In what respect was Japans experience of industrialization closer to that of Russia than to that of the United States or Western Europe?

• Tweet

  Nội dung chính Show

  • Take Competitiveness Seriously
  • The automobile industry
  • Put National Interest First
  • The basis of leadership
  • The Western approach
  • Know How to Sit
  • Seek No Final Victories
  • Ideals & Realities
  • The case for tradition
  • The business heritage
  • The historical context
  • Facing up to a pluralist society
  • What was Japan's response to industrialization?
  • Why was Japan successful in industrialization?
  • How was Japan's industrialization different from the states in the West?

• Post

• Share

• Save

• Get PDF

• Buy Copies

• Print

To many business people and public officials in the West, the postwar success of the Japanese economy is both an impressive and a puzzling achievement. The success is obvious and measurable; the reasons for it, far less so. Seeking explanations, Western observers often fasten with wide-eyed enthusiasm on the mysterious workings of “Japan, Inc.,” that fabled edifice of business-government cooperation. To it they ascribe a continuous application of single-minded energy; from it they expect a continual flow of industrial miracles. In this article, Peter Drucker, long recognized as an authority on Japanese business, takes pointed issue with this familiar myth. No such thing exists, he argues, at least not in the form commonly attributed to it. The accomplishments of Japanese industry are the result not of some all-powerful structure but of Japan’s having defined more ably than any other industrial nation some of the essential rules for managing complex organizations in the modern world.

“I am more afraid of the Japanese than I am of the Russians,” a young lawyer said to me recently. “To be sure, the Russians are out to conquer the world. But their unity is imposed from the top and is unlikely to survive a challenge. The Japanese too are out to conquer us, but their unity comes from within. They act as one superconglomerate”—a conglomerate Westerners often call “Japan, Inc.”

To the Japanese, however, Japan, Inc. is a joke, and not a very funny one. They see only cracks and not, as the foreigner does, a monolith. What they experience in their daily lives are tensions, pressures, conflicts, and not unity. They see intense, if not cutthroat, competition both among the major banks and among the major industrial groups. And the Japanese are themselves involved every day in the bitter factional infighting that characterizes their institutions: the unremitting guerilla warfare that each ministry wages against all other ministries and the factional bickering that animates the political parties, the Cabinet, the universities, and individual businesses.

Perhaps most important, where the foreigner sees close cooperation between government and business, the Japanese often see only government attempts to meddle and dictate. “We pull at the same rope,” the chief executive officer of one big company remarked, “but we pull in opposite directions.”

The Japanese government is not always successful in making industries work together in the national interest. Despite 20 years of continual pressure, the supposedly all-powerful Ministry of International Trade and Industry (MITI) has simply not been able to get the major computer manufacturers to pool their efforts—something that the governments of Germany, France, and Britain have all accomplished.

One foreigner after another extols Japan’s harmonious industrial relations, but the Japanese public curses the frequent wildcat strikes on the government-owned national railways. Only where the labor unions are exceedingly weak—that is, in the private sector—are labor relations harmonious. As Japanese labor leaders point out somewhat acidly, Western companies without unions (IBM, for example) tend to have the same kind of equable labor relations as do Japanese companies. In the public sector, where unions are strong (a legacy of the U.S. occupation after World War II), there is no sign of this fabled harmony.

Still, the Japanese have achieved the necessary consensus to participate effectively in the world economy. Contrary to popular belief in the miracle of Japan, Inc., the competitive success of Japanese industry is not the result of some uniformity of thought and action. It is the result of something far more interesting—habits of political behavior that use the diversity in Japanese national life to produce effective economic action.

Take Competitiveness Seriously

One of these habits is to consider thoroughly a proposed policy’s impact on the productivity of Japanese industry, on Japan’s competitive strength in the world market, and on Japan’s balance of payments and trade. This has become almost second nature for Japanese policymakers in the ministries, in the Diet, and in business as well as for analysts and critics in the popular newspapers and university economics departments.

Unlike the Americans, for example, the Japanese are far too conscious of their dependence on imports for energy, raw materials, and food ever to shrug off the rest of the world or to push it out of their field of vision altogether. These broad considerations do not always carry the day—but again, unlike the Americans—every interested party in Japan takes them seriously.

