docomo japan s wireless tsunami how one mobile telecom created a new market and became a global fo phần 1 pdf

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JAPAN’S WIRELESS TSUNAMI

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DoCoMo JAPAN’S WIRELESS TSUNAMI How One Mobile Telecom Created a New Market and Became a Global Force

J O H N B E C K

A N D

M I T C H E L L WA D E

American Management Association

New York •Atlanta •Brussels •Buenos Aires •Chicago •London •Mexico City San Francisco •Shanghai •Tokyo •Toronto •Washington, D C.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the pub- lisher is not engaged in rendering legal, accounting, or other professional service If legal advice or other expert assistance is required, the services of a competent profes- sional person should be sought.

Library of Congress Cataloging-in-Publication Data

1 DoCoMo—History 2 Cellular telephone services

industry—Japan—History I Wade, Mitchell E II Title.

HE9715.J3 B435 2002

384.3’06’552—dc21 2002008312

© 2003 John Beck and Mitchell Wade

All rights reserved.

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Special discounts on bulk quantities of AMACOM books are available to porations, professional associations, and other organizations For details, con- tact Special Sales Department, AMACOM, a division of American Manage- ment Association, 1601 Broadway, New York, NY 10019.

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For Roger

—JB

For my parents

—MW

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Introduction ix

Chapter One: Love 1

Chapter Two: Inequality 39

Chapter Three: Impatience 73

Chapter Four: Luck 103

Chapter Five: Fun 147

Chapter Six: Strength 193

Afterword 213

Appendix A: Intimacy and M-Commerce 219

Appendix B: Interview with Kouji Ohboshi 225

Index 233

vii

C O N T E N T S

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We have a confession to make: This isn’t the book we thought we weregoing to write And if you’re looking for a safe, detailed history of anexceptional company, this isn’t it.

Let us explain NTT DoCoMo is a truly exceptional company.

Largely unknown outside Japan, it has created more wealth in recentyears than almost any other company in the world (The Stern StewartWealth Added Index [WAI] compares share-price increases and divi-dends to the cost of equity for 5069 firms worldwide, from June 1996

to June 2001 DoCoMo is the only Asian firm in the WAI top ten, andone of only three from outside the United States.)

Originally spun off from a hidebound bureaucracy, DoCoMo wasthe kind of startup that might simply have faded away Instead, it hasbecome a true global superpower It has over 30 million paying Inter-net customers—as many as America Online—but got there five timesfaster Its technology is a full generation ahead of anything in theUnited States or Europe And it is rapidly acquiring stakes in everymajor global market Insiders believe this Japanese powerhouse coulddominate the new economy, just as Sony and Toyota have dominatedthe old one

So the elements are there for the book you might expect: a classic(if conventional) high-tech success story What’s more, this is clearly asuccess story that matters, truly, to the entire industrialized world Forsome time now, just about every telecom you can think of has beeninvesting and positioning and preparing for the Big Mobile CommerceBoom And many other businesses have been watching closely, because

ix

I N T R O D U C T I O N

mobile data is one of the very few things that seem capable of bringingthe good times back It’s the economic grail, or at least one of them: adisruptive information technology that begins once more to drivegrowth in stock prices, employment, wages, and housing—just aboutall the markets that matter But the Boom hasn’t really happenedyet…except in Japan When you look a little closer, what that reallymeans is that it has only happened, so far, for one company: DoCoMo.

So anyone who cares about recapturing boom times—anyone whowants to see the tech sector come roaring back—needs to knowDoCoMo’s story Certainly, all the players who are now investing forthis wireless future (as well as the skeptics not investing) need to know.Yet the one company that has really pulled this off has remained almost

an unknown Those who do care about wireless know something aboutits success But most of them write it off with explanations that, stripped

of their camouflage, boil down to “Oh, those wacky Japanese!”

