In the second half of the twentieth century, Japan had a strong economic growth that ended abruptly in 1991. During the period of economic boom, japan rapidly became the world’s second-largest economy (after the United States) and this phenomenon was known as “The Japanese economic miracle”. The following decades would see Japan’s economic decline substantially. Some commentators refer to the period beginning in 1991 (the year when Japan began its long period of economic stagnation) as the “Lost Decades”.
Japan’s economy was seriously harmed during World War II. But by the late 1960s, Japan had achieved an astoundingly rapid and complete economic recovery, the greatest years of prosperity of its history had begun. The Japanese government contributed to the post-war Japanese economic miracle by stimulating industry and the private sector growth, and by concentrating on trade expansion. In fact, the Ministry of International Trade and Industry (MITI) was instrumental in Japan’s economic recovery after WWII.
Japanese banks invested heavily in strategic industries such as shipbuilding, electric power, coal, and steel production. During this period of economic boom, Japan managed to complete its industrialization process, gaining significant improvement in living standards and witnessing a significant increase in consumption.
What was the key to Japan’s success? First, Japan’s government efforts of catching up and perhaps even surpassing the US economy. Second, large companies and a well-educated workforce. Third, the “keiretsu”: huge business groups that link industrialists, banks, and trading companies. Their exclusive relationships allowed the companies to build and share a wide financial and market net of connections. The concerns of consumers were secondary, their main goal was to gain market share rather than accumulate short-term profits, and they aggressively entered high-growth sectors with long-term potential.
Although the keiretsu themselves were stable, they created a business environment of extreme competition. Japanese companies (Kaisha) went through the arduous task of not falling behind other companies, which would mean its end. For that, the state of worry and exhaustion prevailed to make their strategy of copying new-product designs and innovative production techniques work.
Although such competition almost seems like torture due to how the companies employees were personally affected, it was one of the main reasons for Japan's economic boost. The companies were thriving for new ideas and techniques which helped to make a great and extraordinarily fast advance in technology. This amazing development was somewhat expected, the workers of the Kaisha were carefully chosen and hired directly out of the country’s most prestigious universities. They had no problem in working extremely long hours, they were subjected to partake in extremely rigorous rules of behavior towards certain clients, they were loyal and they were committed to a lifelong job.
Some of these “secrets” that helped Japan reach its success were also turning into obstacles. The Japanese companies characteristic of taking everything slow and with extreme carefulness was tiring, it was hard to initiate projects and to terminate them.
The society’s respect for its seniors also proved to be disadvantageous, the managers advance in their careers exclusively by seniority, regardless of the merit of their ideas.
The competition environment that once proved to be successful led to some remarkably inefficient behavior, such as putting the client’s needs as a low priority.
One of the biggest worries of Japanese society, in general, is to keep appearances, keep their status, avoid embarrassment and failure. Because of those characteristics, it was unthinkable to take risks, instead of trying to find a new solution for a problem, not changing anything was easier. Even leaving a Kaisha was impossible to do without losing social standing.
This oppressive and often meaningless routine of their jobs drained the employees' energy and it's no surprise to see how tired these people appear at the end of the day, after tremendous amounts of work.
The hope of change falls into the younger generation, they're most likely to not stand for any subordination. They didn’t grow up in the same environment as their parents did, they had much more space for personal growth and development.
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