
Published here September 2006.


The Role of Information

Another distinguishing feature of Japanese management is that corporate growth is not achieved through takeovers and acquisitions, as in the West, but through organic growth, based on management information. Information is a most valuable resource, and it is the quality of the information available to it that is fundamental to a company's ability to compete. In Japan, information is considered crucial, a factor that plays a role even before the birth of a company.

Indeed, it is information about products and markets that leads to the formation of companies in Japan.[22] It seems that information and knowledge, in the technological, marketing and managerial fields are key invisible assets, which the Japanese excel in using. Companies in the West, however, usually focus on their visible financial assets, taking a short-term view of investment payback and profit. But in doing this they lose long-term growth, with the creation of new economic wealth.

It must also be recognized that people hold information, the key invisible asset: it is their knowledge, skills and judgment that are important. This is just as much an output as the physical products of the company, hence the famous quotation:

"Matushita is a company that creates people"

A company must ensure that this asset is fully utilized. In Japan there is considerable horizontal transfer of junior and middle managers, so that they can acquire a wide understanding of the company and its environment. This also develops communications linkages and reduces the barriers between departments and functions. The approach is well illustrated by the fact that Toyota, when recruiting, look for "someone who understands cars and what the customer wants in a car: we will teach him to be a welder".

In the ultimate analysis a company receives, accumulates and transmits information both within the company and also with its environment. People within a company exchange information among themselves, process and store it, and exchange it with the market and the company's environment. Thus invisible assets are accumulated. Japan has really capitalized on this, many of their innovative products having been developed from information provided by the chain of suppliers and customers with whom they are associated. This aspect has yet to be fully exploited in the West, particularly in Europe.

More Plus Factors for Japan  More Plus Factors for Japan

22. Punset, E. and Sweeney, G., Information Resources and Corporate Growth, Pinter Publishers (USA), 1989.