Welcome to the Newsletter Series. Ivy and I co-write a periodic newsletter. This piece is adapted from an edition of it, dated when the newsletter came out.
Last time we mentioned that Japan felt behind compared to China. Reality is more nuanced, it’s not fair to say Japan is behind generally, there’s so many different factors to look at and even a single facet has both good and bad. The lens we’ve mostly been observing and analyzing places through is the advancement of economic development and innovation, so we wanted to talk about how those areas are affected by Japanese culture and values.
After leaving New Zealand, Ivy made it her goal to meet as many people in the global tech space as possible to learn about the tech ecosystems elsewhere and the technologies, ideas, and market trends emerging from them. Our following opinion piece is heavily based on our conversations with all the people we (but mostly Ivy) met while in Japan as well as a book we read.
Culture of Japan
When we think of a stereotypical Japanese person, we create a persona in our minds that is polite, quiet, and afraid to be of inconvenience to others. When we think of Japan, we think of the attention to detail in high-quality Japanese products and the unison displayed in Japanese teamwork (military, company, production, sports, social group).
These observations on Japan and its people are manifestations of ingrained values within their society and culture. Several values stood out to us as unique to Japan. Many are very interconnected, so we’ve grouped them under two main categories.
Consideration of others
- Honne to Tatemae: Private vs Public face
We all, to some extent, have a side that we show to the public, and another more authentic side that only people we trust can see. The number of people grouped into public and private, the size of the grey zone, and the scales of trust varies by person.
In Japanese culture, everyone has the same public face - polite, smiling, careful not to make anyone uncomfortable or inconvenienced. There is clear right and wrong in how to behave in public and everyone follows these unspoken rules.
- Haragei and Aimai: Haragei is a form of rhetoric intended to express real intention and true meaning through implication and Aimai is Vagueness
In order to not make anyone feel uncomfortable, Haragei and Aimai are considered desirable virtues. The Japanese way of being vague and indirect is for the sake of harmony. The Japanese implicit way of communication is very difficult for non-Japanese to fully understand. Whereas in Western culture we value clarity and candid honesty, the Japanese value being polite, humble, considerate, sensitive to others, and knowing their place.
For example, instead of ever saying “No”, the Japanese may use:
“I’ll try my best.”
“Reaching a decision will take time”
“I’ll think about it”
“It’s a bit difficult…”
Haragei also functions as a method of leadership, replacing direct orders to subordinates with subtle, non-verbal signals. It is considered a desirable trait in a leader in Japan. However, it may make assigning of responsibility or blame to the leader difficult.
- Kuuki Wo Yomu: reading the air
“Reading the air” is something Japanese people do almost subconsciously when in a group. Our friends described it like a shared social intelligence, a sixth sense of sorts. In any situation, there’s an unspoken understanding, and people sense each others’ feelings on the moment. This is what is needed to read Haragei and Aimai.
They do this by looking at subtle hints, tone of voice, body language, pauses, and even silence.
Loyalty
- Senpai-Kohai Seniority Rules
Senpai is someone that joined the organization earlier, Kohai is someone that joined later. Kohai speak to Senpai using honorifics and respect their word and decisions. This hierarchy is very informal, yet it governs how relationships are across everything from companies to schools.
Kohais even in school bow to their Senpais. These rules are strict through society in respecting your elders. In a company, even if a younger person performs better than someone older, these rules hold. A Kohai, anyone younger, must show respect and listen more to anyone older.
- Shudan Ishiki - Japanese Group Consciousness
Shudan Ishiki teaches that the group as a whole outweighs the needs of the individual. Uchi is those inside the group (family and associates) and soto is those outside the group. Japanese life consists of remaining in the uchi while avoiding soto status.
Loyalty to the group is essential which can be good or bad depending on the group’s core values. Often times it is more important to retain group solidarity to maintain harmony rather than oppose the group, even if acting in opposition is the right thing to do. If an individual opposes the group, he risks being excluded from the group, which often times is unbearable for those living in a group-oriented society. A common saying exhibiting this in Japan is, “The nail that sticks up is pounded down”. The nail being representative of an individual.
Because of this value, people that we talked to in Japan often say that everything is a group decision. Decisions are also very difficult to make as no one wants to go against the group and step forward with a definitive decision.
The Effects
It’s hard to make Japanese friends
As someone visiting Japan, because of how people are with their public face and reading the air, it seems like everyone is so pleasant and the atmosphere so peaceful, everything is wonderful. Even in the subway everyone’s quiet, unlike in China where people are blaring videos from devices or talking loudly on the phone.
But when you live there instead of just visit, because negative things aren’t said, as well as the fact that people reveal who they really are (private face) only to those they’re close with, it can be hard to make new friends and get close with them.
This is part of why drinking culture is so intense in Japan. Becoming part of someone’s private circle to see the real them and hear their genuine thoughts, instead of only interacting with a cordial, opinion-less, pleasantry, takes a lot of time, patience, and many many beers.
