Economic Recovery and Resilience: Lessons from Japan

Economic recovery from the COVID-19 pandemic is uncharted territory, and none of us really know how,  when, and if things will return to “normal.”   I’m on the hunt for any type of lessons learned from past experiences, from history (such as the 1918 Spanish Flu pandemic) to more recent events.  An interesting new Harvard Business School report, “Why Japanese Businesses are so Good at Surviving Crises,” looks at how Japanese firms dealt with the impacts of the 2011 earthquake and tsunami.

Japanese firms must be doing something right, as they are long-lived. In fact, the five oldest companies in the world are all Japanese.  The oldest, Kongo Gumi, a construction firm, got its start in 578CE.    In these case studies, Japanese companies pursued strategies advanced disaster relief and recovery, and strengthened their companies along the way.

In 2011, successful and resilient Japanese firms exhibited the traits known as “toku,” which refers to having a moral purpose in running a business.  In our terms, Japanese firms are community minded or are pursuing a double or triple bottom line.   The report authors discuss the model of “wise leadership” as driving the business response in 2011 and beyond.  Wise leadership is not a complicated concept; it simply refers to a business focus on building both economic and social value. This is a welcome shift from an exclusive and maniacal focus on shareholder value, which is still embraced by many US corporate leaders.  The pandemic seems to be changing this perspective, and there are many promising signs that “wise leadership” thinking may be gaining traction here.  As these Japanese examples show, this approach not only supports business longevity, but it also helps with economic recoveries as well.