Report No.7
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Japan Entrepreneur Report No. 7 May 2003
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- Chinese entrepreneur challenges myths of Japanese "business culture"
- Mayor-turned-entrepreneur creates online citizen's media
- Allen Miner to kick off series of Entrepreneur Association events
- Schedule your dreams
- Bits and bytes
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Chinese entrepreneur challenges myths of Japanese "business culture"
Wen Zhou Song isn't one to mince words.
"Popular explanations for Japan's success--the 'Japanese are unique',
Japan is an island nation, it's people are clever with their hands, and
so forth--are nonsense," said Mr. Song in a recent interview with the
Asahi Shimbun.
"Japan's miraculous postwar recovery was the result of doing things in a
way that fit the unique environment of the time, not because Japan itself
is inherently formidable. Japan has no need to confront other nations
with military power. It's been able to co-opt as much technology as it
needs from America, and was able to borrow money freely as well. Japan's
experience of past success is stunning, but it's because Japan tries to
cling to that model of success that things are going badly now," he
asserts.
In short, Mr. Song says, the notion of a unique Japan business culture is
nonsense, and what Japanese companies need now is a no-nonsense attitude
toward business.
Mr. Song has earned the right to comment boldly about business here.
Originally from Shantou, China, he attended graduate school at Hokkaido
University, earning a Ph.D. in engineering. As a student, he developed
construction analysis software that ran on mainframe computers. He
joined a software house immediately upon graduation, but the company
folded within two months, so he adapted his software to run on PCs.
It sold. In fact, it sold very well. There were no directly competitive
products, and in five years the software earned 700 million yen for Mr.
Song. That gave him the wherewithal to develop another product: sales
support software. That sold even better, and in December of 2000, he
became the first foreigner ever to emigrate to Japan after the age of 20
and subsequently list his own company (www.softbrain.co.jp) on a Japanese
stock exchange.
What is refreshing about Mr. Song is that his very success is due to
strong disagreement with much of the conventional thinking about Japan.
Personnel practices are one example.
The typical attitude toward hiring in Japan (and toward business in
general for that matter) would be described in Japanese as "wet" (uetto),
a term that means emotional or sentimental. For example, companies often
display an indulgent attitude toward marginal or even incompetent
employees, retaining them solely because of length of service and/or a
sense of obligation to maintain their livelihoods, in spite of inadequate
job performance.
The opposite of "wet," logically enough, is "dry" (dorai), a term that
means rational, objective, direct and to the point. Mr. Song's beliefs
about employment practices are decidedly "dry." Speaking in the same
newspaper interview, Mr. Song said it's "unbelievable" that Japanese
companies typically pay all new college recruits the same salary, a
practice he views as grossly unfair. Even among university grads, he
says, some are hired to make deliveries and others are hired because they
can hold their own in a debate with the director of a customer company.
Firms don't need people who are all the same, and they have to become
more objective and rational about hiring to remain competitive.
Companies hire skills, not people, he claims.
A "dry" approach to personnel issues, on the other hand, would call for a
range of different salaries for new hires and the elimination of marginal
and incompetent employees. Carlos Ghosn's stunning turnaround of Nissan,
for example, involved substantial downsizing and other severe cost-
cutting measures. Some observers say it would have been impossible for a
Japanese president to take these tough actions, simply because Japanese
managers are incapable of adopting the necessary "dry" attitude.
Does this mean that Japan's companies must bring on 'ringer' foreign
executives like Mr. Ghosn and Mr. Song in order to make and execute tough
business decisions? Both of these men would probably disagree. As Mr.
Song has demonstrated, businesspeople in Japan--and everywhere else in the
world, for that matter--are not predestined to behave in certain ways
because of their particular cultural backgrounds.
Thinkers who examine the interaction between culture and entrepreneurism
around the world tend to favor "dry" explanations of entrepreneurial
behavior. "The challenge," wrote Fernando De Soto in The Mystery of
Capital, "is fathoming which... traits are really the ingrained,
unchangeable identity of a people and which are determined by economic
and legal constraints."
Quoted in the same book, Fareed Zakaria says, "Culture is hot... as an
explanation for social phenomena... Cultural explanations persist because
intellectuals like them. They make valuable the detailed knowledge of
countries' histories, which intellectuals have in great supply. They add
an air of mystery and complexity to the study of societies... But culture
itself can be shaped and changed. Behind so many cultural attitudes,
tastes, and preferences lie the political and economic forces that shaped
them."
I think both Mr. De Soto and Mr. Song would argue that it is not simply
culture itself that renders Japan's managers incapable of taking tough,
rational action, but rather the political and economic rewards and
constraints, both tangible and intangible, that reinforce their "wet"
decisions.
