Many years ago, my job was to help Australian companies crack the Japanese market. One of the elements of that job was explaining the Japanese business psyche to the Australian businesspeople targeting Nippon. As you might imagine this wasn’t an easy task, as the mindsets are so different. White colonisation of Australia started in the late 1700s and the first convicts and settlers arrived into a vast continent, without one permanent structure, bridge, road or port. Aboriginal life was nomadic. Hunt everything you can in the area around you, then pack everything up and move to the next location. You didn’t need modern infrastructure for that lifestyle.
The consequence has been that the culture built up amongst the early English settlers was very much one of “can do” and optimism that they could tame the heat, droughts, fires, cyclones and floods that are part and parcel of life in Australia. Six generations ago, my ancestors hacked their way through the bush by hand, to create fields for agriculture and to feed the cattle and sheep. If you couldn’t take it, you could always go back to Mother England.
Japan is a also country with no shortage of natural calamities. Earthquakes trigger fires in cities and wooden houses burn quickly. They also trigger tsunami and these can wipe out entire towns, as we have seen in 2011. Typhoons and floods destroy crops and building. Floods and landslides are common. My super wealthy, famous Japanese friend was walking his dog after heavy rain and a wall suddenly collapsed and killed him. Japan has volcanos as well and recently the well known Sakurajima volcano has had a major eruption. This tough environment is part and parcel of Japan and there is no Mother England to retreat to – this is it for the Japanese population. The mindset of the Japanese in my experience is one of the glass is half-empty and life is difficult.
When I was trying to explain the different attitude between the Aussie glass half full and the Japanese glass half empty approach, I found a useful comparison. I discovered a graph showing the degrees of business optimism in Australia spread over many years. Fundamentally the Aussies were positive and optimistic. Japan has regular tankan surveys of business optimism and fundamentally the Japanese scores are usually negative or very low in terms of positivity. When you compare the graphs, the results are strikingly different.
Historically, when a person working the land in Australia needed to replace an implement, there would be a six month turn around, as the sailing ship went off to Merry Old England and then sailed back with the replacement. In the interim, people became innovative and flexible about finding a solution. It created a “can do” mindset, because there was no choice. So having these problem solving, positive, “can do” Aussies convincing Japanese buyers to start relying on them was a huge job. I would show them the graph of how basically for the Japanese the glass was always half-empty and so the Aussies should curb their enthusiasm and approach the sale in a different way.
This is a generalisation and it doesn’t make it any less true, but Australia is a country of creating things out of nothing and finding solutions and Japan is more one of caution. Once you understand that the Japanese are not expecting anything spectacular to happen and are more concerned about things going horribly wrong, then you focus on reducing risk, rather than trumpeting your capability and your successes. This is where track record, data and “smarts” about doing business in Japan come in.
Japan is a graveyard for MVP (Minimum Viable Product) launches. The product has to be working extremely well, with no defects or problems. If it has any of these issues, the situation becomes problematic very quickly. Similarly, early adopters in business are a small crowd here. Basically, in business, nobody wants to go first. “You trial it, we will watch very, very carefully and if it doesn't blow up, we may take a look at it” is the usual ethos. Note the word “may”, because even if it goes well, they may not take any action. You don’t get into trouble in a Japanese company for not being a path finder. Steady as she goes is preferred to anything smacking of risk taking.
When things go wrong in Australia, then the suppler gets to work to fix it and if some money needs to change hands as a result, then it gets done and everyone moves forward. In Japan, you have to fix it, but that isn’t where it ends. You have to head around there to apologise in person, bearing gifts and expect to be lambasted for your poor reliability and shoddy work. You also have to have forensic detail concerning why this problem occurred in the first place and a detailed, clear plan of making sure it never happens again. Even then you may be removed as a supplier, especially so if you are not genuinely contrite and authentic in your remorse, for having caused the buyer problems. Never forget, your buyer has their own buyers. If your problem got shared with their part of the food chain, then you have endangered their trust with their own clients. This is the most disgraceful and egregious error you can make for any Japanese company who values their reputation and they all value their reputation.
