At first glance, Masato Iino appears to be the quintessential Japanese career worker. Born into a wealthy Tokyo family, the clean-cut Iino went to the best schools, spent a decade managing millions of dollars at the prestigious Industrial Bank of Japan Ltd., and earned an MBA from Harvard Business School. But in 1998, he gave up the stature and benefits of his blue-chip job and joined GE Capital Corp. in search of bigger challenges. Two years later, itching for even more experience, Iino, 36, moved to a little-known Internet venture started by a friend.
Three miles across Tokyo, Kiyonori Takechi was growing increasingly frustrated that he would have to wait around for years to earn enough seniority for a promotion at NEC Corp. After NEC invested in eBay Japan in 1999, the 33-year-old Takechi badgered his bosses until they transferred him to the Internet auction site. Then, in September, 2000, he left the tech giant to join the eBay subsidiary full time, permanently swapping his nine-year-old company pin for the hip fleece sweater he wears nowadays.
Seiichiro Nakagawa, 38, was suffering from the same urge. A former banker, he found the corporate life constricting. After a brush with death--a plane he was on nearly fell out of the sky--he chucked six years with the Bank of Tokyo to head to the U.S. for his MBA and then on to stints at the World Bank and Japanese retailer Ito-Yakado Co. But in 1999, hungering for more responsibility, he joined e-commerce software maker SiteDesign. As chief financial officer, Nakagawa is wrestling with a wide range of tasks--from acquiring companies to taking his company public.
New skills. In Japan, the Net has wrought far more than a gaggle of Web sites and dreams of dot-com dough. Net downturn or not, workers have been introduced to a new way of doing things--and they like it. Now, unwilling to slog through stifling 30-year career jobs, rising stars such as Iino, Takechi, and Nakagawa are heading for the caffeinated lifestyle of Web ventures. They're after new skills, more responsibility, and--maybe, just maybe--the chance to make it big at a cutting-edge outfit. "This generation is looking more at substance and thinking about the future," says Masayoshi Son, CEO of Internet financier Softbank Corp.
That's prompting a growing number of midcareer workers to trade in their blue suits for black turtlenecks. Last year, a record 3.21 million Japanese, or 5% of the workforce, changed jobs, up from 4.5% a year earlier. The most startling statistic: The number of job-hoppers between 35 and 44 years old jumped 20% in 2000 from the year before. Sure, some of these workers took early retirement packages from companies cutting payrolls. But the chance to join a Net startup likely made defecting a lot easier, given the growing dissatisfaction with big-company life. A survey by newspaper Nikkei found that 54.7% of Japanese men want to swap jobs or start their own company, ten points higher than a similar survey in 1998.
In the U.S., it was the glittering allure of dot-com riches that drew thousands. Less so in Japan. A study by Unifi Network, a division of consultant PricewaterhouseCoopers, shows that Japanese overwhelmingly seek personal growth, new skills, and creative content when moving to Net upstarts. What happened to "show me the money"? Making oodles of moolah placed last on the list. Take Iino, the former banker and father of two, who went for a 65% pay cut to become chief operating officer of Resonance, an online publisher and advertising agency. Despite the loss of income and stature, he could not be happier. He makes crucial business decisions daily, something he couldn't do at the bank. "I was on a smooth, straight path that anyone would understand, but I was living in the old paradigm," says Iino. "If I stayed at the bank, my path would have been static and linear."
These unsung marketing managers, accountants, and software programmers are not only building Japan's Internet industry, they're also chipping away at the old order. As the top tier of Japan's workforce moves to Net startups, large companies face a brain drain that may rob them of their most creative workers and sap their competitiveness in years to come. Banks and trading companies, which traditionally hire the best college graduates, face the stiffest challenge keeping workers, since foreign financial houses also are scooping up top-flight talent. To keep their workers happy, Japanese companies are scrambling to put together a variety of programs, from online MBA courses to more flexible work and promotion schedules.
