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Hitachi

Hitachi Research Institute

Interview

Interviews with experts and opinion leaders from our research network

Learning Global Management Skills from Ancient Rome
- Aiming for stable growth based on diversified human resources -

Steering an economy towards stable growth is becoming increasingly difficult in a global age, where previous strategies no longer hold currency. Ancient Rome managed to achieve development despite a host of problems, including the failure of its overseas strategy, shrinking domestic investment, rising unemployment, and declining birth rates, all of which are similar to challenges we face today. For this interview we invited Ms. Nanami Shiono - a writer based in Rome who shows deep insight in her portrayals of historical figures - to consider with us new corporate strategies for today, in light of the example of the Ancient Romans.

Ms. Nanami Shiono

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Writer

Career Summary
Born in Tokyo in 1937. After graduating from Gakushuin University with a degree from the Department of Philosophy, Faculty of Letters, Ms. Shiono studied in Italy from 1963 to 1968. She commenced writing in 1968, and published Runesansu no Onna-tachi (Women of the Renaissance) in the Chuokoron journal. She received the Mainichi Publishing Culture Award (Mainichi Shuppan Bunka-sho) for Chezare Borujia Aruiwa Yuganaru Reikoku (Cesare Borgia or Elegant Cruelty) and took up residency in Italy in 1970. Received the Suntory Prize for Umi no Miyakono Monogatari (Story of the City of the Sea) in 1982. Awarded the Kikuchi Kan Prize in 1983. Commenced writing The Story of the Romans at the pace of one volume per year in 1992. She was awarded the Shincho Literary Prize in 1993, and the Shiba Ryotaro Prize in 1999 for The Story of the Romans, Volume I. Published seven volumes of Shiono Nanami Runesansu Chosakushu (Shiono Nanami Collection of Writing on Renaissance) in 2001. Awarded the Grande Ufficiale Ordine Order of Merit by the Italian government in 2002. Finished writing The Story of the Romans upon completion of the 15th volume in 2006. Selected as a Person of Cultural Merit by the Japanese government in 2007. Published Roma Naki Ato no Chichukai Sekai (The Mediterranean World after the Fall of the Roman Empire) in two volumes from 2008 to 2009. Completed the four-volume series of Jujigun Monogatari (Story of the Crusaders) in 2011. Published the two-volume Kotei Furidorihhi Nisei no Shogai (The Life of Emperor Friedrich the Second) at the end of 2013.

The significance of the top players winning through

Kawamura: In December 2013, I happened to read an article written by you in the Nihon Keizai Shimbun where you made the comment, “The top players like Toyota Motor Corporation and Hitachi are starting to win in Japan. As companies, they are beginning to perform better.” Upon reading this, I felt greatly encouraged.

Shiono: Yes, that was how I felt at that time on my return to Japan after a long period away. After all, it is only right that the top players should win. Seeing their top players making progress encourages Japanese people.

Kawamura: For a long time Hitachi was described as an“unsinkable battleship.” This was because Hitachi remained undaunted in the face of devastating repercussions from two oil crises. But later Hitachi began to show the effects of the protracted recession and some began referring to us as a “sinking battleship.” In the third quarter of 2009, Hitachi suffered the worst downturn since its establishment, in the wake of the Lehman Brothers’ bankruptcy. In the five years since then, however, it achieved a V-shaped recovery. I was very happy to realize you had picked up on this.

Shiono: When companies like Toyota and Hitachi are on the winning side, the scale of winning is different to begin with. While the idea of making profit is the same, integrity also comes into play in economics, and the impact upon people is different. People have an innate desire to respect people and organizations with integrity. Therefore, for the sake of the Japanese economy, I hope Hitachi will show its true mettle as a winning company.

Kawamura: Thank you for your encouraging words.

Human resource strategy in a global age

Shiono: Before this interview, I was shown various wonderfulprojects by the Hitachi Group. When I was in Italy, I also sawon the news that Hitachi had successfully tendered for a highspeedrail project in the United Kingdom. I thought it was anoutstanding achievement that Hitachi was to launch a railwaysystem project in that country.

