So how does a company or government get prepared for a crisis? What should corporate executives or government officials do when disaster strikes? This month, the Journal posed these questions and others to leaders of the major public relations firms in Japan. We asked them to give us advice in post-3/11 Japan.

Journal: In post 3/11 Japan, what do you see as being the greatest challenges for you and your clients?

Ross Rowbury, Edelman Japan

Hiromitsu Sakuma, Ogilvy PR Japan:The Great East Japan Earthquake made it suddenly clear that global corporations no longer regard Japan as a priority market where they will invest and make wide-ranging commitments. A claustrophobic atmosphere has emerged along with this trend, and the outlook for the economy and business has deteriorated rapidly. It is now extremely difficult to prepare long-term outlooks. On the other hand, there are a number of other trends, especially in the fields of alternative energy sources and energy conservation. The knowledge, technology, and craftsmanship that can turn challenges into opportunities exist in Japanese companies and in the market.

Shuri Fukunaga, Burson-Marsteller Tokyo: The biggest challenge is the reinstatement in the eyes of the world Japan’s credibility, which has been dramatically minimized by perceptions of weak leadership, fumbling governance and weak communications in 3/11’s aftermath. This perception remains uncorrected. For some of our Western clients’ operations in Japan, this perception – coupled with the persistent sluggishness of our economy and rise of China – makes it increasingly difficult for them to gain global headquarters’ attention which they used to get more readily before.

Shoichi Yoshikawa, Hill+Knowlton Strategies

Deborah Hayden, Kreab Gavin Anderson: It is time for leadership with concrete messages, rather than fluffy catch phrases. It is time not only for meaningful words, but also concrete actions. The talk of recovery and change – seemingly craved for across Japan – needs to be backed up with results and activity.

Journal: What lessons did companies (PR and non-PR firms) learn from the March 11 disaster? A greater emphasis on crisis communications perhaps? Or being better prepared for a disaster?

Paul Hasegawa, Cosmo: There’s been a greater realization of the importance of both crisis communications and business continuity planning. Communications in a crisis must be timely, accurate, transparent and truthful. It is quite obvious that the government failed in all three respects after the earthquake.

One major example would be the announcement of the meltdown at the Fukushima nuclear power plant. Scientists were stating in the media that the reactors were in full meltdown in the days after the tsunami. It took the government until the summer to ‘confirm’ this publicly.

Deborah Hayden, Kreab Gavin Anderson

Sakuma: Naturally, companies have become more aware of the importance of crisis communications and the need to be ready when crises occur, but the main lesson companies have learned is that good planning does not mean good implementation. Crisis plans need to be practiced and reviewed regularly in line with real conditions. If crisis preparations cannot be effectively executed, they are nothing but words on paper. It is important to do simulations of what to do in a crisis on an ongoing basis and actually conduct practice exercises.

Journal: How do Japanese companies compare with Western firms when it comes to public relations and messaging in general? Are Japanese companies as successful in ‘telling their own message’?

Dr. Jochen Legewie, CNC Japan: In general, Japanese firms lag very much behind their peers in telling their own message to an audience outside of Japan. Six of the 50 largest companies worldwide stem from Japan but only two are listed among the 50 most admired companies. Toyota comes in as No. 8 in size but only as No. 33 in being admired, which is still the best among Japanese firms.

Fukunaga: Our experience in working with both Japanese and Western firms tells us that there are companies, regardless of origin, that are good at telling their story and that there are also those that are not so. As a norm, companies with CEOs who understand the responsibility of corporations as members of the society and take on the role of communicating actively to the public have a head start.

Dan Underwood, Ashton Consulting

Journal: What are the benefits of in-house PR versus outsourcing? In other words, why should companies hire firms like yours?

Rowbury: PR stands between the organization and its external and internal stakeholders. It not only informs but also has the ability to take the pulse of stakeholders and society at large. The benefits of this position to the organization can only be fully realized if there is objectivity. It is often difficult for in-house PR to be fully objective. This role must fall to an agency. In addition, as Japan evolves its communication model it is only the global agencies that will be able to introduce them to best practices from around the world.

Hasegawa: In-house PR people are experts in their own business: they know what to say. On the other hand, PR firms are experts in communications: they are better able to transmit a message as they know how to say it. We have expertise in placing stories, fostering media relations, and understanding how the media will respond to stories and announcements. We understand both the client’s business and the media. We know how to engage with issues and influence the public through stakeholders and key opinion leaders.

Jochen Legewie, CNC Japan

Journal: Is public relations different for a Western company (as opposed to a Japanese firm) in this country? Are there distinct characteristics that companies should be aware of?
Hayden: The basic principles of how to approach strategic communications don’t change. What foreign companies operating in this market do need to be aware of, however, are some of the cultural elements and the unique characteristics of how media in Japan operates. Engaging with media via the press clubs is one example, but there are many subtleties that need to be taken into consideration when communicating with stakeholders in Japan. Simply rolling out a communications campaign using the exact same tactics as adopted in Western markets is not an option. You can retain the core strategy and approach, but localizing to ensure the message and delivery resonates is critical.

Fukunaga: If I were to generalize, our Western counterparts at client organizations take well to integrated communications approaches, that mix and match different disciplines of public relations. Our Japanese counterparts are inclined to accept more readily segmented standalone approaches – for example, by media relations alone, or by internal communications, by crisis communications, by government relations, and so forth.

Shuri Fukunaga, Burson-Marsteller Tokyo

Sakuma: The basics of public relations are the same around the world. What we must be aware of is that there are differences between markets and media climates. Compared to other markets, Japan already has many companies that lead in their product areas globally. These companies have naturally already listed their shares on Japanese stock exchanges. It is
important to be aware that competing with these Japanese companies and competing with them in the PR domain is tough.

Journal: Is media training important in Japan or is it still a growing field? What are the benefits of media training for a Japanese company?

