JIN-127 -- The Human Factor

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J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the week's business and technology news
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Issue No.127
Wednesday, April 4, 2001
Tokyo

+++ News in Japan
- Hiccups for DoCoMo on the path to 3G
- Sony announces reorganization, shifts from electronics
manufacturer to integrated broadband company
- Toyota will invest in digital broadcasting firms to gain
car-navigation know-how
+++ Yen watch
+++ International news
- Handspring, Sony gain on Palm
- BT, Sharp deal shows Japan threat to European phone makers
+++ Worth a read
+++ Viewpoint

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-------------------------------------------------------------->

+++ NEWS IN JAPAN

--> Hiccups for DoCoMo on the path to 3G
(News.com, March 30)
http://news.cnet.com/news/0-1004-200-5403188.html?tag=owv

Extract: There are growing signs that Japanese phone giant NTT
DoCoMo is encountering problems, including an expected spectrum
and bandwidth shortage, with the third-generation phone service
it plans to launch in less than two months. NTT DoCoMo's
problems also affect companies building applications for
third-generation networks.

Commentary: Nothing unexpected here. We reported back in our
June issue (http://www.japaninc.net/mag/comp/2001/01/jan01_filter_3g.html)
that content developers would be carefully
watching the 3G networks' real-world speed and capacity, and
that DoCoMo, worried about a bandwidth shortage, would ramp up
slowly. Such hiccups were anticipated all along -- the point is
that Japan's cellular operators will have first-mover advantage
in learning how to deal with them.

--> Sony announces reorganization, shifts from electronics
manufacturer to integrated broadband company
(Financial Times, March 29)
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT
3HEWKRWKC&live=true&tagid=ZZZLZDL1B0C&subheading=media,%20enter
tainment,%20%20sport

Extract: Sony on Thursday unveiled a series of organizational
changes intended to strengthen its broadband Internet strategy.
The reshuffle reflects chairman Nobuyuki Idei's vision of Sony
as an integrated broadband company, rather than the electronics
manufacturer it has been for the past five decades. It also
represents an attempt to harness the company's diverse assets
-- ranging from finance to films to computer games machines --
more profitably.

--> Toyota will invest in digital broadcasting firms to gain
car-navigation know-how
(The Japan Times, March 30)
http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?
nb20010330a5.htm

Extract: Toyota plans to enter the digital broadcasting
business via next-generation communications satellites by
initially investing in three CS broadcasting firms. The move is
aimed at providing the automaker with the know-how it needs to
expand its CS broadcasting business to cover car navigation and
car-related communication tools in the future.

Commentary: An obvious market in a country without street
names. The difficulty of getting around in Japan could forge
superior car-navigation offerings that could in turn beat
weaker competition in foreign markets.

--> X-Box faces Japanese unrest
(Financial Times, March 27)
http://markets.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid
=FT3SN5UXTKC&live=true&useoverridetemplate=ZZZ6MJPM90C&tagid=ZZ
ZR4COD20C&subheading=asia%20pacific%20equities

Extract: Japanese software developers are warning Microsoft
that unless it improves marketing and distribution of the X-Box
game console, it could alienate local consumers.

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-------------------------------------------------------------->

+++ YEN WATCH (at close of market each weekday)
=========================================================
26Mo 27Tu 28We 29Th 30Fr
=========================================================
US 124.55 123.75 122.95 123.35 124.90
UK 180.36 180.18 178.82 179.90 181.12
Eur 111.55 111.46 110.33 109.98 110.83
Can 80.47 80.49 79.28 79.76 80.32
Aus 63.17 63.31 62.73 62.34 62.86
Ind 2.84 2.83 2.81 2.82 2.86
=========================================================
* Currency quotes courtesy of Tokyo-Mitsubishi bank.

+++ INTERNATIONAL NEWS

--> Handspring, Sony gain on Palm
http://www.allnetdevices.com/industry/news/2001/04/02/
handspring_sony.html
(allNetDevices, April 2)

Extract: The Palm handheld platform continued to dominate the
handheld arena in February, but Palm-branded handhelds lost
ground to competitors, including, for the first time, Sony,
according to market research firm NPD Intelect.

Commentary: Sony will likely gobble up huge chunks of the
worldwide PDA market. Why? Because it has worldwide name
recognition, and knows how to take a good idea and make it
better. The Red Herring ran a piece on how PDAs were leading a
US revival in consumer electronics that could challenge Japan's
traditional dominance. We felt this was overdone a bit. (See
http://www.herring.com/index.asp?layout=story_generic&doc_id=RH
490015449.) The Economist's piece on the same subject was more
balanced (see http://www.economist.com/displayStory.cfm?
Story_ID=529105). Our take: When it comes to new hardware,
Japan's consumer electronics giants can be late to the game and
still win in the long run. Software is another story, and
that's why the Clie runs Palm OS. (Our May issue will feature
one of Japan's strongest software plays. Watch for it.)

--> BT, Sharp deal shows Japan threat to European phone makers
(Reuters, March 28)
http://biz.yahoo.com/rf/010328/l2853710.html

Extract: Britain's BT Wireless announced a global mobile
handset deal with Sharp Corp on Wednesday, highlighting the
threat Japanese mobile makers pose to competitors as operators
seek advanced phones. The first product, to be launched in the
UK and named Cyclops, will be a version of a phone recently
introduced by BT's Japanese affiliate J-Phone incorporating a
tiny camera lens in the back of the handset. The phone can take
photos, display them on its color LCD screen and email them
immediately. Such products will enable Japanese mobile phone
makers to boost their share of the global market, European
executives working for J-Phone Communications Co said this
week.