Kawamura: Companies like Germany’s Siemens and Canada’s Bombardier are generally the major players in the railway market in the United Kingdom. Although Hitachi took up the challenge to break into the UK market, it was hard to penetrate the barriers in Europe, and it took about 10 years before highspeed trains produced by Hitachi actually began running in the United Kingdom. However, the fact that our trains significantly shortened travelling times made railway users very happy and the railway service has proven its usefulness. At present we are building a new factory to manufacture trains in Newton Aycliffe in County Durham, in the northeast of England. We hope that this initiative will eventually lead to our full-fledged entry into the European railway market.

Shiono: When this order was awarded to Hitachi, were thereany adverse reactions from the local railway industry toward your company?

Kawamura: There was in fact a negative campaign claiming that the project would result in the loss of domestic employment and this placed significant pressure on us, so it was very difficult in the beginning.

Shiono: Some time ago, I believe there was also a severe backlash from local stakeholders against an Italian company that secured an order for a sewerage system in the UK. At that time, the president of the Italian company made the witty comment, “We have only come to repair the sewerage system built by our forefathers.” Well, the Ancient Romans did in fact construct the first water and sewerage systems in the United Kingdom. Not expecting a reply of that nature, the British side was at a complete loss for words. It was an effective approach that silenced objections. Actually, now I come to think of it, it was an Englishman who constructed Japan’s first railway, wasn’t it?

Kawamura: That’s right. An Englishman constructed the first railway in Japan that commenced services between Shimbashi and Yokohama about 150 years ago.

Shiono: People can sometimes have a greater impact on others by replying outside the expected range of responses. I wonder what the reaction might have been if the Japanese side had wittily commented, “In the past, Japanese people learned railway technology from the English. Now, it is our turn to repay the favor.” I am almost certain that the other side would rethink. By creating a moment when the other side is unable hold back a smile and think “Not bad!” the real negotiations can begin.

Kawamura: Good point. But unfortunately, we did not make any witty replies. We just tried to give them straight answers.

Shiono: Well, how about trying it out next time? Thistactic may be slightly wicked, but it is probably effective in a company’s overseas strategy. During the Age of Warring States in China, there was an extremely rich person who hosted as many as 3,000 house guests at one time. He let people with various kinds of talent live on his estate, he fed them, and he fully exploited their talents as required. His objective seemed to be to use his guests to solve a range of difficult problems. Throwing the opponent a curveball is also one form of talent, and if we make use of people with specialist skills, we may be able to steer negotiations with overseas companies to our advantage.

Kawamura: Certainly the ability to talk about technology alone is not sufficient when engaging in business today. We also need to be knowledgeable about financial matters. And to engage in challenging negotiations backed by a team of experts in a broad range of fields, taking into consideration all pertinent factors, from past events to the contribution to the local area. It may even be a good idea for us to include people with specific talents as you mentioned a moment ago.

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Shiono: Japanese companies today are focusing on overseas expansion and globalization, but I do not believe demanding that all company employees become “global personnel” is very efficient. In the past, Japanese acquired skills from foreigners to achieve economic growth. The objective was not to have them learn about company spirit from foreigners. Even if allof a particular company’s employees became so-called “global personnel,” I do not believe that would necessarily make it into a global company.

Kawamura: I believe that diversity in human resources will become increasingly necessary. For the railway business I mentioned earlier, Hitachi established a company in the United Kingdom, and an English national was appointed as the managing director. As a matter of course, Japanese and foreign staff work side by side in the company. Nevertheless, I do feel that perhaps there is a little more need for an education system to train bilingual or trilingual personnel in Japan. If we can create a society that produces leaders who acquire linguistic proficiency in the early stages of their training, Japan will find it much easier to deal with overseas business in the future.

Shiono: While language proficiency is advantageous, I believe there are also advantages in using interpreters. It depends on how the interpreter is used. During the intervals when the interpreter is interpreting the speaker’s comments, the speaker has time to organize his or her thoughts. When I give presentations in China or Korea, countries where my work has been translated, I usually request my translator to interpret for me. Having someone who understands the way I think acting as my interpreter is very important. To prevent the interpreter from abbreviating what I say, I make sure that I never speak in long sentences. Misunderstandings tend to occur particularlywhen answering delicate questions. Therefore, I try to make each sentence short, even stopping midstream in the sentence at a verb. When I interviewed Nissan-Renault’s Mr. Carlos Ghosn, our interpreters sat next to the other party. This method enabled the interview to proceed smoothly without loss of time.