Hayden: It is vitally important, but this is not unique to Japan. Given the global and real-time nature of today’s media, and the pressures companies are under from the markets, putting executives in front of the media without them first being trained is a huge risk. It is essential that those representing the company understand how to effectively communicate its position, and how to avoid being drawn into commenting on issues that should be avoided.

Legewie: Japanese companies are internationalizing at a high speed but many of their executives remain weak in playing foreign media. An outspoken, media-trained Japanese company president is still the exception. Such persons can make a huge difference in positioning their company overseas where expectations are running extremely low.

Hiromitsu Sakuma, Ogilvy PR Japan

Journal: With Press Clubs and a cultural factors impacting how Japanese journalists work (as compared to the West) is it easier to ‘manage the message’ in Japan?

Hasegawa: Press clubs are just mutual-preservation
societies. The journalists in the club get embargoed stories and the companies or ministries making the announcement get to control the environment, to an extent. The journalists will rarely ask awkward questions, so yes, in that respect, it is easier to manage the message. But true management of public opinion requires a more thorough and comprehensive process that goes beyond the press clubs.

Rowbury: Traditionally the quid pro quo relationship between Japanese organizations and press clubs has probably made it easy to manage the message in positive times. But we have seen from a number of recent corporate scandals over the past years that the Japanese media can be just as frenzied and aggressive with local organizations as their overseas counterparts when the situation calls for it.

Journal: Any thoughts about the future of public relations in Japan?

Yoshikawa: More Japanese companies are expanding portions of their operations overseas, for long-term investment by way of M&As, joint ventures, alliances and other partnerships. While this creates opportunities for us, the challenge for Japanese corporations will be to evolve themselves and adopt international standards of communication, be it language or culturally.

Underwood: Boardroom-level corporate communications in Japan is still in its infancy compared to many European and North American countries with far smaller economies, but we see it moving in the right direction.

Paul Hasegawa, Cosmo

Legewie: Public relations in Japan is slowly but clearly moving away from simple relationship-based company or product promotion to integrated and strategic communications, in other words from simple PR agencies to communication consultancies.

Sakuma: What I am going to say is not limited to Japan, but I think the frameworks of PR and advertising will become more and more unclear, and that increasingly more attention will be given to how to plan for and make use of various communication channels. On the other hand, as symbolized by social media, the cornerstone of PR, which is to listen sincerely to others in both good times and bad times, will become the foundation for all forms of communication activities.

Rowbury: We believe public relations in Japan is about to enter a golden age as stakeholders demand that government, business and organizations move from a single direction “announcement” model to one of true engagement. Public relations is the discipline that is best equipped to facilitate this transformation. The future is bright indeed.

ACCJ President Mike Alfant. Photo by Genki Art Photography

APCAC panels focused on innovation and entrepreneurship, the TPP , restoring supply chains after the earthquake and the floods in Thailand. There were also discussions about energy, good governance, health care and financial services. Guest speakers included nine US Ambassadors from around the Asia-Pacific Region and some high-level personnel from Washington such as US Deputy Secretary of State Thomas R. Nides and Under Secretary of Commerce for International Trade Francisco Sanchez.

But the real highlight came on day two:a surprise visit by the Prime Minister of Japan, Yoshihiko Noda. Prime Minister Noda thanked the ACCJ for contributing to the relief efforts in Tohoku and spread the message that “Japan is open for business.”

In a prepared statement, Noda said: “As you are all aware, the Asia-Pacific region is the center of global growth. It is private companies such as those you represent here that have enabled the realization of sustainable economic growth in the region and this is something I applaud.

“I hope that efforts will continue to ensure that the growth trajectory for the Asia-Pacific is one that is both sustainable and balanced.”

The Prime Minister also expressed his wish to “make a visit to the United States… and work with President Obama to make further efforts to strengthen our invaluable bilateral ties.”

Noda’s visit followed a March 1 address by Yukio Edano, Japan’s Minister of Economy, Trade and Industry.

Other APCAC speakers included Rakuten’s Hiroshi Mikitani, and Takeshi Niinami, President and CEO of Lawson. In light of last year’s 3/11 tragedy, APCAC 2012 devoted one panel directly to business supply chain disruptions. A great deal of attention was also paid to changes in business development and opportunities.

Several panelists noted a “post 3/11 effect” which may have opened the doors in several areas, particularly, though not exclusively, in areas of IT (a reflection in part of how many businesses were cut off from constant communication with overseas offices and/or other facilities in Japan). The need for a comprehensive review of Business Continuity Plans was also a theme repeated in several panels.

TPP was also a hot topic in various panel discussions. Since talks between the various countries involved are still in the early stages, there were no definitive answers for what a final agreement might look like or what follow-through mechanisms for contentious issues might look like.

Prime Minister Yoshihiko Noda. Photo by Genki Art Photography

A March 2 breakfast session on Good Governance centered on questions about corporate governance and legal compliance, which were also issues addressed at several other panels. Overall, APCAC 2012 brought many people together and garnered good reviews from those who came to network and learn.

“I was impressed with both the quality of the speakers and the attendees,” said James R. Fink, of Colliers International. A first-time APCAC attendee, Fink said, “Going forward it would be helpful if there could be some time devoted to how the various chambers across the region can coordinate and cooperate in effective ways to assist and promote American businesses.”

Hank Wang, of the Beijing office of Garvey Schubert Barer, said, “I (was) impressed by the number of our ambassadors that showed up at this conference to show their committed devotion to the common task of rebuilding a strong US economy and by the way people from the government and private sector work together, a true public private partnership.

“I thought that the event went very well,” he added.

At APCAC, Chamber leaders and government officials discuss policy ideas, develop advocacy proposals and share best-practices on ways to promote American business across the Asia-Pacific region. Topics on the agenda will include the Trans Pacific Partnership agreement, the evolving trade architecture in Asia, the recent natural disasters in Japan and Thailand, and the role of promoting innovation and growth throughout Asia and America. Essentially, APCAC is a way for members of American Chambers to learn how to speak with one voice.

