Part III: My struggle at the frontline of Japanese Enterprise IT
By James Mok
The ancient religion of Shinto regards all natural objects and exceptional creatures as kami or “Gods.” Visitors to Japan can easily sample a taste of kami-sama treatment by indulging themselves in the high level of customer service in tasteful restaurants, cozy ryokans or in engaging with the eye-dazzling selection of consumer goods. However, the same ‘Customer-is-kamisama’ attitude in the IT services industry has worked adversely by accounting for more inefficiency than hospitality. Vendors and IT departments, by solely focusing on indisputably meeting users’ requests, have not only engaged themselves in the costly pursuit of excessive perfection and overly riskadverse decision-making, but have also inhibited their ability to innovate beyond what is being told.
Customer—the unquestionable God
A few years back, there was an incident when a supermarket accidently sold beef of faked origins and hence needed to pay massive refunds. At the end, the frontline workers had almost sent the business to bankruptcy by reimbursing all customers regardless of whether they had bought the beef or not. This is an example of the tendency for the frontline to excessively meet customer demand, which sometimes works against the overall benefit of the business.
By a similar token, IT departments tend to consider the end-users as customers and IT vendors have to treat the user corporation as customers. The strong association of okyaku-sama (customer) and kami-sama (God) in Japan has led IT vendors to make excessive efforts to meet demands that in many cases are, of at least, questionable necessity. Such excessive customer-driven approaches to meeting near-term end-user requests have the following pitfalls:
The focus on superficial needs is in part driven by the social pressure to not upset the harmony and cause meiwaku (nuisance). Efforts are rewarded without considering whether they are justifiable from an overall business perspective. As a result, many IT projects have chosen to pursue perfection in a bid to alleviate the immediate social pressure rather than to justify a return on investment.
To be more specific, it is quite typical for a Japanese project to spend huge amounts of time and effort during the design phase or required definition phase as an attempt to catch all desirable functionalities from all levels of users in great detail. During system construction, tremendous efforts are also made to attain freedom from bugs, regardless of business priority. From my experience, it is not uncommon for a project with a similar scope to one conducted in US to cost twice or multiple times more in Japan.
Such ‘Customer-is-kami-sama’ and ‘Perfect-at-all-costs’ attitudes are driving the decision-making processes for projects and vendor-selection to give disproportional weighting to risk-avoidance. The over-emphasis on doing what has been done before hardly fosters innovation. Nor does it give incentives to undertake risky projects that are justifiable by a potential higher return.
An organized war room, decorated with chaos
Take the example of an ERP implementation project at a Japanese automotive parts supplier. I visited the project war room six months before the planned system went live, and I could immediately tell that the project would not be on time.
While teams of engineers and consultants were already engaged in endless overtime to deal with the changing requirements and bugs, several hundred action and issue items were decorated on the walls of the project room. Guess what? None of the issues had been assigned as priority.
I spoke with the general manager of the system subsidiary company in charge of the project. He told me: “Jobs from our parent company are our bread and butter. We need to meet all their requests in a perfect manner and hence their business priority is not of much importance to us.”
This subsidiary IT company was not equipped with enough business knowledge to negotiate requirements or make recommendations to its parent company. IT vendors and consultants working under the supervision of the subsidiary company had no access to business decision-makers and hence were not in a position to offer any advice. As a result, this planned one-year project lasted for three years before completion.
A more important problem on this project was the vague business objective. “It is time for us to update our 20 year-old inhouse developed legacy system. Our headquarters have established operations around the globe and hence we think it makes sense to choose a package vendor that has international support,” said the project manager.
In order to cope ‘perfectly’ with user requirements, the project team had developed a large number of customized programs. Hence the resulting system could not be easily upgraded or expanded to overseas operations. The ‘Customer-is-God’ attitude had led to over-budgeting and delayed cutover. The rather vague business objective behind the project was executed in a way that totally deviated from its original strategic intent.
Despite all the above, this case is on the list of representative success stories published by the package vendor. It is not uncommon that the definition of project success is measured by whether the system ultimately runs rather than by whether business objectives are met.
Answering the age-old wicked problem
The problem of aligning IT initiatives with business initiatives has been there for decades. The reason why it has not yet been resolved is that it belongs to what town planner Horst Rittel coined as the “wicked problems” back in 1984. In contrast to “tame problems,” which are well-defined problems to be solved by objective analysis through external experts, “wicked problems” cannot be easily defined and are subject to the changing perceptions of the participants. Managers and business users cannot expect to delegate their problem to be solved by an IT department or an external vendor. Active and equal participation of all the parties involved to evaluate option scenarios and to understand compromises being taken is essential. The one-way communication traffic, the result of the ‘Customer-is-kami-sama’ mindset, is hence an obstacle that needs to be overcome in solving wicked problems.
To deal with such issues, many international companies have made progress by adopting a matrix organization. For instance, each business unit has its own dedicated IT personnel who perform ‘dotted-line’ reporting to the IT department. Business unit managers are held accountable for the strategic use of IT. Such matrix organizational structures encourage equal dialogue between business units and the IT department.
However, Japanese corporations tend to be much less receptive in implementing matrix organizations. This is probably due to the strong cultural sensitivity to organizational hierarchy. The use of language and social protocol are delicately determined by relative positions in the organizational hierarchy. In a matrix organization, hierarchical relationships are easily confused by the multiple lines of reporting.
Despite the cultural difficulties, cross-functional matrix organization is not impossible to implement. A famous example is the legendary revival of Nissan, restructured by the leadership of Carlos Ghosn. Many of his results can be attributed to the embracement of cross-functional teams stretching across both blue and white collar working cultures.
Recognizing the need to make recommendations and business proposals instead of blindly following customer requests, most major Japanese SI vendors have acquired business consulting firms in the past few years.
Unfortunately, no such acquisitions have yet to be recognized as a spectacular success. “Many of our best consultants left the firm after the acquisition,” said a former partner of an acquired consulting firm. “On one hand, the pressure from the Board for consistent revenue stream in the SI business works against the fluctuating nature of the consulting business. On the other hand, many of our customers were just not ready for an equal dialogue when we started to put the logo of an SI company on our business card.”
While recognizing that to succeed in deploying today’s IT initiatives entails mingling with the complexity of cultural, business and technology issues, business executives should be wary of finding comfort in seemingly accommodating IT departments and vendors. One should always be reminded that when it comes to successful IT services, indulgence in customer experiences that allow one to leave the decision-making to others simply should not exist.
James Mok, Msc, MBA, Beng, a Hong Kong-born Chinese, arrived in Japan as a researcher at the Institute of Industrial Science of Tokyo University in 1992, after completing graduate studies at Stanford, CA and Bristol, UK. He spent 5 years working as an engineer on the shop-floor of a Japanese manufacturer before switching to an enterprise IT career, while finishing his MBA at Temple University of Japan. He ended up as a rolling stone, switching identities as e-commerce consultant for a Japanese SI company, ERP consultant at a US consulting company, IT manager of a global manufacturer and then started the Japanese subsidiary of a US software vendor making its way into the ‘scared frontline’—the Japanese manufacturing shop floor.