Cultural Influence in Stakeholder

Management, A study of Japanese Stakeholders

Project Management
Assignment [Nov 2018]
Table of Contents
1. Purpose:....................................................................................................................................................................................3
2. Introduction: .............................................................................................................................................................................3
3. Literature Review: ....................................................................................................................................................................3
3.1. Stakeholder Classification: ...................................................................................................................................................4
3.2. Stakeholder Management in Project Lifecycle: ...................................................................................................................5
3.2.1. Step 1: Identifying, prioritizing & analyzing the stake holders ....................................................................................5
3.2.1.1. Identify: ...................................................................................................................................................................5
3.2.1.2. Prioritizing & Analyzing ...........................................................................................................................................6
3.2.1.3. Understanding Japanese Stakeholders, Management Strategies and their Culture: .............................................7
3.2.1.3.1. Understanding Stakeholder Management Strategies followed by Japanese: ....................................................7
3.2.1.3.2. Understanding Japanese Stakeholder / their culture: ........................................................................................9
3.2.2. Step 2: Devise Stakeholder Management Strategies: .............................................................................................. 10
3.2.3. Step 3: Best practices for stakeholder management and communication .............................................................. 12
4. Conclusion: ............................................................................................................................................................................ 13
5. References: ............................................................................................................................................................................ 15

2
1. Purpose:
Globalization has become a necessity and this is evident with the emergence of the several multi-national companies
globally. MNCs need to engage with different local and international stakeholders and manage sophisticated relationships
with them. This research work intends to:
(1) Understand Stakeholder management techniques
(2) Understand Japanese culture, in effect to leverage the diversity factor while managing Japanese stakeholders
(3) Understand Japanese cultural influence as one of the causes of project management failures in 2 case studies
(4) Analyze and understand the strategies which has been successful in handling a Japanese Stake holder.

2. Introduction:
A stakeholder is an Organization, group, or individual who is impacted by the outcome of a project and can sway it’s
success either way.
Stakeholder analysis, starting from the late 90s has gradually emerged and now is a standard practice among most
organizations – irrespective of nature of the industry. This principle can
be traced back management theories from the 1930s, and it continues
to gain momentum in today’s business world.
Stakeholder Management is an approach which tracks how stakeholders
will be affected by a company’s direction, how stakeholders can guide
the organization in the right direction while also mitigating risk.
Considering the complex and volatile nature of both internal corporate
structures and external market forces, this is quite useful.
Japan is a country which has developed corporate social responsibility
(CSR). Stakeholder management was actually a part of CSR activity until
recent years. It is quite interesting to see how duty bound Japanese
companies find their own way to communicate with local and
international stakeholders.

3. Literature Review:
Unobtrusive Research methodology is used for this research:
 Content Analysis
 Analysis of existing data
 Historical analysis
The scope of this literature is on
(1) Overall stakeholder management framework understanding,
(2) Branching out specifically to Understanding Japanese stakeholders, their management Strategies and their Culture.
(3) With 2 case studies, also attempt to understand how the culture can impact stake holder management decisions.

3
 3.1. Stakeholder Classification:
There are different classification of Stakeholders that is widely observed:
Classification 1: Business Stakeholders:

[i] Primary stakeholders are those stakeholders that have a direct

stake in the organization and its success

[ii] Secondary stakeholders are those that have a public or special

interest stake in the organization
Classification 2: Business Stakeholders:

[i] Core stakeholders are essential to the survival of the firm

[ii] Strategic stakeholders are vital to the organization and the

threats and opportunities the organization faces

[iii] Environmental stakeholders are all others in the

organization's environment
Classification 3: Stake holder wheel: 1)Owners / shareholders 2)Managers 3)Employees 4)Customers 5)Suppliers &
Partners 6)Competitors 7)Regulators 8)Community
Stakeholders present both Opportunities and Challenges. Opportunities have to be quickly leveraged to build good
productive working relationships with the stakeholders. Challenges tests on how the firm handles the stakeholders.
Principles of Stakeholder Management:

4
 3.2. Stakeholder Management in Project Lifecycle:
Stake holder Management lifecycle representation from PMI institute is represented in the below picture:

