docomo japan s wireless tsunami how one mobile telecom created a new market and became a global fo phần 4 docx

“As far as ment style, not all Japanese companies were strong in the 1980s and1990s like Americans seemed to believe—some were good, some werenot.” He also believes that, at least during

became a bestseller in the United States and a runaway hit in Japan Itforced both sides to acknowledge a fact that, for very different rea-sons, they had been reluctant to see: Japan had finally caught up

In fact, the pendulum of perception—and perhaps market reality—swung even further By the late 1980s, when Tachikawa returned toNew York City, Japan was actually seen as surpassing the United States

In his judgment, there was definitely overreaction “As far as ment style, not all Japanese companies were strong in the 1980s and1990s like Americans seemed to believe—some were good, some werenot.” He also believes that, at least during the 1970s and 1980s, Japanhad enjoyed the advantages of not leading “Japan lags behind theUnited States by ten years; changes are slower here So Japan has had aneasy model—it was good to be behind All Japan had to do was follow.”Still, during his three years at the helm of NTT’s U.S office,Tachikawa faced daily reminders that leaders in American politics andbusiness saw his own organization and many of its peers as somethingclose to national enemies NTT, among others, was targeted by Con-gress and U.S firms for “unfair” trade practices It felt like Japan wasout ahead The problem had shifted radically—but feelings of inequal-ity were still driving it all

manage-An Elusive Opponent

Just as Tachikawa and his countrymen were beginning to master thisnew game of seesaw competition with the United States, where thecompetitive balance could go either way—with hazards for Japan nomatter which end was up—the game changed entirely Despite thetruly historic triumphs that Japanese business had won during his life-time, Tachikawa now saw his nation’s entire economy overcome, not

by a technological or business competitor, but by the abstract, ble, almost impenetrable forces of macroeconomics Japan entered arecession that, a decade later, still lingers

invisi-In Tachikawa’s view, that recession was a natural outgrowth ofthe Japanese triumph—maybe even inevitable “It is not surprisingthat depression set in after the Japan bubble burst The stagnation of

the current period was expected.” That is, after decades of the ese working hard and saving fanatically, all in order to “catch up,”their economy at long last had achieved a huge, globally recognizedsuccess This triumph—which truly has few, if any, parallels in all ofeconomic history—created a certain amount of euphoria Add to that

Japan-an enormous supply of cash, from all that work Japan-and all that saving.Then factor in typical market overreaction, only this time on a world-wide scale: With modern mass communications and the emergingglobal economy, literally everyone on the planet who had money toinvest knew about the Japanese juggernaut, and wanted to get a piece

of it (if only to hedge against the threat of stagnating Westerneconomies) What you had, then, was a powerful formula for over-valuing Japanese assets

And there’s simply no question that the formula worked Whenyou can theoretically sell the city of Tokyo and with the proceeds buyall the land in California (roughly the same land mass as all of Japan),you know you’ve got a problem—no matter what your taste in coun-

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 0

FIGURE 2-2 Rents in Tokyo and Atlanta: 1987–2000.

SOURCES: NATIONAL REAL ESTATE INDEX, IKOMA DATA SYSTEM.

tries, cultures, or cuisines When the market corrected, as it alwayseventually does, Japan’s economy hit recession Long-standing prob-lems in the structure of Japanese financial institutions and the trans-parency of their markets compounded the slide So Japan’s recession iswith us still.