The changes are rippling through all businesses. As more "salarymen" abandon their jobs, carmakers, homebuilders, and others must rethink how to sell to Joe Suzuki, his wife, and two kids. In the past, companies made products for a clearly defined spectrum of wage earners. But midcareer job-hoppers don't fit that mold and, worse, are more tightfisted than those who do. "The market is more fragmented, so companies have a harder time generalizing consumers," says George Fields, a marketing expert and author of From Bonsai to Levi's. "The belt-tightening is worse among those in their mid-30s to mid-40s."
The cash-strapped government could face even larger problems. Japan's social safety net, built during the high-growth 1950s and '60s, relies on a large, stable supply of middle-aged workers who remain at their jobs for decades, not years. These white-collar workers pay the lion's share of personal income taxes and national health and pension contributions. Since many midcareer job-hoppers take pay cuts, they contribute fewer tax dollars. According to the Japan Life Insurance Culture Center, job jumpers earn 16% less and spend 6% less than workers who stick with one company. If this kind of penny-pinching becomes widespread, it could delay Japan's emergence from its decade-long malaise, since a big slice of the workforce would have less disposable income to splurge on new TVs, microwaves, or bright red SUVs.
The Japanese government must tear down old social and financial policies if the country hopes to build itself into the Internet powerhouse Prime Minister Yoshiro Mori promised last year. Yet government officials continue to focus more on lowering costs of telecommunications and equity financing than unraveling the byzantine regulations that penalize workers. Unless labor laws support entrepreneurial companies, Japan will remain a Web backwater reliant on slow-moving companies and outsiders for innovation. More liberal financial regulations could give employees who jump jobs additional income and help put money back into the economy. Tax benefits on retirement payouts, for example, are 20 times more lucrative for workers who stay more than 20 years at one job than for those who quit before then. "Our labor laws destroy motivation," says Tatsuyuki Saeki, president of Nasdaq Japan. "Japan is more communist than China."
Entrepreneurial Japanese aren't waiting for the government to dole out piecemeal solutions. Especially Takao Ozawa. The wiry 29-year-old free spirit realized that his 9-to-5 software sales job at system integrator CSK wasn't holding his attention. So Ozawa--who took a year off college to caddy on the Japan Pro Golf Tour--started secretly writing business plans during his spare time and plotting his exit. His chance came in 1999, when Japan's venture-capital market exploded. With another friend from CSK, Ozawa built Bizseek, a reverse auction site for business supplies.
During the next year, Ozawa persuaded five other CSK engineers to jump ship, even as investor interest in Internet ventures soured. He needed the extra brainpower because Bizseek's auction software proved too difficult to use. So the team quickly built an online used bookstore instead, called Fukkan.com. "I don't have a lot of talent for writing software, but I can bring people together to complete a project," says Ozawa, who points out that he shares the same birthday, Feb. 29, as comic book hero Superman.
Ozawa certainly can't see through walls, but he has developed another skill that most managers go an entire career never attempting: In true Net startup fashion, he changed business strategy and turned his tiny company on a dime when the original plan didn't pan out. That helped win Ozawa a second round of financing, some $3.5 million, in October. He says his company will break even this year.
Other Japanese workers aren't after such thrills. Instead, they're chafing under the country's traditional seniority system of giving promotions and top dollars to longtime employees. After graduating with an engineering degree from prestigious Waseda University, Kiyonori Takechi thought he had lucked out as a corporate freshman when he joined NEC. Instead of getting shunted into sales or research and development, he landed in the then-backwater Value Added Network division, which was in the business of setting up networks for Japanese companies. There, Takechi wrote feasibility studies of the Internet, jetting around the U.S. with corporate vice-presidents who spoke no English. (He learned his in Trinidad as a kid.) When the Internet took off, his department ballooned as NEC focused more on building its successful Big Globe Internet service provider into a powerhouse.
