For years Japanese companies looking to go global and foreign capital companies looking to grow in Japan have struggled to attract and retain the appropriate leadership talent-linguistically competent, culturally intelligent, with an agile growth mindset-within the context of the traditional Japanese employment ecosystem. Then the COVID pandemic hit and shed a bright light on the enduring issues surrounding employment flexibility, the talent gap, and particularly that of executive leadership in Japan.
When the pandemic hit many foreign executives had to return home for an extended period, local leaders “retired” or moved on creating gaps, workplaces had to adapt quickly, and existing business models needed to be reviewed and revamped. The gaps in the skill sets required of executive leadership in Japan became much more apparent, as organizations needed to adapt quickly. The need for quick action and flexibility also exposed the rigidness of traditional employment models and leaders who were not able to adapt and grow. It brought to the forefront the immediate need for more flexibility in how all companies approach leadership and employment in Japan.
The limits to traditional “permanent” leadership are not new, but Japan has been unable to effect or accept change. But now the lack of “global” level talent in the traditional employment system has reached the point that both Japanese and foreign companies are losing the ability to compete in both the Japanese and global economies. Attracting executive leadership talent that can lead and grow a business whether on site or remotely should be every company’s top priority now.
In order to address this crisis, it has become clear that there is a need for new strategic leadership solutions in Japan. There are four distinct types or approaches to strategic leadership that Japan needs to embrace to become more flexible and competitive in the global economy. The labor market overall needs to embrace more flexibility, and change should start at the top.
Interim Leadership
Perhaps the most obvious need is for an interim leadership solution when there is an unanticipated “gap” in leadership. Hiring a C-level permanent leader is a time consuming and important process and HQ is right to take their time to get it right. In the meantime, the business needs a leader. A seasoned Japan experienced leader can often step in to take the reins of an existing business to ensure continuity, maintain team morale, and preserve the all-important trust relationships with business partners in Japan.
Two potential benefits of an interim leader are one, that leader can parachute in and provide HQ with a fresh, third party view or even analysis of how things have been going on the ground. Being the new eyes and ears of HQ can create a deep level of trust between HQ and the Japan leader and shed light on the kind of leadership skill set that is needed. Two, the interim leader may end up being the best final choice for the permanent C-level role, once they have been on the ground, seen what might need to be done, and gained the trust of the teams.
Transformation Leadership
Transformation leadership can be an extremely compelling solution in certain circumstances. One of the aspects of the gap between HQ and Japan that is enduring and perhaps the most frustrating is the speed of change in Japan. As much as people read about it, hear about, or even witness it, change in Japan can take three times longer than anywhere else. This is even more difficult for a new expat to effect. An experienced Japan leader can often parachute in with a specific mandate, and if that leader has the cultural intelligence and linguistic skills, effect change in a Japanese business environment faster than an existing leader or new expat from HQ. Change will still take longer than in most other countries, but a seasoned transformation leader with Japan expertise can speed things up.
Another form of transformation leadership is when there is a special or new project that needs to be implemented. The existing CEO or Country Manager probably already has their hands full running the existing business. A transformation leader can come in and on an interim basis, launch a new project or initiative without straining existing leadership resources. This could also be termed “change” leadership in terms of implementing a new business project or driving a digital transformation that needs to be handled by a “third” party.
Launch Leadership
Entering the Japanese market and launching a new business can seem daunting, from one perspective, and look easy from another perspective. The reality is somewhere in between and knowing how to start is the key. From both perspectives, choosing the right launch leadership is one of the most important decisions a company can make when starting up in Japan. The views at HQ can range from “we have to have a Japanese native because after all this is Japan” to “let’s get a sales agent on the ground and start selling first.” There are of course all the variations of these views, but the most important questions to ask are, “what kind of skill set does a launch leader actually need?” and “do we have a Japan market ready leader already in the company-someone with Japan specific cultural intelligence?” The Japanese market has very distinctive characteristics and is like no other market. Choosing the right launch leadership can make or break a Japan business launch.
Growth Leadership
After the Japanese business has launched, it is imperative to take a rational look at how things are going at strategic points in its growth. The best launch leader may be perfect to take you to 5, 10 or 20 people. That person may be a great founder type. But it happens so very often that the launch or founding leader is not the same person to take the business to the next level. A growth leader will be experienced in pulling together the many moving parts of a new business and ramping up growth. Particularly in Japan, the first year or so may be indeed focused on getting relationships in place, handling relevant regulatory filings, hiring some key people, and establishing the presence. At some point, you need a leader who can capitalize on the foundations and “take charge” to expand. An experienced Japan based culturally intelligent leader can often help HQ to see opportunities that are distinct to the Japan market. There are so many ways that Japan looks like another western country on the surface, but underneath is a very different story. A talented growth leader can help HQ see through the veil to identify new opportunities.
The Flexibility of Strategic Leadership
It is helpful to use these four types of strategic leadership to organize thoughts about how to deal with or approach the Japanese market. In that context, there will be many situational permutations of each cadre. The beauty of strategic leadership is its flexibility.
A particularly appealing aspect is that these strategic roles can be non-exclusive and for a specific term, such as one year. Moreover, they can be structured to suit the needs of the Japan business. This is particularly attractive to SMEs who cannot afford and do not need a full time C-level, such as a CFO or CMO, but desire to have that kind of deep expertise. Many new and growing businesses would benefit greatly by having a C-level executive for only two or three days a week over a specified period. Additionally, these non-exclusive and potentially non-full time engagements allow you to access a much wider pool of experienced executives with deep Japan experience.
The Japanese market is like no other and thus leadership solutions also require out of the box thinking. There is a vast experienced pool of executives who may have been sidelined in the game due to rigid hiring practices or organizational thinking that remains traditional and inflexible but who have the kind of experience or entrepreneurial talent that traditional employment policies do not recognize. It’s time for Japan to embrace these types of strategic leadership to bring more flexibility to the labor market and tap into the deep pool of market experience to ramp up productivity and develop a new layer of young leaders.
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