Japan must reward bright sparks

By Michiyo Nakamoto

Japanese industry shows strong resistance to the idea of rewarding merit. This was highlighted last month when the Tokyo District Court ruled that Nichia, a mid-sized chemical company, should pay Shuji Nakamura, its former employee, ¥20bn ($189m) for an invention he developed while at the company: a way to manufacture blue light-emitting diodes (LEDs).

The blue LED has revolutionized areas from the recorded sound and film industries to traffic-signaling systems. It vastly increases the capacity of compact discs and DVDs and is likely to replace traditional light bulbs. Mr. Nakamura’s invention transformed Nichia from an obscure, rural chemicals maker with annual sales of ¥20bn into a global group with annual revenues of ¥180bn.

The court’s decisions, that Mr. Nakamura’s contribution was worth 50 percent of the profits Nichia could make before its parents on blue LEDs expire in 2010, was widely condemned in Japan. While the criticism focused on the size of the payments to Mr. Nakamura, the ruling caused deeper worries about Japan’s future. Business leaders warned that corporations, worried that they would face similar payments to successful researchers, would move their research and development operations offshore. Some characterized it as a sigh of the collapse of Japanese social values, and some media commentators questioned the justice of rewarding an individual for his invention.

According to old-style Japanese corporate values, Mr. Nakamura, nicknamed ‘the slave’ by his western friends for his low pay at Nichia, should have been pleased with his modest rewards. Yet, while his blue LED helped new industries to start up, and was widely praised as one of the top inventions of the decade, no Japanese academic institution offered him a job when left Nichia. With US universities competing to hire him, it is not surprising that he moved – with his bright ideas – to the University of California.

In Japanese schools, there are no winners on sports days. Apart from the relatively brief periods of innovation by companies such as Sony, Japan’s high-technology industry has largely competed to offer similar products with little regard for their own specific skills. Now these companies are undergoing painful adjustment as they struggle to identify their individual strengths and make some money. Until Japan can offer both financial and social recognition for individual achievement, it is unlikely to produce its own Microsofts or Dells or for that matter, a better-performing Sony.

From the Financial Times

Strategy

Scenarios

By Tony Jackson

Making up stories about the future might seem a curious occupation for grown-up executives. But there was a time, s in the 1970s and early 1980s, when scenarios were a familiar part of the planning process. They then fell out of fashion for a while, as did strategic planning overall. Now that strategy is making a comeback, so are scenarios. In essence, the scenario technique consists of describing a range of possible futures. Let us suppose that the Chinese economy collapses, or that it flourishes: that the Internet enriches the telephone companies, or drives them out of business. What then?

The aim is not to make predictions, but to provide a framework into which subsequent events can be fitted. If executives have thought out the possible outcomes, they should be quicker to react when one of them arrives. As Arie de Geus, former head of planning at Shell, puts it, they can remember the future.

Since the oil industry undertakes vast single invest­ments such as refineries or petrochemical complexes, scenarios appealed as a form of risk analysis. What would happen if the oil price soared or plummeted? What was the probability of a given host government collapsing, or nationalizing the industry?

Then came the reaction. In a recent book, The Living Company, Mr. de Geus describes how in the 1980s, Shell's senior executives became skeptical. Making up stories, they said, was great fun and good public relations. But how many decisions could be attributed directly to the scenario process?

Over the last 10 years, says Roger Rainbow, Shell's present head of planning, there has been more emphasis on getting the managers involved. The trend has been to get them to bring scenarios into their decision processes,' he says. 'We need to help people make decisions on quite specific issues, down to the level of a specific strategy in a given country, or a specific project.'

At the same time, he reports, there is a rising level of interest outside. 'We get one or two companies a week calling us up to ask our advice on scenarios. If we were a consultancy, we'd be making a lot of money.' There are a number of consultancies doing just that. Northeast Consulting, of Boston, was founded by a group of consultants who had previously done scenario work for IBM.

According to Keith Anderson, senior associate for Northeast Consulting Resources in Europe, the difference in origins is fundamental. Where Shell began with geopolitical change, the computer industry was more concerned with detailed developments in technology.

As Mr. Anderson puts it, the task is not merely to describe possible futures, but to identify the preferred one and work to bring it about. Microsoft, he observes, was dismissive about the Internet at the outset. When it perceived its mistake, it set out not merely to catch up, but to take a lead in determining how the Internet developed.

From the Financial Times

Culture

CORPORATE ROAD WARRIORS

The characteristic that most distinguishes today`s executives is not their technological sophistication but the amount of the time they spend on the move. To observe the real impact of globalization, you only have to walk around an international airport. Among the crowds of tourists, an army of road warriors and corporate executives march red-eyed across the world`s time zones. Global markets mean constant global travel.

Management consultants are among the most frenetic frequent fliers. They routinely cross continents for a face-to-face meeting and then return home. They point to the importance of personal contact. For a profession built on rational analysis, it seems illogical. Face-to-face meeting when one of the parties is exhausted and jet-lagged seem unlikely to benefit anyone. But most consultants act as if e-mail and satellite links had never been invented. For the masters of logic, only the face-to-face experience will do.

The question is why all the technological gadgetry has failed make a dent in the amount of business travel? The answer seems to lie with a simple statistic. More than 90 percent of human communication is non-verbal (some studies put it as high as 93 percent). Facial expressions, body language, eye contact – these are all key conduits. Without them you can`t get past first base. It`s tough to bond over the Internet/ “Most of us still want face-to-face contact”, says Cary Cooper, professor of organizational psychology and health at the University of Manchester Institute of Science and Technology (UMIST). “A lot of people rely on their personalities to persuade others”, he says. “That doesn`t come out in e-mails, and video conferencing is limiting. They may also want to influence people outside of meeting. That`s why eyeball-to-eyeball is so important. We still don`t fully trust the technology even though it`s been around for a while. We prefer to talk behind closed doors”.

We also read body language to pick up the atmosphere, he says, “We walk into a meeting and pick up the feel of what the other people are thinking. We watch how Y reacts to what X is saying. You can`t do that by videoconference. Most of us don`t have the self-confidence to believe we can built the sorts of relationships we need with clients and suppliers down the wire. Business travel won`t decrease for that reason. It`s a shame because at the moment we`re burning out an awful lot of people”.

Culture