3.2.1. Step 1: Identifying, prioritizing & analyzing the stake holders

3.2.1.1. Identify:
There’s nothing worse than being blindsided, by an unknown stakeholder, half-way through a project. Every stakeholder
will have their own view on what “success” looks like and will have to be handled with care and discretion. Below are few
simple realistic steps that can be adopted for identifying stake holders in a project / Program:
1. Brainstorm with project team and create the list of stake holders:
Brainstorm by starting with internal team—the project’s sponsor, manager, and team. Questions which would help
in identifying stake holders who might be impacted by the project can be triggered with the team. It is not
compulsory to close the identification in one discussion session. The team members can individually create the
initial list, with can be collated and finalized after couple of brainstorming sessions.
2. In parallel, identify the stakeholder’s power and influence in the project decisions:
With the initial list derived from brainstorming session, it would be interesting and hard to identify stakeholders
who might be influential not during the full execution period of the project, but only during certain points. Every
Projects have critical milestones, and approval gates and these are pivotal moments which opens opportunities to
identify more stakeholders.
Create a classification of stakeholders who is involved in each decision, their authority and if they are internal or
external. There are several Stakeholder Analysis techniques used widely in the industry, and the Top 5 is explained
in the below section.
3. Dig in and find your secondary stakeholders:
There’s also a relatively small, yet significant group of stakeholders who might not have huge influence on the
project, but who would have to kept informed and need to be managed. Say for example, they could be:
 Regulators are external stake holders who won’t get involved unless something goes wrong or you break a rule
 Customer’s customers

5
  Competitors and opponents of the project
Though these set of stakeholders won’t get involved unless their interests are seriously violated, it’s still a good idea to
keep them on radar and add them to the master list of stakeholders.

3.2.1.2. Prioritizing & Analyzing

Below are the TOP 5 Stake holder analysis Techniques widely
used:
1) Power-interest grid: First stakeholder analysis technique is,
power-interest grid and this can be best illustrated with the help
of following figure.
The steps for constructing power-interest grid during stakeholder
analysis in a project are:
 Identify all possible different Stakeholders who are part
of the project
 Determine the interest levels (concern) stakeholders
have and how much power levels (authority) they have to
change the direction of the project
 A 2x2 matrix with Power on the Y-axis and Interest on X-
axis is plotted as shown in the figure above. In Y-axis, The
power of stakeholder increases, as one move from
bottom to top. Interest of stakeholders is on the X-Axis, and increases from left to right.
 Create Classification of stakeholders based on their power and interest
 The top right corner of the grid have high power and interest stakeholders. PM needs to manage them closely and
ensure that they are consulted, collaborated with and engaged completely
 The top left corner of the grid have high power but less interest stakeholders. PM needs to keep this category
satisfied, however not go into the details, and on daily basis
 The bottom right corner of the grid have low power but high interest stakeholders. PM needs to keep them
informed on the progress and changes. These stakeholders are potential allies on project and help prevent issues.
 The bottom left corner of the grid have low power and low interest stakeholders. PM needs to keep a watch on
them and monitor their interest levels. Needs to Engage them with casual or generic communication methods
that need less effort with less detail and frequency.
2) Influence-Impact Grid:
Second stakeholder analysis technique is influence-impact grid.
 An influence versus impact grid can be plotted Similar to the Power Versus Interest grid.
 Influence depicts, how actively a stakeholder is involved or, the extent to which a stakeholder can persuade/force
others in decision making. Impact is the ability of the stakeholder, to bring a change or result.
 Helps to prioritize stakeholders
3) Power-Influence Grid:
Third stakeholder analysis technique is power-influence grid.
 Similar to the Power Versus Interest grid.

6
  Influence depicts how actively a stakeholder is involved while power is the level of authority
4) Importance – Influence Grid:
Fourth stakeholder analysis technique is importance-influence
grid.
 This is Similar to the Power Versus Interest grid.
 Importance is the order in which the interest and needs
of each stakeholder should be addressed
In all the above four stakeholder analysis models, it can be
observed that the top right corner category stakeholders need to
be managed closely.
5) Salience Model:
Salience stakeholder analysis model helps PM to sieve or clearly segregate
the important stakeholders from the not so important ones. This is a 3
dimensional model which considers the power, legitimacy and urgency of
the stakeholders. The intersection of these three factors is plotted like a
Venn diagram. We already saw what power is. Legitimacy is the
appropriateness or the rightfulness of the stakeholder’s involvement in the
project. Urgency highlights the PM how quickly the stakeholder’s needs are
to be addressed.
In addition to the time, urgency also tells this stakeholder analysis model
helps project manager in prioritizing the stakeholders. The greater the
number of factors the stakeholder has, higher is their salience.

