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Change in Japan in the age of COVID-19

Blogs from Third Way Forum

Change in Japan

An article appeared on a contact-of-a-contact's Linked-In page last week. Shared by the CEO of a tech start-up based out of San Francisco, he was exalting the benefits of work from home and remote work. If to be believed, costs would fall, employees would be happier, companies and teams stronger, and more importantly no company could survive past this shift within the next 10 years. It would be a change as powerful as the digital revolution.

At the same time, another connection posted about the need for Japanese companies to fight shareholder activism - Western investors not being able to grasp the the nuance of Japanese business and pointing out that Japan has more companies over 200 years old than any other (56%, actually). Here, excessive change in Japan was the enemy.

The situation playing out with the COVID-19 pandemic is a giant experiment of these seemingly conflicting ideas in Japan: modernization and traditionalism. It’s worth remembering Bill Gates’ words at this time, that “we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

On the one-hand, we have a country with huge corporate inertia - many of the companies we have talked to at the Third Way forum are simply not ready for Western management models or employee practices. We look at their HR practices and cultures, and wonder how they are going to adapt (and in some cases, survive) to changing employee demographics and internationalization.

However, change is happening in some quarters: we have seen a number of companies (and here we mean blue-chip, not nimbler start-ups) making the shift to remote offices and flexible work hours, before COVID-19’s emergence. Systems have been put in place, policies carefully tested, trials and questionnaires run to gain the support needed to get an office on board with the inevitable disruption. And slowly employees have come around to the idea and managers have shown increasing engagement.

But for those companies who were unprepared and forced into making change, we have to wonder how they will cope. Reliance on paper ringisho, unclear team responsibilities and performance reviews, metrics based on time in office rather than defined output - and the laundry list of Japanese office inefficiencies - will test Japanese companies ability to change and survive.

But in both cases, it’s not just the companies that need to prepare. Japan as a whole will need to look to change. An army of salarymen will soon be required to work from home on any number of given days, putting pressures on space in the home, traditional family power dynamics, and marital harmony. People used to the close comfort and support of their work team, of shared decision making and careful consideration, of dinner at a noodle bar alone on the way home, will need to learn to work more independently and efficiently.

If quiet meetings in Japanese offices were alien to international staff, imagine this amplified with the anonymity of being online. And how ready are employees to show the rest of the company their home sanctuary on video chat?

The tech-CEO may be right: change is coming and those that can embrace it will reap the rewards. But at what cost? There’s a bigger conversation about the need for human contact and interaction, but in the short term, it will be an interesting test to see if Japan can adapt to the new future of work, what will it mean for the companies with long and stable histories, and how this will impact the culture of work in Japan.

The hope is that there is a Third Way in Japan - a middle ground that brings flexibility, speed, and independence to work and workers, while keeping what has driven success in other areas of Japanese business. And that is something that we look and try to understand more when we talk to our members. Given current events maybe we’ve underestimated the shift that’s coming in the next 2 years - but knowing Japan, the change may take 10.