With this in mind, the Journal sat down with two of the organizers of this year’s summit to discuss the importance of the event. Tom Clark and Lawrence Greenwood are co-chairs of the ACCJ’s 2012 APCAC Task Force.

Journal: What is the importance of APCAC?
Tom Clark: APCAC is an organization that includes over 21 countries, 27 member Chambers. It’s really the voice of American private sector, businesses that are on the front lines of our trade and engagement with Asia. With all the talk about TPP, with all the success that we had at the recently concluded APEC summit in Honolulu, it’s clear that more and more of America’s economic future is in Asia. Certainly the American business future is about the Asian markets where growth is strongest.

And so APCAC really has a role to play in helping the sort of the people who are on the ground involved in business in those countries – making sure that markets are open, that they’re working closely with the US government in terms of letting them know where there are issues that need to be dealt with. (Also) working with the host governments around the region to let them know how American business can help in terms of bringing new products to their consumers, partnering with domestic companies and raising issues that are not necessarily confrontational trade issues… but are often win-win, where we’re raising the issues that frankly also affect local businesses and how can we make the whole system more coherent, make regulation

The second significance is just that having this APCAC meeting here in Tokyo is something that’s really quite important. First of all, it’s the first time of it being in Tokyo for almost a quarter of a century. And it’s very timely to do that now because, of course, the conference will almost be on the one year anniversary of the disasters of March 11. And to show very clearly and concretely what the presence of hundreds of American executives from around Asia means, that the US business union recognizes Japan is open for business, is a big part of our own growth story in Asia, I think is very important.

2012 APCAC Task Force Co-chair Lawrence Greenwood

Journal: So positioning and branding-wise, the summit is an opportunity for you to speak as one voice, 27 chambers 21 countries, promoting American business interests and Western business interests in Japan?
Lawrence Greenwood: Right. As you know President Obama, when he was in Hawaii then with his onward visits to Australia and Indonesia, really marked a strong pivot in American relations with Asia and very strong recommitment to the region on the economic business side. It’s obviously where the rubber meets the road on that in terms of that pivot and that relationship. So,the kinds of issues and the kinds of things we do every day to make money and to provide services and goods to the people and the consumers in Asia is where the American interest is. Right now, this is the only strong growth center in the world. And this region of the world is going to carry us through this very difficult time. So we have got to have even stronger ties here.

For the Chamber, it’s a great branding opportunity because this is the largest Chamber (in Asia) and it’s been very active in APCAC, so it’s also carrying on this greater leadership role that we’ve been playing already in APCAC and it’s a great opportunity to show that.

Another opportunity is that we’re in the midst of a generationally important debate on taxation in Japan which is going to go very much to the sustainability of growth in Japan over the next 20 years. And we’re going to be talking about, in terms of external relationships, the TPP and how open they want to be. So two really important topics that go to the very future of this country are going to be at stake in this time frame. So what better time to bring people from around the region, from the United States to talk about this issues?

2012 APCAC Task Force Co-chair Tom Clark

Now, there have been competitors, there’s East Asian Summit, the ASEAN Plus-6 – now there’s even a Plus-8 which does include the US and Russia – but where that is going is a lot less clear. Where TPP is going, especially after Honolulu, seems to be a lot more clear and that place is a 21st century high level agreement that doesn’t just stop with the usual tariff at the border issues that have been bandied about for many, many years – but really tries to get it some of the deeper structural regulatory coherence issues, transparency, level playing fields – frankly a lot of the issues that ACCJ has been championing bilaterally within Japan only now apply to this growing bloc of countries that are the future of growth and the area that we’re going to hopefully work with to pull the whole world forward.

So TPP, not to be too grandiose, but it really can be the solution to getting Doha re-started; if we could show that a major trading area like the Asia Pacific can come together and advance these high level goals. There’s 21 chapters, it covers things from financial services to environmental goods and services, cross border flows of capital and information, we’ve dealt with state-owned enterprises, government procurement – all the issues that go well beyond traditional tariffs and that we deal with day-to-day in many countries. And on many of them, Japan is a very natural ally and many of them, frankly, Japan and the US are on the same side of the table looking at how these issues might play out in other Asian countries.

And of course our eye is always on China because in the long run, to be a truly APEC vision of an FTAP, this would have to be open to the current APEC members including China. So this could be a solution (to that). So, it’s an incredibly important initiative and it’s one where I think it may be a once in a lifetime chance to move the needle in Japan, and with Japan’s help move a needle throughout the region.

Journal: And the consumption tax issue?
Greenwood: I don’t believe (the Chamber) has a particular position on the consumption tax. But it’s important because it’s one of these basic issues that Japan is going to have to deal with, which is how it’s going to deal with this demographic challenge of an aging society, escalating social costs and a very high debt already. So it deals with this fiscal issue.

And what the business community will be looking for are good actions that demonstrate a sound fiscal policy, that demonstrate the long term debt problem is under control because the concern is that at some point Japan’s current account surplus will go away and then therefore they’re going to have to fund the debt through external financing, and that is a lot more challenging to manage – and so, how Japan’s going to do that goes to one of the fundamental issues about the confidence that people, including Japanese, have in their economy in the future. So it’s one of those key issues, it’s how they do it. In some ways, it’s a little bit like TPP. We’re not saying how Japan should do TPP…we’re not…particularly strong in terms of that, it’s just really will Japan move forward? Will it take the steps it needs to revive growth here after a very long period of slow economic growth?

Journal: What about quake reconstruction and the whole rebuilding of Japan. What do you think will come out of APCAC in terms of recommendations or policy positions in that area?
Clark: While the disasters of 3/11 weregreat human tragedy, there’s also, as always, an opportunity to find a silver lining which may be that we’re not going to be rebuilding Tohoku exactly as it was. We’re going to use this as an opportunity to enrich the lives of the people in that region and hopefully the rest of Japan by having it become a leader, as it reconstructs in things like cloud computing, developing new forms of delivering healthcare to an increasingly aging population.

