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Dean's Corner: Japan in Transition—Management Schools Must Respond

By Dr. Hiroshi Kurimoto

Japan is falling behind in graduate management education.
Japan's well-documented post-war growth was extraordinary. A country with few natural resources, other than its people, managed to become one of the world's major exporting powers through hard work, innovation, and a business culture which promoted stability and long termism. Japan remains the world's third largest economy, but the times are changing and the various tenets which served this country so well in the past need to adapt to the modern challenges of globalism and knowledge-based productivity.

Knowledge has not been a problem in Japan in the past. The country's population is, by many measures, very highly educated. Over half of the population (age 18 or older) is enrolled in higher education—in line with many industrialized countries. But graduate education (including graduate management education) is where Japan falls markedly behind.

Figures published by Japan's Ministry of Education show that in 2012 only 2.1 people per thousand have a graduate education, compared with Korea (6.3), USA (8.8), France (8.1), and the UK (8.3).

Figure 1. Number of Graduate Students per Thousand

Corporations prefer in-house management training.
For Japan, this is a disappointing story, partly because of our long-standing business culture, where the 'one company for life' model has become, and to a great degree, remains dominant. Regarding business education in particular, companies prefer to train their managers in-house rather than send them to (or accept them from) higher educational institutions. Indeed, in many cases there is even a degree of mistrust of externally trained managers.

To a certain extent, this in-house training strategy was deliberately pursued by companies as a way of ensuring employee loyalty—training managers in the skills they need to succeed at that specific company was one way of keeping them there. Moreover, salary was linked to length of service rather than to ability and skill set, so mobility was not a priority for employees either.

For many years, this setup worked. There are numerous examples of Japanese corporate management training being very successful, perhaps most famously that of Toyota, whose management practices, together with its production methods, have been studied and admired the world over.

Facing the emerging challenges of globalization.
But, and at the risk of generalization, traditional in-house management training has limitations (beyond its increasingly unaffordability) and today we find that the forces of globalism are increasingly laying these limitations bare.

In-house management training programs are often conducted by company employees who have an excellent knowledge of that company's own management culture and of the specific business sector that it is involved with. However, there are two clear drawbacks to this model. Firstly, it limits the mobility and career potential of the management trainee. Because the trainee's management education is so highly specialized, it has limited broader applicability and therefore reduced value outside of their company. Secondly, it limits the innovation potential of the company. Even some of Japan's largest and most successful companies are finding that, in the face of new and more adaptable competition from abroad, success in the sectors that they have traditionally dominated is no longer guaranteed. In response, Japanese companies are increasingly looking to diversify into into non-core markets but find that their employees struggle to adjust.

Going back to Toyota—in recent years, the automotive company has entered the housing construction market. Sony, another great Japanese institution, has entered the medical equipment market. Suddenly, long standing in-house training practices are inadequate for the new activities and finding or training employees with broader management skill sets and wider experience has become a competitive priority.

Responding to the challenge.
It is here that business management schools in Japan have a clear duty—to fill a skill and experience gap in the workforce, especially in its manager class. Traditional employment and training models must (and are beginning to) break down, and it is the goal of the Nagoya University of Commerce and Business (NUCB) to provide employers with the new type of highly versatile managers that they need to lead their businesses.

This year, NUCB celebrates 60 years since its foundation. Since launching its graduate education programs in downtown Nagoya in 2001, NUCB now has nearly 400 graduate students enrolled and this number is rising fast. We aim to grow to 1,000 enrolled students during the next decade whilst retaining and enhancing the quality of the management education we have so carefully nurtured.

To support this growth, we have broken ground on a new Graduate School campus in the central business district of Nagoya. Due to open its doors in 2014, this new, state-of-the art building represents a 180 million USD investment and will comprise 14 stories containing classrooms and seminar rooms, group study areas, a library, faculty offices, conference hall, dining hall and more. It also will make it possible to accommodate students from Tokyo when the new linear train line comes into service in 2027, reducing the current travelling time from 100 minutes to just 40 minutes.

Japanese businesses have little choice. They must embrace quality, independent management education if they are to remain competitive in the new Asia. This century, population growth in the Asian continent will increase immensely. China's population is already 10 times that of Japan, India's is more than 10 times, and Indonesia's is double. What must not be forgotten in these raw figures is the growth of the all-important middle classes, where predictions estimate that 40% of this huge population will constitute high-quality labor with ever-rising consumer power. This growth represents huge challenges for Japanese businesses, as well as huge opportunities if the necessary management reforms can be realized.

NUCB will continue to strive to provide tomorrow's managers with the skills they need to succeed in their careers, and companies with the employees they need to survive and prosper in today's increasingly diversified business world.


Dr. Hiroshi Kurimoto
President
Nagoya University of Commerce and Business (NUCB)