Former Accenture Chairman Masakatsu Mori shares his 30 years of experience in advising many of Japan’s leading corporations as well as foreign corporations doing business in Japan and beyond.
Linking Growth Strategy to HR Strategy
JAPANESE corporations have accumulated huge capital and technology over the past 50 years. There are over $2.7 trillion in cash and equivalent assets in the corporate sector. Among the top ten companies which own the highest patent values worldwide, five are Japanese. However, the number of global business leaders developing and running global businesses has been increasing much more slowly compared to other countries around the world.
As a result, Japanese companies are losing their global market share. They are taking risks by running global businesses, especially overseas. Many larger Japanese companies are facing diminishing growth in the domestic market due to an aging and declining population. They have been aggressively buying foreign businesses to seek additional growth in the global market. Mergers and acquisitions (M&As) of foreign businesses by Japanese corporations totaled $68 billion in 2013. In the past there were many cases of business value write-offs regarding acquired entities due to the lack of management capability after M&As. I believe Japanese companies will face similar issues in the future. Japan has one of the lowest GDP export rates among the developed countries with 17.4%. The global market is an opportunity for Japanese growth.
In order to achieve global business growth, Japanese corporations have to link their growth strategy with their human resources (HR) strategy.
1. It starts with a global growth map targeting revenue by business units, regions and countries, covering 5-10 years.
2. A global business architecture (organization) concept has to be developed.
3. Based on the growth map and the architecture, the number of required core business leaders to run the global business has to be identified by key functions. The key functions are as follows: General Manager, Chief Financial Officer, Chief Marketing Officer, Chief Operating Officer and Chief Information Officer
4. Determine the source of core leaders by internal development vs. experienced hires, and also Japanese vs. non-Japanese.
5. Design programs for developing global core business leaders.
6. Determine the investment cost for the programs and get approval from the executive committee.
The program cost should not be treated as part of HR costs but rather a strategic investment for achieving global business growth. Aligning an HR strategy to a global growth strategy is important for Japanese corporations to be sustainable in the global age. tj