To us, that seems like a mistake, and that’s why we began thebook John had lived in Japan, consulted all over the world, andtaught international business for twenty years.* He knew that Japanwas on a different continent, not on a different planet Mitch, who hadspent the same twenty years looking at how people actually use infor-mation, knew that driving the adoption of a complex new technologywas getting harder just as the real-world impact of those technologies(or at least their potential impact) was growing much larger And both

of us were conducting wireless-commerce research at Accenture’s tute for Strategic Change, a think tank focused on ideas that lead toimmediate management action

Insti-From this perspective, it seemed obvious that DoCoMo’s successreally matters We felt strongly that no company that had succeeded sothoroughly—especially in a field with so much intense and skillfulcompetition—could be ignored After all, DoCoMo had accumulatedthat AOL-size user base, in a market where paying users were scarce

It was reaching milestones, such as a market cap that, for a time, made

it the second largest company in the world Only a few years old, it

*Throughout this book, the two authors will be referring to each other by their first names, John and Mitch.

was big enough to start buying significant stakes in companies likeAT&T Wireless Given all that, the lessons from its core success, nomatter how Japan-specific, would surely be of use to other competi-tors Who knows? They might even hold the key to starting up thatBig Mobile Commerce Boom.

So with the generous support, unflagging enthusiasm, and less industry knowledge of Masakatsu Mori and Chikatomo Hoda atAccenture, we began to study the case of DoCoMo Colleagues there,led by Meiko Ueyama and Junko Ohhira, provided Japanese-languagedocuments, detailed analytic material, and company expertise thatsimply can’t be found anywhere else Then Yuiichiro “Pat” Kuwahata,DoCoMo’s head of International Public Relations, with the blessing ofCEO Keiji Tachikawa, managed to line up interviews for us with all ofthe top executives in the firm These in-depth discussions provided uswith unprecedented access; we knew we had a chance to crack thecode—to really understand why DoCoMo’s i-mode service had sweptits entire national market by storm at exactly the moment when wire-less data offerings worldwide were being met with a resounding yawn

match-We began our research looking for strategies, tactics, technologies,details of execution and leadership—all the ingredients that case stud-ies traditionally focus on And that’s what we found, at first But once

we got behind the DoCoMo curtain, and began to hear directly and atlength from the people who had actually made this success happen, wediscovered a surprise:

In the end, this huge techno-success story is all about feelings.

The triumph of DoCoMo is not mainly about engineering, or the

right legacy infrastructure, or backing the winning technical standard

It’s not mainly about pricing the service wisely, or guaranteeing

distri-bution, or staying close to customers Even though DoCoMo is a very

Japanese company, its triumph is not really about dedication and

effi-ciency All those are part of the story, of course But many competingcompanies have done quite well on all those dimensions In the end,

what sets DoCoMo apart is passion.

That’s a surprise to many, who know only a little about Japan Butthose who have experienced Japan more deeply realize that feelings arecentral—as central, in fact, as in our seemingly “warmer” Western cul-ture In one of the first American books written about Japanese busi-

ness, Japan’s Managerial System, Harvard Business School professor

Michael Yoshino explained that the basic building block of Japanese

social structure was giri (obligation or duty) But a society based only

on duty would be too hard to endure, so a complementary concept

emerged: ninjo The term can be defined literally as “sympathy” or

“kindness,” but in a culture where good and evil are determinedalmost completely by social context, ninjo takes a much more impor-tant place It has come to mean “human feeling,” and it is the glue thatholds Japan together

We would argue that Japan is not alone in needing this glue;almost every society, almost every business, almost every person trying

to make things happen in the real world, could profit from a littlemore ninjo Looking closely at DoCoMo’s performance, we suspectthat the smart, dedicated, hardworking business culture here in theUnited States would actually become even more productive with a lit-tle less attention to the obvious aspects of creating value, and a littlemore attention to passion

In our research at DoCoMo, the role of human feelings was ous Once the key figures began sharing their experience with it, therewas no denying the point: Passions are vital This very young companyfaced the huge challenge of creating a mass market for wireless data(and, before that, the substantial challenge of creating a national mar-ket for cell phones at a time when Japanese customers just weren’tinterested) They succeeded beyond anyone’s expectations because theright people in the company had the right mix of powerful, humanemotions—and proved extremely skillful at managing them DoCoMoused passions to lead its own creative and competitive efforts, to leadthe market, and, ultimately, to lead a global industry

obvi-These findings force us to propose a radical, almost embarrassingidea: In managing your business, human passions matter A lot Morethan any of us admit, and certainly more than we act on (And we are

deliberately excluding the obvious place for feelings—the only placemany managers think about them—which is marketing and advertis-ing.) Feelings are worth paying attention to, in your daily manage-ment, in choosing what company or group or project to work on, and

in selecting technologies to back or companies to invest in Want toget a great job, avoid a layoff, stay in the good graces of your board,keep a key customer, or get a good deal from a supplier? Skill, talent,profitability, quality, responsiveness, and a slew of other businessissues are vital But lots of individuals and companies can do compa-rably well in these areas