Kawamura: Hitachi uses simultaneous interpreters at our Board of Directors meetings and other functions. Three of the 12 members of the Board of Directors are non-Japanese - an American, a Brit, and a Singaporean - and their common language is English. We use simultaneous interpretation because consecutive interpretation is time-consuming and can cause meetings to drag on. During the meetings, interpreters are positioned in a separate booth, and all directors wear earphones and have a microphone.

Shiono: That is probably the ideal set-up. When I make speeches in Italian, I always make sure I have my manuscript checked in advance, to avoid using infantile expressions or unrefined words that as a foreigner I might use unwittingly. Essentially, I do not believe the inability to speak a foreign language is a hopeless demerit. After living abroad for almost half a century, I really believe that. My son used to study classical Greek and Latin, and one day he said to me, “These are not dead languages at all.” A considerable number of the derivations of natural science terms are Greek, and the derivations of 40% of English terms in the humanities come from Latin. In other words, there is a kind of common understanding among Westerners based on the derivations of words. This is an advantage that we Japanese do not possess. But did you know that no matter how well people speak a foreign language, they will never be able to speak or write it above the level of their native tongue? Sometimes I am asked, “Why do you write about occidental history?” The reason is we Japanese are still forced to compete in an arena built by Westerners. With the advantage of longer legs, Westerners are able to spring into the ring with ease, but this is not the case for us. Therefore, I tell them that through my writing I am creating stairs so that the lesser endowed can get into the ring more adeptly.

First encounter with Italy

Kawamura: Ms. Shiono, I understand you first went to study in Italy after graduating from the Department of Philosophy in the Faculty of Letters at Gakushuin University. You have been based in Italy now for many years and have written many wonderful works. What was it about Italy that first interested you?

Shiono: I acquired a thorough knowledge of philosophy, history, and religion from my studies at the Department of Philosophy of Gakushuin University. Perhaps accidentally, my studies at university were similar to the European liberal arts prevalent in higher education in Europe at the time, and I became accustomed to this style. For my graduation thesis, I wrote about art in 15th century Florence. The reason I decided to go to Italy after graduating was basically because I wanted to see the actual works of art for myself. I was quite passionate about wanting to go.

Kawamura: So, from that time you were already quite interested in European history?

Shiono: When I stood in front of the actual works of art in Italian museums, I realized that they were works that I should accept in an open-minded manner and not something I should try to expound on. Rather than focus on the lives of artists such as Leonard Da Vinci or Botticelli, I wanted to know who the people were who provided the support that enabled such artworks to be created during the period known as the Renaissance, and why they supported the arts. At that time, no books had been written from this perspective. Because I am a person who hates to lose, I was also looking for an area I could explore that was free of competitors.

Kawamura: To date, I believe you have written two comprehensive histories, one on medieval Venice and the other on ancient Rome. The Story of the Romans has a total of 15 volumes, and you completed this work over a 15-year period at a pace of one volume per year. This is a significant accomplishment, but may I ask why you decided to embark on writing a comprehensive history of ancient Rome too?

Shiono: Like the story of a person’s life from birth to death, a comprehensive history is the story of the rise and fall of a race. The reason I wanted to take on the task of writing a comprehensive history of ancient Rome was quite simple: I just wanted to know why a people were able to prosper for a period of over 1,000 years. This was the key question I had in mind when I was writing about ancient Rome. For more than 250 years since the appearance of The History of the Decline and Fall of the Roman Empire by 18th century British historian Edward Gibbon, many historians have focused on the decline and fall of the Roman Empire. Although so much fuss has been made about the decline and fall, it stands to reason that there must have been a significant rise before the decline and fall. Bearing in mind this question, I began my work from the rise of ancient Rome. The period of the Roman Republic following the period of Regal Rome was a period of high growth, and it was Julius Caesar who tried to turn this period into a period of stable growth (volumes 1-5). After this, the empire entered into a monarchical period, which was accompanied by stable growth (volumes 6-10). Then, the Roman Empire entered its twilight years (volumes 11-15). Prior to my comprehensive history, existing comprehensive histories on Rome were essentially the works of Gibbon, who focused on the decline and fall, and the works of the 19th century German historian Theodor Mommsen, who wrote about the history of the Roman Republic, which corresponded to the period of high growth. However, nobody had ever covered the period of stable growth of ancient Rome. The pattern is quite clear when we look at the history of a country. A country that endures first makes its way uphill, achieves high growth, then begins to go downhill and eventually reaches a period of decline and fall. Even though we might refer to a period of high growth, growth is never a linear movement but has a series of ups and downs in the course of development. The period of stable growth that follows may give the impression progress has reached a plateau, like the summit of Mount Fuji, and this pattern is similar for any country.