Approach the deal with a solid understanding the Japanese side isn’t going to get excited about your widget and that they are world champion sceptics. Emphasise the track record, safeguards, measurement systems, quality control and the worst case scenario plan of action. Expect to start small, in order to prove what you say is true. Keep in mind that apart from you, no one is in a hurry to do the deal and so adjust your expectations accordingly
“Out of the frying pan into the fire”, seems to be an appropriate descriptor for where we are now. We have been battered by Covid, or at least many of us have had that unpleasant experience, but now everyone, even those who sailed through Covid, are about to get swept up in to the next recession. Inflation, rising interest rates, supply chain turmoil, energy supplies being weaponised, the list is long and depressing. Japan relies on foreign markets and if the USA has a sniffle, Japan catches a cold is another old idea. So what happens in sales if we find ourselves getting daily cases of covid deaths and infections under control through vaccinations and herd immunity and yet are now in a global recession?
Here are some things to think about.
Covid may have wiped out some of your rivals. I couldn’t believe that the Heichinrou Chinese restaurant in Yokohama closed down in May. It has been serving customers since 1884 and now is gone. For the other Chinese restaurants who are still in operation in China Town they have seen a major competitor vanquished. The other businesses are still operating and so they have buying needs. In fact, they may have an uptake in customers who cannot go to Heichinrou anymore and so their sales may pick up. It is a sad day when legendary business names fall, particularly in Japan where corporate longevity is treasured, but that is the capitalist system. Maybe your rivals are not extinguished entirely but they may be wounded. They may have fired staff to reduce costs and so their scope of capacity has diminished. They cannot see as many potential clients as before, but maybe you can see them, because you toughed it out and kept your crew together.
Recessions are uneven phenomenon. Some industries are hit harder than others. Covid hit tourism, training and hospitality particularly hard, but other industries sailed through the pandemic with barely a flesh wound. The recession will impact certain industries more than others and so it is useful to identify which of those industries will still have the capability to buy. Unlike a global pandemic, most of us have seen recessions before, so we will have some idea which businesses we should concentrate on and which we should avoid worrying about. We will also have probably experienced inflation before too and the ramifications that has on your industry. Look back at what happened in the past for useful lessons on what to expect this time around.
In our sales training, we use a matrix which aligns your existing buyers with your products and services. It is always shocking to realise you are only supplying some clients with a very narrow band of offerings. It reminds you that they have multiple needs but you are not servicing them. Maybe you were unable to gain entry before, because the incumbent was so strongly positioned, however Covid may have changed that power balance and now is the time to suggest other solutions from your line-up. Existing clients know you well, they trust you, they will take your call, so you don’t have to navigate your way through the serried ferocious gatekeepers to get to the buyer.
Existing clients can become past clients quite easily. In our case, the HR Director changes and next thing you know, you are out on the street and they have replaced you with their favoured suppliers. During Covid perhaps some of the line managers have left the company or moved to other sections and maybe there is some nice new buyer who comes to the conversation with an open mind and no baggage. Perhaps the gate keeper is still being a barrier, but at least if you have dealt with that company before, they may be willing to take a message from you, even if they won’t transfer your call. You could try and bypass them altogether by sending some mail to the new person or at least to the position most relevant to your business. The beauty of this is that the same gatekeeper who won’t transfer the call, will diligently walk over to the manager’s desk and drop your parcel on their table. They will open it up at some point and they may decide that you have what they need and be open to talking about reactivating business with you.
It works in your favour sometimes too. That nice buyer you have built a strong relationship with, is now in a similar role in another company and they realise you have the solution they need. If you haven’t found where they went, now might be a good time to do so. LinkedIn only has about two million followers in Japan, so the chances you can track them on LinkedIn if they are working for a Japanese very domestic company are slim. Often if you call and ask for them, the person taking the call will tell you they have left. If you are lucky, they may be able to tell you where there have gone.
The Game of Thrones character Petyr Baelish noted that “chaos is a ladder” and pandemics and recessions are chaotic. It is usually more like snakes and ladders though and sometimes you are lifted up and at other times you are pushed down. Research past recessions and look for which ladders are likely to be pointing up. Get closer to existing clients and see if there are additional services or goods you can supply. For those in the “until recently existing clients” category see if you can rekindle some flame from the ashes of the fire.
