The New Meritocracy

In the past forty years there has been a change in America that is relevant to Japanese business people doing business in America.

As a business consultant I work with Japanese businesses who are buying American companies (film studios, golf courses, service businesses, etc.). My Japanese clients often try to evaluate their American counterparts and prospective lawyers based on the university the Americans attended. My clients prefer to work with American business and legal people who attended Harvard University. They also seemed comfortable with graduates of Yale, Princeton and a few other universities.

I tell my Japanese business clients to reject this way of choosing American partners. America has changed. My clients usually listen, but many Japanese business people working in America do not know about the change.

Over the past twenty years, many Japanese businesses found that choosing a colleague based on their Harvard, Yale or Princeton background did not guarantee an honest relationship. Graduates of any American university occasionally turn out to be dishonest.

Two things seem to be happening. First, I think many Japanese business people are making decisions about America based on their experiences in Japan. Many seem to feel that a graduate of Todai, Kyoto University or any other top ranked school is a sign of honesty. I don't know if that is true in Japan, but it is not necessarily true in America.

I have dealt with several dishonest Americans who graduated from Harvard, Yale, Princeton and other prestigious schools. They did not usually go to jail because of their dishonesty; they made a good living while being dishonest, but they constantly had to find new customers to cheat -- often foreign business people.

The second reason that Japanese business people make a mistake in choosing American business associates based on the university attended, is that America has changed.

Before 1970 and certainly before 1960, America had a distinct class structure. There was a top social class, a middle and a bottom class. There was very little movement between classes and class was important in business management. Before 1960, most members of the top social class (less than 1 million people) attended the top universities and were given priority in admission to the universities. Before 1950, a top university had more than 75% of its students from the top social class. The most powerful law firms and the top managers and owners of corporations were frequently members of the top social class. Entry to the top social class was difficult or impossible in one generation. Only the children of wealthy business people could rise into the top social class by going to the right schools and universities and behaving appropriately.

Since members of the top social class had a large number of close friends, more than fifty in nearly all cases, and had several thousand close associates, and belonged to over-lapping clubs and associations, there was camaraderie and probably a fair amount of internal honesty and loyalty to the social class.

It was this top social class and its internal loyalty that many Japanese business people coming to do business in the United States hoped to be associated with, I believe.

Starting in the mid-1950's top universities began changing America and made it more meritocratic and less a class society. Harvard, Yale, etc. began selecting students for admission based on unbiased public test scores. By 1960 the majority of college admissions were based on unbiased public test scores, not on membership in the top social class.

As a consequence, by the 1970's the top social class became much less important, less powerful. Top lawyers, top corporate executives became increasingly selected based on intellectual merit.

That is the way it is today. America has weak social classes, and America is more of a meritocratic society. Choosing business associates based on university credentials will give a measure of intellectual merit, but Japanese business people need to find other ways to evaluate honesty.

I tell my clients the best way to evaluate honesty in an American is to carefully examine their past business dealings with friends and strangers.