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Can Japanese and Scandinavian management culture go hand in hand?

Japanese companies were involved in 2,950 deals totaling $290 billion in the first nine months of 2018. Milestone Systems was acquired by one of the larger ones almost five years ago, but we are still a company deeply rooted in our Scandinavian values. We have learned a lot in the process, as I’m sure the Japanese have, too.

When I first met him, he was enjoying a cup of green tea with his CFO. I politely asked him how long the two of them had worked together. The answer somewhat surprised me somewhat; 53 years! I’m referring to Fuijo Mitarai, chairman and CEO of Canon Inc. This was five years ago. Today, Mr. Mitarai is 83 years old and has worked for Canon since 1961. In 2014, we decided to sell our company to Canon, and today we’re a stand-alone company in the Canon family. It’s been an exciting and very complex process, discovering how two so different cultures, the Danish and the Japanese, work together and learn from each other.

One of my major priorities was to maintain our culture and identity. Milestone Systems was born a startup 21 years ago, and even though we employ just under 1,000 people today, we are still deeply rooted in our original culture of openness, innovation power, a flat hierarchy and a very Scandinavian management style. I wanted to preserve this and avoid becoming just one company out of many in the large Canon family.
So we listed a number of requirements for our new owner: we didn’t want to be a mere development facility for the parent company, but a standalone company with our own governance structure. We built a Chinese wall around our company, leaving the mother company with no access to our customers or our physical locations. We asked Canon not to interfere with our daily operations and wanted the freedom to work with direct competitors of Canon. Canon respectfully accepted our requirements and continues to do so.

One thing I learned, though, is that introducing a Scandinavian management culture to a Japanese company – and vice versa – is impossible. So I asked myself how we could find common ground and create a smooth collaboration. First and foremost, you need to understand the culture. And when it comes to Japan, the first thing you learn is how you introduce yourself to a colleague or business partner with a complex exchange of business cards: it needs to be done in a tactful and intelligent way that reflects who you are and where you belong in the hierarchy.

The real challenge, however, is the decision-making process. Although Danish and Japanese companies are among the most consensus-seeking company cultures in the world, according to INSEAD professor Erin Meyer, navigating the approach to consensus is very different. In Denmark, and in Scandinavia in general, the flat organizational structure and active involvement in meetings and brainstorming, form the basis of what we perceive as decision-making based on consensus. The Japanese discuss just as much as we do, but they do it in an entirely different way.

The ability to navigate is crucial
In general, the Japanese need a clearly defined framework prior to the meeting and prefer that you stick to this framework during the meetings. The first rule is that you do not make nor discuss any decisions during the meeting. You do this prior to the meeting. The meeting is perceived as a form of ceremony where you repeat and confirm and perhaps elaborate on the decisions that have already been made. If you want to influence the decision-making in a Japanese context, you need to understand that the actual decisions are made before the meeting. If you start brainstorming during the meeting, which is quite the rule in our part of the world, it is perceived as poor preparation. Let me give you an example: during one of our first meetings with Canon, my colleagues and I were well-prepared as to how we were expected to behave. But as the meeting proceeded, one of my colleagues, out of mere excitement, got up from his chair to discuss and develop ideas. Our Japanese colleagues didn’t say word. It goes without saying that that was the end of the brainstorming that day.

Admittedly, this very different approach to communication and decision-making tends to frustrate me. In Scandinavia, we often go by the rule that good communication is about informing about a task and ensuring that your colleagues have heard and understood what the task is about, and that they eventually accept the task: a linear model where the sender is in focus, and where the time frame from when the task is explained to the point where it’s completed, is relatively short. In Japan, the focus is not on the sender of the task or decision, but rather on the content of the task or decision. This communication is based on a mutual and dynamic reflection where the knowledge foundation is created in unison.  It is not about stating your opinion but about making the decision together.

I have learned something very interesting from this; the Japanese are collectivists, whereas Scandinavians are individualists. In Scandinavia, it is customary and well-accepted to focus on yourself, your career, your own performance, work-life balance, etc., whereas in Japan it’s all about the company; the company is bigger than the individual. Look at Canon: they have a 200-year vision because in Japan, it’s about the company’s goal. Does that mean that Milestone Systems will also have a 200-year vision and do we want to shift focus from individuals to the greater whole? No, that’s not what we will do. We will maintain what works for us, namely a culture where everyone has a voice, and where focusing on one’s own goals is accepted. But that doesn’t mean that we cannot learn from how things are done in Japan. We can use it to challenge ourselves and our ways and we can use it as a tool to get better at working more efficiently with the Japanese. And I believe that the Japanese can learn from our more linear approach to decision-making and in this way promote a more efficient decision-making process.

We don’t want to copy the way Japanese do business, just like Japan shouldn’t copy the way we do it, but we need to understand and respect each other’s ways.

Read the comment originally published in Ugebrevet Mandag Morgen here