Ironically, the department's success left Takechi further from the action. Older managers with little understanding of the Internet were winning promotions, using the knowledge gleaned from younger workers, such as Takechi. Takechi joined the team that negotiated a stake in eBay Japan. Seeing a chance to get out from under top-heavy NEC, Takechi asked for a transfer to the Internet auction site. At first, he was told no. But after four months, his boss relented and lent Takechi to eBay Japan. The challenge of reporting directly to eBay Japan President Merle Okawara, dealing with eBay's head office in San Jose, Calif., and learning about Internet applications proved intoxicating. Takechi quit NEC in September to become eBay Japan's business development manager. "Everyone said I was crazy, but I thought the opposite," he says. "Work is not about the company, it's about being proud of what you do."
That Takechi would ditch a stable job in a hot industry says as much about the stultifying atmosphere in big companies as it does the allure of Net startups. When times were good and paychecks and pensions fat, workers gladly sacrificed their personal ambitions for the group. But these days, loyalty is being replaced by looking out for Numero Uno, as workers realize old-line companies no longer guarantee jobs for life. Doubters need only look at Japan's record-high jobless rate of 4.9%, hiring cutbacks, and rocketing bankruptcies.
Managers that jump to Net upstarts have a chance to change the rules. In 1999, Seiichiro Nakagawa, joined SiteDesign, an e-commerce software maker. In just over a year as chief financial officer, he is busy building a merit-based pay and promotion system for the young company--a critical motivational tool and something only half of Japanese businesses have established for their workers.
It took a life-changing experience to radically alter Nakagawa's outlook. In 1990, after six years as a banker, Nakagawa was on a flight to southern Japan when his plane plunged, the air masks fell, and passengers were told to prepare for a crash landing. The plane landed safely, but the shock led Nakagawa to reexamine his career: "I was following the straight and narrow path because my parents told me to. I realized then it was my life to lead."
The next year--against his wife's wishes--he quit the bank, moved to the U.S., and earned an MBA from Cornell University. After Cornell, Nakagawa spent two years in the Asia department for the World Bank in the U.S., then returned to Japan to start an ATM banking network at Ito-Yokado. But again Japanese company life proved limiting, so Nakagawa headed to SiteDesign. As CFO, he organized the company's first share offering and acquired an online retailer. "At the bank, everyone builds just one block, but at SiteDesign I build big blocks and can knock the whole thing down and start again if I like."
Working at a startup isn't always roses and Web sites. It can be risky. Bankruptcies at Japanese ventures fell 24.4% in 2000, but the high cost of starting a business and stiffer competition for venture capital are limiting funding while speeding up burn rates. Labor laws virtually prohibit companies from firing workers to save money, but they can't keep pink slips from being issued at companies going under--something that experts expect to happen in droves at Japan's dot-coms. Says Taketoshi Natsui, president of MidCareer.com, a job search Web site: "There's a time lag between the U.S. and Japan, so Japanese are in for a rude surprise in a few years" when Internet companies start folding.
That day of reckoning doesn't worry Mari Kaneko, 39, director of business development at womenjapan.com. Sure, she sees tough times ahead for Internet small fry, including hers, as companies trim budgets in a slowing economy. But like many other midcareer job-hoppers, she is determined to fight the naysayers and not turn and flee at the first sign of trouble. Besides, going back to former jobs is tough because most big Japanese companies are unprepared to handle returnees, and the social stigma of abandoning the group still runs deep in Japan.
That is, if Kaneko even wanted to return. For now, she is getting management experience in one of the few industries where women are readily promoted. Women make up 40% of the full-time employees at Internet ventures, vs. 20% at big companies, according to the Unifi Network study. Despite lip service to the contrary, the government does little to push companies to offer women managerial posts. In fact, most women still make tea for their bosses and are expected to quit once they have children, although many are rehired years later as part-timers for less pay.
It's a wonder more workers aren't joining Internet ventures. Even the dark clouds hanging over the economy and the Internet boom-gone-fizzle haven't dampened the enthusiasm of people who have made the leap to Net upstarts. Like most of the midcareer dot-com workers, Kaneko is more confident in her abilities now that she has left a big company job. "Working at an Internet company is the kind of gamble I like to take," says Kaneko. Gamble, yes, compared to the keep-your-head-down crowd at most companies. But Kaneko's optimism may be just what's needed to inspire Japan's frustrated workers and breathe life into an ailing economy.
Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.
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