* Winter 1994 In this issue: Feature Article: Making It Work The Translators Craft: The Subleties of Syntax Insights: Gaining Access Business Tips:Winter 1994 Issue's Tips Culture: Uchi-Sto KEYS TO A SUCCESSFUL STRATEGIC ALLIANCE Strategic alliances have become an essential part of successful business plans in the 1990s. Yet more than half of all such alliances fail. Identifying the right partner, essential to success, is often difficult. And even when a link is formed, the skills required to implement an alliance well are new to many companies. Fortunately, the practices of successful firms and the advice of experts provide some guidelines. Genetics Institute (GI), a bio-tech firm in Cambridge, Massachusetts with sales of over one hundred million dollars, is pleased with its alliance with Yamanouchi Pharmaceuticals. While alliances between American biotech firms and Japanese pharmaceutical companies are not uncommon, the GI-Yamanouchi alliance, consisting of a partnership in the U.S., a partnership in Europe and a joint venture in Japan, is the first such relationship that is fully global in nature. In a 1993 Bain & Company study of strategic alliances, the leading cause of failure proved to be poor strategic fit for one or both partners. GI's Executive Vice President Tuan Ha-Ngoc, who oversees GI's ties with Yamanouchi, affirms that the strong motivation on the part of both companies to develop new drugs to treat serious medical conditions keeps the alliance on course. Similarly, Scott Gordon, leader of Digital Equipment's strategic alliance with Mitsubishi Electric (in which the Japanese firm manufactures and markets microprocessors based on the Alpha AXP trade; technology transferred from DEC) attributes much of its success to strategic fit. "We found a partner with compatible goals, and kept to those goals," he states. According to Bain's study, poor partner selection is the second leading cause of failure. A common mistake on the part of smaller American firms is to look to Japanese companies simply for a quick infusion of cash. Clyde Rettig, President of Rettig Technology Alliances, a specialist in small company-large company pairings, warns, "the company with the strongest balance sheet may look like best partner, but you're more likely to achieve a successful alliance with a suboptimal partner that really needs the deal than with an ideal partner that doesn't." GI, which began the selection process from an initial list of some fifty Japanese companies, resisted the temptation to seek quick cash. Says Ha-Ngoc, "shared long-term vision was the pivotal factor." Yet finding the right partner does not ensure success. Poor operating implementation, Bain's number three cause of alliance failure, can result when inadequate attention is paid to the `people' aspects of the relationship. Frequent meetings, from the top levels of the organizations down, are essential. Kuni Yamamoto, Vice President in charge of GI's Japan subsidiary, estimates that GI's top brass meets with Yamanouchi about once every two months, while many more meetings take place at the project level. It is simple enough to schedule meetings, but if the partners in an alliance wish to interact productively, they must learn to be flexible and, in many cases, culturally sensitive. Managers accustomed to wielding control must learn to accomplish their goals through influence, which requires attention to building and maintaining relationships. Both DEC and Mitsubishi Electric have set up clearly defined alliance teams, and, says Gordon, the result is "a well-balanced peer-to-peer approach to implementation." Cultural training has also helped GI and DEC to implement their respective alliances successfully. Gordon reports "more effective English presentations to non-native speakers" as one clear benefit. Flexibility and sensitivity extend to corporate culture. GI has begun a more formal planning process "that was somewhat new in our entrepreneurial culture but was a better fit with Yamanouchi's style," says Ha-Ngoc. Meanwhile, seeing that the customarily large role of university professors in the clinical trials process in Japan made GI uncomfortable, Yamanouchi brought more control of the process in-house. The differences, says Ha-Ngoc, "can cause stress and anxiety at times," but, much as in a marriage, earnest efforts to resolve them seem to build a stronger relationship in the end. Very few of them who studied by Bain failed due to problems in the deal structure. Yet, sadly, structuring the deal consumed a majority of the total efforts allocated. Professor Vladimir Pucik of Cornell University writes, "an alliance is a process, not a deal." In a study funded by the International Consortium for Executive Development Research, Pucik states that