A miraculous thing often happens when I am meeting clients for the first time. We have had our meeting, I am closing up my organiser where I have been taking my notes, I am getting ready to leave, when they will drop some major insight or important piece of information on me. It is always a bit fraught because the meeting has obviously ended, I am already packed up and I cannot easily unpack the organiser and start making additional notes. I have to wait until I am out of sight to then grab that vital titbit or garnish they have added and record it before I forget it.
I have come to realise that the way I run the meeting isn’t allowing for these opportunities. Naturally, I am running the meeting rather than the client. I have the navigation in mind. I know where we have to get to and how we will get there. It revolves around me directing the action, because that is my job in sales.
Asking intelligent questions and listening carefully for the answers is the sales life. Many salespeople reading this will have no idea what I am talking about. They think the job is to do all of the talking, batter the buyer with data and information and through force of will, wrestle the buyer to the ground and get them to sign the order form. They are pitch people not salespeople and there is a vast difference between the two.
In the course of asking questions, I am searching for opportunities to ask something in a way that stops the buyer in their tracks. I want them mentally reeling back and thinking, “I haven’t thought about that”, or “I haven’t prepared for that”. I want to bring them to a point of realisation that if they don’t buy my solution, life will be grim, the business will suffer, the future looks bad, etc. Now I could just tell them all of these things as a statement but that is not effective. If I make these statements, the buyer is thinking, “well of course he would say that, he is trying to sell me something”. Instead, I want to ask a question in such a way in which the buyer has to agree with the proposition. When the buyer accepts the idea, they are saying it and so it is true.
I might say something like, “If there was a way to make sure your key people are not going to be poached by the current horde of ravenous recruiters who are constantly scouring firms like yours for bodies to move to your competitors, to collect their 40% first year salary fee, would that help to keep your business from instability?”. Perhaps this client wasn’t aware that recruiters were getting paid so much for lifting people out of companies like theirs or that there was so much of this poaching going on. Maybe they were aware, but they hadn’t concentrated on the problem until I brought it up. I am purposely using highly evocative language, drawing word pictures of disaster, doom and destruction: “poached”, “horde”, “ravenous”, “scouring”, “competitors”, “40% fee”, “instability”. The question is also framed in a way in which the only logical answer is “Yes”.
As professional salespeople we go through the process of asking questions about where they are now and where they want to be, to gauge the distance between the two to see if there is a possibility of the client taking immediate action. If they think they can get from point A to point B under their own steam, then we have no urgency in play and we won’t do a deal today. We are looking for what changes need to happen to get from point A to Point B and what is possibly blocking the path. Usually, we have what they need to clear that blockage and help them make it to where they want to be and we can do it faster and cheaper than they can do on their own. Given a 100 years, anyone can get to the goal, which is why we always emphasise the time it takes to get there and the consequent opportunity cost of unnecessarily waiting. We also want to know what all of this means for them personally in career terms. If we solve the issue, how will this help them inside the company. Even if they don’t proffer an immediate answer, we get them thinking about their own self interest and subtly make the point we are here to help them in that endeavour.
In Japan, the chances are strong that we will need to come back to them with the details of the solution for them and there will be another meeting required. This is the point where we may be tempted to pack up and head out the door. Before we do that, we should just pause and wait a moment to see if they are going to add anything additional to the conversation about what they need.
Remember we are experts at this. We are doing this questioning gig all day long, five days a week, fifty weeks a year. They are not experts in this field. They will only be in the receiving end of this occasionally, because most of the time they will be getting smashed with a pitch by our competitors. Consequently, their brain will be slowly digesting the essence of our message and processing it. Further things will occur to them, especially toward the very end of the meeting and we should allow for that.
So once you finish talking, just sit there for a moment, don’t say anything and just look at them in silence. Fifteen seconds is a very long pause and at this point we ask, “Is there anything else I should know before I come back to you with our proposal” and then shut up - don’t add, garnish or expand on what you have said. You will be surprised at what comes out when you do this. I must say I always am.