3.2.1.3. Understanding Japanese Stakeholders, Management Strategies and their Culture:

Japanese industrial enterprises chose to import American management methods and practices from the second decade
of the twentieth century. Japanese developed indigenous Management practices like lifetime employment and promotion
by seniority. In the 1950s and 1960s, almost all elements of American practices were eagerly absorbed by the Japanese
Productivity centers, but with their own tailoring. Key essential aspects of the so-called ‘advanced scientific managerial
approaches’, such as using linear programming, decision sciences, mathematical models, and others, were hardly adopted
at all in Japan.
Quality control, which is the most successful management practice transplanted to Japan, is a good example of how
American methods were modified. Total Production / Quality control (TQC) techniques are recognized as unique
development by the Japanese Management System.
Upskilling and educating the youngsters by sending them to America to finish their MBA degree was another strategy
adopted by Japanese in the 1970s, to understand the American Management Theories and tailor it for Japanese Shop floor
needs.

3.2.1.3.1. Understanding Stakeholder Management Strategies followed by Japanese:

Below were the Key strategies adopted by Japanese stakeholders. All Internal and external stakeholders are impacted by
these base Strategies followed by Japanese.

7
 The attention to quality, a critical part of the lean enterprise, emerged naturally, culminating in the introduction
of total quality management (TQM) and zero defects (ZD) programs
 Multifunctional Teams : In the lean enterprise, new product development is undertaken by large, multifunctional
teams. These teams are made up of representatives both Internal & external - internally from engineering,
production, marketing, and externally from suppliers and subcontractors.
 Horizontal Integration: Japanese firms have extended relationships with their suppliers to facilitate continuous
innovation and rapid adjustment to changes in demand.
 Imitation: In Confucian philosophy it is considered honorable to imitate and an honor to be imitated. The
willingness of Japanese firms to imitate their competitors and suppliers also encourages the diffusion of
technological innovations.
 Loyalty to Classmates: Another societal mechanism that leads to technology diffusion is the intense loyalty that
engineers feel toward their classmates.
 Industry Associations: Industry associations are an additional mechanism that helps to transfer technologies
between firms. One of the major intent of these associations is to hold workshops where information is exchanged
freely.
 Ministry of International Trade and Industry (MITI) committees: Formal MITI committees constitute the final
major mechanism that facilitates the diffusion of technology in Japan. Quite Often, MITI identifies technologies
that will become critical to a major industry.
 Take Competitiveness Seriously: One of these habits is to consider thoroughly a proposed policy’s impact on the
productivity of Japanese industry, on Japan’s competitive strength in the world market.
 National Interest First: It is a habit in Japan to start with the question of “What is good for the country” and not
at any other individual or selfish levels.
 The endless strive for Innovation and Efficiency: They believe in the principle of ‘Praise less, work more’, hence
directly aiming for efficiency. The side effects
include boosting productivity and cutting
down on waste. The secret to innovation is,
“Jokes = Ideas”. Joking and relaxing at work
can open up the mind of people, especially for
Japanese workers for whom this may be an
unfamiliar and curiously surprising idea.
‘Learning by intrusion’ which is nothing but,
cooperative utilization of information and
learning through problem generation, is
central to innovation in Japanese companies.
Intense interaction is also important as the
members can tacitly grasp what others are
trying to achieve. The Company is generally
viewed as a Sponsor in the business culture of
Japan. People can achieve greater ends and reach more people using the structures and resources of the
company as opposed to ‘doing it alone’.
 Caring for the Employees:
o The working environment nurtures the budding younger staff who would be running the company one
day with ‘Now 21’ types of initiatives. Toyota has been a pioneer in several management strategies
including this.
o Another concept of ‘Mikansei’ (Incompleteness) encourages employees to view product as incomplete,
to think on lines of innovation and bring in ‘Kaizen’ (Improvements) to the product

