Japanese are pragmatic and sensitive to change!

Allan JARDINE

When a company is in serious trouble, the management may have to choose between undergoing a restructuring, or even worse, bankruptcy. But when many people think of restructuring or “corporate turnarounds” as they are sometimes called, they automatically picture mass job cuts, bitterness and misery.

In the short-term, this is often the painful reality, however, over the long-term, as illustrated so clearly by Nissan Corporation’s stunning corporate turnaround, it is not always the case. Now, many people are curious about this growing phenomenon. Foreign companies have played a huge role with their capability to bring about changes, provide advice about turnarounds and introduce funds for the turnaround process.

Allan JARDINE of corporate turnaround specialists The Salzer Group, provided Hiragana Times with a unique insight into the industry in Japan, and some key lessons the turnaround industry can provide to business people.

Many people have noticed the similarities between business building and the turnaround business, he says. The turnaround business has very strong similarities with pure entrepreneurship because a turnaround is in effect a “re-birth,” where managers learn from past mistakes to build a stronger, more capable company.

One example of a turnaround operation carried out by his company involved the Japanese division of a western multinational chemical company. The management of the branch office was actively resisting participating in the globalization plan of Head Office. “Internal divisions in the company resulted in a confused workforce and increasing losses,” Allan says. “We convinced the Japanese management team that a turnaround would be beneficial to their staff. The management team in Japan exceeded their downsizing targets. The division was transformed from a loss-maker into the highest profit-earner globally by becoming a fully integrated member of the global company.”

“More often than not the companies that we revitalize after a short period end up employing more people than when we walked in,” Allan says of the positive benefits. “Sure, there are some people who no longer fit into the newly reorganized company structure, but invariably the firm needs an injection of fresh talent and these people are taken on.”

Long-held socialist attitudes under Japan’s lifetime employment system are major cultural barriers to turning a company around. Other common challenges to carrying out a smooth turnaround are:

No shared vision or common long-term plan — “Actually employees will have the solutions to problems. Before looking ‘outside the box’ take a look inside first!”

Confused thinking — lack of a clear plan to create profit, not enough focus on customers and too much time spent chasing competitors.

Many focus on cultural issues: Japanese are pragmatic and sensitive to change — “Do as you say you will, and offer people incentives to change!”

Don’t invent issues before they arise. For business managers, Allan suggests, “Assume nothing, work fast and focus on objectives, making sure everyone else does, then earn trust and respect by producing strong results. Ignore negative stereotypes about what can and cannot be done and deal with the issues as they arise — don’t invent them before they arise, and don’t let anyone else do it either.”

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