Is this the one thing stopping Asian companies from going global?

A businessman rides an escalator outside a commercial building in Tokyo March 26, 2015.

Image: REUTERS/Toru Hanai

Yoshiaki Fujimori
Senior Adviser, President and Chief Executive Officer, Lixil Group Corporation (Aug. 2011 - June 2016), LIXIL Group
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This article is part of: World Economic Forum on ASEAN

“There’s nothing worse than unrealized potential.”

It’s a phrase we’ve probably all heard at some point, most likely from a teacher or parent at some point during childhood. But it is also a truism that relates to so much more than just rebellious teenagers; it is just as applicable in corporate life.

It’s a lesson I have learned throughout my career, including at General Electric, where I worked for 25 years leading businesses around the world – from healthcare to financial services and industrial products. My former boss and mentor, longtime GE CEO Jack Welch, encouraged employees at all levels to stretch themselves beyond their comfort zones – and one way to do that was by forcing to people to think beyond the confines of their home market.

Two secrets of success

Companies from Japan and elsewhere in Asia continue to press ahead with globalization, including through mergers and acquisitions. However, it’s not mergers or the size of a company’s operating footprint that determines success as a global company. Success is determined by having a clear vision for where the company is going, and ensuring that those within the company who are executing on that vision have the mindset, skills and capabilities to drive the company towards those goals.

As the CEO of Japan-based LIXIL Group, I have been applying these same lessons over the past five years. LIXIL was created in 2011 when five of Japan’s most successful housing and building products and materials companies joined forces. Since then, we’ve rapidly expanded internationally by acquiring some of the most trusted names in our industry globally.

But the journey to becoming a global company has not been about our ability to acquire global companies: it is about being able to effectively integrate the entities in our group and create a single corporate culture globally; one that is based on diversity, meritocracy and equal opportunity for all.

A single corporate culture

That may well sound like management jargon, but if you consider the context of LIXIL’s home market, Japan, the enormity and importance of these challenges becomes clear. Implementing these principles has been the single most important area of focus since I joined LIXIL, and the greatest achievement of the past five years.

If we were to be acquiring the most advanced companies in our industry segments globally, it was critical that Japan not become a bottleneck. Principles such as meritocracy were not the norm in the corporate culture we had inherited in Japan, where employees were still used to the notion of lifetime employment and a hierarchy based on years of service. We could not risk a two-tier system for Japan and global operations, nor could we wait in the hope that Japan operations would change organically. Up against long-established norms, the only way to drive true change in Japanese corporate culture was with strong leadership from the C-suite.

It wasn’t until a leadership training programme during my time at GE that I fully appreciated the value of leadership and a global mindset. Before flying to Paris to attend my first leadership training session, I looked up the word “leadership” in the Japanese dictionary and was surprised to find that it didn’t exist. Instead, I was led to the entry for “leaders”, which I had mistakenly taken to be something akin to charisma and had assumed was a quality people were either born with or not.

Lessons on leadership

What I learned at that training programme, however, was that leadership is something that absolutely can be taught and developed. And, that it is enhanced through a diverse, global peer set. At LIXIL, we are now teaching leadership and embracing diversity as a means of driving innovation and curiosity.

Ultimately, the core responsibility of the CEO boils down to these two things: instilling a change in culture, and providing the leadership training to ensure that your people can grow and have the ability to execute on the vision.

An important component of such leadership training is instilling belief in the importance of risk-taking, and not being afraid to fail. This is where I needed to lead by example. When forcing change, and seeking to do something outside of traditional norms, criticism of mistakes will inevitably be more severe than if you were to fail doing something the same old way. Completely overhauling traditional HR systems, for example, is something that cuts to the very heart of the traditional corporate culture, inevitably stirring resistance. To overcome these challenges and avoid being dragged down by the fear of failure, a clear vision, confidence in your actions, and optimism are essential.

To form unique teams that can achieve ambitious targets, it is important to create businesses centred on the best global intellectual capital rather than a traditional operating base. In LIXIL’s case, we now have a global leadership team heading our core businesses and driving functional expertise, as well as foreign representation on our board of directors, which provides us with valuable counsel on corporate governance and evaluating legal risks in various countries.

A borderless mindset is key to building a truly global business and addressing global challenges. For companies from ASEAN and elsewhere in Asia setting out on a path towards globalization and looking to achieve such a mindset, first breaking down the barriers within the organization will be critical to achieving your goals.

The World Economic Forum on ASEAN is taking place in Kuala Lumpur, Malaysia from 1 to 2 June.

This article first appeared in the New Straits Times.

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