I think APCAC and the summit will have a lot of recommendations that are being made in the context of the whole region in terms of human development, of healthcare IT, deployment of new forms of low carbon-emitting energy production – all of which can have specific application in Tohoku. Obviously after the nuclear events we’re looking at potentially needing to find additional sources of energy. And there’s a whole chapter in TPP on energy and a whole focus in APEC on energy that I think this conference will have a lot to say.

One of the great achievements of the past APEC year that the US led, culminating in the summit, was an agreement within APEC to reach an accord on environmental goods and services – specifically an agreement to cut tariffs on environmental goods and services to five percent by 2015. And this was achieved, not withstanding some opposition or lack of enthusiasm from Russia and the PRC – but not withstanding that, the administration very deftly secured the support of most of the other countries in the region to move that agenda forward. So that was a big win in Honolulu and I think things like that are directly applicable to the needs of Tohoku as they rebuild to make sure that they are looking at renewables – Japan needs a strong renewables policy to promote those forms of energy efficiency that will not affect the environment so much; that won’t be so reliant on one single form of energy. So as they’re doing that, there will be lessons from the region.

In terms of disaster recovery I think the conference will be able to promote a very stimulating discussion of best practice sharings. Because we’ll have at this conference US Chambers from Thailand – Am-Cham Thailand has been very active in mobilizing support and recovery for the recent flooding there – Chambers from Indonesia which of course has had a number of devastating disasters including the 2004 earthquake – so to have representatives from American Chambers in all of these countries – and I should add also some government officials from these countries as well together, talking about how disaster recovery can be improved and we can learn from the lessons of each other – it should have a very important role to play.

Greenwood: Tohoku also has an opportunity to see if Japan can do something different on entrepreneurship and innovation and that will be in fact one of the presentations and seminar sessions. And it also very much links into Ambassador Roos and the US Embassy’s Tomodachi Initiative which is focused on entrepreneurship, innovation and looking in particular at young people and changing the way people think about entrepreneurship in Japan. Obviously it’s an area with lots of small business already and Sendai is actually a very thriving center for small business. So there’s a lot of opportunity there and also an opportunity, because of the tragedy, to do things differently than in the past. So that’s another theme that we will be exploring in the conference.

Journal: And along those lines, somebody like Mr. Mikitani, the new wave of Japanese business leaders, central to moving Japan in a new direction… How important is it to have somebody like Mr. Mikitani as one of your speakers?
Clark: I think having someone like Mr. Mikitani is very well-aligned to some of the lessons that we want to come out of this conference. The fact that there are new business models that are open in a society and an economy that promote the values of entrepreneurship, that reduce some of the burdens—both regulatory and structural, and even just conceptual to allowing people with a new idea to get to market quickly—how that can add value. Having the ability to talk about what is it that makes entrepreneurship such a vital source of growth and how can Japan, which is a world-class innovator with the best technologies, but which maybe isn’t being as good as it could be because it’s not quite finding the way to promote entrepreneurship and small business – these are topics that will be very timely and very much on the agenda of our meeting.

Journal: At some summits you see local government officials in a “bear-pit” session with foreign executives. Do you do anything like that at this conference?
Clark: We will have members of host governments throughout the Asia region participating in some of the panels. It’s probably a little more focused on some thoughtful exchanges with public and private sector leaders around the area. There will of course be time for interaction with the audience.

Journal: Do political issues like North Korea come up at conferences like this?
Greenwood: Not specifically, but we’ll have US Government officials here as well, from Washington. So it will be much more talking about the ‘pivot’ that I mentioned and what that means for US Government policies in the region and what that means for business, as opposed to security issues.

A public relations representative for McDonald’s Japan Co. told the Mainichi Shimbun that: “Without a mandatory retirement age, the motivation to nurture younger generations of workers seemed to fade among employees, with the passing down of work know-how and information being put on the back burner.”

McDonald’s eliminated mandatory retirement in 2006, after the government raised the age of retirement, in an effort to tap into the experience of veteran employees and to offer performance-based salaries and benefits. However, few employees stayed with the company past the age of 60 and most current employees are young.

The company spokesperson says there were problems with the decision namely, “We saw a trend of employees shirking away from undertaking new challenges” and many began to “think in terms of avoiding making waves and keeping the peace.”

EXCLUSIVE PREDICTIONS
In its final edition of last year, the Nikkei Business magazine published predictions for 2012 from nine Japanese business “experts.” All nine were men and only one was under the age of 50.

Among the comments:

• “measures to deal with the aging population will become an urgent issue for distribution and logistics” (Susumu Iida, age 83)
• “wide propagation of electric vehicles is unlikely” (Masayuki Okano, age 78)
• “deflation will worsen and number of izakaya will fall to one half of the current number” (Seiji Ishii, age 69)
• “US dollar to fall to 60 yen, a huge blow for export-driven businesses” (Motoo Matsuura, age 76)
• “gap between businesses will expand, depending on whether or not they harness the potential of smartphones” (Ichiro Kawanabe, age 41)
• “Ginza night life will also make a comeback” (Takashi Suzuki, age 76)

STOCKING UP
Japanese stocks have been on a steady decline since the bubble years of the 1980s. And the slide has been so precipitous, it cost Japan its place as the world’s second-largest equity market to China in 2008. Now, Japan’s leading exchange, the Tokyo Stock Exchange, has announced plans to buy out its smaller rival, the Osaka Securities Exchange, which would create the world’s second largest exchange behind the NYSE.

In a joint statement, the two companies said the merger will boost Japan’s role as an international financial center and serve as a “step toward the revitalization of the Japanese economy.”

The merger is happening amid increased consolidation involving international rivals and will eliminate duplication at the exchanges, which will be renamed the Japan Exchange Group. TSE President Atsushi Saito will become chief executive officer of the new company while OSE President Michio Yoneda will be its chief operating officer.

The TSE is currently the world’s third largest exchange operator by market capitalization and the merger will bring the total market value of the companies listed on the two exchanges to about 280 trillion yen ($3.67 trillion), placing the new Japan exchange behind only the NYSE in terms of total value.

