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FORWARD LOOKING LESSONS FROM THE JAPANESE TRAGEDY
Awaiting a new phase in history
By IMD Professor Jean-Pierre Lehmann and IMD President Dominique Turpin
We sadly mourn the many deaths and suffering arising from the earthquake and tsunami that remorselessly pummelled Japan, and especially for our numerous Japanese IMD alumni and friends who may have been affected. While there will be much analysis of what happened, this tragedy provides also an opportunity to draw broader lessons and look forward.
Both of us can claim to know Japan reasonably well based on having lived, studied, taught and worked extensively in the country. We have maintained very close contact with Japan and a number of its leading companies throughout the years. During the 1980s, when we worked together, we shared a fascination for Japan. It has to be said that we were not alone with this view, as by any objective criteria Japan was in many ways awesome. In the context of our research, this was especially true of the world of enterprise, where leading Japanese companies were dauntingly innovative.
But it was not just the world of industry. This was also a time when the Japanese came to master many culinary arts, including the French. As Frenchmen, we and our compatriots had to admit that some of the best “French cuisine” in the world (including France!) was to be found in the recipes of Japanese chefs in the restaurants of Tokyo, Osaka, Fukuoka, Sendai and many other Japanese cities. The last edition of the famous Michelin gastronomic guide doles out a whopping 266 stars to Tokyo restaurants, more than Paris and London combined. Fashion, architecture and classical music were among other areas where the general Japanese atmosphere of creativity prevailed.
During this period, Japan’s global soft power spread. Japanese studies centers opened up in numerous universities in the West, many of Japan’s Asian neighbors felt impelled to express publicly their desire to learn from Japan, sushi restaurants and other forms of Japanese culinary arts spread throughout the planet, manga defined a new artistic genre, Japanese overseas travellers were multiplying, Tokyo was the world’s biggest stock market, Japan became the world’s largest donor of overseas aid and many Japanese brands became synonymous with excellent quality and innovation. In 1989, when IMD first published its ranking on competitiveness, Japan was firmly in the number one position, while the US was third.
Then, something happened and Japan took a quite different, radical and unexpected turn. The asset bubble burst in the early 1990s, with both the Nikkei index and property prices plunging precipitately. However, it was more than “just” that. As we argued in a joint publication in 2002 (“Japan missed the first globalization train: Will it catch the next?”, Perspectives for Managers, 19 June 2002), Japan seemed to have failed to understand, let alone anticipate, the profound transformations driven by several key driving forces of the turn of the century: demographics, the IT revolution, the rise of China and globalization.
As a Swiss demographer once said: “The only thing sure about tomorrow is that we will be older than today.” Japan, with one of the fastest ageing societies in the world, has not been able to take this challenge to truly find growth opportunities outside of home. Consequently, many Japanese companies are stuck in their domestic market and find it more and more difficult to globalize.
Also in the 1980s, Japanese companies retained their lead in many “hard” electronic products, but the playing field was rapidly shifting to the internet. Attempts by new Japanese entrepreneurs to create new venture businesses “à la Steve Jobs” were quickly crushed by the large traditional Japanese companies. But today, there is no Japanese Microsoft, Google or Apple.
Their attitude towards China was interesting. In spite of physical and cultural proximity, atavistic attitudes prevented the Japanese from responding appropriately to rising Chinese competition. As to globalization, the Japanese were unready in many ways, including the basic but fundamental imperative of mastering the English language. In a 2009 comparative survey by TOEFL (Test of English as a Foreign Language), Japan scored even worse that North Korea and Myanmar!
For the last couple of decades, not only has the economy been sluggish, but so has the spirit. Whereas Japan was the talk of the town in the 1980s, for the most part of the last couple of decades it has been conspicuously absent from global attention and discourse. The Japanese have been closing themselves off from the world. Whereas, for example, the number of students from many countries to the US and other overseas universities has been booming, in Japan they have been decreasing. Japanese companies have been finding it increasingly difficult to post executives abroad or even to recruit new staff with basic global skills.
Japan seems to have entered a phase of quite deep depression and sense of isolation from the outside world. Japanese speak increasingly of the “Galápagonisation” (garapagosuka) of the country, in reference to those isolated islands situated in the Pacific 1000 kms from Ecuador. Japan’s own anomie has resulted in either global indifference – in stark contrast with 20 years ago, Japan is very infrequently mentioned in the IMD classroom – or criticism.
Yet this terrible tragedy shows the Japanese in many ways at their finest. It is needless to say dramatic that the world should be turning its attention to Japan because of the catastrophes it is experiencing. But we are sure all will concur that the Japanese people in the face of this tragedy have displayed awesome courage, dignity and perseverance. Many foreign commentators have remarked on the amazing stoicism of the people and the order that they managed to retain in the carnage. In how many countries in the world could one imagine such a scenario even vis-à-vis lesser tragedies?
As the world watches Japan with anguish and admiration, one is reminded of the great resilience of the Japanese people and how much, in fact, they have to offer. The dead will tragically need to be buried and mourned, those who suffer will need to be consoled and the damage will need to be repaired. But we also hope that Japan’s incredible past phoenix-like capacity to rise from the ashes will manifest itself again; and that having shown themselves so dignified and courageous in the face of great tragedy, the Japanese will “eave the Galapagos" and rejoin the global mainland, from which it stands to benefit, but also to which it can bring so much.
March 11th 2011 may mark a new phase in Japanese history, with the Japanese regaining self-confidence and the intellectual openness vis-à-vis the outside world for which for many decades they were well known and respected. In this new phase, Japan will catch the next globalization train and provide a forceful influence in meeting tomorrow’s global challenges.
Jean-Pierre Lehmann is Professor of International Political Economy and Founding Director of The Evian Group @ IMD. Dominique Turpin is the Nestlé Professor and President of IMD. Prior to this, he was responsible for the Japanese market for many years.
Both Professor Lehmann and President Turpin wrote their PhD theses on Japan-related themes and have published widely on the country throughout their academic careers.