Japan’s companies are key to Japan’s growth
Economic growth: Almost everyone agrees that economic growth is preferred over stagnation and decline. Fiscal policy and printing money unfortunately can’t deliver growth.
- Building fresh new successful companies,
- returning stagnating or failed established companies back to growth (see: “Speed is like fresh food” by JVC-Kenwood Chairman Kawahara), and
- adjusting the structure and business models of existing companies to the rapidly changing and globalizing world (see: “Japanese management – why is it not global?” by Masamoto Yashiro)
Economic growth for Japan: reducing friction
Governments best help economic growth by reducing friction, and by getting out of the way of entrepreneurs building, turning-round, and refocusing companies.
Some required action is counter to intuition: for example, in many cases reducing tax rates increases Government’s tax income, a fact known for many years. Effective education and research are key to create, understand and apply such non-obvious knowledge.
Economic growth for Japan: corporate leadership and governance reform
Companies need efficient leadership, leadership needs feedback, wise and diverse oversight by Boards of Directors, who ring alarm bells long before a company hits the rocks, or fades into irrelevance. Corporate governance reform may be the most important component of “Abenomics”. Read a Board Director’s view on Japan’s corporate governance reforms:
- Corporate Governance Reforms – A board member’s viewpoint (Journal of the American Chamber of Commerce in Japan, ACCJ)
- Corporate governance reforms in Japan – practical views of a Board Director – in greater detail, and with many links and references
Japan’s electrical conglomerates are some of the poster children motivating Japan’s corporate governance reforms. In an interview about Toshiba’s future on BBC-TV a few days ago, I explained that Japan’s electrical conglomerates showed no growth and no profits for about 20 years, and the refocusing Toshiba has announced now should have been done much much earlier, 10-20 years ago (“Speed is like fresh food“). Refocusing Japan’s established corporate giants will release resources for start-ups, spin-outs and growth companies.
Economic growth for Japan: Japan can be very good at restructuring and turn-rounds
After Japan’s economic bubble burst in the 1990’s, Japan developed much know-how to successfully turn around failed companies:
- Japan Airlines,
- Kenwood, or
- Atsushi Saito’s Industrial Revitalization Corporation of Japan (IRCJ) successfully turned around about 40 companies, and returned a profit to tax-payers,
- and many more.
Happy New Year!
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