Clearly defined right and wrong makes life simpler
Since we grew up in the West, freedom of expression and individuality are the greatest values for us. We had a hard time understanding why people would choose to be constrained to a society that pressures you to always behave a certain way in public to such an extreme. Although each society does have its norms in how to behave in situations, there is most definitely less variation in Japan.
Our friends simply answered, it’s easy to know what to do when there is only one right way. Everyone knows what to expect and how to act, there is no variation in how your words will be received and everything happens the way it’s supposed to happen.
Related, trains are always on time to the minute, deliveries are not late. In fact, logistics companies keep re-delivering if they don’t reach you in some buildings. It’s the right thing to do. This makes life very convenient - you know you will find good food, service, convenience stores the same in every block.
This is what most people love about Japan, the convenience and reliability of everything working as it should.
Change is slow
When everyone is used to everything happening as it should, change is very difficult. Every one of our friends, particularly those who have experienced tech in any place outside of Japan, have emphasized how slow companies move in Japan.
This makes sense because: Fear of making people uncomfortable + vagueness in communication + groupthink + seniority over ability + adherence to the one way to do things (tradition/processes) = SLOW
At every company, decisions small and large are made every day. In Japan, due to being considerate for others and the emphasis of group decisions, in order to make a decision, every stakeholder needs to be consulted. During meetings, the concept of public face, fear of stating your own opinion since it might clash with the group’s, means that no one really says what they mean. A friend joked that you have to get the foreigner on your team to give your boss real feedback.
Another friend who is a designer relayed that when he submits a copy for approval, it usually takes two weeks for feedback because one person wanted something changed and it took that long for that to be communicated through. After a few iterations, something usually done within a week of quick back and forths gets accomplished in 2 months.
Change is non-disruptive
Japanese people are very good at increasing the capabilities on existing technologies to make them even better - think high quality cars and blazing fast trains. This partly results from there being clear ideas of what people want more of from them, what’s right to improve on.
However, Japan is not very good at implementing disruptive new technologies. Japan is still a cash heavy society (not even credit cards) and as the fourth largest economy in the world, has barely any software tech companies - they only have 1 unicorn right now and most IPOs are in the one hundred to five hundred million range.
A friend at a software company said that their site almost never removes any buttons because people expect them to be there and it would be inconvenient to the users if that changed. So whenever they add new functionality, it’s just built on top, and the site gets more and more cluttered over time.
Promotions are based on tenure
Because of the Senpai-Kohai relation, the longer you stay at a company, the higher in the ranks you get. This means that people are incentivized to work longer, not smarter or harder. Salarymen put in absurdly long hours at work to get in more face time or because of social pressure from coworkers doing the same.
The hierarchy in a company is very straightforward from this, you don’t have to worry so much about your place in society. It’s almost impossible to get fired. Once you’re in a company, you’re part of the Uchi or the inside group and you stay there for life. When we asked Japanese friends what drives them, not many of them had really thought about this before, it’s not a necessity.
A negative though is that because employees are not rewarded for innovating – in fact you can be punished for taking a risk that turns out poorly – employees tend to be risk averse. This along with the group think contributes to innovation being incremental.
The Opportunities
During our conversations with people who live and work in Japan, we tried to learn more about what opportunities there are for those that might want to work in or work with the Japanese. With the uniqueness of Japan comes unique opportunities, open to people who can navigate the cultural differences. We narrowed them down to three areas.
Services for growing demographics
Population is declining and the average population is old. Aside from opportunities for more goods and services for the elderly, there will be opportunities to create businesses that service expats.
Japan is such a homogenous society, proud of their own culture and distant from other races. It’s very difficult for expats to fully integrate into Japanese society. In order to deal with the decline in population, the government has opened up visas inviting in blue collar and white collar workers to easily achieve Japanese residency. This is very appealing to the people in Southeast Asia, and we predict many people will migrate to Japan - a place with low interest rates, a 0.5% mortgage rate on your home, and a place with more opportunities compared to many countries in Southeast Asia.
New Technologies for Mature Markets
Ivy met with the Director of Product at Paypay, a joint venture by India’s PayTM for technology, Yahoo, and Softbank - to bring technology that has dominated in an emerging market into a mature market.
When Japan was ready to adopt the banking infrastructure decades ago, it had to build on top of the existing technology. Now, there is a huge opportunity to help Japan upgrade to current tech with faster transactions and mobile payments. In the next years, with the help from Softbank’s investments, we will see an influx of technologies first seen in emerging markets enter Japan.
This is also seen in boba shops. There were no bubble tea shops in Japan until last year when the Chinese opened up some stores. Now there are several boba shops per block.
Investments Abroad
The Japanese government is currently lending to the national banks at a negative interest rate…so you can guess how low interest rates for the Japanese can be. Many Chinese business people living in Japan are using the credit of their small business to take out loans at low interest rates to invest abroad.
Unlike the West where a corporation’s finances are separate from the individual’s, in Japan, you are personally liable for any loan your company takes out. The banks are risk averse and so are the people - few are actually taking out big loans.