One can easily imagine that assuming presidency at difficult times puts great pressure on the new president. In this project, I interviewed two leaders with such an experience. They are; Tsutomu Okuda, Chairman of Daimaru, Inc., and Noriyuki Inoue, Chairman and CEO of Daikin Industries, Ltd.,

Both companies once had difficulty in their conventional business strategies and needed innovations. Both Okuda and Inoue became the CEO replacing the founding president, which is something they have in common. Neither Okuda nor Inoue were typical corporate high flyer in the companies. Rather, Okuda had been assigned in the overseas branch operation, which was not necessarily the mainstream business in the department store. Inoue, on the other hand, had been in the human resource management.

Both leaders took on the corporate reform soon after assuming the office. The way they instituted the innovations were similar, i.e. unprofitable divisions were abandoned and disbanded, a persistent search was made for means to rebuild the main business, and the organizations underwent radical change as a whole.

Despite the fact that they are from the different industries, the way they restructured the business is quite similar. This may demonstrate the commonality of the problems that Japanese corporations had in the past 15 years. But to what extent does the restructuring success owe to the quality of leadership?

From the point of view of an outsider, Inoue and Okuda seem to be managers of totally different type. Inoue advocates ‘discussion before decision’ and appears to be a consensus driven manager. Okuda, educated in the U.S. often viewed as a dry number-oriented business leader. However, the restructuring approaches are not that different. Daimaru solicited voluntary retirement while Daikin explored new market without layoff. The only difference between the two managers is the way they dealt with the corporate culture. Okuda pushed for the change in corporate culture while Inoue chose to keep them. For example, in Daimaru, the human resource management underwent a drastic change - a performance based remuneration system was introduced and the seniority system was abolished. On the contrary, Daikin kept the conventional way to assess the employee performance. The difference could partially be attributable to the personality of the leaders.

Both firms are currently performing well with respect to their competitors, however, the interview revealed some common issues for the future. That is how to cope with the rapidly changing business environment and the corporate governance. Inoue remarked that he is exploring a new style of corporate governance which meets the global standards. Okuda was concerned with how to secure a place for training future personnel to make up for the withdrawal of its overseas outlets.

It should be interesting to see how things will unfold for these corporations. The leaders in the next generation for these companies must be very competent. In order to maintain their success, they should be full of challenger spirit to tackle with the future problems.