Tachikawa, however, hopes that this difficult phase is now tially over “People really needed the time to think about why the bub-ble happened, why it burst, and how to overcome those problems and

essen-grow again,” he says But “the last decade has been a long period of

reflection The readjustment has gone on long enough.” From his spective, the Japanese economy is now ready: ready both psychologi-cally (the human attitudes that drive markets have come full circle)and numerically (the relative values of Japanese assets compared toU.S and European counterparts are such that a reasonable growthrate in Japan makes economic sense)

per-Playing with a Handicap

Whether it is over yet or not, Japan’s long economic contraction hasbeen a fact of DoCoMo’s life for as long as DoCoMo has had a life Ifyou want to understand just how rare the DoCoMo story is, this tellsyou more than any academic study you can imagine: In the midst of adeep recession, in a hypercompetitive sector filled by huge interna-tional players, a sleepy monopoly (practically part of the governmentitself) spun off not only a successful new firm, but a market leader.And, with i-mode, this competitor has been able to achieve success in

a market—mobile data—where billions have been invested and yetwhere, even in 2002, no one else had really made it work

Many, many factors combined to yield this unexpected success.Tachikawa himself emphasizes that the single most important element

is the leadership of Chairman Ohboshi “He is the big success factor;

my job is just to keep the current levels going and to further improve

them.” Fair enough, yet how can the company’s CEO not have been a

factor? Indeed, a close look at DoCoMo’s history reveals thatTachikawa has been a vital player as well And all along, this playerhas used feelings of inequality to inspire himself and his colleagues

Missing the Brake

“Inspiration” wasn’t the word that came to mind when Tachikawa firstjoined DoCoMo Because he was a lifelong NTTer known for relativelyconservative views, many in the press expected that his appointment

Box 2-10 The most valuable firms.

Even as Japan’s entire stock market declined sharply in value (by

70 percent between the early 1990s and the first years of the newmillennium), NTT DoCoMo became one of the ten top wealth-creating firms in the world—one of just three not based in theUnited States, and the only one from Asia

Stern Stewart created the Wealth Added Index (WAI), whichcompares share-price increases and dividends to the cost of equityfor 5,069 companies between June 1996 and June 2001 Here arethe top ten:

added ($Billion)

was designed to moderate the spinoff Some even speculated that hismission was specifically to “rein in” the renegade firm, serving as ahuman brake on the new company’s more aggressive thinking.

The speculators were surprised With Tachikawa, DoCoMo gotnot a brake but a turbocharger Far from suppressing innovation, hequickly became the biggest cheerleader of creative, aggressive solu-tions In late 2001 he announced that he planned to increase the pen-etration of DoCoMo handsets in Japan to 500 percent of the Japanese population by extending the functionality to machines and to pets Aquirky vision? Perhaps But it quickly and memorably made the point,

to DoCoMo and to the market, that traditional thinking about thismarket was simply too small Far from being a conservative box-checker, Tachikawa forced his firm to think outside the box Likeother Big Hairy Audacious Goals (see Box 2-11), the vision of 500percent DoCoMo penetration may never be achieved.4 But the firm hasdone amazing things because that goal was articulated

Although this may have surprised the pundits at the watercooler,given Tachikawa’s history and values, it makes perfect sense As hereflects on the contributions that DoCoMo hopes to make, the samethemes emerge: a belief in technology, a deep understanding of theglobal market, and—most of all—those feelings of inequality Theseforces don’t necessarily contradict the conservative decisions so com-mon in large Japanese companies Rather, for an organization placedlike DoCoMo, they simply apply more visibly As a leader of a com-pany, Tachikawa says, “You have to look to the future and forgetabout the glories of the past.” There are times in history, he points out,when information technology simply forces that approach The print-ing press and the telephone made major changes, over a long period oftime He fully expects mobile communications, both voice and data, to

do the same

Techno Super-Friends

The companies that will lead in such a period of change, he says, arethose that “develop new fields of business, improve technology, andstrengthen their existing management styles; and of course, the very

foundation of management philosophy has to be a solid one.” The key

to doing all that, he believes, is to focus on fostering equality—andconstant progress—for all people “To become a leader, any businessmust have a solid philosophy It must think not just about profits andmaking money, but mostly about people Printing technology made ahuge contribution to people’s thinking processes.” It became one ofthe Truly Big Things in economic history, he says, because “it made iteasier for people to think, to consider things more.” The telephone fol-lowed the same pattern “The year 1890 was the first time for tele-phones—developments have followed for the next century.”

