Nagaoka Review had a great opportunity to interview Torsten Kanisch, a global leader involved in top management positions with Novartis, Johnson and Johnson, Bristol Myers Squibb and most recently AstraZeneca.
In the first part of the article, Torsten shares valuable insights regarding the recruiting process inside big Japanese corporations, talks about techniques to motivate people in the workplace and gives his perspective on the right profile of a leader.
The second part uncovers change management and decision making in times of crisis, habits that keep him happy and reasons why he chose Japan over other countries for the last 20 years.
Nagaoka Review (NR): Torsten, thank you for making the time to have this conversation.
Torsten Kanisch (TK): It is a pleasure, thank you for having me.
NR: Firstly, I would like to know what are people looking for when choosing a multinational company in Japan?
TK: When talking about a traditional Japanese company versus a multinational corporation having a branch in Japan, people’s expectations from the business style are slightly different. Whoever applies for an international company is looking for more independence in their daily job, a more casual leadership style, less top-down approach.
Usually, “the bigger the better” also works, as it gives one more opportunities to grow inside the company. Being a multinational is an attraction, especially for females, as those companies often do better in diversity and inclusion, promote equal pay and have proportional female managerial roles.
”The profile of the leader is very important. People choose their bosses and the team they are going to work with.
Salary is important too, but money is not a strong motivator in the long run. If it’s only money motivating someone, they will look for the next offer and change quickly. Therefore, it’s not in the business’ best interest to reach people looking only for a bigger pay check. Cultural fit is equally important.
You also need to consider the balance of the team. Eventually it becomes known how much somebody earns. In general, we have a market reference and a margin around that. We hire people inside 80-120 percent of that market reference. If I already hired someone at 120 percent, then I have a lower bandwidth to increase that person’s salary overtime and that might demotivate the employee. So I rather prefer to hire someone who is motivated, good, and pay them somewhere around 80-90 percent of the market reference, as I will have some extra margin to develop that talent.
NR: Switching to your perspective, what is a leader looking for when hiring new people and how is the competition over talent in Japan?
TK: I look for self starters. People that show initiative, that take risks and can perform on their own.
The war for talent is very intense in Japan and you always run into competition with others, especially for interesting skills, such as data science or artificial intelligence. In these cases, potential candidates won’t necessarily search for a Pharma company, considering there are so many interesting options out there, including startups. So I have to be a real salesman when doing the interviews to create excitement and also hire the right person.
”I rarely hire people just for execution purposes.
NR: Now that you got the best talent, how do you keep them motivated? What keeps people engaged in a company’s daily business?
TK: While in western countries it is easier to excite and motivate people on a vision such as “We want to be the best in five years!”, in Japan people cannot easily see five years ahead. And they don’t get excited by a vision, but ask themselves “What’s my next step?” or “What should I do tomorrow to slowly get to that vision?”.
Add the fact that, along the way, they are distracted by all the bad scenarios that could happen. There is an English saying: “We will cross that bridge once we get there”. But Japanese people really want to see a complete plan for five years and how to get there, step by step.
It is a cultural thing. Japan has a long tradition in manufacturing things. So people want to understand the details from the beginning. Huge time goes into planning, but when the plan is on, there is no deviation.
”In general, Japanese employees execute on a detail level flawlessly, much more refined than their western counterparts.
Empowerment creates extra motivation. Giving people the freedom to work on their projects and own their deliverables. Yet, if it’s just empowerment without any backup nor risk absorption, people will feel disengaged. But if you have regular check-ins, remove obstacles in the background and sometimes step in to help overcome a skill gap, people will be very loyal and motivated. I think this is a winning formula for Japanese employees.
But whether it’s a pure Japanese company or an international one, people here usually look up to their leaders and wait for their confirmation.
”There is a tendency for not taking the risk in Japan. Therefore, a good leader has to absorb potential threats in order to motivate the team.
Therefore, in order to make a company operate well in Japan it is important to prepare the agenda for the people, set the milestones and then absorb potential risks, so people can execute.
NR: Let’s focus a bit more on leadership. As you said, a good leader should be there whenever needed. But how often should one intervene in daily workflow and how do you know you’re facing a low performer?
TK: Asking for help requires courage on the employee side, but there is a question of trust as well. A good leader has to create that level of trust, so the people will naturally talk about the obstacles they bump into. It is very important how you react. If you say something like “You are on your own, go figure it out”, the next time they won’t bring you their problems.
”The worst case scenario is when people hesitate asking for help and the problem escalates.
