You're unlikely to hear about my personal failures in the startup world, such as failing to communicate fully, letting problems slide to avoid conflict, or building products without customer input. As a reader, you're probably more interested in understanding the underlying issues in Japan and what you can learn from my experiences.
Career Path
Japanese companies have a rigid career path. You enter as a new graduate, work for a few years, and if you're good, you're sent to different departments to build experience across the company. You move up the ladder to become a 課長 (kacho, section chief), then repeat the process until you're old enough to be a 部長 (bucho, department head). Eventually, if you've earned enough trust from the current 社長 (shacho, company president), you might be chosen to take over when they retire. Sounds simple enough, right?
The issue lies in the potential for derailment at any step. If a project you're leading fails, costs the company significant money, you fall ill and need extended time off, or you simply don't get along with your superior, any of these can derail your entire career. Missing a promotion when your colleagues who joined at the same time are moving up effectively means your path to the top is over.
You might wonder, given how difficult this career path is to navigate, how people stay ahead. Even if you're a genius, there's no guarantee that all your projects will succeed.
Decision by Committee
This concept isn't new; it's recorded in ancient Japanese texts. One of the most famous examples is the "Assembly of the Gods" (神の宮, Kami no Miya) described in the classical Japanese text, "Records of Ancient Matters" (古事記, Kojiki) and "The Chronicles of Japan" (日本書紀, Nihon Shoki). In these myths, gods gather at the "Plain of High Heaven" (高天原, Takamanohara) to discuss significant decisions, reflecting the idea of collective decision-making.
In modern Japan, this concept persists. Nobody wants to take sole blame if a project fails, so consensus-building among stakeholders is arduous. This is why negotiations with Japanese companies often take a long time. All stakeholders must agree, and in negotiations, you may only be talking to some stakeholders while others learn about your proposal through meetings and PowerPoint presentations.
While this can be beneficial for ensuring everyone buys into the project, it also creates an incentive for individuals to shield themselves from negative consequences. When a project fails, it's seen as a group failure, not an individual one.
In my opinion, this decision-by-committee approach often creates bland outcomes. The aim isn't to be wildly successful (by taking risks), but to avoid failure and guarantee every stakeholder's "safety."
This risk-averse thinking permeates every corner of Japanese society and influences the startup ecosystem as well.
Single-Issue Startups
Japanese VCs typically try to take fewer risks because losing money is simply unacceptable for investors. It's not about how much money they can make from a unicorn project, but about not losing money on most projects.
For example, one prominent VC firm (which I won't name) has a portfolio in Japan composed almost entirely of single-issue startups. These startups aim to tackle only one issue, such as replacing a single industry's current process with a SaaS product. The rationale behind these single-issue startups is that they can find somewhat "guaranteed" success in tackling that specific issue, but nothing beyond that.
I'm not arguing that these startups are bad; there's clearly a demand for them. However, if your entire portfolio consists of single-issue startups, it suggests you're not thinking big enough or willing to take on significant risks.
Bonus: A Hollywood Anecdote
A veteran Hollywood producer once shared this story with me: During Japan's economic bubble, Japanese companies invested heavily in Hollywood. After one movie became a blockbuster, a Japanese investor asked the producer at the celebration party:
"Why can't we only invest in the successful movies?"
Conclusion
While these risk-averse practices have contributed to Japan's stability and consistency in many ways, they also present challenges in an increasingly globalized and fast-paced business world. The emphasis on consensus, rigid career paths, and single-issue startups may limit innovation and hinder Japan's competitiveness on the global stage. However, change is slowly occurring, driven by a new generation of entrepreneurs and the necessity to adapt to global market pressures.