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Gerontocracy and its perks sap resources

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LAUSANNE, Switzerland — In 1999 I was invited to participate at a conference held in Tokyo under the title of “Management Challenges for the 21st Century.” The first and keynote speaker was Jack Welch, former chief executive officer of General Electric, followed by about a dozen CEOs of major Japanese companies and, lastly, the president of IMD, Peter Lorange, and myself.

I prefaced my remarks by saying that having reached my mid-50s, I very often find myself to be among the oldest at many meetings, reunions, etc. Fortunately, however, there are two places where I can still feel comparatively young: one is the Vatican, the other is corporate Japan. As the organizers had distributed brief biographies of all the speakers, it appeared that among the Japanese CEOs, the youngest had been born in 1936 and the oldest in 1921. As remarkable as these men (there were, of course, no women) may have been, they belong to the 20th century, not the 21st. Welch, at the age of 60, was about to retire from GE, after 20 years at its helm, at an age when most Japanese CEOs are just beginning their tenure.

This and many other examples one could draw on point to the undeniable fact that is ultimately the root of all of Japan’s problems: Japan is a country run by old men, for old men.

To my knowledge there has been no estimate made of how much of a drain this pervasive gerontocracy is on Japan’s resources. It must be absolutely astronomical. And when factors such as demotivation among the younger generations and loss of potential vitality are included, it becomes, of course, far greater.

When DaimlerChrysler acquired Mitsubishi Motors, they discovered that there were 68 “senior advisers” in the corporate woodwork. All of these men had offices, staff and various perks, while in general their contribution to the corporation ranged from the ineffectual to the positively dangerous. Mitsubishi Motors could probably be taken as a microcosm of Japan: a company that, in fact, had reasonably good products and technology, but because of gerontocratic management and all the costs associated with it was crumbling to the point of disintegration.

What strikes any reasonably astute observer of the Japanese scene is not only the prevalence of the gerontocracy, but all the pomp and circumstance that attend it. A gerontocrat, for example, hardly ever seems to displace himself without a large retinue of flunkies. And then there is the whole manner in which they are addressed. As I discovered when I was in a venture last decade in which the senior Japanese was a gerontocrat, one does not question these people’s judgment, let alone contradict them. They have, so to speak, become venerable sages, even if they in fact have very little wisdom. Their entourage exists to flatter and to pander.

The parallels between late Tokugawa Japan and Japan today are striking. Tokugawa Japan was cracking under the immense burden of parasitic daimyo with their large retinues of samurai and all the empty ceremony that unproductively occupied so many people. The costumes are different, the “daimyo” today are the presidents, chairmen and senior advisers of corporate fiefdoms, while the samurai are the “salarymen” and the servants are the “office ladies” — trained to university level to serve tea and make photocopies. But there are no signs of an impending Meiji-style revolution.

Back in the days of the Japanese management fad, it used to be said that decision-making in Japan was bottom-up, hence these old boys were harmless, no more than mere symbols. That is myth. It is probably true that they do not meddle in the day-to-day affairs of the company — of course, no proper CEO should — but they do exercise very considerable power, especially veto power, which is why it is so difficult to bring about change. Japanese CEOs are also far more likely than their counterparts in other industrialized countries to choose their successors.

Globalization and rejuvenation will need to go together, with the latter the crucial catalyst. Globalization is about adapting to and managing change. As old dogs do not learn new tricks, it is clear that gerontocrats are not the proper leaders for the global era. In a conversation I had with the CEO of one of Japan’s more global and successful companies, while he agreed with me, he pointed out that his main problem was the next generation, the people in their ’50s. By the time these men — and, again, it is invariably men — have reached that age and the positions that go with it, they will have spent so many years schmoozing their way up the greasy corporate pole that obsequiousness has become second nature. As they have had to be obsequious to their superiors for so long, when they become superiors themselves they will demand obsequiousness from their inferiors — along, of course, with all the perks, privileges and pomp of their newly acquired station.

What should be done? For one thing, I believe Japan desperately needs language reform. “Keigo” (the highly formalized manner of speech) should be gotten rid of — and women should refuse to speak in that artificial high-pitched tone. This will greatly facilitate adopting more “global” forms of dialogue, but also go some way in Japan itself to get rid of the linguistic feudal legacies that are impeding the country from restoring dynamism.

Language reform is difficult, but it can be done. In Sweden, for example, and also to a considerable degree in Spain, the formal form of address has been practically abolished. Today in Sweden people address each other, irrespective of status, almost exclusively on a first-name basis. Many Japanese contend that the form of language, including keigo and other formal speech mannerisms, displays politeness and respect. But politeness and respect should be based not on form, but on substance.

Rejuvenation should be sought across all Japanese institutions, not just corporations. As I suggested in an earlier article, for example, it would be a powerful symbol if the president of Tokyo University were a 40-year-old, preferably a woman. The old political guard, the “elder statesmen” hovering as kingmakers behind the scenes of the LDP, should be sent off to pasture. And in corporate Japan, probably nothing less than a revolution is called for in promoting to senior positions, including the very top, people in their 40s and late 30s.

As someone in his mid-50s and who certainly intends to continue functioning for a few years, obviously I do not believe that anyone over 50 is useless. In any case, with current demographics, people in Japan and Europe will have to remain working longer. What is wrong in Japan is that positions of authority are in fact mobilized by one gender (males) and one age group, i.e., that the country is run by old men for old men. Not only should younger people be far more involved in sharing power and responsibility, but those who stay on in later years should encourage the younger generation to be challenging, not to be subservient.

Until and unless this rejuvenation occurs, young Japanese men and women must realize that the male gerontocracy is ruining their country and their future.