8
 o Group Solidarity is Paramount: Group based incentives (not individual) cultivates freedom to use the
incentives on projects that they feel is the next thing, thereby motivating to develop ideas at Group level.
 Viewing the grapes and not the grapevine: Putting negative energy to work by allowing the people to make
changes to the system, however small, gives them a desire to achieve a sense of responsibility, a desire for self -
realization.
 Customers first: The Japanese companies value their customers more than themselves. Their main goal is ‘Profit
Maximization’ through ‘Customer Satisfaction’ and not the other way round. This is the reason why they construct
their technology, destruct it and then build it again. The endeavor for innovation is continuously inspired by
customer satisfaction and happiness.
 Demanding Customers: The most challenging part of every business venture is the fact that the customers are
never satisfied. Therefore each and every company tries to surprise and attract its customers. Customer Loyalty
and Customer Retention have become Herculean tasks for all the companies, this gives rise to aggressive
competition and smart innovations among the global markets, with the Japanese companies acing them both

3.2.1.3.2. Understanding Japanese Stakeholder / their culture:

Basic Traits of Japanese Stake holders to be watchful about:
 Long Term Relationships: Japanese developed indigenous Management practices like lifetime employment and
promotion by seniority.
 Age Equals Seniority: Japanese value seniority than knowledge and talent. Hierarchy goes in DNA. It is expected
to treat older executives with a more marked deference than you do younger ones in the group you're interacting
with. Say for instance, be sure to greet the most senior person before you greet anyone else. Likewise, make sure
to offer your business card to the senior person first.
 More Expected than Explicitly Stated: Most of the Japanese companies expect their products to do the talking
and artifice rather than themselves. They don’t just want to benefit the user, but the society as a whole.
 Detailed oriented: Japanese construct a detailed account of their plans and forecasts, hence slowing down the
process of decision making. However, the information and analysis retrieved are invaluable and they hardly
face much failure.
 Business Cards are Talismans: For Japanese Meishi (a
business card) is an extension of their identity. Accept
the card with both the hands, read the card briefly and
put in the Business Card Holder (not in back pocket)
 Politeness (Silence is Golden): The Japanese have a
persistent use of silence in their business
environments. They are reserved and formal while
they are getting to know the new business partners.
Written and telephone communication are not
considered as reliable as a face to face connect with
the partners. Blowing your nose in public (like a
meeting room) , is considered in poor taste; best to
excuse yourself and walk out.
 Punctuality: It is considered that the Japanese people
are very punctual in nature. They always finish off
their work and meetings in the expected time, this helps them stay ahead of competition.
 Hard Sell –not the right choice : Japanese decision making style is by consensus. Hence it is important to identify
the points of agreement and showcasing the virtues of the what is being proposed. Trying to speed up the process
is many a times considered disrespectful. Rather than being impatient, it is recommended to perceive the long
process as an opportunity to build trust and cement the relationship.

9
  Privacy is Valued: Japanese people are notoriously private and reserved. Where in one part of the world asking
couple of personal questions in the initial meetings is considered as building Rapport, for Japanese it is being rude
or pushy. It is quite surprising to note that, only 28 % of Japanese Internet users visit social media sites on a
monthly basis, and time spent on social networking in that country is a meagre 2.9 percent, compared to 16.8
percent in the U.S.
 What You Don't Know Can Hurt You: Exchanging gifts in the first meeting is considered an important tradition in
Japan. However, one needs to understand cultural aspects like, white flowers are shared during funerals and
hence should be avoided. On the same lines, RED is used for Funeral notices, so better to avoid sending RED
Christmas cards.
 Chopstick Manners Speak Loudly: Use the towels provided in airlines to wipe your hands ONLY and not your face.
When the serving utensil is missing, do not poke with the chopstick, rather pick however slippery be it. When you
are finished eating leave your place setting closed to however u found it.

