Global Rediscovery of the Japan Leadership Model

Continued from Part 1

Japan’s corporate leadership model

Part 2 of our three-part series on the 25th GPP Lecture & Workshop features  a keynote address by GPP cofounder Jusuke Ikegami, Dean of Waseda University Business School (Graduate School of Business and Finance).

Professor Ikegami began by referencing his latest book, Resolute Japan.

“Our research initiated in 2019, tracing Japan’s recovery from the lost thirty years. My coauthors, Professors Harbir Singh and Michael Useem, are superstars at the University of Pennsylvania’s Wharton School, which ranks number one globally among business schools. These gentlemen are world-renowned authorities on strategy and international management, respectively.”

The three experts researched Japanese firms which achieved remarkable recovery in recent years, articulating their findings as explicit knowledge for global entities to reference. The authors interviewed 105 executives from companies such as Hitachi, NTT Data, Asahi Breweries, Lawson, and Sony—all of which successfully diversified or transformed their businesses—unearthing the essence of each corporate comeback. Yokogawa was one of the companies studied.

What emerged was a new Japanese leadership model worthy of study by global companies. Ikegami and his coauthors named the model “Resolute Japan” (RJ) and identified its key components.

1. Fusing traditional Japanese management methods (such as stressing internal resources and adopting long-term perspectives) and innovative management
2. Transforming business portfolios through ambidextrous management, which deepens ongoing business while exploring new opportunities, leveraging the strengths of (1) above
3. Exhibiting executive leadership combining resolute decisiveness and personal integrity, with an openness toward employees
4. Maintaining a multi-stakeholder perspective, viewing internal/external stakeholders (including shareholders) as complementary partners
5. Transitioning from employment security and seniority-based systems to talent mastery–oriented organizational management that emphasizes capability development.

Ikegami elaborates on these points.

“Companies worldwide struggle with stakeholder governance. However, those adhering to the RJ leadership model follow a multi-stakeholder approach which includes their shareholders. Contented employees generate quality products and services, satisfying customers and elevating sales and profit. That in turn produces consistently higher share prices, pleasing shareholders and allowing for corporate-based social contributions. This cycle also has a positive impact on business partners and employees.”

What global entities can learn from Japan’s corporate RJ leadership model

RJ-style executives are equipped with resolute decisiveness and personal integrity, and while they may be inconspicuous, they demonstrate leadership that is deeply rooted in the organization, driving transformation with solid strategic thought and sustained execution.

Professor Ikegami interviewed an illustrative RJ leader, former Yokogawa President and Representative Director Hisashi Nara (currently Chairman of the Board and Representative Executive Officer). Nara was one of the first to spot shifting values among young professionals—who prioritized social contributions and their relationship with society—and to empower each employee. However, he felt that corporate support remained inadequate, and senior management failed to understand younger employees.

About that time, Tamaki proposed establishment of a new project: the Future Co-creation Initiative. Nara, supporting the future-oriented and co-creation aspects of fostering young leaders, provided support from behind the scenes as the project’s first owner.

Ikegami pointed to former Sony CEO Kazuo Hirai as another example of the RJ leadership model. When Hirai assumed the reins of Sony as President and CEO in 2012, the firm was aggressively bleeding red ink and subject to rumors of a management crisis.

“The key factor in Sony’s comeback was a major business portfolio shift from electronics to movies, music, games, and network services. They executed a huge transformation. Today, Sony’s growth is in entertainment and content. Hirai’s “people power” remains his leadership strength, as he retains his strong ties with employees.

New resources and personnel are sought for new businesses launched in Western countries, whereas existing resources are leveraged in Japan. To run an ambidextrous business, leveraging existing resources while exploring new areas, employees must be motivated to do the same. This takes time and requires a visionary leader.”

Toyota Tsusho was introduced as another RJ leadership model. A general trading firm under the Toyota umbrella, the company operates a global automotive-related business.

“When Jun Karube assumed the presidency in 2011, both performance and growth rate were on a roll. Although the majority of the company’s revenue had come from Toyota, one of the most stable companies in Japan, he announced a policy to reverse this dependence, not due to concerns over Toyota’s future but because he felt bringing in new partners was crucial to sustaining Toyota Tsusho’s corporate growth. He was surely a visionary focused on the future.”

Japan has a wealth of promising industries

Ikegami points out that Japan also has “industries with potential for growth.”

“Japan ranked near the top (3rd) both in automobile production volume and in the World Economic Forum’s Travel and Tourism Index. Japan’s automobile industry represents a 400-trillion-yen market. The travel industry represents a quadrillion-yen market, with inbound tourism accounting for 300 trillion yen—projected to reach 400-500 trillion yen in the next decade—making it comparable in scale to the auto industry.”

Ikegami suggests that the energy and educational resources directed at Japan’s tourism industry account for only 5% of the total directed toward manufacturing. This is precisely why the tourism industry, with its large market size, is a highly competitive and promising sector globally and is therefore a significant opportunity for Japan.

“Japan holds five of the world’s top ten globally recognized character-content IPs. How can we give due futuristic consideration to these opportunities? This is where scenario planning comes into play,” concludes Ikegami.

Continued in Part 3