25 Aug Japanese vs Western Management Styles
An insight into the foundation and the management policies of both camps, as we pursue the universal approach to management
Masataka SATOU (Senior Manager)
Consulting Headquarters (LiB Consulting Co., Ltd.)
If our goal is the realization of good mid-term management, arguing whether Japanese or Western Management will work better will not be effective. On the other hand, it’s also not advisable to have only one standard for good management, and accept all its characteristics for use on your company. For if the underlying value, personality or forte of a company is different, the influence of environmental changes on the company would also be different, and the ideal management for the company would turn out to be different as well. That is to say, as we compare Japanese and Western management, the key to finding the universal management style is having a consistent grasp of both, from their foundation right down to their policies.
The Company’s Three Layers
Let us navigate our discussion along the three layers of a company: the foundation of management, the interpretation of changes in the business environment and the management policy.
At the bottommost layer, we have 1) the foundation of management. This is made up of the company’s ideal, values, environment and culture, among others, which are the universal way of thinking within a company, the implicit common practice of tradition.
The middle layer is 2) the interpretation of changes in the business environment. This includes both changes that occur daily in the macro environment—politics, the economy, society, technology, etc.—and the micro environment, which is the market and competition. Although these factors will be the same to any company, the interpretation itself differs depending on the company’s preconditions.
At the top we have 3) the management policy. These are the concrete measures, such as the system, present in every company. This is the domain we close-up on when we observe case studies of other companies, and is usually introduced as the benchmark as well.
The Characteristics of Japanese and Western Management
Foundation of Management
This domain is ubiquitous in all companies. For the Japanese management, its defining characteristics are:
- the management respects the personnel
- the company exists for its stakeholders and
- the emphasis is on long-term, steady growth.
Whereas the Western management is characterized by contrasting features:
- the aim of management is to increase capital
- the company belongs to the shareholders and
- the emphasis is on short-term profitability.
Interpretation of Changes in Business Environment
In this area, it is more the different preconditions between companies, rather than the matter of Japanese or Western management style, which brings about the different interpretations of changes in the business environment.
The management policy on the top floor is built upon the constraints of the underlying two floors, which in the case of the conventional Japanese Management results in lifelong employment, seniority system, collaborative decision-making, non-professional career path and bottom-up management, etc., which has been established as features which set Japanese Management apart from Western management.
As the business environment undergoes rapid changes, countless policies of the Japanese management became outdated, losing their competitive power, and the time is long past for turning your back to change and obstinately clinging to what have brought you success in the past. On the other hand, constantly pursuing nothing but change and absorbing the success stories of other companies for use on your own would lead to a clash with your company’s character and forte, and result in your company malfunctioning. Though we mention the company in a collective sense in this comparison, the same can be said for any individual company. The important message is that you must clearly define your company’s foundation of management, correctly interpret changes in the business environment and optimize management policies as you go. Here at LiB Consulting, we also offer Diagnostic Tools based on these ideas as well, as we fervently wish to contribute to the realization of good management in your company.