Have you ever paid for something that you found was very good and which you used for many years. You will have forgotten perhaps the price you originally paid, but you have not forgotten the quality you received. You always maintain a positive mindset about that company and the product or service. On the other hand, if you paid for something that didn’t deliver what you expected, over time, you will forget the exact amount of money involved, but you will always recall that the quality was poor and not acceptable. This is where salespeople make the mistake of concentrating on price and don’t make the effort to bolster the quality aspects of what they are supplying.
Not only does the item or service suffer from a negative association with poor quality, the salesperson’s personal brand is also damaged and maybe irrecoverably. When you find a bad deal, you make the determination to never buy from that supplier again and by extension from that person again. Not only that, you will also make a point of warning others not to deal with that person, because they are not reliable or they lack integrity or they are a rip off. In the market our reputation is everything and we cannot afford to allow it to be stained with ill repute.
Sometimes even good quality firms have problems. Machines, supply chains, people are not perfect so there can be problems. How these problems are addressed says everything about the integrity of who you are dealing with. No one likes people who want to justify the unjustifiable and you would think that no one would be that stupid, but you would be wrong. Yes, there are people who will try to slip out of any and all accountability and who run from taking any responsibility. We can all accept that things can go wrong, but what we want is for it to be fixed and fixed pronto. We will forget the price we paid, but we will remember that the problem was sorted out fast and with integrity and no arguments.
Given all of this logical discussion about price versus quality, the expectation would be that when salespeople talk to clients they are concentrating on quality to justify the price. Instead what do we get? The pitch. The salesperson goes into great detail about the specs for the widget but doesn’t take the time to align what the widget does with what the buyer wants. The latter is the quality conversation, not the rattling off of data and details about the weight, size, colour, etc of the widget. Getting the requirement to be matched by what is going to be supplied is the key aspect of providing a quality service.
How do we know what is required? No mysteries there – we simply ask. In Japan, this is where things break down. You might be thinking “wait a minute, how hard can it be to ask what they buyer wants in Japan?”. Surprisingly, salespeople here usually don’t ask questions, because they are busy going headlong into their pitch. One cultural twist is that the buyer has been trained to expect a pitch and every Japanese person has been trained since childhood to do what everyone else is doing and don’t stand out and be different. As the sales leader you can talk to you are blue in the face about what they are supposed to do, but if you don’t actually go with them to make sure they are asking questions, they won’t take that route. Conformity is a crushing weight in Japan and few are willing or able to buck its oppressive limitations.
Once you have asked the first key question, life gets better immediately. What is that key question? It is so simple – “may I ask you a few questions”. We not quite that simple, because you have to set it up. You need to talk about what it is you do, then mention some results you have had for similar clients, proffer that “maybe” you could do the same for this client. At this point you then say, “in order for me to know if that is possible or not, would you mind if I asked a few questions?”. There is a very tiny number of buyers who will dismiss this approach and ask for the pitch anyway. That cannot be helped and that comment is a red flag anyway, which tells you it is better to hightail it out of there and find a better client. The vast majority of clients will agree and then you can start aligning what you have with what they want and the whole quality dimension possibly starts to go straight up.
If we keep in mind that quality lingers in the mind of the buyer, then we are always better off to be concentrating on that. Prices fluctuate based on the market, supply chain, energy disruptions and currency movements, but the fundamental quality doesn’t fluctuate, unless there has been an unforeseen event. If we can align the price to justify the quality, then over time the memory of the price paid fades, but the recollection of the quality never goes away. When it comes to the time to do more business with you, the buyer is open to that because the track record is there and the trust has been built.
“In our business, at our size, we have to be the speedboat, we cannot be the oil tanker”, is a key mantra for my Franchise company. Why is that the case? I am the only non-Japanese in the firm and I was frustrated at the slow pace of decision-making and action taken by the team. Growing up in Western business, speed of decision-making and taking action are requirements drummed into you from any early age. Other foreign leaders in Japan reading our speed mantra will be sagely nodding their heads at this point, because their multi-national firms may be much larger in scale, but the issue is the same. It doesn’t seem to make sense why things are so slow here.