What policies support stable growth?

Kawamura: What interests us at Hitachi most about this topic is the period of stable growth of the Roman Empire. A period of stable growth accompanied by some minor setbacks during ongoing growth is an ideal form. However, this is extremely difficult to achieve. Hitachi may appear the same from the outside but internally it has undergone significant changes in the 100 years since its establishment. Since traditional ways of doing things no longer hold currency in today’s world, we have to change the contents by weeding out what is bad and keeping what is good. To achieve this, we are thinking about creating an environment where employees can freely express opinions about the way the president conducts company affairs, with a reformist president leading at the top and diverse members serving on the board. I believe Ancient Rome also underwent various changes during its 1000- year long history. Why do you think a great country like that was able to continue its prosperity?

Shiono: The period of stable growth of the Roman Empire can be described as the era from the transition from a monarchical government until the end of the period of the Five Good Emperors, which was from the early 2nd century AD. This was the most prosperous period and a time when the Roman Empire enjoyed peace and stability for the first time since its beginning. One of the Five Good Emperors was Emperor Trajanus. He was the first emperor to come from a Roman province (Spain). After winning the Dacia Campaign (in today’s Romania), he expanded the territories of the Roman Empire to their greatest area. He also carried out numerous public works. One policy he implemented that greatly impressed me. That is, he established a law targeting the members of the Senate, who could be described as the privileged class, requiring them to invest one-third of their earnings in the home country of Italy. This policy was actually designed to prevent the hollowing out of Italy while maximizing its territories. While investment in the home country was low risk and low return, investment in a province like Dacia, which had just beensubjugated, was high risk due to instability. At the same time, this was also the reason high returns could be expected, and the money naturally flowed into the provinces. In an era before economists even existed, he decided on and carried out policies which today’s economists would have criticized. The main industry at the time was agriculture and many of the senators were also owners of farms. As I was writing about this, I could not help but thinking, “If this were happening in present-day Japan, it would have been equivalent to the Japanese government passing legislation ordering the member companies of the Federation of Economic Organizations such as Toyota or Hitachi to invest 30% of their earnings in domestic business in Japan.”

Kawamura: At present, Japanese companies face similar problems. As they make aggressive inroads into markets overseas, domestic investment and employment have contracted from what they were in the past. We question whether this is really a good thing. Companies generally hold the viewpoint, “We are earning money abroad that goes back to Japan.” Nevertheless, no one can avoid the issue of employment at home.

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Shiono: Although followers of Islam in medieval days defeated the Christian crusaders, they later lost their strength and cohesiveness, and the Christians that had been defeated carved out a path to prosperity. My view is that a key shortcoming of those Muslims was their failure to create a social structure that guaranteed jobs. At that time in North Africa, which exported natural resources such as gold and marble, it was sufficient for only people in theupper classes to be able to turn a profit, and there was no need to provide jobs for people in the lower classes. On the other hand, in the city-states of Italy, which were manufacturing and trading nations, a system for providing jobs to many people was being established due to an advanced division of labor.

Kawamura: If we look at the resource-rich Arab countries, the situation has not changed much from the medieval period.

Shiono: Yes. Recent years have been marked by many events such as the Jasmine Revolution that began in Tunisia. But I believe the problem goes beyond religion and other matters and basically boils down to “a lack of jobs.” The reason Emperor Trajanus forced the wealthy to invest in the home country was to provide jobs. In Japan too, if we could ensure jobs, everything else would move in a better direction.

Kawamura: I agree that employment is very important. If we retained even only the service industry in Japan, a solid number of jobs could be secured. But there would be a significant difference in the amount of profit, and how this could be overcome remains a difficult issue. Ultimately, I believe we need to move toward stable growth by building a structure that creates employment and profit while firmly maintaining the core areas of manufacturing in Japan.