Usually the decisions that most affect your career and the success

of your company come down to questions like this: Does my boss likeme? Does the board trust me? Will customers call me, before calling acompetitor, because they just prefer talking to me? Would my supplier

be willing to shave a percentage point off the product price just to tinue our working relationship?

con-Reflecting on the research presented here, we believe that a pany that understands the power of human passions, and managesthose passions in its customers, its employees, and its leaders, will cre-ate value faster than its competitors

com-DoCoMo is a fantastic example Here’s a company that went fromessentially zero to over $30 billion in revenues, without major acquisi-tions, in only a few years—mainly because in several key areas it tappedinto the power of feelings In a floundering national economy, in a sec-tor where billions have been invested for disappointing returns, in aproduct category that most customers don’t yet understand, DoCoMolaunched what is surely the most successful new product in history Bythe time i-mode was barely two years old, it was carried by a third ofthe adults in its home market Although there are extremely capablewireless competitors in Europe and the United States, to say nothing ofAsia, none has matched this feat So far, none has even come close

We believe that the only way to really understand that success—and find ways to emulate it in your own business—is to explore thepassions that DoCoMo has used to lead These include the very per-sonal feelings of the company’s:

■ Customers—their love for one another, their passion for

free-dom, and their excitement at being in on a shared social phenomenon

style, and who used those passions to inspire the company they led

invented i-mode DoCoMo couldn’t have done it without them Andthey couldn’t have done it without some very particular emotions—enabled by those above them—that don’t usually show up in corporateannual reports

together make up so much of any company’s corporate culture ToDoCoMo, these people brought exactly the passion it takes to create aphenomenal run of good luck

one passion that can help the company surmount its two greatest lenges This feeling, already commented on by business partners in theWest, is crucial in determining how much farther DoCoMo’s successcan extend

chal-As you can see, this book is very much about people and passions.But we assure you, it is not “touchy-feely.” After all, it is real data—including the thoughtful comments of very serious, successful, andbusinesslike people—that brought us (with great surprise) to theseconclusions And we accepted them ourselves only after extensivereading and analysis So while we will tell you DoCoMo’s insidestory—revealing these passions—we will also share the intellectualunderpinnings Every chapter includes analytic information, based onboth well-founded theory and practical experience, to help understandwhy passion, and specifically these particular passions, should be soimportant, not just for DoCoMo, but for other firms in other indus-tries And we never lose sight of the “so what?” question Each chap-ter ends with concrete actions you can take to convert the lessons ofDoCoMo into extraordinary performance for your own firm

After all, passion is great…but why get all worked up over thing you can’t act on? We believe that a look inside DoCoMo willgive you some great stories, some new ideas, and some insight into theemerging wireless economy But much more important, we believe thatthe core lessons of this story will help you turn your own passions intobusiness success.

BUSINESS CASES aren’t romance novels Things begin, and end, with

the numbers If there’s a story behind those numbers, it’s supposed to

be a military epic: brilliant generals, clashing armies, risky maneuvers.DoCoMo’s story has all that and more But at its core, DoCoMo’s suc-cess depends on a love story Somewhere, mixed in with the systematicanalysis of corporate strategy, the technical innovation of engineering,the analytically derived emotion of marketing, and the ruthless effi-ciency of operations, the i-mode team sparked a love affair

But we’re getting ahead of ourselves Why should anyone careabout this particular love story? Because it created success for Japanexactly where every industrial nation needs it—and exactly where

efforts in the United States and Europe have met only failure With

i-mode, DoCoMo made commerce on the mobile Internet pelling—so compelling that it is fast becoming universal throughout Japan Even there, in an economy plagued by recession for ten years or

com-more, the result has been the kind of tech-fueled boom that the entiredeveloped world is now praying for By delivering mobile Internetaccess that people actually use for new kinds of business, DoCoMo cre-

1

Love

“Love and work are viewed as totally separate,

yet work without love is dead.”

— MARTA ZAHAYKEVICH

C H A P T E R O N E