NO PARTNER, NO PROBLEM
Japan’s population is on a rapid decline and the prospects for a rapid population explosion appear to be getting slimmer. The number of unmarried Japanese men and women without partners continue to grow. According to the National Institute of Population and Social Security Research, the number of unmarried Japanese men without a partner hit a record-high of 61.4 percent last year, up more than 9 percent from the last survey in 2005.

The number of unmarried women with no partner in the same age category – 18 to 34 – also jumped nearly 5 percent to a record high of 49.5 percent.

But most shockingly, nearly half the respondents of both genders say they do not want to date anyone. Most of the respondents say they were willing to get married, but were single because they don’t know how to be in a relationship. More than 86 percent of the men and 89 percent of the women said they want to get married at some point in their lives.

More than 43 percent of men and 53 percent of women asked whether they wanted to get married within a year said “yes,” if they could find someone suitable.

About 10,000 people responded to the survey conducted last June.

Illustration by Louise Rouse

At a science fair in Tokyo, Sony scientists had children mix shredded paper with water and enzymes, powering a small fan. Chisato Kitsukawa, a public relations manager at Sony says “bio batteries are environmentally friendly and have great potential” because they use no metals or harmful chemicals.

However, the technology is a long way from commercial use because of its low power output. Kitsukawa says at the present, the shredded paper process is only strong enough to run digital music players but not powerful enough to replace regular batteries. Sony first unveiled the sugar-battery technology in 2007 and has since reduced the battery’s size.

At the fair, another Sony sugar battery was embedded in a Christmas card, playing music when drops of fruit juice were added to it.

TOYOTA AIMS HIGH
Toyota is aiming high for its 2012 global production target. The company is hoping for a record sales of 8.65 million vehicles this year. That would be the largest output in five years – since the 8.53 million unit total of 2007.

In domestic output, Toyota is aiming to exceed 3 million units. That is the threshold the firm needs to maintain employment and capacity for technological development.

The auto giant set the 2012 production target at 8.9 million but revised it downward in the wake of the global economic downturn and the European debt crisis.

TRAGIC TRAINS
Drunkenness at a Tokyo train station can be annoying and even disturbing for people heading home after work. But now, new statistics show that drinking and riding can also be dangerous.

According to the Ministry of Land, Infrastructure and Transport, 2011 was the worst year ever for people being injured or killed after being hit by trains – with many of the accidents being alcohol-related.

Many of the problems happened in or around Tokyo, and most after 9 p.m. on a Friday night, the peak period for passengers heading home from after-work imbibing. Smartphones and trains are also a dangerous combination; the ministry reports an increase in the number of people falling on the tracks while using their phones or handheld games.

The ministry and rail companies urged people not to climb down onto the tracks to help people who have fallen. Instead, people are asked to press emergency stop buttons located on the platform.

EXPENSIVE PILE-UP
It was something out of the bubble-era excess. Shortly before Christmas, eight Ferraris and a Lamborghini were among the vehicles damaged or destroyed in a massive pile-up in southern Honshu.

Speeding was blamed for the road accident which was believed the most expensive in Japanese history. About 300 million yen worth of luxury cars ended up in a crumpled heap of twisted metal on the Chugoku highway in Yamaguchi Prefecture.

Footage from television coverage showed several racing-red Ferraris spread all over the roadway. About 20 supercars were travelling in convoy on a wet Sunday morning when the driver of the lead car lost control and slid into a guardrail. Drivers behind slammed on their brakes but could not stop in time.

An eyewitness told the TBS network: “A group of cars was doing 140-160 kilometers per hour. One of them spun and they all ended up in this great mess.”

The speed limit on that section of highway was 80 kilometers per hour.

Illustration by Louise Rouse

Chefs require a license to prepare fugu and they do not normally serve parts such as the liver. However, the customer and her husband apparently requested it. Some fugu customers like to experience the thrill of eating forbidden pieces.

In an interview with the Wall Street Journal, head chef Takeshi Yasuge of Fukuji said, “I can’t say anything else except that I am deeply sorry. I am just so sorry. My heart is in chaos.”

Police and health officials are investigating the incident. Yasuge could face a fine or even go to jail for violating the city’s food safety laws.

Journal: How did you become CEO of Dale Carnegie?

Peter Handal: I was doing consulting in the late ‘90s and the Dale Carnegie company asked me to do some work for them about strategy and corporate direction. I made a presentation of my findings to the board and to my surprise they liked what I laid out for them enough that they asked me to join the board. I was on the board for about six months when the existing CEO decided he wanted to retire, and they asked me to take on the lead role. This was in January 2000. I found out later that they were specifically interested in bringing on someone from outside the firm, someone who could understand the culture, not destroy it, and who was ready to build on the rich tradition and insights that the company has developed over the years. Basically, it was a matter of good timing.

Journal: What makes Dale Carnegie special?

Handal: Dale Carnegie was founded 99 years ago, in 1912, and is still privately owned. The founder and first Chairman was Dale Carnegie, who famously wrote the book “How to Win Friends and Influence People” back in the 1930s. After his death in 1955, he was succeeded by his wife Dorothy Carnegie, who went on to build the business into a global organization. When she retired in 1978, she was succeeded by other members in the family. It’s the links with the founders that gives the organization its strength and its special culture. Dale Carnegie was inspirational and Dorothy Carnegie was an excellent businessperson. As a result, the people there today are smart and nice to work with, and with such a great reputation, the quality of the engagements makes the work really interesting. Right now I think I have the best job in the world.

Journal: What has been your greatest achievement during your tenure?

Handal: There have been a number. Firstly I’ve been able to stimulate the development of new products. Prior to my joining we only had “time-space” programs, where we sold blocks of time in classrooms, for example a management course for twelve weeks. Now we have a whole variety of things to offer clients, addressing their actual needs rather than our concept of what those needs should be.
Another major step we took was to expand our global reach. We’re now in 86 countries, providing training in 30 languages, meaning that about 60 percent of our business is now outside the U.S. This is a dramatic change from 12 years ago.
Probably the third major change has been the quality of interaction with and support to our partners. You see, we’re a franchise organization, and we’re only as good as we can help our partners to be. Therefore, we’re always coming up with new and better services to ensure that our franchisees have what they need to development their local markets.

