One of my colleagues asked me the other day why projects with more traditional Japanese companies, or with more traditional Japanese employees, fail to reach decisions quickly, even after several meetings on the same subjects. I told him that the transformational change often expected by Western companies on many projects is still quite new in Japan; that Japanese have long preferred breakthrough achievements as the result of several incremental improvements.
Toyota is one example of this, with their steady rise in the USA now resulting in a seemingly unstoppable momentum and market strength. On the other hand, there is also the example of more sudden, transformative change implemented by Nissan domestically within Japan. As more Japanese return from overseas to take executive positions in Japan, the approach will change per project or initiative. But a true change in the foundation of Japanese business society will require many more years and generational turnover.
As my colleague expressed his frustration, I realized perhaps more consciously than before that a lot of the benefit of relationship building in Japan must be preceded by a comfortability with the fact that you may not know early on how any particular business relationship will develop. In Asia, this I believe is more of an art than in Western countries where written rules and contracts take precedence.
For businesses in this environment, it means investing significant resources up front for a potential deal with a very rough estimate of future cash flow. For larger, well-resourced firms, this type of investment can be creatively subsidized by other, more established businesses or contracts. But for unsubsidized smaller firms and relatively unsubsidized new business units in a market like Japan, this scenario can be taxing on the health of the overall business. Especially if the target customer and respective contract is very large, a smaller firm may end up living and dying in the short-term by the results of such a contract. The resources required to sustain momentum are significant, and yet if the project doesn't move quickly as can happen with large Japanese customers, there is not enough cash flow to sustain that momentum (assuming parallel projects are limited and running at breakeven). But to simply cut the opportunity off the books severely impacts future expected cash flow.
Thus, a firm in this situation cannot be completely dissatisfied with short-term losses associated with such an investment of resources. It is a cost of doing business in such a market and requires a combination of patience, steady determination, and a commitment to relationship development. At the same time, for a business unit evaluated on profitability, such a situation eventually requires tough choices--drop the project all together or work your tail off to find new sources of cash flow elsewhere in order to subsidize already dedicated resources.
In the end, if the strategies in place do not accurately reflect the business's market realities, customers will be selected inappropriately and resources utilized inefficiently in building a strong foundation for future success.