Alexander Bell started hawking his new invention, the telephone, immediately after its invention, but it was twoyears before the first switchboard was installed—with eight subscribers Bell’s recommendation that the phone should

be answered with the word “Ahoy” never caught on The moral of this story? No one hits a home run every time,not even certified geniuses But they always swing withstyle, don’t they? As Jerry Seinfeld might say, “Ahoy??!!??”

Drawing on such models, Tachikawa long ago formulated hisprinciples for technology and business “I believe in a societyimproved by technological advancement.” For an information tech-nology company to succeed by becoming part of that process, it musthave a simple goal: “to make life more comfortable, more convenient,

and to support people’s thinking lives.” Mobile communications canclearly do that, and Japan is poised to lead the change Tachikawa is the first to point out that his nation and his company do not lead the world in every relevant technology But he notes that in two keyareas of telecommunications, fiber optics and digital microwave,

“Japan has strong capabilities.” (Modestly, he does not mentioneither DoCoMo or NTT.) The opportunity, he believes, is there forDoCoMo to take

Tachikawa believes that DoCoMo is the Microsoft of mobile munications By that, he doesn’t simply mean that “we can be a bigsuccess.” Neither does he mean that DoCoMo will become a globalhousehold name He has something different, and quite specific, inmind Tachikawa expects that, over the next few years, services like i-mode will finally emerge around the world With the help ofDoCoMo’s global partner network, he expects that most of those ser-vices will involve i-mode itself—at the very least as the basis of a busi-ness model or as a vital and value-added technology backbone

com-But the goal is not to be a brand name in the way that the otherlarge Japanese companies are Though he respects Sony and Mat-sushita, he has no plans to emulate them Rather, his goal forDoCoMo is to maintain the top market capitalization in Japan Also,not surprisingly, he seeks financial results that “achieve comparablelevels with Europe and the United States.” In his view, DoCoMo’sfinancials today are a lot like the balance sheets of other Japanesecompanies…just bigger and achieved in fewer years Tachikawaargues that there is a much higher bar for financial success in the rest

of the world—and that Japan can measure up to this standard

Sensing Success

Tachikawa believes that Japan can address this new level of inequalityand take a new position in the global economy No longer running tocatch up, nor intimidating trading partners, Japan instead can play aless confrontational role: creating growth by concentrating on itsunique gifts and capabilities Japan’s success, under this model, wouldfall in the win/win category To make DoCoMo a leader in this trans-

formation, he will look to the same deep forces he has always relied on:the power of science and technology to make people’s lives better, andthe firm’s ability to help individuals, families, and other companiesachieve their own equality with these tools To Tachikawa, this is justthe next logical step in a process that has the scale, and force, of history

“Cell phones were a big change They made people’s lives a loteasier.” His company has achieved remarkable growth because

“DoCoMo enabled people to communicate on the move with a less device during the 1990s.” The coming transformation will depend

wire-on an equally striking advance Tachikawa calls it “3D Virtual RealityCommunications.” He notes that today’s technology, though it iscalled multimedia, tends to rely primarily on one sense (either sight orsound), and almost never to weave multiple senses together in the waythat real life, and many artistic experiences, do

Tachikawa believes that now, however, the imminent rollout of 3Gtechnology finally gives DoCoMo the power to break out of single-sense communications He wants future versions of i-mode to supplythree of the five human senses (sight, sound, and touch) through acommunications device That combination, “virtual substance trans-

FIGURE 2-4 Top twenty Japanese companies

7 Mitsubishi Tokyo Financial Group 46,443

*As of March 2002.

mission,” would change the game as deeply as mobile data has, andmobile voice before it It would open the way for a set of applicationsand services that, like the content providers that have fueled i-mode’ssuccess, cannot be imagined in advance.