Shiono: Another point I would like to mention is the “Law of the Three Sons,” which was introduced by Augustus, who succeeded Caesar and became Rome’s first emperor. This is a policy that still has resonance today as a measure for addressing the current falling birthrate. In Rome from the period prior to the Roman Empire’s period of stable growth and thereafter, the birthrate was declining, particularly among the wealthy class. Just as we see in our own society today, people’s life choices had increased and this was accompanied by an increase in the number of people remaining single. The “Law of the Three Sons” was a policy that gave priority to employing and promoting persons with three children when people’s abilities were the same. Of course, some people may be childless through no choice of their own, and it would be understandable if people rebelled against this legislationas discriminatory. However, exceptions were recognized and adjustments to the law were skillfully made. In the days of the Roman Empire when capable people were to be sent to the Roman provinces, although people with three children were given priority in hiring, the government assigned people with outstanding ability as exceptions even if they did not have children. In this way, policies that supported the prosperity of the Roman Empire were established during the empire’s period of stable growth.

Kawamura: This topic came up during a previous interview as Japan’s dwindling population is becoming serious. Emperor Augustus’ policy is useful as reference even today for achieving sustainable economic growth.

Shiono: The number of single mothers in our society is set to increase in the future. Children who grow up with memories of a struggling mother are sensitive to a society that treats mothers with compassion. I believe that if we create a system that gives priority to single mothers when their abilities are the same as other contenders - just like Emperor Augustus’s measure to address the falling birthrate - this approach would be a significant element in enabling stable growth. If Hitachi implemented such a measure, both mothers and children would love Hitachi, and the ratio of people wanting to work for Hitachi would grow significantly. It might also create an element of surprise among people if Hitachi, being what is considered a “smokestack industry,” moved ahead with this. People might take off their hats to Hitachi as a trendsetter. Current measures to address Japan’s declining birthrate focus solely on the children that will be born in the future, but it is more realistic to consider how we make use of the children already here.

Kawamura: There are certainly many single mothers in countries like Italy and France, and the number is set to increase in Japan too. I believe Hitachi can consider various measures in light of this.

Strength created by a winner’s generosity

Kawamura: Ms. Shiono, you commented in your book that the ancient Romans’ practice of “assimilating even the vanquished” was the starting point of the Roman Empire. Ancient Romans accepted all of the cultures and gods of the countries and regions they conquered, and acknowledged diversity. I believe their process of expanding and ruling their organization by opening the way to citizenship even for the defeated and appointing influential people to high positions is a source of inspiration for global management today.

Shiono: The broad-mindedness of ancient Romans still lives in the philosophy of “win yet yield.” As they continued to win in battle, they also kept yielding. The Roman Empire basically left the vanquished to their own devices - to go on living on their land, rather than take advantage of the opportunity for a conqueror to pillage and plunder. This style of ruling, where the victor did not necessarily take advantage of a victor’s rights, is clear from the fact that Romans granted Roman citizenship to the people they conquered. Even people from the Roman provinces were granted Roman citizenship if they became auxiliary soldiers in the Roman legion at the time of their honorable discharge following 25 years’ service. Doctors and teachers who worked in the Roman Empire were not only immediately granted citizenship, irrespective of their race, but also were exempted from paying provincial tax. The people of the Roman provinces without Roman citizenship paid 10% of their income as provincial tax, but people from the provinces viewed this as a form of security payment. Because the Roman legion protected their borders, they were able to concentrate on their farming with a sense of security. Roman citizens also received exemptions from direct tax (income tax) in exchange for military service. Laws were important in a diverse society. For persons with Roman citizenship, their private property and individual human rights were protected under Roman law, and even jurisdiction and rights of appeal were recognized. The expansion of citizens’ rights, which commenced from the time of Caesar’s rule, was an expression of the commitment to treat the conquered in the same way as the conquering Romans were treated, and this way of thinking was communicated to people of the Roman provinces, who also had an awareness that they too were Romans. I was very impressed by the effectiveness of this soft power approach. Emperor Trajanus, who I mentioned before, also came from a Roman province, but no one was more Roman than he was or made a greater contribution to the Roman Empire.

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Kawamura: The Roman Empire is impressive for its efforts to integrate the provinces with the home country by actively granting Roman citizenship to the people, to the degree that a person from the provinces could become a Roman emperor. It might be a good idea for Hitachi to consider appointing persons from different countries as president in the future.

