It means 'to dig around the roots' in Japanese, as a gardener might carefully do to a bonsai tree before transplanting to a new pot.
The term has come to mean doing the time-consuming work of building a consensus within a Japanese company before getting a formal decision - or even asking for one.
Mark Fields, president of Mazda Motor Corp., admits, 'I will never be an expert on Japanese culture.' Yet he is keenly aware of the frustrations and benefits of nemawashi. It delays decisions. But if done properly, nemawashi allows making a decision much faster than in a Western-style company.'The issue of nemawashi is important. My issue is that it takes too long,' Fields says.
For all of his frustration with nemawashi, Fields has become a master of the technique. He took over in 1999 amid considerable doubts about his ability. As president, he worked hard to convince managers and workers that Mazda must change in order to survive. His work is paying off. Last year, he persuaded the work force to accept Mazda's most sweeping restructuring effort.
There is a sense of urgency at Mazda. The company has estimated a net loss of ¥49 billion, or $412 million, in the year ending March 31. It was the company's sixth loss in the last eight years. In Europe, Mazda's sales slumped last year, and in Japan the company lost market share to Toyota and Honda.
To ensure Mazda's long-term survival, Fields counts on deep cost cutting and a worldwide array of new products. Fields - who called Mazda's strategy the Millennium Plan - wants to eliminate Mazda's losses this year. Over the next five years, he wants to earn a 6 percent return on assets. The company will reduce purchasing costs 15 percent and slash its large debt by half.
Over the next four years, Mazda will launch 16 models or major vehicle redesigns in Japan, 11 in North America and nine in Europe. Fields remains committed to the 'Zoom Zoom' advertising campaign, which appeals to youthful-minded motorists who are passionate about their cars.
Of course, all automakers would like to appeal to that group. So Mazda must convince consumers they have a better 'Zoom Zoom' experience with the MPV minivan, for example, than its competitors.
A veteran marketer such as Fields should feel comfortable working with the 'Zoom Zoom' campaign. But doubters still question whether he can lead Mazda through the restructuring. Fields lacks the charm that allows Nissan Motor Co. Ltd. CEO Carlos Ghosn to inspire his workers even as he asks them to accept painful cuts.
But car company presidents are not always popular. Ford Motor Co. President Jacques Nasser is not loved by his employees, but he is effective. If judged by his accomplishments, then, Mark Fields must be given high grades. Indeed, he is the most underrated chief executive in the Japanese auto industry today.
`A MAN TRANSFORMED'
Gradually, though, he is winning admirers. Stephen Usher, a Tokyo auto analyst for Jardine Fleming Securities (Asia) Ltd., was among those who came away underwhelmed after first meeting Ford's former marketing talent.
Usher had a positive impression after a series of meetings in February. Fields displayed a notably stronger understanding of the actions the company must take, he says. 'He strikes me, over the last 12 months, as a man transformed.'
Moreover, Fields' grasp of the challenges facing Mazda has permeated the company. 'What he's done in terms of internal communications is very impressive,' Usher says. 'It is almost business schoolesque. What he's done is get everybody on board. People are very aware of what the problem is, where the company is, what they individually have to do, and where the company is going.'
Still, skeptics remain. They talk more about Fields' shortcomings than about the arguably worse performance of some of Japan's other automotive chiefs. Critics ask if a marketing man can run an automaker. Others dislike Fields' natty clothes, his constant use of business-school jargon, his directness. Some cite these as signs that he lacks the dignity of a CEO.
In his office, Fields is the opposite of a gray-suited, elder statesman of corporate Japan. Ask a Japanese business executive about the future of his company, and he might drone on about his corporate philosophy. Fields, in his double-breasted suit, strides to a white board to diagram his plans for Mazda. A bottle of Diet Coke sits on his desk where a Japanese boss might keep his cup of green tea.
Fields displayed a breezy confidence at a press conference that outlined Mazda's Internet build-to-order system, the first in Japan that allows customers to request options in combinations not available in the catalog. He quickly took off his jacket. After declaring, 'The glare from this computer screen is too bright,' he donned a pair of wraparound sunglasses. The newspaper photographers scurried for close-ups.