alliances are fundamentally a "race to learn," in which the winners gain "an accumulation of invisible assets - new competencies that improve competitive advantage," while th losers see "a deterioration of their competitive position in the global market and also vis-a-vis their partner." The short-term pressures of managing corporations can make "long term vision" and "invisible assets" seem elusive and irrelevant. Yet the relentless pace of change in today's business environment, and positive interim reports by such firms as Genetics Institute and Digital, suggest that an investment of resources in carefully chosen strategic alliances may ultimately offer one of the best returns available on a corporation's assets. The Subtleties of Syntax Of the many aspects of the Japanese language that make it difficult to translate or interpret, syntax poses a particular challenge. Indeed, those approaching the language from an English-based perspective may be inclined to describe Japanese syntax as backwards. The most basic sentence order in English proceeds from subject to verb to object. In Japanese, the verb comes last, so that the most basic sentence order is `[subject]-object-verb' (the subject is often omitted). Hence, the sentence, `I sent a memo' becomes in Japanese, `[I] memo sent' ([Watashi wa] memo wo okurimashita). The addition of adverbial or adjectival phrases further complicates the issue. For example, the English sentence `I went to the office this morning to meet a client' becomes, `This morning client meet in order to office to went' (Kesa kuraento wo au tame ni jimusho ni ikimashita). This syntax, in particular the placement of the verb at the end of the sentence, has important cultural implications. Since verb endings largely determine the nature of a statement (for example, whether it will be positive or negative, a question or a statement of fact, a command or a request), the speaker benefits from an ability to subtly adjust the meaning of her words as she senses how they are being received. The highly nuanced and non-confrontational character of spoken communication in Japan is thus reflected in and encouraged b the language itself. Gaining Access Information Resources on Japan Since graduating from Tokyo University, Takayasu Miyakawa has spent a fruitful career promoting the creation of and access to information on Japan. Miyakawa is Senior Councillor at the esteemed Mitsubishi Research Institute (MRI) and past President of the Japan Database Association. In addition, he has authored numerous books and articles on international information issues. Here he suggests a two-pronged approach for American companies and organizations to increase their access to information from Japan. It is widely believed that information resources in Japan are informally organized and difficult to access from the outside. Similarly, information dissemination channels are said to be formed on narrow and closed human contacts which are inaccessible to non-Japanese. Are these complaints valid? In fact, many Japanese organizations - for example, the Japan Information Center of Science & Technology - have labored to create, improve and systematize information resources and flows on many levels. [See short list below]. What about informal channels? Research we conducted indicates that one of the most reliable and frequent means that American researchers are using right now to search Japanese information, mainly in scientific and technical fields, is personal contact with Japanese counterparts and acquaintances. Information scientists frequently stress the importance of informal communication among researchers in a particular field.Non-Japanese can and do access informal channels as well as formal channels of information. A combined approach that makes use of both types will form a sound, practical basis for an information-gathering strategy. The uchi/soto structure of Japanese society (see The Culture Connection) poses a challenge for Americans seeking information on Japan, but the door is not closed. The key to gaining access to informal personal networks is to work on building relationships. Formal sources of information are increasing, and an increasing number of those are being translated and made accessible in the U.S. Selected Sources of On-line Japanese Information in English 1. Japan Patent Information Organization (JAPIO) : Patent abstracts and patent delivery. Call ORBIT On-line Products, 800-955-0906. 2. Nikkei: Japan's largest private on-line data service. Extensive business and financial information. Call Nihon Keizai Shimbun America, 212-261-6240. 3. Japan Information Center of Science & Technology (JICST-E): Summaries of technical journals and reports as well as document retrieval. Call STN International, 800-753-4227. 