The challenge is, if someone comes over with the same problem (s)he should have known how to solve, then you have a low performer in front of you. And dealing with low performers is a difficult task in Japan.
Compared to western countries, let’s say the US, there is less peer pressure in the working environment here. As a Japanese employee, you also have a much bigger safety net in the national labour laws. Basically, in a Japanese corporation it is very difficult to let people go. For that you have to go through a very cumbersome process of performance improvement program, document the whole process and eventually offer some packages that lead to a voluntary termination of the contract.
In traditional Japanese companies, it happens that low performers are set aside without many responsibilities and are carried along by the organisation. This doesn’t work with multinationals because we have a lot of pressure when it comes to employees headcount.
”A low performer becomes a burden for a multinational organisation. That’s why hiring is the most important skill a leader should have.
NR: What other qualities define a good leader?
TK: My organisation is classified into individual contributors, team leaders, leader of leaders and myself, as a unit head. The base qualities are not different between an individual contributor and a team leader: smart, self starter, self motivated, constant learner. English capabilities are also very important for any leader working in an international organisation.
But not everyone wants to be a leader. Some want to be expert individual contributors. And that is great! But the truth is the more you go up in your career, the less important the functional skills are and the more important become other areas such as people development, big picture thinking, agenda setting, visioning and communication. Constant communication. You can have a group leader that was an expert in what he did and has a passion for people but might not be a good communicator. People in Japan think “If I do a good job, I will be known for my good job and I will be recognised.” But in a big organisation one cannot know what everyone is doing.
”You need to create a brand as a leader. What do you want to be known for? This means you need to communicate all of your successes.
NR: How do leaders create a brand inside your organisation?
TK: There was a time when you would have received an email at the end of the week with a newsletter from the CEO. Those times are gone. We are not using email anymore to communicate. At AstraZeneca we are a social organisation. We use Workplace, the business version of Facebook, and constantly post there. As a leader, you have to possess the skill of storytelling – the “WHAT”, meaning your actions, and the “SO WHAT”, meaning the impact of your actions. What is the story I want to tell? What is the action I want to create? What are the internal channels and the audience I want to reach? This requires a new skill that not everyone has.
The way you communicate your impact on the organisation has also an effect on the variable bonus system. This is a zero-sum game, meaning if you give more to someone, you have to give less to someone else. That’s why it is so important to tell your own story and your team’s story and let people know what you accomplished.
NR: Executives are sometimes involved in enterprise-level changes. For example, you had to digitalise certain processes in big Pharma companies. How is change perceived when addressing billion dollars businesses?
TK: You need to spend a lot of energy on the change management. Change is incremental in big companies, rather than a big bang disruption. The process usually takes longer because you need more pilots, more small scale proven successes before taking steps forward.
The companies I worked for were successful companies, meaning there was no rush to restructuring something because of financial pressures. The main question often was: “Why change something? This is working and we are doing well.”
Furthermore, the industries I operate in are so called “asset heavy” industries. That means they don’t get disrupted easily by newcomers, in the way Uber or Airbnb did with taxi and hotel markets. This reality makes Pharma companies safer from the risks associated with fast disruptions but increases the risk of “compressive disruptions”.
What is compressive disruption? Imagine the value one company creates as a big circle. This circle has a lot of slices that you have to put attention to and keep updated. Otherwise, new agile disruptors will start cutting away parts of your big business model and create new value propositions.
”If you don’t drive change in the way you do business, there comes a point of no return when you have to switch to other company's services because you cannot longer compete with them.
TK: You need to spend a lot of energy on the change management. Change is incremental in big companies, rather than a big bang disruption. The process usually takes longer because you need more pilots, more small scale proven successes before taking steps forward.
The companies I worked for were successful companies, meaning there was no rush to restructuring something because of financial pressures. The main question often was: “Why change something? This is working and we are doing well.”
Furthermore, the industries I operate in are so called “asset heavy” industries. That means they don’t get disrupted easily by newcomers, in the way Uber or Airbnb did with taxi and hotel markets. This reality makes Pharma companies safer from the risks associated with fast disruptions but increases the risk of “compressive disruptions”.
What is compressive disruption? Imagine the value one company creates as a big circle. This circle has a lot of slices that you have to put attention to and keep updated. If you don’t drive change in the way you do business, then other small companies will start cutting away parts of your big business model and create new value propositions.
In the beginning you won’t realise this, but there is a point of no return. Those agile disruptors have done such a good job in their segment that you can no longer compete with them, so you start switching to other company’s services. Your big circle becomes smaller and smaller and your profit margins decrease. And this is how smaller businesses compressively disrupt a big business.