Is that dignified? No. But this year Mazda has no new models in the Japanese market. With nothing new, Mazda will try to attract customers through 50 product actions, as Fields refers to limited editions and new color combinations.
If a picture of Fields in sunglasses gets the company publicity, he will take it. He may not understand Japanese culture, but he knows marketing.
The issue of dignity is code for the real issue: his youth. Some critics still cannot accept such a youthful chief executive. He turned 40 in January, an age that would be too young to join the board of directors at most Japanese companies.
Among some Mazda employees, Fields' age is an insult against the company's older Japanese managers. Fields was, after all, the third president of Mazda in as many years named by Ford Motor Co., which owns a controlling 33.4 percent of Mazda. Does that imply that none of Mazda's vice presidents are talented enough to run the company?
'For the Japanese market, he is extremely young,' says Koji Endo, auto analyst at Credit Suisse First Boston. 'So I wonder if he has been accepted by the conservative, aged Hiroshima people. I think it's hard for him to put a tight grip on such people. He could become president at Ford in the future. Nobody thinks he's stupid or dull. But he is young.'
The age issue comes up repeatedly. The head of the union at Mazda immediately discusses age, if only to refute it. 'I don't feel that age is an issue. He can be respectful,' says Kazuyuki Oda, president of the Mazda Workers' Union.
The rapid turnover among Ford executives at Mazda also has undermined Fields' credibility. 'Are the Ford dispatchees just here for two years to help their careers?' asks one young Mazda employee, who does not want to be named. 'They will be here for only two years, but we will be at Mazda into our 50s.'
Fields admits he will not be at Mazda for 10 years. 'Down the road, there should be a Japanese president at Mazda,' he says. But those are issues for the future. For now, Fields must build his credibility to win support for his Millennium Plan.
Kunihiko Shiohara, auto analyst at Goldman Sachs (Japan) Ltd., offers a sarcastic compliment to Fields - and Mazda. 'The function of Mazda is not taking leadership; it's just filling in some blanks in (Ford's) brand matrix globally,' he says. 'Mark Fields is a reasonable person to be in charge of Mazda management. But if Mazda wanted to go for a growth strategy independently, then Mark Fields is not the appropriate person to take leadership.'
But getting Mazda placed within Ford's global brand matrix was a major accomplishment - and one for which Fields can take credit. When Henry D.G. Wallace became the first non-Japanese president of Mazda in 1996, he spent an enormous amount of time coaxing Ford and Mazda to coordinate product plans. The first result was the Ford Escape and Mazda Tribute, jointly developed compact sport-utilities that debuted last year. But the slow product coordination delayed Mazda's new-product programs. Hence this year's lack of new models.
At first, Japanese journalists denounced Wallace, warning that Ford-style management would bring on massive layoffs. Wallace eventually won respect for his statesmanlike bearing and Mazda's improved performance. He also deflected criticism by using former chief financial officer Gary Hexter to take the blame for harsh measures, such as revoking contracts of suppliers who failed to perform.
Yet, Wallace failed to resolve Mazda's biggest problem: its currency exposure. Mazda exports approximately 70 percent of its production, more than any other Japanese automaker. That leaves it at the mercy of the yen's fluctuating exchange rate.
When Fields took over, Mazda had enjoyed its first profitable year after five years of losses, and its highest earnings in 14 years. But the company was perhaps too eager to announce its recovery. Mazda executives minimized the impact of favorable exchange rates and one-time gains from asset sales. As a result, Fields found 'a very low sense of urgency' at the company.
Mood of distrust
Moreover, Fields says, labor relations were 'not robust.' That is stating it weakly. The previous union leadership had taken the extreme step of flying to Ford headquarters in the Detroit suburb of Dearborn, to voice their displeasure with Fields' predecessor, James Miller. They complained to Wallace, who was Ford's chief financial officer at the time. Miller eventually left Mazda and Ford, citing unspecified health reasons.
