Doing Business In Japan

Japanese companies are highly hierarchical. Nonetheless, decisions are not made by the chief executive officer alone or solely at the highest management level. Quite the opposite. Japanese invariably strive for harmony and consensus from the bottom upwards. 

A special decision-making process, called ringiseido, serves this purpose. Any new idea or plan is summarised in writing first and then passed on from management level to management level.

Depending on their assessment, the senior managers at each level will mark the written document (ringisho) with a personal seal (hanko): If they agree with the new idea or project, the seal will be placed the right side up.

If they reject it, it will be placed upside down, and if they abstain, the hanko will appear sidewise on the paper. Comments and change requests are also possible. After reaching consensus on one level, the ringisho is then forwarded to the next higher level. There, the process is repeated.  

Agreement Leads To Approval

If at one level consensus cannot be reached, the new idea is abandoned. Thus, only if all levels consider the new plan to be good unanimously and pass it on, the top executive will receive the document for a final decision. If it is approved, the new plan or project can be implemented straightaway – without having to expect any concerns or even resistance on lower levels, since all managers are already well informed and in agreement. Any first proposal has already been reviewed, tested and adapted.

Implantation Of A New Idea

In addition to this official decision-making process along the hierarchical levels of a Japanese company, there is also the more informal nemawashi taking place.”Nemawashi” can be translated as “preparing the implantation”: in informal conversations, different viewpoints are exchanged, input is given and alliances are formed. A ringisho that is currently in circulation is also discussed and modified via these informal communication channels. 

The subsequent implementation or “implantation” of a new idea or a new project is thus prepared at the grassroots level over a longer period of time. It is ensured that the innovation does not cause any upheaval within the company.

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