Leading Across Cultures: An Executive Journey in Japanese Organizations

How do you drive a massive transformation within a highly traditional, 90-year-old Japanese corporation? For foreign executives stepping into Japan’s deeply established business culture, the answer lies in mastering the art of alignment.

But what does this alignment look like in practice, how do you navigate the unspoken rules of a high-context culture, and how can you successfully build consensus?

These questions were explored by Dirk Schapeler, SVP and President of Niterra Ventures Company, during the GLOBIS USA, Inc. seminar “Leading Across Cultures: An Executive Journey in Japanese Organizations.”

During the seminar, Mr. Schapeler taught attendees how understanding long-term planning and high-context communication can be a strategic advantage rather than a hurdle. Drawing from his experience spearheading a USD 100 million fund to pivot Niterra beyond internal combustion engines, he provided a rare look at how to build trust and leverage nemawashi (consensus building) to successfully drive change. Below is an article adapted from the seminar’s transcript, edited for clarity.

Dirk Schapeler: I have been working in global leadership roles in automotive, material science, and pharmaceuticals. I worked in large German, French, American, and now Japanese companies. For the last six years, I have been at a Japanese company, living and working partly in Silicon Valley and in Nagoya, Japan.

Every nation and every culture has its pros and cons; there is no perfect one. But I would like to share what I have learned working at a large Japanese company.

The Power of Long-Term Planning

Schapeler: In a corporate setting, Japan has a very strong passion to plan things. There is the fiscal year, which typically lasts from the April 1 to the end of March. For this year, everything is very well planned.

My experience, having worked in German, French, and American companies, is that you plan something, but then three months later, the plans get thrown over and changed significantly. In Japanese companies, this is less the case. This fiscal year plan is something that, once it is approved, you can actually stick to.

Beyond the one-year plan, there are also five-year and ten-year plans.

• The five-year plan is typically referred to as the mid-term plan.
• The ten-year plan is referred to as the long-term plan.

These plans set the overall strategic direction of the company. They take a lot of time to prepare, and budget is usually assigned to them, sometimes even five years ahead. I underestimated the strength and the power of such a plan, but also how fixed it is.

If you miss the planning cycle—for example, coming up with an idea a month after the plan was fixed—you might have missed the boat.

Furthermore, when you miss milestones, it can damage your credibility quite a lot. The Silicon Valley culture of promising a “hockey stick” growth curve doesn’t work in a Japanese company. It is better to under-promise and over-deliver.

Decision-Making and Nemawashi

Schapeler: There is a strong hierarchy in Japanese organizations. Before an official meeting, there are alignment meetings where you have casual discussions to understand other opinions. This is sometimes referred to as nemawashi.

If you were to join a Japanese organization, my recommendation for your first 90 days is to talk to as many people as you can on all levels. You need to map out who is actually influencing the decision-making and who the stakeholders are in the company. Otherwise, you might be surprised to enter an official meeting with an amazing pitch and all the data, only to run against a brick wall.

There is also a built-in consensus building. Sometimes, the definitions of responsibilities for different functions are a little bit ambiguous and intended to overlap. This forces people to talk to each other and at least understand what is their opinion. What appears to foreigners sometimes as a lengthy, annoying process is actually making the decision much better.

High-Context Communication and Harmony

Schapeler: In Germany, we have a very direct culture. We say it’s black, it’s white, or I don’t like it. This kind of direct way of expressing an opinion is not very well accepted in Japanese culture, which is based on preserving harmony and trying to not be too direct.

What I would recommend you learn in the first 90 days is how to ask clarifying questions. Try to ask questions that might lead toward the other person understanding what your intention might be.

Additionally, in Western organizations, we often try to get everybody in a room for two days to discuss a topic until everything is clear. This doesn’t work as well in a Japanese organization, especially with a mixed team. Japanese colleagues are not always comfortable sharing as openly. They get overheard by people who have better English skills, a louder voice, or are more expressive.

Because English is mostly mastered on a written level rather than a speaking level, written preparation is oftentimes much more important.

Finally, the Japanese language is highly context-driven. In English or many European languages, you can express a thought in one sentence and it becomes very clear. In Japanese, meaning depends on who is saying what to what person, and what the environment is. Making an effort to learn some Japanese helps you understand the culture and the context.

Navigating the Environment

Schapeler: There is extremely high trust and honesty in Japanese society. For example, I had my phone slip out of my pocket in a cab, and the next day somebody sent it to me for free. It is an extremely safe and honest culture in general.

However, it is historically a rather closed society with high ethnic homogeneity. There is a more or less strong “Japan first” mindset. As a foreigner, you are never Japanese. You have to somehow live with that and accept it.

But you can sometimes play the “gaijin card”. Japanese people are very forgiving. For example, if I go to talk to one of our board members and ask a more direct question, I am probably more forgiven than if one of my Japanese colleagues does that.

Ultimately, before you try to drive change, please spend the time to understand the culture and the environment. Build trust before you influence anybody, and adapt your ambition to the cultural context. If you time it right, you can be highly successful.