‘Three arrows’ of successful policy shaping in Japan
Shaping health policy in Japan can be difficult for Western corporations who are used to bold actions and autonomous decision-making rather than the incremental and consensus-based style favoured in the country. Here, we look at the three essential components to success.
There is an old Japanese legend about samurai Motonari Mouri called the ‘legend of the three arrows’. He instructed each of his sons to break a single arrow. Once they did, he gave them three arrows to break at once. When they could not do so, he explained that combined strength is greater than individual power.
Because of the familiarity with the three arrows in Japan, we like to use a similar model when talking to clients about how to approach shaping the environment and health policy in Japan as a foreign-owned entity. For these purposes, the three arrows are:
· Arrow 1: Ensure internal alignment
· Arrow 2: Adapt to structural barriers
· Arrow 3: Localise your approach to engagement
This article will go into depth on each of these, but first, it’s important to return to Abe and his three arrows. As you may know, the interdependence of the three arrows was key to Abe’s vision; monetary easing could lift prices, but without fiscal stimulus, demand might stall. Both could falter if structural reforms didn’t address rigid labour markets, low productivity, and an aging workforce.
And in fact, part of the reason Abenomics fell short was not fully committing to all three, in particular the third around structural reform.[1]
Likewise, our three arrows are inter-dependent – for reasons which will become clear later on. Foreign corporations hoping to successfully shape policy and Japan’s pharmaceutical industry will only succeed if they commit to all three arrows.
Arrow 1: Ensure internal alignment
Bridging the gap between Western leadership and Japanese staff
Senpai and kōhai are Japanese terms used to describe informal hierarchical relationships. Roughly translated, senpai is a senior person while kōhai is the junior person.
While these terms are not used in the workplace as such, they are good background for understanding its hierarchy, which is demonstrated via tenure, job titles and communication. A kohai typically defers to their senpai, observing, listening, speaking cautiously and rarely pushing back. The senpai provides guidance and represents their team.
This dynamic creates a business culture very different to Western corporations.
The challenge: differences in company culture
Therefore, when foreign leaders walk into Japanese affiliates with a Western playbook, they often find themselves stalled due to these cultural contrasts.
Western corporate culture uses explicit low-context communication, which provides a direct explanation of objectives before considering how to get there.
By contrast, Japanese culture relies on high-context communication: much is unsaid and ‘reading the air’ (kuuki wo yomu) is a critical skill. Many decisions are made by middle-level management through interpreting vague statements from higher levels.[2]
These decisions emphasise the how and assume everyone understands the why and what. As a result, Japanese teams often deliver detail-heavy implementation plans which confuse Western leaders who are expecting crisp, top-down strategic logic.
Also, Western-style individual accountability and swift decision-making can clash with a culture that places value on consensus, long-term thinking and avoiding risk.
Anyone who’s had to reach a consensus on an issue in Japan is likely aware of nemawashi,[3] a process of gradual alignment that avoids public disagreements and leads to smoother implementation after decisions are made. As a result, meetings are often used to formally confirm actions already agreed in private. Western-style back-and-forth debate contrasts starkly with this. In this environment, it is easy for foreign leaders to misread the room.
Consequences: conflicting strategies and ineffective execution
Serious misunderstandings can arise if leaders do not recognise and address these different approaches.
A common example is when Western leaders provide suggestions without realising they might be treated as firm directives. Japanese teams then either go to great lengths to implement ill-fitting suggestions or invest significant effort in justifying why they shouldn’t be adopted. While well-intentioned, this dynamic can lead to inefficiencies and compromised outcomes.
And although practices such as nemawashi can be effective in segmenting tasks between teams, Western leaders must be aware that Japanese teams operate in strong silos to manage risk. They maintain tight control over their specific responsibilities and avoid relying on external parties. This results in substantially less cross-functional collaboration than in Western organisations, and a tendency to propose safe, incremental actions that may fail to meet short-term expectations.
Ultimately, internal misalignment undermines trust on both sides and hinders the organisation’s external engagement goals. The leader can end up micromanaging or over-ruling the team, while the Japanese staff censor what they tell the leader. With most foreign pharma leaders operating on a 3-5 year cycle, they may simply drag their feet and wait for the leader to move on.
Solution: building the bridge
Therefore, it’s crucial that before organisations start work to shape the external environment, they must ensure organisational alignment, being clear on the differences in attitudes to hierarchy, decision-making, leadership and strategy in order to find the middle ground. From there, they can start to forge clear decision-making structures that integrate both Western and Japanese cultural approaches to work.