3.2.2. Step 2: Devise Stakeholder Management Strategies:

The culture and nature of business has a significant impact on the Stakeholder Management strategies to be designed.
Below are details of 2 case studies of Japanese companies, and the stake holder Management Strategies followed by them.
Ford: Case Study on Failure of Ford Edsel :
Failure of Ford Edsel (1957) is one the
famous case studies of poor Stake Holder
Management by the Japanese
manufacturer. The ideology behind the 1958
Ford Edsel was, it was intended to be the
new premiere car for middle-class
Americans. Ford was so confident in the
product that it pumped $250 million into it.
Unfortunately, instead of starting a
revolution, the company lost $350 million on
the unattractive gas-guzzler.
There were 4 key lessons from the failure of
Ford Edsel car, one of them being mis-
management of stake holders which lead to
this downfall:
(1) Mis-Management of Customers (Key Stakeholders) by Executives in Ford:

Poll results not used, losing customer involvement and Customer delight: The new launch was overly poll-tested. However,
instead of leveraging on the poll result which was the customer’s expectation, the Ford Executive ONLY pretended to be
acting on the poll.
Example 1: Although the Edsel was supposed to be advertised, and otherwise promoted, strictly on the basis of
preferences expressed in polls, some old-fashioned snake-oil selling methods, intuitive rather than scientific, crept in.
Example 2: Extensive polls were conducted for choosing the perfect name for the perfect car. But to everyone’s surprise,
the chairman of the board decided at the last minute that he was going to go with Edsel, the name of Henry Ford's son !!
This had hurt the customer’s involvement point.

10
Example 3: As for the design, despite the inputs
were sought and collected with the polls, it was
arrived at without even a pretense of consulting
the polls, and by the method that has been
standard for years in the designing of automobiles
- that of simply pooling the hunches & instincts of
sundry company committees
(2) Vision was lost in the game:
FORD, the Japanese automobile manufacturer,
identified that American market did not have too
many car models in late 50’s, with tremendous
difference in performance. In a Lazy attempt to
please everybody, Instead of designing variants to
address performance factor, FORD designed 18
variants of EDSEL with difference just in the look
and feel, which inadvertently led to the
categorization of Male and Female Variant. Edsel's
designers knew that they were creating an image, a
character, but they decided to make it everything
at once, instead of refining their vision.
(3) Missed Risk Assessment of Failure as an
option:
FORD was over-confident to the level that they
persuaded the dealers to make pre-booking even
before the first car was manufactured. They had
invested in such large scale, where roll back seemed to be practically impossible. Had they been more cautious and not
betted so much on the car, they could have pulled back once the stock market took a nose dive in 1957, and people
stopped buying Mid-Priced cars.
(4) Missing effective Root cause Analysis on Failure:
When launched, the car was too expensive and mileage was not even close to expectation. A redesigned Edsel, had
better reviews, but the brand had already lost its name and charm. Finally in 1960, the production was stopped.
Though eventually FORD recovered, the worst nightmare of ignorance & mind set of non-acceptance of key failure reasons
was observed in FORD executives, by several reviewers. It even went so far as blaming the American public for the failed
launch. An Edsel Marketing Manager, told one of the journals that he was flabbergasted that the American consumer
dared to be so fickle.
I

SONY: Competitor Management: Case Study on Betamax failure

Sony launched Betamax, its cassette recording device in the mid 1970s.
It has lost the battle of market share to JVC’s VHS technology. But Sony
didn’t stop making Betamax tapes until 2016, long after it was relevant
to most of us - who have never realize it was still in production.

11
Lessons Learned:
Sony failed to understand the customers and also its competitors.

The story of Betamax has become nearly synonymous with failed marketing or in other failed customer (stakeholder)
understanding. While it was innovative and did hit the market well before its competition did, other products proved to
be cheaper and better.
The lesson learned here is that project management is a continuous process and doesn’t end when a project is launched
or a campaign has run its course. Successful projects are followed up, analyzed, evaluated continuously as part of
operations, so they can maintain their velocity and continue to benefit the company’s bottom line.
1. Don’t go it alone. ‘Contrary to popular belief, what would help every category pioneer is competition,’ says renowned
analysts.
2. Let others in. Betamax would have had a better chance, if Sony’s rivals had adopted it, let alone whether Sony refused
to license its format or not.
3. Cut your losses. Ignoring VHS until 1987 was an undeniable mistake.
4. Supply equals demand. When the manufacturers of pre-recorded tapes decreased their supply of Beta format tapes,
demand for Sony’s Betamax recorders inevitably diminished.
5. The Japanese cultural style of clinging on to their beliefs, was another reason for the delayed decision of stopping
production only by 2016.

