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What Japanese Companies Must Do To Create a Second Economic Miracle
By the late 1980s, Japan was the second-largest economy in the world, in part due to its ability to produce high-quality products like automobiles. But the Japanese Miracle, which had begun with Japan’s quick economic recovery after the Second World War, ended abruptly in 1990. This article suggests that Japan, while excelling at reverse engineering and incremental product improvements, must boost innovation in order to thrive. It attributes Japan’s innovation deficit to its culture of harmony, which affects decision making. Japan’s “nemawashi-ringi” decision-making process involves preparing the groundwork for a new proposal, including talking with those affected by the proposal, getting their feedback, and modifying the proposal. Unfortunately, this process is slow, focuses on incremental improvements, and suppresses innovation. A better process should be compatible with Japan’s culture of consensus building, should foster knowledge creation, and should fit a centralized, hierarchical firm. Top management should encourage the formation of self-organized groups (the engines of innovation) and use a Rapid Evaluation of Ideas process. This includes a group formulating a proposal on a specific problem, identifying stakeholders, preparing a list of assumptions for each stakeholder, assessing these assumptions’ “Importance” and “Certainty,” plotting assumptions on a two-dimensional scale, analyzing the plot and identifying the next steps, collecting more information, meeting a week later after gathering information, and determining the next steps.