As many Japanese staff will have limited experience with Western companies, especially new hires from traditional organisations, it’s important to provide long-term coaching to guide staff in how to succeed in a Western-style company culture, including effective communication, how to speak up and frame strategy.
Western leaders also need to understand and adapt to Japanese ways of working[4] and encourage two-way knowledge transfer within the organisation.
Many companies already have some Japanese mid and senior level staff who understand both cultures and therefore how to build bridges. Western leaders should identify, empower and carefully listen to these staff.
Arrow 2: Adapt to structural barriers
Decoding the external environment
In 1853, Commodore Matthew Perry of the United States Navy led a squadron consisting of two steamships and two sailing vessels into Tokyo Bay aboard the frigate Susquehanna. He pressured Japan to establish trade relations with the United States and insisted on a treaty that would allow American merchant ships access to Japanese ports. Lacking a naval force capable of resisting, Japan had little choice but to comply with his demands[5].
This incident, which the locals called the ‘black ships of evil men’ is just one experience with foreign intervention that has bred caution towards external influence on Japanese policy.
Even today the term ‘Black Ships (黒船, Kurofune)’ is sometimes invoked to describe external pressures on Japan, such as trade negotiations with a powerful partner like the 1985 Plaza Accord, or even disruptive foreign competitors like Apple or Netflix[6].
The challenge: structural barriers
With this as background, it’s important to understand the impact of Japan’s current policy framework – which reflects economic nationalism rooted in post-war recovery strategies[7] – on policy shaping efforts.
Foreign corporations seeking to influence public health policy in Japan must contend both with a scepticism towards foreign corporations and a government that often protects domestic companies, particularly in strategic industries.[8,9] We have seen some examples of Japanese domestic nationalism already in the pharma industry, such as the ‘company criteria’ rule which penalised non-Japanese companies in relation to pricing and was only reversed in 2024.[10]
Japan’s policy ecosystem operates through a tight-knit network of domestic stakeholders, informal networks and influence channels that, like mentioned earlier, prioritise consensus as well as long-standing relationships. They are difficult for outsiders to access. However, when opportunities for engagement arise, for example industry hearings at the Central Social Insurance Medical Council (‘Chuikyo’), insiders have likely already reached a consensus, leaving little room for the industry to have a meaningful impact.
Consequences: not penetrating the inner circle
When foreign companies seek to engage in policy advocacy in Japan, they often encounter structural and relational challenges that make it difficult for their concerns to gain traction. Without long-standing relationships or historical ties, these companies may struggle to penetrate this exclusive circle of policymakers and influencers. Foreign corporations also have limited access to behind-the-scenes policy channels and frequently come up against bureaucratic gatekeeping by powerful ministries.
Unlike their domestic counterparts, they often lack the power and co-ordination of domestic business lobbies, such as the Japan Pharmaceutical Manufacturers Association (JPMA) or Keidanren (Japan Business Federation), whose interests may not align with those of foreign companies.
Solution: Mapping the environment
Therefore, any strategy to shape policy in Japan should be designed with this in mind. A key step includes conducting in-depth stakeholder and process mapping to understand when, how and by whom decisions are made – since they are often made well before the more performative ‘formal’ decision-making and official stakeholder engagement opportunities.
As part of this, it is crucial to understand the dynamics between political policymaking, the administration’s policy implementation and the motivations of key players involved. One example that is relevant to the medicines industry is the Japanese Medical Association (JMA). The JMA wields enormous political influence and is a key voice on the Chuikyo where drug price policies are decided. Given the link between drug reimbursement and medical fees under the Health Insurance Act, there is a strong incentive for the JMA to advocate for cuts in drug prices to enable increases in physician fees.[11] Understanding underlying motivations is crucial for meaningful engagement with key stakeholders.
Foreign companies can strengthen their voice through long-term relationship-building, however that isn’t always an option when faced with urgent policy issues. Whether building a long-term presence, or looking for access in the short-term, a key to successful engagement is recognising the right local allies, influencers, and advocacy groups – and not just talking to the usual networks, but instead identifying individuals who can meaningfully influence a specific issue.
In these cases, engaging specialist consultants and advocates can be a real asset.
Arrow 3: Localise your approach to engagement
Balancing Western boldness with Japanese pragmatism
In Japan, foreigners are called gaijins, and they have what’s colloquially known as a ‘gaijin pass’ or foreigner privilege. Gaijin pass means foreigners can get away with speaking more openly than Japanese people, which can be useful when having critical policy and advocacy conversations.
