JAPAN, GERMANY and ITALY: In a crisis, the German will say: “the situation is serious but not hopeless.” The Italian will say: “The situation is hopeless, but not serious.”

Of course, there are variations among Japanese persons and organizations as there are among Europeans and Americans. But in Japan, more than anywhere else except perhaps in Korea, an organization (be it a company, school, or cooking club) exists for the main purpose of continuing to exist. And Japanese have a great ability not to see threats to existence as long as the existence continues. One way to think of this is in terms of Germans and Italians. In a crisis, the German will say: “the situation is serious but not hopeless.” The Italian will say: “The situation is hopeless, but not serious.”
Okay, it’s a bad joke. But during the crisis in Japan that followed the collapse of the bubble, we saw many Japanese companies that we called Zombie companies. They were dead, but they didn’t know it. Their people kept going to work. They kept getting paid, even as the companies piled up hopeless levels of debt. Everyone acted as if nothing had happened, until the doors literally were closed and barred. Or take the example of WW II. The war was over after the Battle of Midway. Yamamoto knew that. Tojo knew that. The Emperor knew that. But they proceeded for four more years as if Midway had not occurred until it was completely, totally impossible to deny. Nor did this seem crazy to the Japanese. For them, the very essence of shame would have been to negotiate some compromise peace without having proven that they had resisted to the complete, bitter end. Literally, they had to spill their guts on the ground before they could justify making peace to themselves, even though, intellectually they had known for four years that the game was up.

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