Japanese companies are involved in joint ventures throughout the world, espein cially with American companies. The GM-Toyota joint venture agreement
process was the result of over two years of negotiation and decision making. In this new company and in similar companies, Americans and Japanese are involved in decision making at all levels on a daily basis. The Japanese decision- making process greatly differs not only from the American process but from that of many other countries-especially at the higher levels of their organizations.
An understanding of the Japanese decision-making process, and indeed of many of their management practices, requires an understanding of their national culture. As previously discussed, much of the Japanese culture, and therefore the basis of Japanese working relationships, can be explained by the principle of Wa, meaning peace and harmony. This principle is one aspect of the value they attribute to amae, meaning indulgent love, a concept probably originating in the Shinto religion, which focuses on spiritual and physical harmony. Amae results in shinyo, which refers to the mutual confidence, faith, and honor required for successful business relationships. The principle of wa influences the work group, the basic building block of Japanese work and management. The Japanese identify strongly with their work groups, where the emphasis is on cooperation, participative management, consensus problem solving, and decision making based on a patient, long-term perspective. Open expression or conflict is discouraged, and it is of utmost importance to avoid embarrassment or shame-to lose face-as a result of not fulfilling one's obligations. These elements of work culture generally result in a devotion to work, a collective responsibility for decisions and actions, and a high degree of employee productivity. It is this culture of collectivism and shared responsibility that underlies the Japanese ringi system of decision making.
In the ringi system, the process works from the bottom up. Americans are used to a centralized system, where major decisions are made by upper-level managers in a top-down approach typical of individualistic societies. The Japanese process, however, is dispersed throughout the organization, relying on group consensus.
The ringi process is one of gaining approval on a proposal by circulating documents to those concerned throughout the company. It usually comprises four steps: proposal, circulation, approval, and record.68 Usually, the person who originates the written proposal, which is called a ringi-sho, has already worked for some time to gain informal consensus and support for the proposal within the section and then from the department head.69 The next step is to attain a general consensus in the company from those who would be involved in implementation. To this end, department meetings are held, and if necessary, expert opinion is sought. If more information is needed, the proposal goes back to the originator, who finds and adds the required data. In this way, much time and effort-and the input of many people-go into the proposal before it actually becomes formal.
Up to this point, the process has been an informal one to gain consensus, called the nemawashi process. Then the more formal authorization procedure begins, called the ringi process. The ringi-sho is passed up through successive layers of management for approval-the approval made official by seals. In the end, many such seals of approval are gathered, thereby ensuring collective agreement and responsibility and giving the proposal a greater chance of final approval by the president. The whole process is depicted in Exhibit 5-11.
The ringi system is cumbersome and very time-consuming prior to the implementation stage, although implementation is facilitated because of the widespread awareness of and support for the proposal already gained throughout the organization. But its slow progress is problematic when decisions are time- sensitive. This process is the opposite of the top-down decisions made by Americans, which are made quite rapidly and without consultation, but which then take some time to implement because unforeseen practical or support problems often arise.
In addition, another interesting comparison is often made regarding the planning horizon (aimed at short- or long-term goals) in decision making between the American and Japanese systems. The Japanese spend considerable time in the early stages of the process defining the issue, considering what the issue is all abotit, and determining whether there is in fact a need for a decision. They are more likely than Americans to consider an issue in relation to the overall goals and strategy of the company. In this manner, they prudently look at the big picture and consider alternative solutions, instead of rushing into quick decisions for immediate solutions, as Americans tend to do.
Of course, in a rapidly changing environment, quick decisions are often necessary-to respond to competitors' actions, a political uprising, and so forth- and it is in such contexts that the ringi system sometimes falls short because of its slow response rate. The system is, in fact, designed to manage continuity and to avoid uncertainty, which is considered a threat to group cohesiveness.
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