The automobile industry

MITI has, since around 1960, steadily opposed expansion of the Japanese automobile industry because, in large part, it views the private automobile as a self-indulgence and as the opening wedge of a consumer society, which it finds abhorrent. In addition, it has maintained, at least it did in the early years, considerable scepticism about the ability of untried Japanese manufacturers to compete against the likes of GM, Ford, Fiat, and Volkswagen. It has also been quite fearful that a large automobile market in Japan would provoke irresistible demands to open Japan to foreign imports, the one thing it has been determined to prevent.

But MITI has also believed, quite sincerely, that expansion of the automobile industry would have an adverse, indeed a deleterious, effect on Japan’s balance of trade, on her ability to earn her way in the world economy, and on her productivity generally. The more successful the Japanese automobile industry, MITI has argued, the worse the economic impact on Japan. The automobile, it has pointed out, requires the two raw materials that are in shortest supply in Japan: petroleum and iron ore. It also requires the diversion of scarce resources, both food-growing land and capital, to highways and highway construction. Instead of an automobile industry, what MITI has wanted is massive investment to upgrade the railroads’ freight-handling capacity.

There are plenty of diehards left, and not only at MITI, who still maintain that letting the Japanese automobile industry expand was a serious mistake. Even with record sales to North America and Western Europe, the industry’s export earnings, they argue, are only a fraction of what the automobile costs Japan in foreign exchange for petroleum and iron ore imports. A small part of the sums spent on highways would have given the Japanese railroads the freight-carrying capacity that the country still lacks, for the enormous amounts spent on roads have not been enough to build an adequate highway system. Trucks clog the roads; port cities are overcrowded; and air pollution is increasing.

MITI lost its fight against the automobile. It was defeated in part by the automobile industry, which forged ahead despite MITI’s disapproval, and in part by the infatuation of “Nabe-san,” the Japanese “man in the street,” with the motor car—despite its high costs, despite the lack of places to park, and despite the traffic jams about which no one complains louder than Nabe-san sitting in the driver’s seat. But at least—and this is the point—the automobile’s impact on Japan’s productivity, competitive position, and balance of trade was rigorously considered. Even the automobile company executives who fought MITI the hardest admit openly that it was the ministry’s duty to make sure that these considerations were taken seriously, no matter how eager they might have been to proceed with production or how devoted Nabe-san might have been to his automobile.

Put National Interest First

Estimating the impact of various policy alternatives on Japan’s competitive position in the world economy is only one of the habits of behavior expected of Japanese leaders. They are also expected to start out with the question “What is good for the country?” rather than the question “What is good for us, our institution, our members, and our constituents?”

The basis of leadership

In no other country are interest groups as well organized as in Japan, with its endless array of economic federations, industry associations, professional societies, trade groups, special interest clubs, and guilds. Each of these groups lobbies brazenly, openly using its voting power and money to advance its own selfish ends in ways that would make a Tammany boss blush. Yet if it wants to be listened to and to have influence on the policymaking process, every group must start out in its deliberations by considering the national interest, not its own concerns.

No group is expected to be completely unselfish or to advocate policies that might cost it money, power, or votes; Japan’s Confucian tradition distrusts self-sacrifice as unnatural. Each group is, however, expected to fit its self-interest into a framework of national needs, national goals, national aspirations, and national values. Sometimes this expectation produces blatant hypocrisy, as when Japanese physicians claim that the only thought behind their successful demand for near-total exemption from taxes is concern for the nation’s health. Still, the physicians pay at least lip service to the rule that demands that the question “What is the national interest?” be asked first.

By failing to do even that and, instead, asserting that what is good for labor is ipso facto good for the country, Japanese unions have largely forfeited political influence and public acceptance, despite their impressive numbers. Conversely, a substantial proportion of Japan’s business leaders has for 100 years subscribed to the rule that the national interest comes first, a rule first formulated by the nineteenth-century entrepreneur, banker, and business philosopher Eiichi Shibusawa (1840–1931). As a result, business management is respectfully listened to whenever it discusses economic and social policies, even by the two-fifths of the Japanese population who faithfully vote for avowedly Marxist or stridently antibusiness parties and candidates.