Shiono: Soichiro Honda, the founder of Honda Motors, once made the comment, “I would not mind if an American became president of Honda in the future. However, I would like whoever is president to at least pass on the Honda spirit.” It does not matter what nationality top management is. But it raises the question of what constitutes the spirit of a company. The answer is quite clear and simple: one must look back to the time when the company was founded. Everything can be simplified. If not, we have failed to get to the essence. What does a company require as it develops a broad business base? Unless this is clearly understood, today’s young employees cannot take appropriate action. Only once managers determine what the most important aspects of a business are and provide this information accurately to staff, can they respond properly.

Kawamura: Phrases such as “income-doubling” or “change of government” convey a whole concept in a single utterance. When former Prime Minister Ikeda made a commitment to income-doubling, it had a tremendous impact largely because it was at a time when the entire population in postwar Japan was still very poor.

Shiono: I believe the term income-doubling was a great tour de force as a phrase in postwar Japan. Machiavelli once said that the ability to engage in abstract discussion marked the difference between the professional class and non-professional class. It is much more effective to appeal to the masses using concrete terms. Moreover, I believe that the economy does not operate on figures alone. If that were the case, it would be a question of simple sums, 1+1=2. On the other hand, 1+1 can also lead to a sum of 3 or 0.5. How can such phenomena occur? I believe it is the effect of the intervention of people in the economy.

Kawamura: I think so too. When we get ready to launch a project, we first conduct analyses, plan a strategy, and then engage in discussion. Our next important step is to involve various other parties in implementing the project. Doing so enables us to aim for even higher outcomes.

What triggers decline and fall?

Kawamura: I believe there will be a major turning point in Hitachi’s overseas businesses in the future. At present, Tokyo gives directions to overseas offices, but the overseas offices are sure to become dissatisfied if at some point they are not able to make decisions on their own. The day may come when it is necessary to open up even the core areas of manufacturing that Japan would like to retain. After enjoying a long period of stable growth, the Roman Empire began to decline. Its inability to respond rapidly to changes in the environment and political instability resulted in a weakening of the organization, but what other major causes were there?

Shiono: Following the death of Emperor Marcus Aurelius, the last emperor in the period of the Five Good Emperors, the Roman Empire began to decline rapidly. I believe there were two main causes. The first was the announcement of the Constitutio Antoniniana decree by Emperor Caracalla in 212 AD, which granted citizenship to all freed slaves in the Roman Empire. A comparison of the status of citizenship in Athens in ancient Greece with citizenship in ancient Rome makes the issue surrounding citizenship easier to understand. First of all, citizenship in Athens was a right bestowed within the territory of Athens only to children whose parents were both Athenians. The cases of Socrates and Aristotle illustrate this. Socrates, whose parents were both born in Athens, had citizenship by birth, but Aristotle, who was born in Macedonia, was not granted citizenship regardless of his contribution to the improvement of Athenian culture such as establishing schools. Later when a court sentenced Socrates to death, he poisoned himself as dictated by Athenian law, irrespective of how bad that law may have been. On the other hand, Aristotle quickly ran away. Since he was not a citizen, there was no obligation for him to follow the dictates of law and die a martyr. On the other hand, Roman citizenship was granted to people who contributed to the empire in some way, even to the people of Roman provinces such as Gallia (today’s France) and Britannia (today’s United Kingdom).

Kawamura: I wonder if it caused any weakening of spirit or the loss of ambition in the people when Emperor Caracalla started granting citizenship to people simply because they happened to live there.

Shiono: I believe this was the case. A second cause was the spread of Christianity and its influence. Soldiers in the Roman legion had previously protected the Empire by fighting against the “barbarians” invading the empire. Following the spread of Christianity inside the Roman Empire, however, the distinction between friend and foe become blurred, since many Romans now worshipped the same God as the people from other tribes. Until then, Romans had been polytheistic, and Christianity had been prevalent among other tribes. The Roman gods were guardian deities that supported people who thought and made efforts on their own. But the God of Christianity is a sole and supreme deity that instructs people how to live. It took three centuries from the death of Christ for the teachings of Christianity to spread throughout the Roman Empire. In an era when the Romans felt fully in control of their destiny, Christianity had not been necessary. Once the Roman Empire was no longer functioning well, however, the Romans lost confidence and sought a strong presence to cling to and faith to find redemption in. Therefore, they started to believe in Christianity.

