How a Computer Executive Rewrote the Rules

Tadashi Sekizawa, recently retired president of Fujitsu Ltd., took the helm of the moribund computermaker eight years ago and made it a company to watch. Mr. Sekizawa ripped away layers of management, streamlined the decisionmaking process, emphasized merit and productivity in the pay structure, and ordered staff to take English-competency tests.

In slow-moving, consensus-building Japan, this was shocking stuff. But Fujitsu, the world's third-largest computer firm behind IBM and Hewlett-Packard, thrived.

The Monitor spoke with Sekizawa about his corporate strategy and his views on the challenges Japan faces today:

You've adopted some Western-style management techniques like merit-based pay. How do you respond to critics who say that Fujitsu is abandoning its workers to pursue a profit-first mentality?

What you refer to as "traditional" was only cultivated in the last 50 years after World War II ... when Japan was rebuilding. [As in the United States,] the rules of the game have changed with the times. Where did the [American] antimonopoly law come from? Rockefeller's monopoly over the oil market was reason for that law - people didn't like him monopolizing everything. People rewrote the rules as time went by.

That's how new pages of history are written. Japan is no exception. The rules of the game until now - lifetime employment and seniority-based pay - were only created in those 50 years. Before the war, the employment system wasn't as stable as now. The income disparity was much larger. Japan achieved affluence after the war through hard work and consensus sharing.

Now it's time to create and apply new rules. Labor has changed drastically [too]. In our Fujitsu factory in the 1940s and '50s, there were many young women on the assembly lines. If you go to the same factory now, you'd be amazed. There are a lot fewer people punching in data on keyboards, entering orders, or checking the quality of the product on the line.

With such changes, we cannot simply apply the same wage system, the same employment conditions, or the same employment contract. I know Japan achieved affluence with [the old] system, but we cannot necessarily apply the same system in the future.

Japanese are used to the idea of lifetime employment and seniority-based pay. How do you explain the shift to merit-based pay to the older workers?

Maybe there aren't drastic hikes in salary, but they still get enough to enjoy themselves. Plus, if they contribute to the company by accomplishing something more creative or new, we are always ready to pay something additional.

In that respect, I didn't have to invest a whole a lot of time and energy to persuade [them]. I did receive criticism from people who believe in "traditional ways," but looking at the trend now, [others] are definitely shifting in the same direction that we are headed."

Koichi Kato, the former secretary general of the Liberal Democratic Party, recently said his party wants to see a Japan "based on individual choice exercised through free markets." Is this how you see Japan's future? Do you see less government interference and more consumer choice?

I think consumers already have free-market choice. Anybody in Japan can import products directly from other countries without any government interference. The market is completely globalized.

If the past 50 years were about sharing wealth and consensus, what does the future look like?

Japan's economy hasn't been doing well in recent years. Other nations [tell Japan] to revive its economy by expanding domestic demand. But domestic demand isn't all that easy to boost, especially when it's as saturated as it is now.

Instead, I think it's very important to look at the situation over the longer term and invest in something that would be a plus for Japan in the 21st century.

The US has put a lot of effort and money into the expansion of its information-technology industry in the past 10 years. As a result, the information highway and information armaments have now become their core economic industry. For our future too, it's extremely significant to put money into something like information or networking businesses.

We should also have changes in our rules and systems. Both private sector and government should allocate more money into the areas that are more likely to have ripple effects in the future. Unless they do that, it would be very hard to see domestic demand expand.