The demand that Japanese leadership groups—especially Japan’s business leaders—take responsibility for thinking through the policies that the national interest requires forces them to lead. It forces them to take the initiative and to formulate, propound, and advocate national policies before they become issues. Indeed, it forces them to define what the proper issues are.

The Western approach

In the West, particularly in the United States, the conventional economic interests are expected to be preoccupied with their own concerns, their own needs and wants. As a rule, they are rarely prepared to act in a matter of general rather than factional interest. They can only react. They cannot lead; they can only oppose what someone else proposes. Whenever a legitimate matter of general concern comes up, someone within the group is bound to see it as a threat; another will oppose doing anything at all; and a third will drag his feet.

In Japan, new proposals are also likely to run into opposition within particular interest groups, but the special concerns of their members are held in abeyance until the national interest has been thought through. In the West, these special concerns are the focus of policy debate; in Japan, they are peripheral. The Western approach can lead to inaction or to doing “another study”—until someone from the outside proposes a law or a regulation that can then be fought as “unacceptable.” But this is only rearguard action and damage containment. Inevitably, it leaves the definition of issues to others, even though, as the Japanese see clearly, to define issues is the first duty of a leader.

The Japanese do not, of course, always discharge this responsibility successfully. Both the bureaucracy and the business leaders of Japan were totally unprepared for the explosion of environmental issues 10 years ago, an explosion for which they had had plenty of warning. Today they still prefer to ignore the challenge posed by the movement of women into professional and managerial jobs—a movement that is gathering momentum and is grounded in irreversible demographics.

For the most part, however, the Japanese have been successful in defining critical issues. In contrast, U.S. leaders spoke of lowering the mandatory retirement age at the very moment when the growing power of older Americans made first California and then the U.S. Congress enact laws postponing retirement or prohibiting mandatory retirement altogether. Business leaders in Japan anticipated the issue, faced the high costs involved, and without any prompting from external constituencies raised the mandatory retirement age. “It’s what the country needs” was the explanation they gave.

The Western “self-interest first” approach worked reasonably well as long as national policy could effectively be formed through adversary proceedings that balanced the conflicting demands of large, well-established interest blocs. But since politics in the industrial West is currently fragmented and since the balance of national power has all too often come to rest in the hands of small groups of single-cause zealots, this traditional approach is clearly no longer adequate. Perhaps the Japanese model, under which both leaders and special interests derive their legitimacy from their stewardship of the national interest, might better serve the unavoidable pluralism of modern industrial society.1

Know How to Sit

In addition to taking competitiveness seriously and balancing local interests for the general good, the leaders of Japanese business have a duty, or so Shibusawa taught them, to understand the views, behavior, assumptions, expectations, and values of all other major groups in their society. At the same time, the leaders feel they have an equal duty to make their own views, behavior, assumptions, expectations, and values known and understood. This does not require public relations in the Western sense but rather private relations—relations made not by speeches, pronouncements, and press releases but by the continual interaction of responsible men in policymaking positions.

Irving Shapiro, chairman and CEO of E.I. du Pont de Nemours, the world’s largest chemical company, was widely quoted in the U.S. press last year for having pointed out that he now had to devote four-fifths of his time to “relations” with policymakers in the Congress and the Washington bureaucracy and could only spend one-fifth to manage his company. The only thing that would have surprised a Japanese CEO in a business of comparable importance is the one-fifth Shapiro has available to run his company.

Very few CEOs of large Japanese companies have any time available for managing their companies. All their time is spent on relations, even the time spent on internal company business. They keep control of things by giving careful attention to personnel decisions in the upper ranks and by requiring meticulous financial and planning reports. But they do not “manage”—that is left to lower levels.

