My initial business experience all began overseas. In 1972, at the age of 22, I was sent to Kato Spring of California (USA), the company's first overseas subsidiary established only one year previously. While the overseas expansion of Kato Spring had been a blank page, I was also a blank canvas. I distanced myself from the Japanese expatriate society and devoted myself to learning the ins and outs of sales. In 1978, at the age of 27, I became involved with another corporate first, the establishment of an overseas production base. Although I was not assigned to the location on a full-time basis, I was given the responsibility of management as the president of Kato Spring (Singapore).
  Reflecting on the past, my father's comments were, "I felt that internationalization was absolutely essential. I was 53 at the time and may have been able to do it myself. "However, when I thought about the future, I decided to try and have Yuichi handle it. It would be impossible to have Yuichi experience what I went through when I was young in the Japan of today. Consequently, I thought why not have him gain experience overseas."
My father's objective was right on the button.
  Leaders who have been placed at the top with full responsibility are in a position that is directly exposed to the elements from all directions.
In fact, the Singaporean company had originally been established three years prior as a three-company joint venture together with a Swiss manufacturer who already had operations there and an Australian manufacturer. Unfortunately, matters didn't proceed smoothly. Suddenly, I found myself flying to Singapore, selling our stocks in the joint venture and restarting our company as a wholly owned subsidiary. This time, we weren't allowed to fail. However, we were only provided with 14 million yen in startup funds, and consequently we ran out of capital after buying the main machinery, a typewriter and a company car.
  As a result, I found myself investing my own personal funds to procure used machinery in Japan and ship it to Singapore. I proceeded to apply for permits, layout the factory, prepare mail documents and other administrative tasks in preparation for starting the factory all on my own. I was truly relieved when the production line finally started moving in March of that year. However, there was in fact a soon to be revealed "incident" that I was confronted with, which I must admit shocked me tremendously as the president of the company.

  The problem was people kept quitting. There was even a time when about 80% of the section-manager level company members quit within a year. The business environment was such that the OEM assembly lines operated in Singapore were experiencing an almost 100% turnover of company members each year. In other words, 500 people had to be hired every year to operate an assembly factory that only employed 500 people.
  The greater the number of products manufactured, the greater the amount of machinery repositioning required whenever a product type is changed. A certain level of skill is needed to adjust machinery quickly and without problem. However, the only company members remaining in the company were novices because once a subordinate had sufficient skills following hours of training, they would find employment in another company that provided better benefits. The annual wage increase at the time was also 20-25%, a national policy that had to be accepted. But the Japanese companies that set up operations overseas were having difficulty handling the job hopping practices of the labor force, where everyone seemed to change jobs at a whim.
  Many Japanese people probably read the column "My Resume (January 1~31, 1999), by Lee Kuan Yew the founding father of Singapore, that appeared in the Nihon Keizai Shimbun (the leading business newspaper in Japan). As intended by the founding of the country, Singaporean people are very independent minded. Of course, the situation behind forming the country differs greatly from what Japanese people would imagine since Japan is predominantly a homogeneous country. As the figures for the Singapore population show, 76% Chinese, 15% Malay and 6% Indian, it is an "ideological country" in which many races live in harmony and resist the pressures applied by surrounding countries.
  The people clearly assert themselves. In the office or factory, they do not move simply because a command is given by a superior or someone of higher authority. If an individual recognizes that there is no merit for being there, or if he/she feels intimidated as if work is being forced upon them, they simply quit. One might ask, "Does flattery work?" Well, does appeasement in the form of letting sleeping dogs lie work? Such approaches easily reveal weakness and a lack of resolve, and lead to the ruin of both company and factory. The so-called "Japanese style of management" that was all the rave at that time elsewhere just didn't work there.
  I myself, having directly experienced a different culture within American society, was also truly surprised by this. It was the first major shock I experienced as a leader managing an organization - my company.
  A premise of traditional Japanese management is that company members don't quit. Although the period isn't exactly a "lifetime," there has always been a system of lifetime employment in Japan. It begins with a preparatory period that lasts approximately 10 years after entering the company. During this time, basically all of the company members that entered at the same time remain at the same level. The company member's age and year he/she joined the company serve as the basis for raises and promotions.
  I discussed in the preceding chapter that Japan has a history of utilizing this system to form a company order similar to a human pyramid, and that it basically functioned in an organized manner. Further, this system fulfilled an important role over time and had a purpose. However, the premise that company members will not quit or transfer to another job is not contractual, but rather an unwritten premise.
  Let me give you a typical example. Matsushita Electric Co., Ltd. created an administrative committee system at the beginning of 1987 under the motto of "Administrative participation by 62,000 people." In the year's opening seminar, the chairman of the Japan Federation of Employers' Association at the time, Mr. Sakurada, said (with the intent of being a warning), "Japanese wages have reached the top level in the world."
  Japan and Singapore... I have long thought about how to interpret the distance between these two countries. It is unknown when a company member will quit. Investment into education and training is absorbed like water poured onto parched land. My question was, "Can a foundation for Kato Spring really be built here?"
  I wasn't stationed in Singapore. I left individual responsibilities for management there and managed the firm through business trips, telephone calls and telexes. However, whenever I went and visited the company, the people in the office and factory were always different. When I tried to obtain reports from the site, I was only provided with figures. It was clear that there was no morale among the workers at the site. There is nothing more alarming for a manager than this. However, as I groped for ideas within this anxious environment, I slowly started to learn to view matters from an opposite perspective. The idea was, "administration based on the premise that company members will quit." This was a real fuzzy image prior to the birth of option management.