Understanding this mood of distrust, Fields decided not to announce a shakeup within a month or two after his arrival. First, he needed to talk to the employees. 'My first role is to promote change,' he says. 'My second role is to communicate, communicate, communicate.'
Starting in January 2000, he held six off-site sessions for the board of directors. They discussed Mazda, market conditions and strategy. In July, Fields launched a leadership program for all employees.
He did not confine his communications to top management. In his office, alongside photos of his family and the launch of a pickup truck at the Ford-Mazda assembly plant in Thailand, he has a photo of himself with the Ujina factory's paint-shop staff. That was the first of what became twice-a-month lunches with workers on the plant floor.
He also sent monthly e-mails to everyone. He receives 10 to 15 e-mails from employees every week, ranging from secretaries and assistant general managers on up.
'They're pretty blunt,' he says. 'It hasn't been such a deluge that I haven't been able to respond,' although he sometimes delegates some replies. He has face-to-face meetings in groups of 200 or less. He also meets with groups of female employees and under-40 staffers.
He meets with Oda, the union boss, once a month. He also attends bargaining sessions during the March Shunto, or annual contract negotiations.
'That's very unusual,' Oda says. Most Japanese automotive presidents meet only when there's a crisis. Some don't even attend the Shunto labor-management council meetings, Oda says. 'He has emphasized the importance of closer communications. Mr. Fields understands the union's thoughts.'
In small groups or by departments, Fields estimates he has met more than 5,900 Mazda employees in Japan. But the centerpiece of his nemawashi campaign was the leadership courses. In three-day sessions for 2,000 people at a time, senior managers taught managers, who in following sessions taught their staff. The curriculum: basic business skills. Topics ranged from cash flow to foreign exchange and the issue of excess capacity.
Along the way, a leader might ask the attendees how they would reduce Mazda's currency risk. That forced employees at all levels to reach the inevitable conclusion: Mazda had to build more cars outside Japan. And that meant the automaker would have to reduce production capacity at home.
'I believe it is a very good background for a very good understanding' of the situation facing Mazda, says union chief Oda.
Fields admits the sessions were tightly controlled. 'The process was participatory; at times it was not democratic,' he said. 'Sometimes I said, `This is the consensus.' '
The result was a work force that could embrace the Millennium Plan, even though Mazda had to close an assembly plant.
GETTING A PLANT
Meanwhile, he was working on Ford, visiting headquarters in Dearborn every three months. Three times last year, Fields met Nasser to argue for Mazda. From Ford, he got what neither Wallace nor Miller had been able to get: an assembly plant in Europe (see related story on Page 16). In addition, Mazda has been designated as Ford's center of excellence for four-cylinder gasoline engines and mid-sized front-wheel drive platforms.
Meanwhile, he got Mazda employees to accept the shutdown of Ujina plant Number 2 in Hiroshima, plus an 18 percent reduction in the salaried Japanese work force. So far, 1,800 staffers have accepted early retirement.
Fields is not finished, either. In the first week of April, he is to begin taking employees, suppliers and government officials through Mazda Mirai. This presentation of future products and concept cars is intended to demonstrate that Mazda will grow and prosper, not just cut and consolidate. ('Mirai' means 'future' in Japanese.)
But Fields remains frustrated by the stately pace of Japanese decision-making. This year he put Mazda's ringgi system on the Internet. It once required more than 15 stamps - the Japanese equivalent of a signature - to approve a decision on major issues, such as the price of a new model or the sale of a company-owned dealership. The process could take up to 45 days, as documents circulated in a special blue envelope.
'Some of them had hair on them' by the time they arrived at the president's desk, says Fields. Now all top managers approve the documents online. It takes as little as five days. Fields signed some by e-mail at the Davos conference in Switzerland.
Now that he has agreement on a restructuring plan, Fields must make it happen. 'He's got five years of misery ahead,' says Usher of Jardine Fleming. 'It's not going to be easy. But I think he's off to a strong start.'
E-mail writer James B. Treece at [email protected]