All this is not to say that culture is unimportant. It's just that, in
the way Mr. Zakaria describes, economic and political forces seem to be
slowly but surely transforming business culture in Japan. Increasingly,
it appears that successful firms are the ones adopting the "dry" rather
than the "wet" approach to business. Maybe the message foreigners such
as Mr. Ghosn and Mr. Song are sending to corporate Japan is simple: dry
out.
Mr. Song believes that the typical sales process at Japanese firms needs a
thorough "drying out." He notes that when he started his own company, he
was struck by the low productivity of white-collar employees,
particularly salespeople, and stunned by the tremendous contrast between
them and highly productive and efficient manufacturing workers.
Resolving to improve the sales process, he developed sales support
software with two radically new features.
The first was extreme ease-of-use, including the ability for salespeople
to submit reports via mobile telephone handsets. In an interview with
ASCII Magazine a little less than two years ago, Mr. Song said that 70 to
80 percent of all employees at the typical Japanese firm are clueless
about information technology, and most rarely touch a keyboard. While
those numbers have no doubt improved somewhat since then, computer-
readiness at Japanese companies is still low, and Mr. Song's point remains
clear: information can only be shared and exploited if it is captured
effectively in the first place.
Second, the software does away with written daily sales reports,
substituting pulldown multiple-choice menus instead. This has two
benefits. First, it replaces text with numerical data, which is much
easier to assemble, quantify and analyze effectively. Second, it
eliminates tedious writing and makes reports shorter and more concise,
and therefore more likely to actually be read and used by managers.
The results of Mr. Song's innovations are clear. Today more than 50,000
people at 400 companies use the software, and last year Soft Brain
enjoyed net operating margins of more than 20 percent on sales of nearly
1.2 billion yen.
With a track record like that, Mr. Song has earned the right to critique
the adopted country he loves. Referring to Japan's economic revival in a
statement released earlier this year on his company's Web site, Mr. Song
wrote that all great renewal movements, from the Renaissance to the Meiji
Restoration, began with "self-denial," by which he means the process of
denying the outmoded beliefs of yesteryear and accepting new, unfamiliar
rules.
That process is uncomfortable and requires courage, he says, and reform
is never successful on the first try. What's more, conservatives
denounce such self-denial as self-inflicted punishment, and try to divert
attention from hard realities by extolling the glories and successes of
the past. But constant effort under the conviction of success ultimately
results in positive reform, Mr. Song promises. He says his company's
mission is to support customers who are truly dedicated to reforming
their sales practices.
That's some inspired dry thinking for a wet nation.
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Mayor-turned-entrepreneur creates online citizen's media
When Ken Takeuchi was mayor of Kamakura, he rode in a chauffeur-driven
limousine, presided over a staff of 1,800 and was responsible for an
annual budget equivalent to U.S. $500 million. Today, as CEO of the
nonprofit organization Japan Internet News, he oversees a skeleton staff
of five in the modest ninth floor quarters of an aging office building in
Tokyo's Kojimachi district. And he couldn't be happier.
"Being mayor was a very significant life experience, a wonderful time of
learning," says the soft-spoken Mr. Takeuchi. "But JanJan is my real
lifework."
JanJan (www.janjan.jp) is an Internet-only daily newspaper whose articles
are written almost entirely by volunteer citizen reporters. It is
modeled closely after OhmyNews (www.ohmynews.com), the alternative online
daily that rocked South Korea's establishment and reportedly played a key
role in political outsider Roh Moo Hyun's successful bid for the South
Korean presidency last year.
"Jan-jan" is an adverb describing sound, as the 'ding-dong' of a bell. I
suspect that Mr. Takeuchi had bells of freedom in mind when he named his
publication. His goal is to provide a liberal, citizen-centric
alternative to Japan's staid, conservative newspapers.
Mr. Takeuchi is no armchair philosopher when it comes to criticizing
Japanese media. He spent 20 years as a reporter for the Asahi Shimbun,
writing his share of "seikyoku" articles that focus on interparty
squabbles and the rise and fall of individual politicians and their
factions rather than on substantive issues of real concern to citizens.
So when I arranged to meet him in his office last month I half expected
to encounter a fire-breathing radical. Instead, I came face-to-face with
a neat, mild-mannered man who speaks with extraordinary clarity. Every
response was as precise and economical as, well, the first two paragraphs
of a tightly written news story.
Mr. Takeuchi told me that JanJan just launched in February and still has
only 300 citizen reporters and fairly low traffic levels. This stands in
stark contrast to role model OhmyNews, which boasts 10,000 reporters and
14 million page views per day. A fee subscription model is out of the
question, so JanJan will eventually have to depend exclusively on
advertising for revenue. Mr. Takeuchi's group is now focused on building
solid content and traffic, and will start considering ad placements this
summer.