The top people spend their time sitting, sipping cups of green tea, listening, asking a few questions, then sitting some more, sipping more cups of green tea, listening, asking a few more questions. They sit with the people from their own industries, with suppliers, with the trading company people, with the managers of subsidiaries. They sit with top people from other companies in their groups—as, for instance, in the famous five-hour luncheons in which the presidents of all companies in the Mitsubishi group come together once a week. They sit with people from the banks, with senior bureaucrats from the various ministries, with people from their own companies in after-hours parties in Ginza bars. They sit on half a dozen committees in half a dozen economic and industry federations. They sit and sit and sit.

In all these sittings they do not necessarily discuss business, surely not their own business. Indeed, to a Westerner their conversation at times appears quite pointless. It ranges far afield, or so it seems, moving from issues of economic policy to personal concerns, from the other fellow’s questions and problems to the topics of the day, from expectations for the future to reappraisals of the past.

Their aim, of course, is not to solve anything but to establish mutual understanding. When there is a problem, one knows where to go. One knows what the other person and his institution expect, what they can and will do, and what they cannot or will not do. When either crisis or opportunity arrives, these immobile sitters are able to act with amazing speed, decisiveness, and at times ruthlessness, for the purpose of all this sitting is not to produce mutual liking, agreement, or trust. It is to produce an understanding of why one does not like another, does not agree, does not trust.

Seek No Final Victories

The last of these habits of Japanese economic behavior is to base human interactions not solely on adversarial relations but also on common interest and mutual trust.

Yet, adversarial relations in Japan have historically been fiercer, more violent, less forgiving, and less compassionate than in the West. Neither “love thine enemy” nor “turn the other cheek” is to be found in any of Japan’s creeds. Even nature is violent in Japan, a country of typhoons, volcanoes, and earthquakes.

Where the Westerner sees no need for feuding or recrimination—as, for instance, when in times past a painter or an artist parted company with his teacher and established his own style or school—Japanese convention dictates that relations be antagonistic or at least be made to appear so. This tradition extends today to divorce, which has reached epidemic, almost Californian, proportions, especially among young, educated couples. An “amicable” divorce is apparently not considered proper. It must be made to look adversarial even if the two people part by mutual consent and on reasonably good terms.

But all these are situations in which a relationship is to be dissolved permanently. However, when people or parties must live together, let alone when they must work together, the Japanese make sure that their relationships have at their core a mutuality of interest. Then, whatever conflict or disagreement exists can be subsumed in the positive bond of broadly shared concerns.

One of the main, though rarely voiced, reasons that the Japanese automobile companies have been reluctant to build plants in the United States is their bafflement at management-union relations in the American automobile industry. They simply cannot understand them. “Our unions fight management,” a young Toyota engineer, an avowed leftist and socialist with strong pro-union leanings, recently told me. “But yours fight the company. How can they not know that for anything to be good for the company’s employees, it has to be good for the company? Where this is not taken for granted—and it’s completely obvious to every one of us—no Japanese could be a manager; but no Japanese could be an employee or a subordinate either.”

One usually does not have to live or work closely with a competitor; hence, competition tends to be ruthless between companies in the same field and between groups of companies—for example, between Sony and Panasonic or between Mitsui Bank and Fuji Bank. But whenever there has to be a continuing relationship with an opponent, the Japanese tend to seek common ground. And it is here that asking the questions to which all those endless sittings are largely devoted begins to pay handsome dividends.

Great care is taken by all parties that there be no damage done to common interests. Great care is also taken that there be no final victory over the individuals or groups with whom one has to live and work. The Japanese know that to win such a war is to lose the peace. Whenever groups in Japan have to live together, both sides will be more concerned with making their conflict mutually productive than with winning in any absolute sense. Yet these same people will go all out for total victory against an opponent with whom they do not share common interests and who therefore can be destroyed.

Ideals & Realities

These four habits, or rules, of competitive success—taking competitiveness seriously, considering the national interest first, making external relationships important, and not seeking final victory over opponents with whom one still has to live—are, of course, ideals and precepts. They are normative rather than descriptive of universal practice. Every Japanese can point to dozens of cases in which the rules have been broken or disregarded with impunity. Not every Japanese necessarily accepts them as being right.

