This seems very strange to me. Skills and diligence should be more important than age for those climbing the corporate ladder. There is another problem. In Japan job responsibilities typically are sliced very thin. Scores of people–bankers, for example –do essentially the same thing, with perhaps slight variations in their jobs. This niche system confines the most talented people. To make things worse, Japanese companies rarely fire people. This old model, once seemingly efficient, now only hinders production. With our declining birthrate, Japan must improve its productivity or the country will be in serious trouble.
The good news is that Japan has a genius for adaptation. More than 10 centuries ago, we sent people to the most advanced countries to learn their technologies and even life philosophies. Confucianism in ancient times, parliamentary democracy after the Meiji Restoration, electronics and cars after World War II: we collected knowledge and successfully applied it to our culture. The same thing is happening now. Japanese corporations have sent many elite employees to America to earn M.B.A. degrees. And many enterprising Japanese students have joined U.S. investment banks and consulting firms. These people are in the vanguard as we shift to a “new economy.”
Some of the new generation are starting ventures, especially Internet companies. Others, frustrated by Japan and accustomed to the U.S.-style meritocracy, are jumping from big corporations to smaller firms. Japan’s traditional personnel structure is still in place, but younger, better-trained business people are working around it. Yamaichi Securities and Long Term Credit Bank of Japan, both of which went bankrupt, have set an important precedent. Companies may fail, but employees can still carry on with their careers. Many employees of those two firms have found new jobs, some with nonfinancial companies. They’ve given a boost of confidence to others who are thinking about changing jobs.
Japan’s financial system is being deregulated. That policy change has helped more foreign capital to flow into Japan and become a catalyst for change. After the economic bubble burst, many Japanese banks became risk-averse; they were hesitant to invest in start-ups. That’s not the case with foreign venture capitalists, many of whom can be seen walking around Tokyo these days. There is no doubt that foreign capital is more open-minded toward new ventures. And it can act as a catalyst for Japan’s new growth economy.
The Internet will become hugely important in the years ahead. The Web has a “flat” infrastructure–meaning you seldom know the age, sex or anything else about the people managing the sites with which you do business. The Web is the enemy of Japan’s old system. It breaks down hierarchies, and sparks the imagination of people. It enables enterprising young people to stand on the same business stage with older workers. It will create exciting job opportunities that will replace the drab tasks characteristic of our old system. The Web should help women, too. Using the Internet, they can work from their home or small offices. Women are the biggest consumers in Japan; the Web will make it easier for them to buy things.
Japan has much going for it. We are not a closed country anymore. There are a lot of new business ideas. Japan’s gross domestic product is more than half that of the United States. The collective savings of our people are enormous–$13 trillion in financial assets held by individuals. Right now, that money is tied up in conservative savings funds. But over time some of it will be funneled to venture funds and entrepreneurs. That’s what we’ve been missing–inventive, risk-taking individuals willing to invest in new technologies. But they are coming. Shibuya, in the heart of Tokyo, is Japan’s version of Silicon Valley. We call it Bit Valley. It is packed with people, including many foreign investors and serious Japanese businessmen eager to start new companies and make their mark on the world. Our frustration with the old system has created a bomb, which will soon explode. When it does, Japan’s new economy will be born.
