Succeeding in Japan: Demystifying the Cultural Divide

Written by
Marcus Otsuji


On July 8, 1853, Commodore Matthew Perry of the US Navy entered Edo Bay with cannons firing to force the Japanese to end their 200 years of isolationist policy and open their ports to US trade. Fortunately, American corporations have since adopted more subtle approaches to Japan entry. However, in emerging IT markets where speed and scale are paramount there is still a tendency, even amongst well-intentioned executives, to overlook important differences in Japan’s business landscape. This can trigger hesitation on the Japan side, resulting in frustration on the side of Silicon Valley companies. This fundamental friction between two different business cultures is perhaps inevitable, but how Silicon Valley CEOs plan and react can be the difference between the massive successes and the frustrating underperformance that Silicon Valley companies have experienced in Japan over recent decades.

Demystifying Japan

The first thing to remember about Japan is that it is not inherently difficult, it is just different. Some Asian countries (not to be named here) are notorious for unscrupulous shakedowns by government officials or nefarious bad actors (often parading as business partners) who seek to pilfer and exploit others’ IP. That is not Japan. Japan is a country where consistent application of the rule of law and respect for intellectual property are the norm. Japan is also the third-largest economy in the world where companies pay their bills, honor their contracts and view their vendors as long-term business partners to whom they are surprisingly loyal. Fundamentally Japan is an attractive market in all the ways that Western companies should hope for and expect and this is important to remember as a starting point. When things get difficult (which they usually do), it is entirely unproductive to assume some fundamental flaw with Japan. Almost always there is an operational and/or product issue (perhaps partially obscured by cultural differences) but which can be diagnosed and fixed within a framework reasonably close to one SV companies are used to and comfortable with. So this begs the question, “why then is Japan so consistently difficult for SV companies?”

The Cultural Divide

Simply stated, Japanese are risk-averse and prefer the status quo while SV companies are aggressive and are trying to change the world. Speaking of IT purchasing specifically, some structural insights are helpful: it is generally understood even in Silicon Valley that Japanese companies outsource much (sometimes all) of their IT operations to their preferred systems integrator. Moreover, Japanese IT executives­­­, are often not even IT professionals, but rather “generalist” executives sometimes from finance and often in IT as part of a three to five year rotation. So while trained in the basics, IT is most often not their specialty or even preference and their mandate is basically to manage vendors and not screw things up. If an enterprising individual in the IT department therefore musters up the gumption to propose something deemed too aggressive, they will most likely be smothered by the decision-making process which requires broad consensus including not only management but also an external SI vendor. Hence the conservative culture wins out over any individual voice — and this is by design.


Given the unique structural idiosyncrasies and cultural considerations on one side balanced by the sheer size of the market and other attractive attributes on the other, Japan both demands and justifies a unique approach to market entry. In this brief article, it goes without saying that we didn’t even scratch the surface of Japan’s unique business culture. Suffice it to say, as a company entering the market, the key to success is to take the time to understand the specific operational and product-related signals Japanese companies look for as they select new vendors.