Another of Tachikawa’s quirky and aggressive BHAGs? (See box2-11.) Perhaps But, like that earlier goal of 500 percent penetration, it

Box 2-11 BHAGs.

”BHAG,” which is short for Big Hairy Audacious Goal, comes

from the book, Built to Last: Successful Habits of Visionary panies (see note 4) As the name implies, a BHAG is a bold mis-sion, boldly proclaimed, and pursued with bold commitment Itsvalue is to stimulate progress We believe that it works by reset-ting the expectations of employees, by demonstrating and thusspreading confidence, and by keeping everyone focused on thecompany’s overall goal As authors James Collins and Jerry Porraspoint out, it typically seems much bolder to those outside thecompany than to those inside After all, the insiders—as atDoCoMo—already know what they can do

Com-Our favorite example, perhaps because it seems almost ascrazy as Tachikawa’s 500 percent market penetration, is one ofSam Walton’s BHAGs In 1990, Walton set a specific target of

$125 billion in annual sales At that time, the biggest retailer onthe planet had annual sales of $30 billion Only one corporation,

GM, had volume anywhere close to Walton’s target Twelve yearslater, Wal-Mart’s annual sales were $217 billion Perhaps 500 per-cent i-mode penetration isn’t so far off after all

focuses all of us on a future for wireless data that is far outside thebox—one that might inspire consumers, employees, investors, andcontent creators to take the kind of leaps that got DoCoMo, andmodern Japan, to where it is today After all, Tachikawa says “mygoal is to change the lifestyle of people with cell phones.” Even if hisvision is never precisely realized, it seems sure to inspire the kind ofdramatic impact he is seeking.

* * * * *

In a way, Tachikawa’s visions are just highly memorable, visible,dramatic scenarios to remind DoCoMo staff and managers of keyinequalities—the gap between what the product could be and what itis; the gap between DoCoMo and the competition; the gap betweenthe success they now enjoy and the larger success they seek Otherlessons from this master of managing inequality:

■ If you are not in first place, no matter how great the distance seems, you can make it up And whenever you find yourself in first

place…watch out Someone as hungry, resourceful, and resolute aspostwar Japan probably has you in their sights

■ Leapfrogging is not just for kids Japan had the advantage of

brand-new factories—an advantage created by starting out so farbehind DoCoMo had the disadvantage of a nonexistent market—andleapfrogged it by inventing an entirely new kind of product, which put

it ahead of competitors worldwide A competitor today, for instance,can draw lessons from the Internet as well as from more traditionaltelecomm markets—lessons that some competitors will ignore becausethey seem too far afield

■ Being second can be fantastic motivation In the United States,

Avis is famous for trying harder Tachikawa and his contemporariestook that strategy to a very successful extreme

■ When leapfrogging, use the infrastructure that does exist.

DoCoMo was able to take advantage of the existing DoPa network

infrastructure for i-mode (DoPa is a PDC pocket network which laid DoCoMo’s conventional PDC network and became operational

over-in 1997) This had technical costs, and certaover-inly political ones But itlet the company leap forward quickly, concentrating its resources else-where

The key lesson: Find the emotion that is best at moving you ward, as Tachikawa did Don’t simply use it, but feed it (as he did withtrips to the United States and with technology comparisons) If you arefortunate enough to share key values with your team, see how far thatinternal motivation will take you

for-Notes

1 Toshihiko Kawagoe, “Agricultural Land Reform and Postwar Japan:

Experi-ences and Issues, World Bank Report, May 1999.

2 Asian Business Information, The Japanese Aircraft Industry, 1990.

3 William Scheuerman, The Steel Crisis: The Economics and Politics of a

Declin-ing Industry(New York: Praeger Publishers, 1986).

4 James C Collins and Jerry I Porras, Built to Last: Successful Habits of Visionary

Companies (New York: HarperBusiness, 1994).