Journal: It was my impression that Dale Carnegie was a licensing operation, rather than a franchise.

Handal: Certainly in the beginning it was. Dale Carnegie would travel all over the U.S. from city to city. When he met someone he liked and thought he could work with, he would teach them the method then give them a license to reuse his materials and methodologies. In a way, he was the first “software” licensor. This changed in 2000, when the company moved to a franchising model. This has been much better for our partners, since they can now own the business, versus simply working to further our interests. This means they own their own clients, they have a strong contract, and can get financing to build their operation into something much larger.

Journal: How does e-Learning fit into your business?

Handal: We have built our business around two-way interaction and the ability to guide and coach as an interaction develops, so as to make the student aware of what they are saying and how they are saying it. This is a challenge in the e-Learning sphere, and we are applying resources to create a strong model that will work worldwide. Right now we have two means of delivery: Firstly, we have modules that include exercises, games, etc., that you can do online, and these are not dissimilar to what you would find in any online university. Secondly, we have webinars, and these are surprisingly effective. We can break up online classes of 25 people into groups of 5, just the same as we do in the physical world, which makes them very interactive.
Then there is online-physical “blending,” where we reinforce that was learned in a real setting with online exercises later. I think this is a likely major direction for us in the future.

Journal: Who are your competitors?

Handal: Perhaps surprisingly, our biggest competitors are the HR departments of our clients themselves. They all have their own training departments and while they start off with mainly technical things, such as IT, accounting, processes, they will typically aspire to do more soft skills such as leadership programs as well. Another area of competition is local colleges, who are really focusing on soft skills training. They offer their courses at low cost, which is of course a competitive threat.

Journal: Amongst corporate trainers, is Dale Carnegie the largest?

Handal: In this industry, because most companies are privately held, it’s hard to tell. But our guess is that 4-5 competitors, companies like Franklin Covey, are about the same size as us.

Journal: Please give an example of your scope and capability.

Handal: We recently went into a bid with four competitors for a client in Germany. After a tough fight we won the project, largely because the client wanted the same training at the same delivery standard across 40 different countries, and of course many different languages. We were the only company that could deliver to this requirement.

Journal: What is your competitive edge?

Handal: Well way back in the 1930s, Dale Carnegie pioneered the concept of changing your behavior to match the values and hopes of those you wanted to influence, and this was a unique body of knowledge. However, over the years others have picked up on Dale Carnegie’s insights and have copied parts of them. So today, what makes us different isn’t so much the original intellectual property but rather the way we impart our programs, our training methodologies. For example, if you went into a college, you will find is that it’s all one-way lecturing. In contrast, our approach is to be extremely interactive. Our trainers go through intense training programs themselves and they are educated to coach people literally as they are interacting with them. They walk the talk by showing how to be a good listener and the different kinds of listening. They are very good at drawing responses out of people and getting them involved.
If you were to drop mid-stream into a Dale Carnegie class, you’d probably feel very uncomfortable. It takes a few hours or longer for people to be willing to open up and interact at the level that we require. There is a lot of presentation work by participants to the rest of the class, and during these presentations they are not only expected to present the actual content, but also to stay alert and be aware of the interactions going on around them, so that they can use that awareness in real business settings later.

What we are trying to do is to change behavior, not try to “teach” people principles. This, I believe, is what makes us different.

Journal: Japanese firms are on an M&A spree, is this a strong opportunity for you?

Handal: Certainly Japanese multinationals are very aware of the need to develop positive, global cultures inside their rapidly growing organizations. We are pitching to a number of firms on the basis that we can offer consistent training across multiple countries to the entire workforce of a foreign subsidiary. Right now, most clients are dipping their toes in the water and trying us out for single country engagements, so they are learning our capabilities.

Journal: Is there a trend that you can identify?

Handal: Well, most of these Japanese multinationals are focusing on language skills first, like TOEIC. This is understandable, since basic communication is of course the most basic need. But what they are now finding is that in assigning managers abroad to integrate their holdings or to interact with new suppliers and customers, they need their people to improve their interactions. Listening, polite behavior, and being aware of how they are perceived is as much a factor of success as is direct communication.

I have just spent the last three days visiting many companies here in Japan, and what I’m seeing is that the push towards management training is coming from the top of the organization, not from the middle, as we would see in Europe and the U.S. The reactions I have been getting from Japanese senior management is that they do indeed understand the importance of training and want more of it. Essentially many of these senior managers want to change their corporate cultures and make them either more competitive or more internationalized, or they have a specific problem that they want resolved, such as improving sales performance or improving product/services development. In fact, about 50 percent of courses here in Japan are to address specific problems in the firm.
I might add that a trend becoming very obvious overseas and which I expect will start to manifest itself here in Japan, is the quality of engagement of employees. There is a talent war going on globally, and companies need to work harder to keep their best and brightest. CEOs want employees who see the business as more than just a place to work. They want contributors and innovators who are fully engaged. This is a highly relevant issue for Japanese firms. A recent Mercer survey found that the average level of engagement for Japanese employees is extremely low: just 27 percent of staff are motivated and actively engaged with their work. This really impacts productivity.

By Lorenzo Barassi

Enter Paul Greenberg, CEO of Cerego Japan Inc. Having taken over the role of CEO from co-founders Eric Young and Andrew Smith Lewis last year, the engaging polyglot is now in charge of iKnow!, Cerego’s innovative, online language learning service. Greenberg took some time from his busy schedule to talk with the Journal and offer his insights regarding how combining entrepreneurship, technology and language learning can help Japanese expand their global reach. 

Journal: Tell us a little about yourself in terms of background and why you decided to join the Cerego team at this point in your career. Also, are you fluent in any languages other than English, or are you studying a particular language?