Some of Japan’s most successful entrepreneurs and companies—Honda, for instance, or Matsushita as well as Panasonic or Sony—have shown scant respect for some of the rules. These leaders do not give a great deal of time or attention to outside relationships, nor do they much care whether they are accepted into “the club.” They do not automatically agree that putting the national interest first in one’s thinking is the responsibility of the business leader. They have even, on occasion, been quite willing to inflict crushing defeats on opponents with whom they have still had to live and work.

There is also a good deal of criticism within Japan, especially within business circles, of some of the rules, and there is grave doubt whether they are still fully appropriate to Japan’s needs. Can top management, some leaders ask, devote practically all its time to outside relationships without losing touch with the swiftly changing realities of economics, markets, and technologies? Others grumble that efforts to find common ground with other groups, with government in particular, have led to spineless appeasement and bureaucratic arrogance.

These rules, in other words, have weaknesses, limitations, shortcomings; they neither enjoy universal approval nor apply without exception. Even so, they have been unusually effective in strengthening Japan’s industrial performance. What, then, lies behind their acceptance and success?

The case for tradition

The most common answer given in Japan as well as in the West is that these rules represent uniquely Japanese traditions and values. But this is surely not the whole answer; in fact, it is largely the wrong answer. Of course, rules of social and political behavior are part of a culture and have to fit it or at least be acceptable to it. How the Japanese implement their rules is very Japanese indeed, but the rules themselves represent a rather than the Japanese tradition. They represent a choice among widely different, but equally traditional, alternatives.

Some of the rules, moreover, have only a questionable foundation in Japanese tradition. The present industrial harmony of Japan, though usually attributed to long-standing cultural values, is in sharp contrast to the ofttimes violent history of relations between Japanese superiors and subordinates. As late as the 1920s (that is, through the formative stage of modern Japanese industry), Japan had the worst, most disruptive, and most violent labor relations of any industrial country in the world.

For the 150 years before modern Japan was born in the Meiji Restoration of 1868, relations between the lords and their military retainers, the samurai, on one side and the peasant labor force on the other meant at least one bloody peasant rebellion per year. There were more than 200 such rebellions during the period, each of them suppressed just as bloodily.

“Government by assassination” rather than the careful attempt to find common ground was still the rule for relationships among competing groups in the 1930s. Nor is it entirely coincidental that student violence and terrorism began in Japan in the 1960s and took their most extreme form there. If it is meaningful to speak of a Japanese cultural tradition, violence and internecine warfare are every bit as much a part of it as the quest for harmony and mutuality of interest.

The business heritage

These rules of economic life did not evolve in a vacuum. They were strongly opposed when first propounded and were considered quite unrealistic for a long time. The greatest figure in Japanese business history is not Eiichi Shibusawa, the man who formulated the ethos of modern Japanese society. It is Yataro Iwasaki (1834–1885), the founder and builder of Mitsubishi, who was to nineteenth-century Japan what J.P. Morgan, Andrew Carnegie, and John D. Rockefeller combined were to the United States. Stoutly denying Shibusawa’s claim that business leaders should take responsibility for the national interest and for embedding conflict in a bond of common interest, Iwasaki rejected out of hand Shibusawa’s vision of society. Shibusawa was greatly respected, but his teachings had little influence on practical men of affairs, who were far more impressed with Iwasaki’s business success.

As a guide to industrial behavior, these rules won general acceptance only after the Second World War. When a defeated, humiliated, and almost destroyed Japan began painfully to rebuild, it asked the question “What are the proper rules for a complex modern society, a society that must participate in a competitive world economy and be dependent on it?” Only then did the answers that Shibusawa had given 60 years earlier come to be seen as right and relevant.

The historical context

Historians will long debate why Shibusawa’s answers, having failed to discover a receptive audience before the war, found one so soon after it. Indeed, historians will be as busy trying to explain what happened in Japan in the 1950s as they have been for years trying to explain what happened in Japan at the time of the Meiji Restoration. In both cases the central questions are much the same: How did a humiliated Japan organize itself to become a modern commercial nation while remaining profoundly Japanese in its culture? How were the appropriate elements of that culture mobilized without violating the rest?

