Wise Japanese Crisis Strategy Focuses on “Community” Over Profits

While COVID-19 has ravaged much of Europe and the Americas, the world can look to Japan for a formula for long-term survival in turbulent times.

Harvard Professor Hirotaka Takeuchi, author of “The Wise Company: How Companies Create Continuous Innovation,” offers insight into the Japanese model.

Rather than dwelling on COVID-19, Dr. Takeuchi points to the March 11, 2011, 9.1-magnitude earthquake that unleashed a powerful tsunami: a wave higher than 125 feet that struck the Tohoku region of Honshu, Japan’s largest and most densely populated island. It killed 16,000 people, displaced hundreds of thousands and left millions without power and water. Some 303,000 buildings were damaged, and roads, bridges and railroads were destroyed. Even more frightening were the three nuclear power plants that suffered meltdowns – leading to more widespread evacuations.

Business Response to Instant Death and Destruction

While the COVID-19 plague is a widespread pandemic, the 2011 tsunami brought instant death and destruction. Prof. Takeuchi chronicles how Japan reacted by focusing on the leaders of four companies who jumped into action soon after the moment of devastation. This story is told by Senior Writer Dina Gerdeman in an article entitled “Why Japanese Businesses Are So Good at Surviving Crises,” which was featured in the June 26 Issue of Harvard Business School’s Working Knowledge.

What was the Japanese crisis response formula?

According to Dr. Takeuchi, it is important for today’s businesses affected by the pandemic and seismic cultural shifts to recognize that many of the Japanese companies so devastated in the tsunami and its aftermath continue to operate today. He attributes this to their dedication to responding to employee and community needs first and their moral purpose of serving the common good.  He points out that these companies assigned less importance to pursuing layoffs or other cost-cutting measures in the face of a suddenly crippled economy.

“Many Japanese companies are not that popular with Wall Street types because they are not focused on gaining superior profitability and maximizing shareholder value,” he says. “They talk consistently instead about creating lasting changed in society.”

Dr. Takeuchi adds that the reward for thinking beyond profits is business longevity. Forty percent of companies that have remained in business more than 300 years are in Japan.

Four Examples: Japanese Corporate Responsibility

One example of corporate responsibility was CEO Takeshi Niinami of Lawson, a chain of convenience stores. Following the devastating event, he sent word to his employees instructing them to “deliver food to disaster victims within seven days and disregard cost.”

A company nearly destroyed by the earthquake/tsunami was Yakuit, a maker probiotic drinks. The company instantly lost 30 percent of its market. Instead of reducing his sales force, CEO Hiromi Watanabe assured employees the company was committed to retaining jobs even if it meant “using all cash and earnings reserves of the company.” Moreover, he distributed the equivalent of $300 to each “Yakuit Lady” from the company safe.

Makoto Kigawa, CEO of Yamato, a home delivery service company that delivers everything from fresh food to skis and golf clubs, messaged its 10,000 employees instructing them that “if help is needed, then help. Don’t worry about profits.”

CEO Tadashi Yanai of UNIQLO retail stores told managers of re-opened locations to keep their outside UNIQLO sign lights on. He believed it provided a psychological boost to the community.

“Not only does a company have to live in harmony with society, but to be accepted, it must also contribute to society,” Yanai told Dr. Takeuchi.

[WRITER’S NOTE: In writing this article, my mind kept remembering the old Aesop’s Fable of the tortoise and the hare. It was the slower, more methodical creature that lasted in the end without all the razzle-dazzle.]