Kawamura: If this were applied to a corporate situation, what would the implications be?

Shiono: The strength of the Roman legion began to diminish as the line between friend and foe became blurred. Specific, clear objectives and rationale are essential to motivate people. For example, even if you appeal to staff by saying, “Our company must work hard for the world,” let’s face it, Hitachi is not the United Nations, so such a rationale would have very weak impact. Japanese people need to be more honest about the notion of doing things for themselves. I believe matters would be a lot simpler, clearer, and easier to understand if people just admitted, “We are doing this for ourselves. This will be beneficial for the company, Japan, and ultimately for theworld.” This is particularly the case when explaining Japanese business expansion overseas. I believe this way of promoting corporate activity to others makes it easier for people overseas to understand as well.

Kawamura: In some areas in particular, Japanese people are known to be fastidious in their work and are respected by people all over the world as a result. For example, when it comes to construction sites, workers do not leave for the day after a day’s work until they clean the construction site and everything is left neat and tidy. Other foreigners at their work sites are known to leave immediately when the bell rings at the end of the day. Even if they are in the middle of cleaning, they go home without putting away the mops, for example. This aspect of the Japanese work ethic makes a favorable impression on people overseas. I believe we can compete in business by making the most of the positive attributes of Japanese people and their work ethic in complying with production processes, adhering to deadlines, and honoring quoted prices. In the railway project that I spoke of earlier, we achieved commercial operation six months earlier than planned in the United Kingdom, where delays in deadlines are frequently seen, and this surprised both our clients and stakeholders.

Shiono: Meeting deadlines has a significant impact on the success of a business. During the Age of Exploration when Vasco da Gama opened a new route directly linking Europe and production regions by rounding the Cape of Good Hope, the Republic of Venice - which had a monopoly on the spice trade in the Mediterranean - adopted a counterstrategy of meeting deadlines. As an alternative to the new route, which entailed lengthy open sea travel, Venice received goods from the Arabs, who mediated with spice traders near Palestine across the Mediterranean, and established a relationship of strong trust with its European buyers by continuously supplying goods on time.

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Kawamura: When a Japanese company makes forays into overseas markets, it goes without saying that the quality and performance of its mainstay products must be undisputed, its after-sales service must be comprehensive, and deadlines and quoted prices must be honored. The same applies to Hitachi’s manufacturing of railway carriages in the United Kingdom. The challenge, then, is to firmly establish an environment where the Japanese spirit of providing service is alive and well in local areas overseas.

Shiono: Italian economic circles are focusing solely on China as an irresistible force, but I have been telling them, “Your efforts would be much more profitable and long-lasting if you were doing business with Japan.” A moment ago you mentioned that Japanese people are fastidious in their work. Aspects of Japanese culture such as Japan’s omotenashi (hospitality), which has attracted a lot of attention in recent years, may one day become a world standard, but it essentially boils down to added value. I believe that it is important to continue adding true value.

*
The name ancient Romans used for other ethnic groups.

Work fosters self-respect

Kawamura: After experiencing the deflationary period of the so-called “lost 20 years” in Japan, under the Abe government, Japan is trying to realize its growth strategy. Although Japan’s economic circles have the impression that we have not had a Prime Minister as determined as Abe leading the country for a long time, until we see results, it is hard to tell. What is your opinion on the second Abe administration, Ms. Shiono?

Shiono: Previously during coverage for the Nihon Keizai Shimbun, I made the comment, “This is a rare case where the same Prime Minister is being given a second chance to lead the government. If he fails to make headway now, he is neither a politician nor a man.” But my message was essentially, “Please do as well as you can.” Japan fell into recession after the demise of the bubble economy and politicians have been racking their brains thinking about what they should do for the past 20 years. One wonders why they are not taking action if they know what to do. What today’s leaders need is not more knowledge, but the mettle to tackle Japan’s problems. That is all. Mr. Abe seems determined at present, so perhaps Japan’s economic circles should leave him to it for the moment and avert their eyes from his shortcomings and the points of uncertainty in his policies.

Kawamura: The Abe government has given top priority to its growth strategy, and we hope that it will make all-out efforts until sustainable growth is achieved. However, politics alone cannot achieve economic growth. Therefore, Japan’s economic circles need to get behind these efforts to offer support from various perspectives.