It would be easy to predict JanJan's rapid failure, given the extreme
difficulty of supporting an online-only publication exclusively with
advertising revenue, the overwhelming dominance of online news by media
conglomerates, and the general lack of independent, media-seeking
behavior by Japan's consumers. But the new online publication is funded
sufficiently to run for the next three years, and it enjoys strong
internal support from a small group of core investors, including Mr.
Takeuchi, who are committed to something bigger than business. They say
JanJan is a publication "of, by and for the people" whose goal is to
"completely rework the traditional concept of media." In my view, that's
something Japan desperately needs, even if the market can't yet support
it.
If you read Japanese and are interested in alternative viewpoints on key
social issues, or are interested in reaching a very highly qualified
audience of socially conscious consumers, have a look at <www.janjan.jp>.
You can also read my full take on Mr. Takeuchi's nonprofit crusade
at<www.JapanMediaReview.com/internet/1051767575.php>.
More next month on nonprofit entrepreneurship.
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Allen Miner to kick off series of Entrepreneur Association events
Allen Miner, creator of SunBridge Venture Habitat, will be the featured
speaker at the first of a series of regular events to be hosted by the
new Entrepreneur Association of Tokyo starting Monday June 2 at the City
Club of Tokyo. Allen will speak in Japanese about entrepreneurship in
Japan and the Venture Habitat concept. Simultaneous interpretation into
English will be provided via wireless headphone. The evening event is
open to all, and will be an excellent opportunity to meet with like-
minded entrepreneurs and aspiring entrepreneurs, says Entrepreneur
Association of Tokyo organizer Dave Mori. See the Association's Web site
at <www.ea-tokyo.com> for more information and signup details. See you
there!
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"Schedule your dreams"
On the way back from taking my kids to the Haginaka Park pool last
weekend, I noticed a seven or eight story suburban office building
alongside Sangyo Doro in Ota Ward. It had large, bold lettering in
English spelling out a single word: Watami.
We had just driven past the corporate headquarters of one of the most
successful young entrepreneurs in Japan today: Miki Watami. Mr. Watami,
who is 44 years old, built an empire of seven different restaurant chains
with more than 340 outlets. What's the key to his success?
"Schedule your dreams," he says. If you set a definite date by which you
want to achieve something, say two years from now, says Mr. Watami, then
it simply becomes a matter of understanding where you are and what issues
you face today, then filling in the gaps between where you are now and
where you want to be two years from now.
That simple but potent advice has been expressed in many different ways
(Mr. Watami's Japanese phrase could be fairly translated as "put a
deadline on your dreams" or "date your dreams"). The earliest reference
I know of is in Napoleon Hill's Think and Grow Rich, written in 1937, and
no doubt the thought, in one form or another, goes back thousands of
years.
In any case, success lies in 'doing' rather than 'knowing'. So start
scheduling those dreams!
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Bits and bytes
Japan's Small and Medium Enterprise Corporation has provided nearly $5
million in matching government monies for SunBridge's 2003 Technology
Fund, a Japan-specific fund that invests in leading edge, early stage
technology ventures. The new fund has placed its first investments,
including SunBridge's first stake in a hardware venture, opto-electronics
startup Fibest (www.fibest.com). The 2003 Technology Fund is set to
close at the end of June. For more information about the Technology Fund
and other SunBridge investment results to date, see the PDF file at
<http://www.sunbridge.com/pr/overview.pdf>.
Longtime Tokyo resident and entrepreneur Kerry Kennedy has launched iTV
Japan, an online streaming video service featuring interviews with
businesspeople, technology gurus and entrepreneurs here in Japan. There
is some outstanding English language commentary, and the service is free.
See <http://www.itvjapan.com>.
Bloggers take note: Gen Kanai, a dedicated blogger whose writing many JER
readers enjoy (http://kanai.net/weblog/), recently moved to Tokyo, and
the other day he pinged me about a mobile blogging conference being
organized by Adam Greenfield for July 5. Details are at
<http://www.marginwalker.org/1imc.html>.
Looking for expatriate digs in Osaka starting this summer? Check out
this large, beautiful, nearly new, foreigner-friendly house owned by a
loyal JER reader. One minute walk from an international school, it will
soon become available for long-term rental. For details see
<http://www.j-seed.jp/rent/osaka.html>.
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Tim Clark
Senior Fellow
SunBridge Corp.
Voice 813.5459.0765
Fax 813.5459.0629
clark@sunbridge.com
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Copyright 2002-2003 Tim Clark
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