Japan Seems Efficient But Is It?
Japan seems very, very efficient. The famous Bullet Train, the Shinkansen, has an unbelievable record of being on time. The average delay of Shinkansen trains is less than one minute per year and there are over 3000 trains annually whistling by at speeds of over 230 kilometers per hour. Train commuters based outside Japan will be astonished at these numbers. There is also hardly any litter here, graffiti, drugs, guns or crime – the usual reality for many people living in big Western cities. Everything works and works well, so it seems the pinnacle of efficiency.
Inside companies though the picture is quite different. In the West, ambitious, thrusting employees trying to make a name for themselves and get promoted, are rapid fire machines. They are constantly pushing the boundaries, taking calculated risks and quite aware they are being judged on how quickly and well they can get things done. In Japan, none of these things are particularly important. Sprinting off a cliff is thought to be a bad idea in Japan. It is much better to take some time, cross every “T” and dot every “I” before moving work along. Speed often leads to mistakes being made and in Japan that is unacceptable.
Measure Three Times, Cut Once In Japan
This fear of making mistakes and errors has everyone measuring three times, before cutting once. Western CFOs are clever. They have worked out that there is a ratio of defects to profitability. The thinking is “if we accept a three percent error rate, even taking into account having to replace defective goods, the firm will make more money that trying to achieve a 100% no defect outcome”. This would get CEOs salivating at the thought of making more profit and the CFO will get a big bonus, but not in Japan. That CFO suggestion wouldn’t see the light of day here, because it is unthinkable.
Supreme attention to detail, no defects, no errors are rock solid values in Japan. To achieve these vaunted outcomes a lot of triple checking is required and that takes time. Getting things out the door pronto is not valued here if there are any mistakes in the process. The MVP or minimum viable product idea is a difficult concept here because the product has to work well and reliably or no one wants to buy it. Of course there is a love of kaizen here around making further incremental improvements, but the original release cannot have problems or the product is dead in the water.
Few Marriages Of Corporate Convenience In Japan
This safety first idea in also a mantra in decision-making. Japan is not as litigious as some Western countries, so the legal ramifications are not necessarily the prime driver. There is another fundamental concern which slows down business deal making. Western firms enjoy marriages of convenience. Two firms come together to make more money collectively, than they could individually and there is the thought that this situation is only as good and lasting as the immediate benefits. When these run out, then we all move on. Japan sees business marriages as monogamous, life long and full of mutual obligations. If the business partnership is a lifelong arrangement then a lot of due diligence has to be carried out before any agreements are struck. This is all understood within Japan and companies here know that Western companies operate off a much more short-term framework, so there is an inherent risk associated with dealing with non-Japanese firms.
The President Isn’t Necessarily The Key Decision-Maker
Unless it is a founder led company, usually the President is not the key decision-maker. The more junior people will conduct the due diligence and then the results go up and get homogenised across the various Divisions within the firm which will be affected by the decision to do business with this other firm. This homogenisation works well for milk but it can be a painfully slow process within the company decision-making structure. Imagine everyone is worried about taking any responsibility for this decision in case something goes wrong, so the triple checking is being repeated at every level. No one gets rewarded for speed, but the downside of mistakes is vast. There is an internal decision document called a ringisho ( 稟議書 )which collects the personal seals of each decision-maker, before it can progress to the senior ranks, where the actual rubber stamp formal decision will be taken.
In the West, when the buyer says “we will think about it”, this is usually an invitation, even a challenge, for salespeople to push harder on who will be involved in the decision, what things will be of major concern to them, how long will this take and how can we speed that process up. In Japan, they really do need to think about it and they would rather make decisions slowly, than repent at leisure for a bad choice. It is not uncommon for us to gain a new client who we met three years ago. I always tell my salespeople, “The buyer is never on your timetable”. Companies prefer to move at a glacial pace because slow is safe. What about all of the opportunity costs, the missed chances, the deals gone begging? No one cares particularly, so focus on patience and perseverance when dealing with Japan.