Shiono: As I mentioned briefly a little earlier, the creation of “jobs” is the first step in improving the economy. When I was writing the third volume of The Story of the Romans, I came across the unemployment problem of Roman citizens. Until then, I was under the impression that the loss of a job meant only taking the bread out of somebody’s mouth. However, I came to genuinely understand how people develop self-respect through work and the implications of the policies adopted by historical leaders. In Italy, where the number of unemployed has risen, in the last few years incidents of domestic violence and homicide between unemployed husbands and wives, and parents and children are occurring frequently. For a very long time, Italians have been known as a people who cherish their families more than anything. After losing their jobs, some people become diffident and can be deeply hurt by simple comments from their partners or family members. In the past, homicides occurred over love affairs but today they seem to be occurring against a background of poverty, anxiety about the future and anger.

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Kawamura: I would like to make the following two requests to the Abe government to raise the employment rate in Japan. The first is to lower corporate tax. If corporate tax is lowered to around 20%, we can increase domestic investment and attract overseas investment to Japan. Companies will also be able to increase their business activities. Moreover, even if the tax rate is lowered, we predict that the overall amount of tax paid to the government would not change significantly. Lowering corporate tax would also make it easier for overseas companies to establish plants in Japan, which can also be expected to increase employment. Although some may hold the view that the entry of overseas companies to Japan may stifle the activities of Japanese companies, at the same time their entry would result in a considerable number of employment opportunities. I believe it would be better to reduce corporate tax in the United States and Japan, the countries with the highest corporate taxes, compared to the rest of the world. Another point I would like to make at the risk of repeating myself is that we should create products that only Japan is able to produce. Since we have reached a stage where competing in the market with electronics components alone is no longer viable, we need to circulate jobs within Japan by integrating various technologies based on an aggregation approach, and combining this with software. To achieve this, I believe such an approach would work well if costs such as land prices could be controlled a little more. That said, the priority for companies is to try to increase employment throughout Japan through their own capabilities. Relying on government should come after this.

Shiono: While the private sector in Japan is struggling, it appears to be making earnest efforts. If we were to roughly divide human society in terms of its productivity, we would find that those who demonstrate their abilities when given a chance account for 20% of people in the top layer, those who demonstrate their abilities when stability is guaranteed account for 70% in the middle layer, and those whose welfare needs to be guaranteed account for 10% in the bottom layer. The success of postwar Japan was perhaps due to the full utilization of this 70% in the middle layer.

Kawamura: People overseas evaluated people in this 70% as “disciplined people.” Some may still have an image of the Japanese as people who solemnly carry out their duties without making a fuss even when they experience a major earthquake disaster. The organization of a company, similar to society, is comprised of a 20% ratio of leaders and 70% ratio of middle-range persons. This may not be an appropriate expression but the remaining approximate 10% are low performers. I fully agree with you on the need to provide stable employment to people in the middle segment.

Shiono: Upon my return to Japan this time, two typhoons hit the country in rapid succession. As I watched details of the typhoons on the news, I was overcome with a sense of how Japanese people demonstrate a wonderful ability to cope with events within their expectations. On the other hand, perhaps they feel helpless when something unexpected like a major earthquake occurs. Japan probably needs special personnel for unexpected events.

Kawamura: By all rights, a leader should emerge from the leader group whenever an unexpected event occurs. Our current leader training now aims to firmly develop such essential capabilities in leaders.

Editor's Postscript

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While living in Italy, Ms. Shiono wrote numerous books on the history of Europe including The Story of the Romans, a work of 15 volumes in total. In addition to receiving numerous awards including the prestigious Kikuchi Kan Prize and the Shiba Ryotaro Prize, she also received the Grande Ufficiale Order of Merit from the Italian government in 2002. In this interview she offers her opinions influenced by the perspective of the history of ancient Rome, in regard to her expectations of Japanese companies including Hitachi, human resource strategies required of companies in a global era, policies required during a period of stable growth, and the importance of employment. The experience of failures in overseas strategies and the problems of unemployment of ancient Rome were not very different from issues Japanese companies face today and remind us of the importance of learning from history. We were truly impressed not only by the depth of understanding Ms. Shiono has as a writer and historian, but also by her penetrating insight into business management.