil tanker”, is a key mantra for my Franchise company. Why is that the case? I am the only non-Japanese in the firm and I was frustrated at the slow pace of decision-making and action taken by the team. Growing up in Western business, speed of decision-making and taking action are requirements drummed into you from any early age. Other foreign leaders in Japan reading our speed mantra will be sagely nodding their heads at this point, because their multi-national firms may be much larger in scale, but the issue is the same. It doesn’t seem to make sense why things are so slow here.

Japan Seems Efficient But Is It?

Japan seems very, very efficient. The famous Bullet Train, the Shinkansen, has an unbelievable record of being on time. The average delay of Shinkansen trains is less than one minute per year and there are over 3000 trains annually whistling by at speeds of over 230 kilometers per hour. Train commuters based outside Japan will be astonished at these numbers. There is also hardly any litter here, graffiti, drugs, guns or crime – the usual reality for many people living in big Western cities. Everything works and works well, so it seems the pinnacle of efficiency.

Inside companies though the picture is quite different. In the West, ambitious, thrusting employees trying to make a name for themselves and get promoted, are rapid fire machines. They are constantly pushing the boundaries, taking calculated risks and quite aware they are being judged on how quickly and well they can get things done. In Japan, none of these things are particularly important. Sprinting off a cliff is thought to be a bad idea in Japan. It is much better to take some time, cross every “T” and dot every “I” before moving work along. Speed often leads to mistakes being made and in Japan that is unacceptable.

Measure Three Times, Cut Once In Japan

This fear of making mistakes and errors has everyone measuring three times, before cutting once. Western CFOs are clever. They have worked out that there is a ratio of defects to profitability. The thinking is “if we accept a three percent error rate, even taking into account having to replace defective goods, the firm will make more money that trying to achieve a 100% no defect outcome”. This would get CEOs salivating at the thought of making more profit and the CFO will get a big bonus, but not in Japan. That CFO suggestion wouldn’t see the light of day here, because it is unthinkable.

Supreme attention to detail, no defects, no errors are rock solid values in Japan. To achieve these vaunted outcomes a lot of triple checking is required and that takes time. Getting things out the door pronto is not valued here if there are any mistakes in the process. The MVP or minimum viable product idea is a difficult concept here because the product has to work well and reliably or no one wants to buy it. Of course there is a love of kaizen here around making further incremental improvements, but the original release cannot have problems or the product is dead in the water.

Few Marriages Of Corporate Convenience In Japan

This safety first idea in also a mantra in decision-making. Japan is not as litigious as some Western countries, so the legal ramifications are not necessarily the prime driver. There is another fundamental concern which slows down business deal making. Western firms enjoy marriages of convenience. Two firms come together to make more money collectively, than they could individually and there is the thought that this situation is only as good and lasting as the immediate benefits. When these run out, then we all move on. Japan sees business marriages as monogamous, life long and full of mutual obligations. If the business partnership is a lifelong arrangement then a lot of due diligence has to be carried out before any agreements are struck. This is all understood within Japan and companies here know that Western companies operate off a much more short-term framework, so there is an inherent risk associated with dealing with non-Japanese firms.

The President Isn’t Necessarily The Key Decision-Maker

Unless it is a founder led company, usually the President is not the key decision-maker. The more junior people will conduct the due diligence and then the results go up and get homogenised across the various Divisions within the firm which will be affected by the decision to do business with this other firm. This homogenisation works well for milk but it can be a painfully slow process within the company decision-making structure. Imagine everyone is worried about taking any responsibility for this decision in case something goes wrong, so the triple checking is being repeated at every level. No one gets rewarded for speed, but the downside of mistakes is vast. There is an internal decision document called a ringisho ( 稟議書 )which collects the personal seals of each decision-maker, before it can progress to the senior ranks, where the actual rubber stamp formal decision will be taken.

In the West, when the buyer says “we will think about it”, this is usually an invitation, even a challenge, for salespeople to push harder on who will be involved in the decision, what things will be of major concern to them, how long will this take and how can we speed that process up. In Japan, they really do need to think about it and they would rather make decisions slowly, than repent at leisure for a bad choice. It is not uncommon for us to gain a new client who we met three years ago. I always tell my salespeople, “The buyer is never on your timetable”. Companies prefer to move at a glacial pace because slow is safe. What about all of the opportunity costs, the missed chances, the deals gone begging? No one cares particularly, so focus on patience and perseverance when dealing with Japan.