Japan Inc.'s Ultimate Challenge: Marketing

Marketing Isn't Core to Japanese Model, but That Can Change

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The management consultant Peter Drucker once wrote, "Because the purpose of business is to create a customer, the business enterprise has two -- and only these two -- basic functions: marketing and innovation." This would be a surprise to most Japanese CEOs. They would replace the word "marketing" with "engineering" and "manufacturing."

During my 31 years in Japan as an advertising executive and marketing consultant, I have seen many businesspeople acknowledge that Japanese companies do not understand marketing. As a result, marketing does not have a core function in the Japanese business model.But unless Japanese companies urgently embrace marketing they risk becoming (even) less competitive in the global marketplace.

There are three reasons Japanese companies struggle with marketing:

Language. There is no direct translation for the word or concept. It is spelled via katakana characters (Japanese phonetic alphabet for non-Japanese words) and as a result is seen as a foreign word linked to a sales transaction. Marketing cannot be comprehended or explained in the way Westerners have come to understand it.

Cultural History. In Japanese, the words mono (thing) and zukuri (process of making), taken together, literally mean the process of making or creating things. Monozukuri combines the desire to produce excellent products through innovative production systems and processes. The drivers of monozukuri (and of business direction) are product engineers.

During the Edo period (1603-1868) the Tokugawa government created a social order called shinokosho or the four divisions of society. Samurai were at the top of society because they set a high moral example. Farming peasants came second because they produced the most important commodity, food. Third were artisans and craftsmen. Merchants were at the bottom of the social order because they generated wealth without producing any goods. The classes were arranged by what Confucian philosophers described as moral purity.

In modern Japanese companies, marketing staff are the merchant class, engineers are the samurai, and all other company functions are the equivalent of farmers and craftsmen.

Education. Marketing is poorly taught in Japanese universities. Professors do not have academic or professional experience in marketing, like western professors. Neither do Japanese companies have marketing training programs. Employees are rotated through the marketing department at some point during their careers; it is not an area of career specialization. When employees -- junior and senior alike -- are placed in marketing positions, they have to figure out their jobs as they go along, and aptitude for a marketing position is not a consideration. Experience gained is rarely retained and passed on. Thus a perpetual cycle of marketing mediocrity and lack of professionalism endures.

Many American companies have a Chief Marketing Officer reporting to the CEO, but the CMO position does not exist in Japanese companies; marketing staff are tacticians rather than strategists. An American-style CMO likely will never work in a Japanese company, because Japanese work in a group or team environment, rather than as individuals. To be effective, the CMO function would need to be implemented as a group function.

A more culturally appropriate solution would be to rename and redefine the function as the Consumer Marketing Office (CMO). This office would direct marketing with functions divided among a team of executives who would work collaboratively with outside agencies. This would spread the responsibility and pressure and allow for planned rotations to permit a constant mix of new thinking, combined with wisdom and experience.

The future of Japanese business lies outside Japan as its domestic market shrinks and ages. Japanese CEOs must figure out the best way to adopt the Consumer Marketing Office. Embracing marketing as a core function of the business does work in Japan. Coca Cola, P&G, McDonald's and many other western companies have entered the Japanese market with entirely new product categories and were accepted by Japanese consumers.

These companies recruited and trained Japanese managers in their marketing methods, with great success. Many of these Japanese marketing professionals later jumped ship to traditional Japanese companies with the ambition of applying their marketing knowledge, but many experienced frustration and regret by hitting a brick wall of resistance.

But the bottom line is this: If Japanese companies cannot shift their thinking about marketing, a 21st century remake of Hollywood movie "The Last Samurai" might be titled "The Last Engineer." A man of great moral purity ... but few customers.

Robert E. Peterson is president of the Wickaboag Consulting Group, Inc. He lives in Tokyo.
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