Searching for the "perfect" manager: foreign companies in Japan need advanced technology, IP assets and, especially, solid employees: bilingual, bicultural and driven to succeed. But does such a "perfect" combination exist? - Recruitment

Japan, Inc., Sept, 2003 by John Dodd

DESPITE A SHORT POST-IRAQ war market recovery that saw the Nikkei stock index peak at 9,990 (closing level) in July this year, the rally has since faltered, and Japanese consumers continue to keep their purses closed and either pay down their debts or set aside some savings for an uncertain future. Managers of Japanese and foreign companies all over Japan are now faced with the reality that there is going to be no easy return to reasonable profits--and that improving the business is going to be through single-minded focus on the key internal issues of staff performance, technical assets and execution of the business, plus brand power or intellectual property rights.

Is Japan a basket case for foreign companies, or is there still hope? The answer is that for those companies that understand the changes taking place, the pickings are still good. After a substantial set back two years ago, IT companies are once again starting to see business growth--particularly in the ERP, CRM, and SCM industries--so long as they can save their Japanese clients' money. The typical savings resulting from a small- to medium-sized ERP implementation is about 10 to 20 percent due to the inherent costs of running a company in the Japanese style. Thus, if the client is doing $100 million or more in sales, then even a 10 percent cost saving is a huge benefit to the bottom line and worth the investment in the software.

Then there are the consulting companies, ranging from management consultants to IR firms. These companies sell on the basis of their brainpower--providing clients that have always valued generalists with specialized capabilities that the modern world demands. From restructuring to spin-offs of unwanted subsidiaries, the impact of some intelligent strategic advice can cut a corporation's financial burden by hundreds of millions of dollars in just a single action. Witness the public listing of subsidiaries such as NEC Electronics, which, although troubled, yielded huge paper returns to their parent companies once they went public.

Certainly technical (not just technology) competence appears to be a huge point of leverage for foreign companies in Japan. Kouichi Takagi, CEO of Human Associates, comments, "With a few exceptions, companies have stopped worrying about market share and general expansion, and instead are focusing on lifting profits through improving quality and engaging in value-added businesses. In particular, we are seeing a lot of change and improvement among the technology and technically oriented industries, such as IT, finance, medical and medical devices."

But what about foreign consumer products companies and retailers that deal directly in the market and which have already cut operations to the bone? Even in this sector, we see that the best performers are those who focus on product/service innovation, company-wide technology, quality of service and strengthening sales. The secret is that they have the cash to invest in bringing operations and staff up to the next level.

Companies such as Walmart (which is acquiring a majority share of Seiyu) are bringing global Best Practices to Japan in a way never seen before. Walmart's weapon is its IT sophistication and the all-embracing nature of its enterprise systems. Then there are various consumer products companies--in cars, bags, and household goods--that have understood that the edge is to be found in finely honed marketing. They are still able to entice young Japanese women to spend their way into a dream of personal, materialistic satisfaction--despite the desperate straits Mom and Dad might be in.

Admark CEO Scott Woodford specializes in marketing and advertising, and thus is in a good position to confirm that consumer products firms are gearing up for a continued big push. He says, "I can say that the consumer sector seems to be moving full steam ahead despite the economic rough waters Japan and many other markets have been experiencing for quite some time. The levels of available positions range from president down to assistant product managers and advertising account executives. In addition, we are expecting the medical and pharma/biotech companies to drive a financial recovery similar to what IT did back in the 90s." So the big contributors to any foreign company that is improving its business in Japan appear to be excellent resources and execution. This implies the need for excellent technology, IP assets and people--in particular, managers who can transcend the normal and produce a functional team using world-class know-how and investment. It is no wonder, then, that the recruiting market, after a long period of consolidation, is starting to become very focused on sourcing and supplying skilled managers with strong track records.

A.C.E. International Managing Director Krishna Mahalingam confirms this trend. He says, "A mature recruiting environment in Japan is now creating demand for very niche but highly critical positions to be filled by people who not only have extensive experience and exposure but who also have an entrepreneurial approach to clients. In other words, every person who wishes to further his/her career in a difficult employment market will have to contribute to the bottom line."