| BUSINESSWEEK ONLINE : MARCH 15, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- INT'L COVER STORY
Commentary: The President Has a Will--but No Way (int'l edition) In 1992, when Minoru Makihara became president of Mitsubishi Corp., Japan's powerful trading company and flagship of the nation's biggest keiretsu, observers thought the group was ready for serious change. Rarely had such a cosmopolitan figure risen to the top of Japan's inbred business Establishment. Born in England, prepped at St. Paul's School, and graduated from Harvard, Makihara was an internationalist. Even though Mitsubishi was a mighty force in the corporate world--as BUSINESS WEEK reported in 1990--Makihara knew instinctively that the keiretsu needed to reinvent itself to meet world-class standards. But the remaking of the Mitsubishi keiretsu never happened. Today, many of its key companies are deeply troubled. They need to plunge into radical restructuring, place a greater emphasis on profits, and put an end to the cross-subsidies that drain the resources of member companies. While this has been obvious for years, only now are Mitsubishi's managers showing the least sign they're ready for action. Somehow, there has been a serious disconnect between Makihara's vision and what he has been able to achieve. WESTERN EDGE. His dilemma perfectly represents the plight of Japan's top bosses. In terms of brainpower, experience, and an understanding of world markets, managers such as Makihara, Taizo Nishimuro of Toshiba Corp., and Hiroshi Okuda of Toyota Motor Corp. TOYOY are among the best corporate chiefs on the planet. But they have been cruelly misplaced in a Japan that cannot tolerate the unemployment and social upheaval that wholesale restructuring would entail. And because Japanese corporate culture places so much stress on building consensus and saving face, even world-class bosses often struggle vainly to impose their visions on the organizations they theoretically run. As competition grows increasingly global, these executives are at a huge disadvantage compared with rivals in America and Europe. IBM's IBM Louis V. Gerstner and DaimlerChrysler's DCX Jurgen Schrempp are pulling off massive overhauls to ensure their companies' long-term survival. Meanwhile, Makihara and other Japanese corporate chieftains must settle for gradualism. That means a few thousand jobs through attrition here and a slight pullback in production there, even though the situation cries out for much more. ''It's the sort of drip-by-drip restructuring that's very debilitating and accomplishes little,'' says Bruce Carnegie-Brown, co-chairman of J.P. Morgan Securities Asia. LOST TIME. The pressure to postpone big cutbacks extends to the political arena. The ruling Liberal Democratic Party, facing a general election next year, is desperate to minimize layoffs. It's all a mistake. Breaking up the keiretsu and other industrial corporations has to be a top national priority. Yes, this would be traumatic for an economy long used to jobless rates of 2% or less. Yet the 7 million surplus workers economists figure large companies are carrying are destroying Japan Inc.'s profitability. Keeping the system in place and forcing companies to muddle through will consign the economy to another lost decade. Makihara thinks outsiders underestimate Mitsubishi's staying power. ''There is still tremendous value in this group,'' he says. He's right, for now. But Japan's politicians, managers, and workers need to understand that the value will shrivel if it is not nurtured. By Brian Bremner _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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