Commentary: Same as the commentary above. It's hard to beat
Japan when it comes to consumer electronics hardware, and the
cellphone now fits neatly into that category. See also
http://www.commentwire.com/commwire_story.asp?commentwire_ID=10

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+++ WORTH A READ

The Japan Issue: Modern Boys and Mobile Girls
(The Guardian, April 1)
The writer who coined the phrase "cyberspace" explains why no
other country comes closer to the future... or makes better
toothpaste.
http://www.guardian.co.uk/Archive/Article/0,4273,
4163142,00.html

+++ UPCOMING EVENTS (Advertisement)

-> Kaisha Ball - Fund Raising for the Children's Cancer
Association of Japan

The Kaisha Society invites you to the liveliest Ball on
April 7 at the Shintakanawa Prince Hotel. Event includes:
special appearance by Miss Universe Japan 2001, champagne
and dinner with live band, and raffle and auction fund
raising. Fees are 16,000 yen. For more information,
http://www.kaisha.gol.com/events/kaisha_ball/index.html
To register, visit:
http://www.kaisha.gol.com/events/kaisha_ball/register.html

-> iLocus.com Show (India 2001), Le Meridian Bangalore,
April 17-19 2001

The event will happen to be the first IP Telephony Event in
India. It will be an ideal time for IP Telephony companies
to forge relationships with carriers and OEM relationships
with hardware/software companies and VARs in India. With a
mix of workshops and 14 exhibitors and 60+ speakers, this
will be an ideal opportunity to interact and exchange views
with the telecom evangelists. For more detailed
information, please email iLocus.com at india@ilocus.com
or call +852 2413 0918. Conference agenda can be found at
www.ilocus.com/india.htm

+++ Viewpoint

The Human Factor

Generally the Western media's take on this country says that
because of its sluggish economy and the resulting deregulation
"forced" upon it, Japan is finally becoming more like "us."
Huge, inefficient Japanese companies -- employers -- will
finally be allowed to fail, and unnecessary workers will be
laid off, as is "natural." The result will be more opportunity
for foreign players to enter the market and leaner, meaner,
more transparent Japanese corporations able to compete more
effectively in the international arena.

But let's not forget the human factor. Japan is the most
peaceful, harmonious nation on earth. The middle class is huge.
The obscene disparities between the salaries of top management
and common workers you see in the West are not the norm here.
This is not a litigious society, where people sue one another
at the drop of a hat. There is trust, in business and in
personal relationships. Such human trust can be far more
important to business deals here than any signed-and-sealed
written contract.

These are all good things, at least in my mind. Western ways
are not always best. In a book entitled "Made in Japan," Sony
founder Akio Morita criticized the poor human management and
short-sightedness found in many Western companies. In the West,
he said, employees are seen as disposable tools, whereas in
Japan they're long-term partners. He used a metaphor of a wall
to describe the difference between the use of humans in
creating a company. In the West, managers build a brick wall.
Employees must be a particular shape and neatly fit into the
space allotted them. When they no longer do, they're often
fired. In Japan, the wall is made of stones, each a different
shape (as humans always are). It is the managers' job to build
a wall with the stones at hand, fitting them together according
to their various shapes and sizes to create a complete
structure. If a stone is no longer a good fit in its current
position, you change its position. This obviously takes more
effort and patience than hastily discarding (firing) the stone,
but in the long run it leads to trust.

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Japan is always looking at the long run. That's why it hasn't
hollowed out its industrial base, companies are often more
pre-occupied with market share than revenue (less acceptable
with sometimes short-sighted US-style investors and boards of
directors), and human and business relationships are built to
last.

Japan is not a hasty country, a fact that drives hasty types
nuts. This country was slow to adopt the Net, but over a decade
ago it was plowing funds into nanotechnology research, which
will eventually be the next big (or small, I suppose) thing.
Turns out the Net venture scene was a bit of a bubble;
nanotechnology will not be, and it's not a field that anyone
can jump into.

Japan has a massive debt problem, but all of it is within Japan
and government based. Japanese individuals are quite wealthy --
they have more than half of the world's savings. The US has a
massive debt problem, but, sadly, much of it is personal. Ask
yourself: Which would you rather be, an American saddled with
credit card debt and subject to being fired whimsically by a
short-sighted manager, or a Japanese with plenty of savings and
a secure job (in a far-sighted company that will help you adapt
your skills to the times instead of letting you go the second
you don't "fit")? Where would you rather live, in a litigious
society with little trust, dislocated people, and handguns for
everyone, or a trust-based, harmonious society with virtually
no crime? As a human being, which would you choose? I know what
my pick would be, if we could choose such things about
ourselves.

But now the consensus in Western thinking is that Japan is
finally coming around -- or about to be forced to come around
-- to our way of doing things. I thought about calling this
essay "Thank God They Don't Listen to Us," and they don't. Or
rather, they often disregard our take on things. The Japanese
are smart. Changes are needed, but they'll figure out their own
way, ignoring the advice of hasty foreigners. At a time when
the Austrian economist Joseph Schumpeter's idea of "creative
destruction" -- managers must cleanse themselves of
"sentimentality" and view company divisions, products, and
people as readily dispensable to keep pace with tech-driven
paradigm shifts -- is conveniently in vogue, Japan will
continue to focus on relationships and trust. Western managers
dealing with Japan will find this behavior maddening.

Three hundred years ago, Tokyo was probably the biggest city in
the world, a fact that had nothing to do with the West.
Columbus stumbled onto America, but he was looking for a route
to the fabled riches of the East, and the ones of this nation
in particular. Three hundred years later, the West still hasn't
found them.

-- Steve Mollman

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STAFF
Written by Steve Mollman (steve@japaninc.net)
Assistance with news compilation:
Richard Ochero (richard@japaninc.com)

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