I don’t watch TV very often, but I saw an interesting program the other night. It was telling stories about how a lot of CEO’s in Japan are having trouble finding their successors right now. It was also very interesting to find out that these CEO's believe none of their subordinates are qualified to take on the position.
Failing to find any candidates, they turned to headhunting firms to take on the task. But these headhunters are also having problems because the demand is too high right now and they don’t have enough qualified people in their “stocks”. While this type of story may not be too surprising if we are talking about companies abroad, it still is a big deal when we are talking about companies in Japan. (After all, some people thought that it was big enough deal to create a TV program about it.)
So what is going on in Japan? Why are companies having problems with finding their next leaders? According to this TV program, today’s increasingly globalized business environments are the reason for it.
Japan has many big global companies such as Toyota, Hitachi, and Sony to name a few. Although these top tier companies have been operating globally for a long time, thousands of lower tier companies have stayed in Japan. It wasn’t necessary for them to go abroad since they were able to provide their goods and services to big top tier companies directly. This business arrangement ended up creating highly efficient supply chain structures as well as logistic networks among these companies. For many years, these business structures brought successes for everyone in Japan. However, with the rise of low cost competitors mainly from emerging markets, this setup has come to an end. The top tier companies simply couldn’t keep their high-cost Japanese partners and stay competitive at the same time.
Now, just like anywhere else in the world, many lower tier companies in Japan are forced to globalize their business operations. The problem with them is that almost no one has international business experiences. Competitions in markets outside of Japan are very tough. Well, what do you do then? Their answer: let’s bring in someone with global business experiences and turn this company around!
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Are they doing the right thing?
Obviously there are many tasks that a CEO needs to take. Out of all the responsibilities he/she has, what is the most important one? I would argue that it is making the right decisions for his/her company under any circumstances.
Having said that, would having sufficient international business experiences help when making decisions on company’s international business operations? Yes, I guess so. Then are these experiences REQUIRED for a CEO to make the right decisions?
I am sure those CEO’s on the TV program would say yes.