Japan’s age of the MBA

To drive Japan’s business success in the 21st century, young people may need to embrace the MBA over traditional linear career progression within Japanese organisations. Leonard Leiser reports

It may surprise you how few Japanese professionals know the answer to the question: ‘What is an MBA?’ 

Despite Japan having the third-largest economy in the world and being home to the Toyota production system, lean manufacturing, Sanpo-Yoshi, Gemba Gembutsu and Ho-ren-so, the idea of enrolling at a post-graduate institution that teaches business practices is far from mainstream. 

Japan is home to operations management guru Taichii Ohno who penned Seven Wastes and Ten Precepts, and whose ideas continue to be adopted by some of the top global executives of manufacturing companies. However, service firms and financial institutions, which make up a significant proportion of businesses in Japan, do not connect success with business administration and management leadership in an academic context. Despite being among the most commercially advanced countries in East Asia, Japan is not considered a destination for post-graduate studies in business. Searches for any Forbes or Financial Times Top 100 ranking for a Japanese Business School will prove fruitless. ‘Cool Japan’ fails to include the MBA. How many MBA students around the world have come across a case study of a Japanese company? 

Galápagos syndrome

Japan is a country of hidden champions but ‘Galápagos syndrome’ (a term of Japanese origin, referring to an isolated development branch of a globally available product) permeates failed business ventures. It is widely believed that ‘what works in Japan, will only work in Japan’. 

It is also believed that a lack of fluency in English and communication skills among traditional Japanese managers is the primary reason for the dearth of international success. 

There are a handful of well-written business cases being employed in MBA courses around the world that support this theory. One impressive company that bucks this trend is Rakuten, led by founder and CEO Hiroshi Mikitani (a Harvard MBA). Despite the success of Toyota and electronics manufacturers in the past, one need only read the business section of any global newspaper to understand the troubles of Toshiba, Sharp, Nissan, Mitsubishi – and even Sony until recently. 

The management processes and operational excellence that made Japan a winner in the past are no longer a competitive advantage and the development of soft skills is sorely lacking. So how can Japan begin to win again? 

The Japanese way

Before talking about post-graduate qualifications, let’s wind back the tape of the typical academic journey of students in Japan to provide context for the MBA. From junior high school-level, schools in Japan are selective. 

In order to get into good schools, students must take entrance exams as elementary school students. At junior high, there are preparations for senior high school entrance exams and these are followed by college entrance exams. What matters most tends to be your undergraduate institution. Once a student has got into college they may already be set for lifetime’s employment within a system of regulation that makes it incredibly difficult for companies to fire employees. 

I have personally heard from many colleagues and professionals that the purpose of the Japanese education and university system is to prepare young people for company life; in other words, to prepare them for the uniquely Japanese culture of harmonisation and the development of the communal mindset and group mentality that lies at the heart of the Japanese corporate machine and Japanese society as a whole. 

And it’s a system that works very well, overall, in Japan. Big companies recruit directly from undergraduate schools, taking the best talent from the big schools. Furthermore, most companies have their own ‘way’ of doing things. Most readers will be familiar with the ‘Toyota Way’ and the ‘Honda Way’ of management, and on-the-job traning and in-house development helps instil these ‘ways’ into the employee’s psyche. 

Many companies are set up to develop generalists within their ranks and those on the executive track have exposure to all sides of the business at some point in their careers. I know of one high-level executive with a degree in engineering who ended up in financial accounting, as well as Toyota engineers who became hospital administrators and directors.  

Enter the MBA…

Beginning with the value proposition of the MBA, many students see MBA programmes as a chance for personal development and life-long learning. However, in Japan, companies are structured internally to promote employees according to seniority rather than merit. With lifetime employment, few Japanese professionals feel compelled to enrol in an MBA or post-graduate programme for the purpose of career switching. 

In the past, prospective students in Japan may have felt it necessary to develop their English and to move to the US or Europe to enrol in a top-flight MBA programme. This would be a difficult barrier to overcome. However, over the past 10-15 years, domestic Japanese language-based MBA programmes, offered as weekend or part-time courses, have started to gain traction. Those that gain international accreditation from organisations such as AMBA, signal to students that their programmes meet the highest quality standards, and are on par with the best international alternatives. While the average age of MBA students at top Business Schools in the US is 27 or 28, the average age of MBA students at Nagoya University of Commerce and Business (NUCB) is mid-30s. Roughly 40% of executive MBA students are over 40, and some are in their late 60s. 

How does the MBA fit in the Japanese market?

Potential MBA students in Japan no longer have to cross the world to study for an MBA; a short hop to a domestic institution offering weekend courses is now available. The power of the MBA is rising in Japan and it is a growing trend.

In the summer of 2017, The Japan Times ran an article that projected the latest findings from the QS World University Rankings Report of 2015-16 and 2016-17. The title of the article summarised its findings: ‘[The] MBA provides better salaries and opportunities.’ 

