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The Truth Behind Cool Biz

Bloomberg posted an article about Takashi Kadokura, then an economist for Daichi Life Research Institute in Tokyo, who claims that 'Cool Biz' has reduced the economic growth of Japan in 2008 by 653 billion yen ($6.9 billion USD). He arrived at those numbers using Shinichi Tanabe's, a professor of Architecture and Environmental Engineering at Waseda University in Tokyo, research that revealed a worker's productivity drops by 1.9% for each degree above 25 Celsius. 'Cool Biz' is something Prime Minister Junichiro Koizumi introduced in 2005 in order to help cut down the use of air conditioners to lower greenhouse gas emissions.

I came across this article while reading Japan Probe, which is a blog that shares interesting tidbits and news about Japan. I also frequently visit Danny Choo's site, which he describes as 'Your portal to Japan - life in Japan, figures, subculture, and more', a description I find very fitting. I personally enjoy his photo articles because it reminds me of the time I spent in Japan, and also following his success and the growth of his company along with the realization of his dreams and the goals he has set out for himself.

Anyways, back to the article. All I can say to this is, "Congratulations. You, along with the quoted professors, have discovered that you have common sense." Alright, maybe this isn't something that's apparent until someone mentions it, but seriously, this is not breakthrough discovery that will change how things are done. A problem, which is really a small part of a larger problem, is identified by Takashi, but he does little to actually provide a solution to the problem nor does it seem like he, along with the others, realize that there is a larger issue.

The larger issue is trying to understand that others are different than you. Just because 28 Celsius is a great temperature for you doesn't mean that it's a great temperature for the entire country, much less the person next to you. The problem with management in East Asian countries is that they are predominantly a top-down model that is uncompromising. The culture itself supports this because of inherent values like respecting your elders and senior-junior (先輩・後輩 - senpai/kouhai) relationships that make it difficult for younger or junior members to freely speak their opinion. It has always been a culture of follow the leader, even if he may be going off a cliff. Thus, managers or people in positions of authority dictate what goes on with little to no insight into the opinions of those around them.

This is not an issue that is only apparent in East Asia, or in this case Japan. BNET shared a report by McKinsey Quarterly that looked into why change management efforts are still relatively unsuccessful, and found that this same issue is what leads to failure. Managers don't realize that what motivates them doesn't necessarily motivate everyone else, in other words, people are different than you. Eureka, we've reached another common sense moment, but as author Dan Ariely has found, and rightly so titles his book, people are predictably irrational. Despite knowing that each person is unique, managers that are comfortable in their position tend to make decisions based upon their understanding of how they think the people affected will respond without actually asking.

So what is the solution to this larger issue? Well, to be honest there's no really clear cut solution that will fix this. The issue itself is deeply rooted within the culture of Japan. Along with the issues stated above, Japan really hates uncertainty or risk because of their deep fear of failure, which makes it even more difficult for change to occur. Japan needs to realize that they need to change. The entire business community is talking about how we can no longer rely on the business models we thoroughly know because 1) they led to our current situation and 2) the world is rapidly changing in response. Japan is no exception to the changing world, and the signs are there that change needs to happen. I do not question that they realize the urgency to change, but I wonder if they have the willpower to challenge things and fight for change? Unless change happens, Japan is in a very difficult situation. Japan's younger generation, like the rest of the world, is actually in a better position of making change happen because of the effects of globalization. The question is whether or not people can support that growth.

Harvard Business Review's (HBR) latest issue discusses the topic of managing in the new world, and they point out the changing times (e.g. Gen X & Y along with their impact and implications on business and management) along with how people need to accept that things might never be the same again. HBR, along with other business groups such as BNET, commonly state that in order to survive through these uncertain times and create sustainable leadership, managers (especially C-levels) need to communicate and work with their entire organization, not just your small, limited leadership team. A handful of executives in a closed room can only expect to make good decisions because the information they know and the context is limited. Great decisions can be made by opening the doors and tapping into your greatest resources: your people.

In order to tap into those resources though, we need to take better care of them. Increasing productivity is constantly a topic of conversations, and many solutions and methods have been presented and tested. Unfortunately, many fail because they fail to truly look into the human factor, and the complexity involved when dealing with the human mind. Takashi touches on this in his conclusion by stating how difficult it is for him and others to work in uncomfortable conditions, and that we should worry more about their comfort instead of greenhouse gas emissions if we're looking to improve productivity. That is true, but it is not a simple issue of changing the temperature to a more desirable level. Management and its practices need to change in order for productivity to increase. Japan Inc published an article by Stephen Long that states that change is needed, and how human resources (HR) are the agents of change. I am glad that he uses John Kotter, but I am really disappointed at how there is a lack of insight in how it is applicable. He briefly shares the extraordinary performances of some Japanese companies like UniQlo and Megane Top Co. Ltd., then shares Kotter's model, but fails to apply Kotter's change management model to them, or even show what we can learn from these successful companies. Sure we need to figure those things out on our own and maybe it's a way for people to come to him for those answers, but there are many articles out there that point out the obvious like he did, thus making it a rather useless article. I'm sure he must have read Kotter's book, so he should have noticed how Kotter's book is loaded with examples that provide context and insight to support his statements. I was hoping Steven would do the same through the companies he listed, but sadly, no. If he had though, it would have been an exceptional article.

In summary, people are the most important asset of any company, organization, group... or anything really. People are the drivers behind any organization. Isn't it obvious that we need to take the time to get to know our people and do things to make them happy? Happy employees lead to prosperity and, guess what, employee retention, which is talent management. HBR's latest issue pointed out how companies need to create a social community within their organizations in order to help accommodate Gen X & Y (they also pointed out how the two generations are actually very similar in their values). So, the focus is on the people. Make them happy, and your organization will prosper. Don't care, and you're screwed. Japan without a doubt has incredible talent, yet they're suffering from things like a declining population, high suicide rates, and high unemployment rates. If Japan can change and support the growth of their upcoming generation and take better care of employees, then they are poised to really take a lead in the global economy. I'll close with a story, which for the life of me I cannot remember/find where I got it, so I'm not quite sure if I'll get the details correct, but you'll get the moral of the story. An organization was looking to cut costs, as is almost every other organization in these tough economic times. They looked around and decided to stop providing cookies in the break room. I mean, they're just cookies, right? As a result, productivity dropped, employees left, and happiness dropped as stress increased. What they didn't realize was how much psychological support those free cookies provided to their employees (which I do not believe the employees themselves realized until it happened). The CEO stated that getting rid of those small cookies was the costliest decision he'd ever made.

Update: Posted a comment for Steve on his article.