One might speculate that the shock of total defeat and the humiliation of being occupied by foreign troops—especially since no foreign soldiers had ever before landed on Japanese soil—created a willingness to try things that had never been tried before. One might speculate further that, although there was no single leader, no one great figure, to put Japan on a new path, the pressing needs of Japanese workers supplied some of the motivating force.

The workers—many of them the unemployed, discharged veterans of a defeated army—desperately required a new sense of “home” and “community.” They needed a defense against the strong pressures put upon them by the liberal labor experts of the American occupation, pressures to join left-wing unions and to become a revolutionary force in Japanese society. Having lost economic and, in many cases, emotional security, they looked to conserve as much as possible of their former lives, yet to conserve it in terms appropriate to the changed world about them.

Facing up to a pluralist society

Why Japanese management was able to respond to these needs in such an effective manner no one yet really knows. The form that response took—Shibusawa’s four habits, or rules, of economic behavior—did not draw on exclusively Japanese sources. In fact, the habits could just as well be explained with reference to purely Western teachings and traditions.

That business leaders are responsible for thinking in terms of the national interest was preached in the West around 1900 by such un-Japanese leaders as Walter Rathenau in Germany and Mark Hanna in the United States. That an enemy who cannot be destroyed must never be defeated or humiliated but must be made into a friend was first taught around 1530 by Niccolò Machiavelli. And that conflict must be embedded in a web of shared interests is also to be found in Machiavelli. It is to be found as well in the work of Mary Parker Follett, that most proper of proper Bostonians who made much the same argument in the 1920s when she first applied political theory to management and to conflict resolution.

All these Westerners—Rathenau and Hanna, Machiavelli and Follett—asked the same basic questions: How can a complex modern society, a pluralist society in an era of rapid change, be effectively governed? How can it make productive use of its tensions and conflicts? How can it evolve a unity of action out of the diversity of interests, values, and institutions? And how can it derive strength and cohesion from being surrounded by, and even dependent on, a multitude of competing powers?

Though the West has asked these questions, it has not taken them seriously enough. Why not? Perhaps the Great Depression had something to do with it, for before the Depression a number of leaders did take them seriously. Both Herbert Hoover and Heinrich Brüning, the last chancellor of democratic prewar Germany, saw the common interest of all groups as the catalyst of a genuine national unity. In contrast, Roosevelt’s New Deal saw the principles of countervailing power and adversarial relations as the basis for a very different kind of unity. Compromises acceptable to all because they do not offend any one group too much offer a promise of national unity based on the least common denominator, not the largest view of national interest.

But this is speculation. What is fact is that the secret behind Japan’s economic achievement is not a mysterious Japan, Inc., a creation that belongs, if anywhere, in some Hollywood grade B movie. Far more likely, it is that Japan—at present alone among the major industrial nations—has addressed herself to defining the rules for a complex, pluralist society of large organizations in a world of rapid change and increasing interdependence.

In the feudal days of Japan, it was the ambition of every samurai or warrior to serve his lord better than did any of his fellow-samurai, and every local lord made efforts to stand higher in the favour of the Shogun and the Emperor than did any other lords in the country. Now that she has entered the world-arena, it is her greatest ambition to be better than the best in the world in any line of culture. In the prewar days the world charged Japan with exporting commodities cheaper than their manufactures would cost in other Countries. She was not dumping them at all, but, on the contrary, she endeavoured to supply the world with cheaper articles than were supplied by any other countries in the world. In art, science, literature, trade, industry and what-not does every single Japanese aspire to stand higher in his own profession and occupation than anybody else, and in her effort to be better than the best lies indeed the secret of the great progress that Japan has made and will make to rise up from her defeated ruins.

1. For more discussion of this, see my recent book, Managing in Turbulent Times (New York: Harper & Row, 1980), especially “Business Enterprise as a Political Institution,” p. 205 and “Managing in a Political Environment,” p. 216.

A version of this article appeared in the January 1981 issue of Harvard Business Review.

What was Japan's response to industrialization?

Why was Japan successful in industrialization?

How was Japan's industrialization different from the states in the West?