4. Teikoku Databank (TDB): Japan's oldest credit bureau offers on-line financial statements and corporate and industry data. Call DIALOG Information Services, 800-3-DIALOG. SELLING SOFTWARE IN JAPAN Understanding Japanese Information Processing, a new book by Ken Lunde of Adobe Systems ($29.95 from Sasuga Bookstore, 617-497-5460), is a useful engineering guide to Japanese character set standards, I/O methods and text processing tools. Soft Landing in Japan, A Market Entry Handbook for U.S. Software Companies contains a wealth of advice on distribution and marketing compiled by the American Electronics Association in Tokyo ($95 from the AEA, 408-987-4200). JAPANESE FOR ENGINEERS Organizations that wish to promote informal channels of Japanese scientific and technical information (see Insights) can call on the resources of the MIT Japan Program, which offers summer courses in technical Japanese. Students learn to function in Japanese laboratories, make presentations in Japanese, and monitor Japanese technical journals. Call (617) 253-8095 for more information. TRAVEL TIPS CONTEST (Attention on-line readers: contest has already ended.) A favorite Osaka hotel? A way to beat the Narita traffic? We invite you to share your travel tips by submitting them to Japan Insider. Published tips will win a $25 gift certificate at Sasuga Japanese Bookstore. The person who sends the best tip will win choice of one tape from ITRI's video training program Working With Japan, distributed by Japanese Language Services (Retail price $395 per tape). Uchi-Soto Imagine two scenarios. In the first, representatives from an American company are negotiating with a party from a Japanese company. The American side proposes a new idea only to be met with an uncomfortable silence. They press for a response but get none. Only later, when the Japanese side has had a chance to confer in private and telephone other members of the company, do they receive an answer. By this time, the Americans are frustrated by the slow pace of their Japanese counterparts. In scenario two, a U.S.-based global corporation issues a new worldwide personnel policy. The Japanese subsidiary does not complain, but neither does it act to implement the policy. Headquarters feels that the Japanese side is two-faced and disloyal. They cannot understand why the subsidiary doesn't act more like part of the company. What is really happening in these two scenarios? In a word (or two): uchi-soto. A Japanese person's sense of identity stems in large part from his or her affiliations with groups called uchi (`inside'). Anyone not in a particular uchi group is considered soto, or `outside.' Many interactions in Japan are influenced by the uchi-soto dynamic of the relationship. The broadest uchi tie is that of being Japanese; non-Japanese are called gaijin, which literally means "soto person." Other uchi affiliations include family, university class, company, and work group. Business dealings with soto people (whether foreigners or Japanese from another company) are generally polite, but always more ritualized than those with insiders. Information is not shared as freely, and a unified front is presented to the outside regardless of internal disagreements. The Japanese in the first scenario above cannot give a response to a new proposal until their uchi digests the idea and formulates its position. In general, the Japanese will not be ready to engage in give-and-take exploration of new points within a single formal negotiating session. For maximum results, Americans should allow time for the uchi to reach a consensus, or should explore less direct ways to introduce new ideas into the negotiation. The corporation in the second scenario must accept a key fact: although the subsidiary will feel an uchi tie as part of the parent's company, by all other yardsticks the Americans at headquarters are soto. To strengthen the uchi aspect of the connection, the American side should consider investing greater effort to build close relations. Good relations will engender a sense of mutual dependence, which will manifest itself on the Japanese side in the responsiveness that the Americans seek. National Holidays January 1 New Year's Day January 15 Coming-of-Age Day February 11 National Founding Day March 21 The first day of Spring _________________________________________________________________ JAPAN INSIDER Copyright 1994 Japanese Language Services, Inc. All rights reserved. PUBLISHER: Carl KayJapan InsiderJapanese Language Services, Inc. 186 Lincoln Street, Boston, MA 02111-2403. Phone: 617-338-2211 Toll-free: 800-USA-JAPAN Fax: 617-338-4611 _________________________________________________________________ E-mail: insider@japanese.com World Wide Web: http://www.japanese.com