While the overall salary compensation package for MBAs in the Asia Pacific region had dropped, by contrast Japanese companies were now willing and able to offer higher salaries and bonuses to those with an MBA. The rate at which MBAs are being hired in Japan is on the rise. While the fastest-growing countries in the Asia Pacific region, China and India have Schools listed in the top rankings tables, only one Japanese institute is currently accredited by AMBA. From this, three major trends reflect the demographics and demands of the Japanese employment pool. The increase in MBA students is top-down – executive education courses, including the EMBA, have emerged as the most popular choice, and specialised tracks have been well-received by the market.

When I say that the increase in MBA students is ‘top-down’, I am referring to company presidents, CEOs, directors, founders, and top-level executives enrolling in MBA programmes. 

From this, either during the programme or on their completion of the programme, they establish pathways for their employees to take MBA courses. Although in some cases, a Japanese company may pay for, or subsidise, the occasional non-degree course, they tend to simply recommend or suggest that employees undertake the MBA as a full degree programme. In most cases, students pay for the degree out of their own pocket. Few Japan-based companies cover an employee’s EMBA tuition fees. So, top company executives are dipping their toes into the MBA pool and encouraging their employees to follow them in.

As an extension of the previous trend, in recent years we have also seen the biggest spike in the number of students enrolled in executive education. Executive programmes require extensive work experience, and the market in Japan is drawing on experienced employees who can realistically only attend short intensive courses at weekends or on weeknights. This trend seems to be a natural consequence of the Japanese market.

Specialised courses offered as certificate-bearing tracks are receiving a lot of attention. At NUCB we have just launched two specialised degree pathways: the global MBA and the healthcare MBA. The former includes courses offered only in English and will include a mix of degree and non-degree students, while the latter is focused solely on management in the healthcare industry. 

One of the key aspects, and key value proposition of both, is that they are certificate-bearing. One trend that is certainly not new in Japan is the appeal of official licences, certificates and degrees to Japanese people. 

This specialised track, we hope, will be a way to introduce our university to a larger target audience and define the meaning of the MBA to Japanese employees.

The outlook for the MBA in Japan

There are three changes which I hope to see over the next five to 10 years in Japan. 

First, an increase in the number of younger people taking MBAs, and people increasingly taking more generalised Master degrees. I am hopeful that young entrepreneurs will find Business Schools in Japan an attractive alternative to a lifetime’s employment with a specific organisation. Business Schools could provide the avenue for them to express their creativity and innovation in a way that will generate profits, create jobs and increase personal satisfaction, while fostering a
better society.

This is not a recommendation for all, or even most, Japanese people, but many young people would be well-suited to undertaking a post-graduate programme before turning 30, rather than sticking with one of the ageing business giants of Japan. 

Some of the biggest success stories – and most popular business cases – involve the founders of Apple, Dell, Google and Facebook dropping out of college to pursue the growth of their own companies. 

While I am not advocating that Japan needs young entrepreneurs to follow this route, I am saying that the inflexible educational structure that begins at elementary school age, and continued adherence to rote learning, is in stark contrast to the global teaching methodologies of the 21st century, and the development of soft skills necessary in the modern workplace. Being in a college setting provides a unique sense of ambition, freedom and confidence, allowing students to explore new ideas and develop a business model with resources and opportunities all in one place.

In addition, Business Schools need to attract more women into post-graduate programmes. Japan faces the double threat of an ageing and decreasing population. Women should be able to access the workforce, and leadership roles, irrespective of this, but it is an added reason for the workforce to draw on all available members of the labour pool. 

Women have been vastly under-represented at management and executive level and the MBA could prove a vital resource for women to develop skills and a quantifiable advantage, to help them secure the top spots across all industries and companies in Japan. The MBA alone will not achieve this progression, but it could provide an important step forward and a push in the right direction.

Finally, I am interested to see how the purpose of the MBA in Japan changes. In other words, how will the factors motivating students to take MBAs evolve over time? 

In a conversation I had with President Dr Hiroshi Kurimoto of the NUCB Business School regarding the role of the Asian economy in the next 20 years, he shared with me that the Asian Development Bank has reported that, currently, some 20% of global GDP stems from the Asia-Pacific region; by 2040 that contribution is expected to rise to almost 50%. 

How will this realisation impact on the value and delivery of the MBA in Japan? Will local programmes launch more domestic-orientated courses and specialised pathways, focused on Japanese business or will programmes begin to cater for an influx of international MBA seekers choosing Japan as their MBA destination of choice within the Asian-Pacific market? 

Will Japanese MBA seekers’ aspirations come into line with those of Western-based MBAs, or will international MBA seekers elect to enroll in Japanese programmes to gain an understanding of the group mentality necessary for success in the traditional Japanese corporate environment?

Only time will tell, but for now, it is an incredibly exciting time to be part of the challenge of the MBA in Japan

Leonard Leiser is Coordinator for International Development at Nagoya University of Commerce and Business (NUCB) Business School

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