Paul Greenberg: I was born and grew up in Toronto, Canada. I went to university at MIT in Cambridge, Massachusetts where I received a Bachelor of Science degree in Civil and Environmental Engineering and two Master of Science degrees, one in Civil and Environmental Engineering and one in Technology and Policy.

My professional career can be broadly split into three main phases: strategy consulting, commercial digital media entertainment, and now learning technology.

After completing my Master’s degrees in 1996 I joined a management consulting firm based in New York. With this firm I was exposed to a broad range of assignments in many geographies around the world across
a number of industries. I was able to work on projects that spanned the traditional, including financial services and transportation, to the transformative, such as major corporations looking to incorporate the burgeoning Internet into their core businesses, to the cutting-edge, including innovative Internet software and hardware startups.

It was with this firm that I first came to Japan on a professional basis in 2000 when I was sent here to establish and startup the new Tokyo office. After approximately two years in Tokyo, I decided to relocate to Europe where I established and ran my own consulting firm for three years, based in Amsterdam, The Netherlands.

While in Amsterdam, I was engaged to put a together Japan market entry strategy for Napster, the digital music distribution service, which had two years prior been re-launched commercially and at that time had operations in the U.S. and the UK. On the basis of this strategy I was hired to return to Japan in 2005 to establish and run the Napster Japan business, which I did for just under 3 years.

I was subsequently hired by MTV/Viacom to lead the North Asia digital media business, with responsibility for online and mobile across the MTV and Nickelodeon brands.

Most recently I joined Cerego Japan as CEO in May 2010.

Starting back in late 2008, I had been closely following macro-level movements in Japan, in particular the rapidly declining and aging population and its resultant implications. It was already clear at that time that these factors would necessitate much deeper outward and inward engagement than Japan had ever experienced before, within a relatively short period of time.

In order to for this to happen, it was also clear that the English language capability of the average Japanese person would have to increase substantially within the same timeframe. And that would require a fundamental shift in the approach to English language learning (ELL) in Japan.

The reason for this is that although the Japan ELL market has consistently been one of the largest in the world in terms of annual spend, performance is consistently at the lowest end of the international scale. This huge gap meant that there was a clear commercial opportunity but also a chance to make a real difference in people’s lives.

I have learned to speak and function in seven languages: English, French, Spanish, Italian, Portuguese, Dutch, and Japanese. I have learned each language in a different way and under different conditions, from highly structured and academic (French) to relatively unstructured and self-driven (Italian). This range of experience has helped me to form clear view on how best to learn a language in a reasonable period of time. Seeing the dynamic described above unfold in Japan I started to investigate a range of possible ways to provide a solution, from raising the funds to buy an existing language school that could be transformed and modernized to starting something completely from scratch.

As part of this investigation, I encountered Cerego Japan’s Smart.fm service midway through 2009. My initial impression was that the core solution appeared to closely match the approach to language learning that I had personally developed for myself over time. Both the applications and the content resonated deeply with my own experience. And I became a very heavy user of the site.

Around this same time, I met Eric Young and Andrew Smith Lewis, the co-founders of Cerego. Through my interactions with them, I was able to gain a much deeper understanding of what they had created. And it impressed me deeply.

Over a period of 10 years, they had passionately and diligently developed a solution that combined the most advanced thinking in learning science and memory, language learning content based on state of the art linguistics, and a leading-edge flexible technology platform. Although the service had not yet been oriented such that it could sustain itself commercially on an ongoing basis, all of the necessary ingredients were clearly there.

As with many things, timing played a big part in my joining Cerego Japan. From my side, I had a very strong personal desire to apply my specific blend of experience and skills developed to date to providing a solution that served a fundamental social need. At the same time, Eric and Andrew had expressed a desire to find someone who could help them take the incredibly special service that they had created to yet another level. And in the background, the Japanese market was increasingly demanding highly effective, flexible, and affordable language learning solutions. And so we agreed to join forces.
My time at Cerego Japan has been without question the most enjoyable and rewarding period thus far in my professional career.

Journal: Given the wealth of face-to-face language lessons, schools, and online language learning resources (e.g. language podcasts, flashcard programs, Rosetta Stone, etc.), can you give us a general idea as to how iKnow! plans to get a foothold in the Japanese language learning market?

Greenberg: With Smart.fm, Cerego Japan already occupies a strong position in the language learning market in Japan. With iKnow! we have taken the core ingredients in Smart.fm, enhanced and upgraded them, and combined them to into a overall solution that is at the forefront of language learning. Going forward, our position will continue to be built around Cerego’s core strengths in learning science, content, and technology.

Cerego was founded with the mission of fundamentally transforming the way people learn by using the best principles of proven science and technology to improve learning and memory. This is at the heart of what we are about.

iKnow! is the embodiment of this. It is a guided solution where what, how much, and when to study is precisely optimized to each individual. And everything that you learn is stored and managed in precise detail. One of the most important aspects of language learning is internalizing the most relevant and natural words, phrases, and speech patterns. With our content, we have used sophisticated linguistic techniques to identify and build a base of content that, when learned, provides the individual with more than 90 percent coverage of contemporary written and spoken English.

Furthermore, this content has been painstakingly put together with highly engaging rich-media. This not only makes learning fun and enjoyable but it also deepens the strength with which the individual learns and retains the content.

With our flexible technology platform, a learner can study anywhere, anytime, and on just about any device in a seamless and synchronized way. This flexibility combined with the fact that a single study session can be as short as five minutes means that even the busiest professional can fit iKnow! naturally into their lifestyle without disruption.

All of this has been packaged in an engaging cross-platform user interface and user experience.

By any measure this is a competitive offering. However, at a base price starting at just 1,000 yen per month with discounts for longer subscription terms, it is highly affordable when compared with all available alternatives.

All this on its own positions iKnow! in a comfortable position in the language learning sphere in Japan. But to simply suggest that we are pitting ourselves in zero-sum competition with any and all comers would be missing the point of what we have created and where we are going.