However, Gaijin pass does not always translate to actual influence. In fact, without care and balance, it can lead to exclusion rather than engagement by Japanese organisations who often favour harmony over confrontation.
The challenge: different approaches to engagement
Western firms often push for rapid, high-level engagement, while Japanese approaches tend to be overly incremental and risk-averse.
Many foreign corporations use a blunt approach to advocacy, favouring direct criticism and clear policy recommendations, which contrasts with the gradual and non-confrontational negotiation preferred in Japan. The process of policy-making in Japan tends to prioritise stability, consensus and incremental change over bold reforms.
Efforts to influence policy discussions can be further complicated by communication and cultural gaps. Japanese leaders rely on high-context, indirect communication which takes reading between the lines to a whole new level. Even if they’re fluent in Japanese, foreigners may misinterpret conversations or miss crucial cultural subtexts in policy dialogues.
Consequences: Inadequate balance can impact results
This communication usually frustrates Western leaders, because key messages can seem to them very watered down and lacking in meaning. On the other hand, what a Westerner might view as clear and concise demands are usually viewed as aggressive and rude under the lens of Japanese business and political etiquette.
Therefore, a typical ‘bold’ Western lobbying approach runs counter to how local policymakers work and risks backfiring, which can have long-term consequences for the company. However, a purely Japanese approach may miss taking advantage of the gaijin pass which can give them an edge in achieving meaningful policy shifts, especially when time is of the essence.
Solution: A balanced approach
What this means is that foreign leaders need to find a balance between these two approaches – adapting to a slower, more relational game that rewards patience and insider status, without completely jettisoning bold, autonomous moves that may give them an advantage.
The first step in achieving this balance is to craft a hybrid advocacy strategy that blends evidence-based policymaking with cultural sensitivity – not a modest campaign as such, but one which takes advantage of gaijin privilege just enough to encourage policymakers to take meaningful action without overstepping the line.
This strategy should include developing compelling messaging tailored to Japan’s consensus-driven decision-making process as well as engaging both top-level policymakers and mid-level bureaucrats who shape policy execution.
Leaders should be aware of nuances around messaging and evidence. In the West, it’s possible to have a high-level meeting – for example, a CEO meeting with a government leader – and trigger change as a direct result.
In Japan, however, best practice is to combine high-level messaging for the senior-level meeting, but provide detailed leave-behind materials. If the senior leader is generally in agreement with the high-level messaging, then their advisers will carefully study the leave-behind material. This is where the real impact can occur. On the other hand, engaging directly with mid-tier officials is unlikely to be successful without them receiving permission to move on an issue.
As such, companies should be ready to prepare appropriately nuanced messaging for senior-level meetings, as well as develop a ‘leave behind’ document containing credible evidence-backed messaging that is specific to Japan.
Embracing all three arrows
To succeed, corporations, their leaders, and all employees must execute on all three interconnected arrows. Without any one of these, strategies are bound to fall flat.
Internal misalignment weakens execution, poor external mapping leads to misdirected efforts, and an ineffective strategy undermines advocacy.
The formula for success might look like:
Foreign corporations wanting to effectively influence Japan's policy and regulatory landscape must ensure they and their staff are fully engaging with all three arrows and not fall into the temptation of neglecting any of these key elements. However, if they can address all three, then they set themselves up for the best chance of effectively shaping medicines policy in Japan.
Confluence Health works with our Japanese partners to bridge gaps from both sides, using our insider understanding to craft a planned, considered policy-shaping approach that works for all levels of seniority. After many years of working with companies and clients to shape health policy in Japan, we know how to facilitate interaction between you and key Japanese stakeholders. Please contact us if you’d like to discuss this in more detail.
References
Nippon (2022) - Abenomics: the reasons it fell short as economic policy
Kopp R. - Japanese executive communication skills
Forbes (2024) - The nemawashi way: the key to employee engagement and decision making
See Upla Consulting - Mastering cross-cultural management: leading teams in Japan
Asia for Educators - Commodore Perry and Japan (1853-1854)
Tse Yk (202) - Black Ships? Locating Netflix in Taiwan and Japan
Takada M (1999) - Japan's economic miracle: underlying factors and strategies for growth
Gabrielle R (2021) - Japan and the power of production: Japanese protectionist policy since the mid-19th century
Suginohara M (2008) - The politics of economic nationalism in Japan
PhRMA (2024) - How could the 2024 NHI drug pricing reform reduce drug lag and loss?
Pharma Japan (2021) - Savings from off-year drug re-pricing should go towards medical fees: JMA Chief