3.2.3. Step 3: Best practices for stakeholder management and communication

Communication plays a key role in Stakeholder engagement model. Be it updating the stake holders on new developments
or trying to influence key stakeholders on pivotal decisions, how the stakeholders are managed and communicated with
makes all the difference. Once the identification of the stake holders is complete by using techniques like Power – Interest
grid, its important to tailor the plan specific to the stakeholder.
Few Key Best practices in stakeholder engagement:
 Get buy-in, by consulting earlier and in regular
frequency.
 Create and enforce transparent
communication process
 All-important communications need to be
documented.
 Never assume, rather vet the information
received from them.
 Difficult stakeholders need to be handled with
additional attention. The Key is though difficult
to deal with, 90% these stakeholders also
intend for the project to succeed. So when
situations turn, do not go to “You Vs Them”
mode, rather we need to re-align and reframe
the expectations. It is always recommended to have one-on-one meeting with such stakeholders, to indirectly let
them know that we have dedicated time and value their inputs. Listening also plays a key role while handling
difficult stakeholders.

12
Common mistakes in stakeholder Management:
 Defining stakeholders too narrowly
 No balance between defense (compliance) and offense (strategic opportunities)
 Going defensive too quickly
 Concealing self-interest. Not being truthful.
 Communication: Too much, too little, too promotional, too simplistic. Confusing communication with engagement
 Underestimating the value of diversity
 Choosing to ignore different voices.
 Making a decision that impacts your stakeholders, without gaining their buy-in
 Failing to make stakeholder/community engagement
a top priority
 Looking at the issue through your eyes
 Allowing the vocal few to dominate
 Believing that what’s said the most, is also most
important

4. Conclusion:

Stakeholders can have the power to energize or exhaust a

project. Every project has stakeholders, and we know that the
way people feel can’t be controlled. However, with proper
identification, categorization, communication, and
management, their influence on the project can be managed
and controlled to desirable extent. A project manager’s
allegiances are to the project’s success - While sometimes a
stakeholder might get in the way of that, the finish line cannot

be reached without them. Hence it is very

important, in the early stages of the project, to
understand who they are, what they need, and
how to manage them.
Cultures cause members to see reality very
differently. Culture leads us to believe that our
way of thinking, acting and doing things is the
only rational way. Globalization has become an
inevitable part of any industry and hence building
multi-cultural skills has moved to the “Need to
have” category, from a “Good to have” status
prevalent a decade ago.
Research and analysis on multicultural skils have
resulted in Global results pyramids and Global
Integrator graphs. These help in understanding
the cultural value of the stake holders we are
working with and in efficiently handling them.

13
In Summary, focus on understanding the other culture. You do not need to concede to them, and they need not concede to you.
Try to draw benefits from the diversity.
Lots of modern techniques and recommendations have also evolved on stakeholder management strategies. Below are
few interesting ones:

14
5. References:
https://www.businessinsider.in/4-lessons-from-the-failure-of-the-Ford-Edsel-one-of-Bill-Gates-favorite-case-
studies/articleshow/48838702.cms
https://www.jetro.go.jp/costarica/mercadeo/communicationwith.pdf
https://www.workfront.com/blog/project-failure-10-famous-failures-and-5-ways-to-spot-them-before-they-happen

https://plan.io/blog/project-stakeholder/#1-brainstorm-with-your-project-team

https://www.linkedin.com/pulse/20140910121649-31890108-a-leadership-case-study-how-hr-caused-toyota-crash/

https://www.emeraldinsight.com/doi/abs/10.1108/RIBS-03-2017-0029

https://www.erina.or.jp/wp-content/uploads/2016/03/naer41-4_tssc.pdf

https://www.ipma.world/projects-and-project-management-in-japan/

https://pdfs.semanticscholar.org/98a7/8df20adffc893e2035ace083567c59972c60.pdf

https://www.emeraldinsight.com/doi/abs/10.1108/MRR-09-2013-0224

https://www.inderscience.com/info/inarticle.php?artid=91264

15