It is already happening in our industry with the commercial model because of new digital players coming into the market which are more dynamic than us. Maybe in ten years from now we will still research and develop the final medicines, but the commercial part will be taken by somebody else. The reason is the business units are so focused on delivering the quarterly numbers that foreseeing the change and thinking about solutions is not on top of their minds. This is why a position like mine is good to have in a company: to foresee the trends, create urgency inside the organisation and make sure the speed of change is not too slow.
NR: While in a top management position with Bristol Myers Squibb, you witnessed the earthquake and tsunami in 2011. With AstraZeneca you’re facing the COVID19 pandemic. How would you describe decision making in times of crisis?
TK: What was needed in both situations was an authentic leader that tells the truth and doesn’t sugar coat it. During the events in 2011 that put Tokyo at severe risk there were companies that took weeks to discuss what to do. At BMS we decided within three days to relocate the headquarters from Tokyo to Osaka to ensure people’s safety. The whole executive team moved there and started to take decisions the next day. We also allowed every employee in the affected area to evacuate with their families, the move being paid by the company. Some foreign leaders in other companies just left the country at that time. But this way you loose your trust in front of your team.
”In times of crisis you need to lead by example and be in the middle of it.
It was a decision at risk we took, because of the costs involved. But in critical situations there is no time to walk a decision through the whole organisation and wait for somebody located far away to agree, considering the fact they weren’t exposed to a nuclear risk, as Tokyo was in those days. So, the crisis manuals are good, but then you have to have the ability to decide fast and ensure the employees and their families are safe.
Being a pharmaceutical company, it is also important to ensure our products keep reaching the patients. So, next thing you do during a crisis it to decide what are the critical business processes that need to run in order to provide the drugs that may save people’s lives, such as certain power antibiotics or cancer medication.
With Corona crisis, there is a lot of information going on all media. So we need to cut through the news and create a consistent strategy while making sure to explain every decision to our employees.
”Sometimes, especially during a crisis, communicating the reasons behind a decision is more important than the decision itself.
NR: As you experienced several job descriptions as an individual contributor, team leader or manager, which one fits you the most and why?
TK: I started out as an individual contributor within a matrix organisational structure. That meant I had to influence without authority, which is the most difficult thing to do. But I realised I liked that challenge.
Then I was appointed a team leader. This is a critical promotion in any company. For the first time I was responsible for a group of people, to understand their needs and unique ways of motivation. I was a matrix leader for several years and I had to drive business improvement. Another critical skill you develop in this position is to create an agenda and build the momentum behind it. You need to be an internal salesman for the agenda you want to drive with your team.
After this, I became a leader of a multilayered line function and it’s what I did for the last 10 years. I am, I could say, a program director of change for systems, processes and strategy. In this role I don’t sell anything myself. I have a shared service function, meaning I have to drive a change agenda to other business units as well, because my success depends on their success. So again, I have to influence without authority. And I think this is the role that suits me the most, because it gives me the opportunity to bring broader change and scale innovation into an organisation.
NR: You are a well rooted Japanese resident, as you left Germany 20 years ago to move and live here. What kept you close to Japan all this time?
TK: Initially it was about adventure and a personal relationship and I never thought I would stay here for so long. But I fell in love with the food, the culture, the cleanliness and convenience of things. I also found myself in resonance with Japanese people’s sense of duty, humbleness and quality of service.
My first two years in Japan happened due to a scholarship I received and this provided me with some kind of a safety net. Yet, since year three I had to find a job for myself. It was not easy in the beginning, especially for a foreigner, and it takes a lot of adaptation to a different culture and perspective. Learning the language is another tough process, but Japanese is an essential skill if you consider staying here for the long term.
Still, difficulties increase your competitiveness. Me in Germany vs. me in Japan, persevering in a rough environment, lifted my value proposition which is much more higher here than it would have been in Germany. Unique opportunities came to me, as I could combine my western thinking with the Japanese ways and add the language skill that became extremely valuable.
”My recipe to personal happiness is that I’m always open to everything. In the morning, I’m usually a happy person just because I woke up.
There isn’t a perfect place in the world, so one should not feel discouraged. Instead, the mind should stay open and stop the comparison to familiar things. Stress is subjective and is happening mostly in our heads. If we succeed in managing this, I think we could live anywhere.
NR: Torsten, thank you again for this generous share of information.
TK: Thank you, Tudor!
