University of the Philippines
Diliman
National College of Public Administration and Governance
Paper
November 2022
A Report on Wise Leadership and
Wise Capitalism
Luis Sidney N. Mariano
I - B Public Administration
PA 111 - FXY
Prof. Abigail A. Modino
Subject Teacher
A paper presented to the National College of Public Administration and Governance,
University of the Philippines Diliman in partial fulfillment of the requirements for the course,
Management of Organizations.
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A Report on Wise Leadership and Wise Capitalism
Luis Sidney N. Mariano
Hirotaka Takeuchi’s journal article Wise Leadership and Wise Capitalism talks
about his two papers: The Wise Leader, the one with Ikujiro Nonaka, and The Great East
Japan Earthquake, the one with his students in Tokyo and Tohoku. These concepts can
be traced back to Aristotle’s three forms of knowledge: phronesis is practical wisdom or
prudence
that
gets
power
over
the
other
two,
such
as episteme (science)
and techne (skills). He explains that phronesis fulfills the gaps between the two and
guides the managers into looking at the higher point of view and making the right
decisions from that perspective. People were content with tacit and explicit knowledge in
management for a long time, purely based on episteme and techne. However, he and
Nonaka discover that in times of calamities, a higher-order of knowledge that
is phronesis in the form of “wise leadership” comes into life. The wise leadership’s six
identifiable abilities: judging goodness, grasping the essence, creating shared contexts
or ba, communicating the essence, exercising political power, and fostering practical
wisdom in others. To understand this further, Takeuchi focuses on the positive role of four
Japanese companies that have helped the response after the 3-11 triple disaster in terms
of immediate action and relief efforts, emphasizing the common good. Consequently, the
companies were as well heavily criticized for prioritizing “toku,” or the common good,
rather than expanding capital gain. The point is that these Japanese companies are
enculturated to live in harmony and contribute to society. This new approach to capitalism
is called “wise capitalism” because it considers economic and societal value. In this way,
business becomes much more sustainable and believed to be lasting for a long time.
Lastly, Takeuchi recognizes that discontinuity such as the said catastrophe is constant,
but because of his transformational and idealistic idea on wise leadership and wise
capitalism, the future now seems more palpable.
One of my reactions to the article was that a leader could empower and let others
believe they are capable of leading too. One good example was when Yanai Tadashi,
CEO of Fast Retailing, was caught eating at a sushi restaurant after the earthquake and
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tsunami hit. Tadashi pointed out, “the leader should trust that the organization will act
autonomously to do the right thing and should feel comfortable about being on ‘auto-pilot’
mode.” Some people might view what he did as irresponsible or arrogant, but he trusted
his employees to control the crisis, as many of their retail stores were affected. In fact,
when Tadashi sent the signal for store managers to act on their own, some decided to
open the stores still and keep the signs on—helping customers who needed clothes. Such
empowerment is derivative of Elton Mayo and Mary Parker Follett’s contributions to
human relations theory that lets employees create their own standards and act on their
own to achieve those, and a leader not having “coercive” (power over) but “coactive”
(power with) power. Hence, a leader does not keep the power all to themself but inspires
their employees to be leaders themselves, banking on their expertise and unique
capabilities.
Complimenting the first reaction, a leader is also a natural storyteller in sharing a
vision and can quickly impart practical wisdom to others. For example, because of Keniku Kai’s mission, vision, values (“To create shining examples of private sector hospitals”),
they made a system where managers took the day and night shifts while the staff
members went home to check on their family, formed relationships within the organization
because of living together in an apartment, and developed ideas and strategies as to how
they could better serve their patients. Because of Lawson’s philosophy, Happiness and
Harmony in Our Community, they provided lunches and desserts when there were no
lunch services in Soma City for the elementary schools after the disaster. In addition,
Takeshi Niinami, CEO of Lawson, respected the Mayor of Soma City’s decision when he
declined the celebration for Lawson’s reopening—and the innate instinct of the franchisee
to provide additional desserts for the students. Because of Yamato Transport’s three
precepts about responsibility and respect, they disregarded the cost, did not worry about
profitability in light of the events, and decided to donate 10 yen for each parcel sent
(almost 40% of Yamato’s net profit that year) by the company. To sum it up, all the
companies have made decisions and taken actions that serve the “common good” that is
placed on their mission statements, first and foremost. Chester Barnard’s theory of
cooperation and organization, which underscored common purpose, further solidifies why
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these companies did what they did. That is to say, a leader, as a visionary, is a master at
narrating this and engaging with their constituents to accomplish it.
In response to the article, I think that the most crucial aspect of a leader is that they
have the initiative to lead change; the reason behind that is because they have high
emotional intelligence and can easily understand both people and situations. It is best
described by Koji Higasa, CEO of Yamato Transport, who said, “If leaders don’t go to
the gemba (where the action is), they can’t make the right decisions and people often
won’t listen.” Immediately after the incident, for instance, besides Higasa going to ground
zero in Tohoku, his company delivered relief supplies with 200 trucks and 500 people in
action, and 40% of their net profit went straight to aid. Fast Retailing donated about 120
million yen of cash and delivered 700 million worth of clothes. Ken-iku Kai sent off a car
with water, food, and medical supplies to a hospital and reopened its own hospital for new
outpatients. Lawson opened some of its stores and prepared over 180,000 hot meals for
the victims. They all responded quickly, and people’s welfare became the heart of their
relief efforts. These CEOs empower and work with a collective goal with initiative—the
same as Barnard’s theory of having a common purpose with communication and initiative
altogether. If an organization cannot accomplish its purpose, it will not survive; the same
is true when it has purpose alone and lacks communication and initiative. Therefore, the
first step to becoming a leader is “to start” with as simple as having genuine care for
others; by then, a leader can empower and work with their employees (and other
organizations) to achieve a common goal.
In conclusion, there are still many definitions of leadership, but three general points
stay the same: empowerment, vision, and initiative. Leadership is different from
management: a leader enables others through influence and motivation to contribute to
the organization’s goal, while a manager takes care of controlling an organization or group
to achieve specific objectives. The terms are interchangeably used, and that is because
someone can be both a leader and a manager, which is just the best type of all. There is
one caveat: being great at one does not mean becoming great at the other. In this paper’s
case, the CEOs both applied leadership and management; in so doing, they accepted the
discontinuity brought by the 3-11 triple disaster and chose to be creative in finding
solutions that both they and society would benefit from in lieu of just standing still.
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Bibliography
Barnard, C. I., & Andrews, K. R. (1968). The Functions of the Executive: Thirtieth
Anniversary Edition. Amsterdam University Press.
Human Relations Theory of Management - Explained. (n.d.). The Business Professor.
Retrieved November 5, 2022, from
https://thebusinessprofessor.com/en_US/management-leadership-organizationalbehavior/human-relations-theory-of-management
Takeuchi, Hirotaka. "Wise Leadership and Wise Capitalism." Kindai Management
Review 1 (February 2013): 15–26.
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