Strategy, Output, and Cultural Differences

Initiating the Global Shift:
Determine the starting point for your globalization strategy.

Identifying the Right Global Players:
Define the profiles suitable for globalization, discerning those who align with your objectives.

Prioritizing Key Positions:
Pinpoint the initial roles critical for advancing globalization efforts.

Navigating the Talent Search:
Develop methodologies for locating the ideal global contributors.

Fine-Tuning the Local Recruitment Process:
Optimize processes to seamlessly integrate global talent into local operations.

Let's explore these dimensions to outline a path toward successful globalization.

Building a strategy

"If you plan to go global in the future, review your strategy now."

Japanese companies often start their business with the mindset, "Let's win the Japanese market first and then consider globalization!" It's undeniable that the Japanese market is vast, offering the potential for satisfactory profits domestically. Additionally, the challenges for foreign companies to penetrate this market create a less competitive landscape, making survival easier. Consequently, many companies opt for a strategy focused solely on the Japanese market, tailoring products, services, and talent acquisition for domestic success.

However, this domestic-centric approach can hinder companies when contemplating globalization. The maturation of products, services, and the workforce within the confines of domestic adaptation poses challenges for a seamless transition to a global outlook. While not an insurmountable problem, adapting to globalization requires significant changes across culture, values, and workflow, demanding careful consideration.

In Japan, unique products and services, akin to the Galapagos cell phone, have developed distinctively. Globalizing such offerings may not be an immediate consideration. Switching to globalization, while challenging, is feasible but necessitates an overhaul of established culture and values.

For companies eyeing globalization in the future, a strategic reassessment is crucial. This trend is evident in the Japanese startup scene, where entities like Metaps, Mercari, and Smart News adopt a global perspective from the outset, leveraging platforms like the App Store for international sales. Some startups, such as Whill, even relocated headquarters to the U.S. for funding and market access.

The output of the strategy

"Language barriers can cause misunderstandings between management and front-line staff, resulting in a 'messy' strategy."

Communication challenges are a notable digression, particularly within Japanese companies, where effective cross-border communication is not universally strong. Despite Japan's high education standards, the average TOEIC score is 40th out of 48 countries globally
 (Japan Ranks 40th of 48 Countries in TOEIC Scores, THE WALL STREET JOURNAL). Proficiency in English, crucial for global communication, remains a challenge for many, unlike countries such as Sweden and the Netherlands, where English is more widely spoken.

Even with a well-crafted strategy, language barriers can derail the output. Tokyo-based companies planning to open a branch office in, for example, Dubai, may face hurdles in transferring talented employees without English proficiency. Hiring locals becomes a common solution, but this necessitates extensive training due to the unfamiliarity with the company's brand understanding and corporate culture.

While decisions like Rakuten's and Fast Retailing's shift to English as the official language have both pros and cons, the potential long-term benefits for Japanese companies are considerable. Bilingual employees, proficient in both English and Japanese, become instrumental in bridging cultural gaps and instilling the company's culture, brand, and strategy at all levels.

Cultural differences

The success of globalization hinges on transcending Japan's physical barriers and understanding and integrating different cultures from the early stages. Cultural disparities between countries can either positively or negatively impact business endeavors.

Japan's island geography limits inbound and outbound interactions, fostering closed communities. When Japanese companies venture into other countries, strategies must consider these cultural variations.

Despite the internet's role in reducing communication costs and facilitating information flow, cultural differences persist. Successful globalization requires an early understanding and assimilation into the target market's culture.

In Conclusion:

Companies, both Japanese and foreign, encounter pitfalls in globalization. Some issues, unique to Japan, stem from strategies solely focused on the domestic market. However, a positive shift is observed, with companies increasingly adopting a global perspective from the outset.
In the next article, we'll explore how Silicon Valley companies embark on globalization, drawing lessons from their unique approach and mindset that anything is possible.

Original article: 【連載】グローバリゼーションという長い旅　第2回 日本企業が“グローバリゼーションする”上での課題――「戦略の構築」「戦略のアウトプット」「文化の違い」