The Nomura Game

Reading an article on Nomura's efforts to radically change its culture and absorb people from Lehman got me thinking. From whatever I have read/experienced about either management or leadership, the effort looks doomed to fail miserably. Nomura is clearly thinking "the best of both the worlds", but all I can see is a "fall between two stools".

On one hand Nomura is trying to change the culture of its own employees from top up. As far as I know, the Japanese society is very hierarchical and people respect "elders", every member is expected to respect his role in the chain. By removing seniority as a defining factor and bringing in performance related pay Nomura seems to be moving in the right direction from corporate point of view. However, that does not mean that it will not create any resentment. I am not sure to what extent these decisions were debated company-wide to cushion their impact. The current facts indicate that they were not.

On the other hand it is trying to absorb the talent it bought from the remains of Lehman. Most of Lehman people may find the culture almost as alien as the Nomura employees may find the Lehman culture disagreeable. At the end who can leave will leave, which means Nomura risks loosing the best of its current AND Lehman employees.

From pure management and leadership point of view, I feel it violates three key principles.

First, it is trying to fix something that may not be necessarily broken. It is worth noting that Nomura was able to buy Lehman only because it had been conservative. If it wants to change to "Lehman" culture, the current employees are well within their right to question the sensibility of the decision.

Second, instead of building two distinct, decentralized units Nomura is trying to have one quick merger of two entities that are poles apart. It is like General Motors deciding one fine day that Chevrolet and Cadillac would be made by one unit to achieve economies of scale and share best practices. At best it is going to be problematic, at worst catastrophic. There are better ways to achieve the same result.

Third, it is not making enough effort to overcome the pretty evident communication gap between the two units, accentuated by the language and cultural differences. Without that the decisions, however well thought, will look like enlightened despotism and further alienate people.

Overall, Nomura has got itself in a tight spot. Although the basic thought process has been correct, it looks like that the implementation will run into problem due to lack of communication and lack of consideration for the cultural differences. Nevertheless, I feel that the situation is still not beyond redemption and if addressed right away can help Nomura immensely.