With our API framework, our technology platform is highly extensible and allows us to integrate and create deep connections with all types of online and offline services and solutions external to iKnow! This opens up myriad possibilities for us to combine the best of what we have to offer with the best of what others have to offer in logical and complementary ways.

Journal: Your website lists Japanese, English, and Chinese as its main offerings. Are there any plans to expand the service to include other languages? If so, do you plan to mainly focus within Asia?

Greenberg: At the moment, the primary focus is on ELL in Japan and on Japanese and Chinese to English speakers. However, there are other language pairs that we will focus on in the near term with our own content. Our commercial focus means that we will prioritize languages spoken and/or required by large numbers of people.

However, our upgraded content creation tools, which will be released shortly, will provide our user base, including individuals, teachers, and companies, with the possibility to create and study content in any language that they may desire.

While our current and foreseeable future is focused primarily on Japan, we are constantly assessing opportunities in nearby Asian markets as well as other geographies.

Journal: What can you tell us about Cerego’s approach to the social networking aspect of the Internet?

Greenberg: Social media has become incredibly important, not just in Japan but everywhere, and not in a flavor of the month sort of way. The large and successful social networks continue to create better and better natural overlays onto the complex connections that naturally exist between people. And, interestingly, they are also allowing us to establish connections that might otherwise not exist. We actively utilize the major social networks as very effective communication and engagement tools. We have already begun exploring a variety of ways to facilitate social interaction and engagement as a natural part of the iKnow! experience. This includes a variety of features that will allow users to enrich the learning experience by inviting, communicating, and sharing various aspects of the service with each other, both within and outside of iKnow!
 
Journal: The number of mobile applications serving the language learning and translation market is exploding, can tell us what plans you have for the mobile platforms such as Android, iPhone, iPad, etc.?

Greenberg: One of the core strengths of the iKnow! solution is our scalable and extensible technology platform built upon a flexible API framework. This has enabled us to provide as a core aspect of the system the ability for users to seamlessly access the service anytime, anywhere, and on their smart device of choice, all synchronized. To this end, we will very shortly be releasing integrated applications that will allow users to study and learn on the go on their iPhone, iPad, or Android devices.

Journal: We’ve noticed in the last 24 months, new businesses are cropping up focused on creating How To and Learning videos to teach (e.g. Khan Academy). Do you see the video instruction platform as something on the near horizon for iKnow?

Greenberg: Video is a media format that is not currently integrated in the first iteration of the iKnow! service. However, going forward we are looking at a number of possibilities related to different content formats, including video.

I believe that video could have a logical a place within iKnow! However, as with any new features and functionalities, we will first carefully examine what provides the most engaging, meaningful, and effective learning experience to our users before taking any specific steps.

Journal: The Asia region has become the hot topic of discussion in the tech sector, drawing Western investors and sparking many new startups. Most of this activity seems to be in China, Singapore and South Korea. With a graying population, tight immigration rules, and a less than entrepreneur-friendly environment (read: failure is taboo) what do you in the future for Japan in terms of competitiveness over the course of the next 10 years?

Greenberg: I look at this issue from two standpoints: from the perspective of an individual inhabitant of Japanese society and from where I sit in my position at Cerego Japan.
From the societal standpoint, there is no question that the factors you mention (plus others such as a public debt crisis and an ill fitting public education system) pose very serious, some argue fatal, risks to this country. However, I am not yet at the point of throwing in the towel.

In my collective seven years in Japan I have noticed qualities that if harnessed and leveraged properly, can give some cause for hope.

First, when push comes to shove, this society has a history of and capacity for large-scale reinvention. Second, at the individual level, it has an entrepreneurial spirit that I believe is quite strong. Some of the most talented cross-disciplinary individuals I have met are right here in Japan. Third, more than almost any other society, Japan has a tendency toward collective movement. If oriented in the right way, the potential energy that can be unleashed is substantial. Fifth, Japan has a talented and motivated female population that has largely gone untapped to this point.

The challenge until now has been that these qualities have not been afforded the space to express themselves. This is due in part to the fact that as an island Japan has remained relatively isolated. And as a very large island that until now has in many ways been self-sustaining, Japan has had the luxury of being able to deal with fewer moving parts than other more integrated markets.

However, peak population of approximately 130 million was passed a few years ago. The current pace of population decline is equivalent to a city roughly the size of Yokohama disappearing every five years. The population is predicted to go from 30 percent over the age of 60 to 60 percent over the age of 60 within the next few decades. As one possible counter-measure, some studies show that the foreign born population in Japan could grow from approximately 1 percent today to up to 20 percent within the same timeframe. These are massive shifts with far reaching implications. Even if there were an explicit desire to maintain the status quo, it would not matter since the gates are being wrenched open in real time.

The recent actions of many large companies in Japan, including becoming more acquisitive and taking bold steps such as making English the official language of communication, are direct consequences of this dynamic. While one could question how effective the reaction has sometimes been in practice, I do believe that the overriding pressure that is driving these actions is a positive force that will serve to unleash the qualities that I outlined above in some fashion.

From the perspective of Cerego Japan, we are a unique team of fewer than 25 people from around the world, based in Shibuya. The company was founded in Japan and has strong roots here. However, we are represented by nine nationalities with the entire team able to move comfortably between English and Japanese. In fact, almost everyone speaks two or more languages.

These qualities give us the ability to tap into and blend the best of west and east. I believe that our success has and will continue to come because we are in Japan, not in spite of it. If we were in one of the other markets you mention, there are many subtleties that we would miss with regard with service development and provision, design sensibility, teamwork, technology, etc.

More specifically, there are qualities that some of the Japanese members of the team bring to the table that I am certain we would simply not have access to in any other market. One example is a uniquely Japanese sense of balanced pragmatism and resourcefulness that allows for maintenance of positive forward momentum within highly uncertain circumstances, which is absolutely necessary in an entrepreneurial setting.

With Cerego, one target is to be one of the “new economy” companies founded in and representative of Japan that can become globally relevant and competitive. I believe that companies such as ours, that are able to embrace the best that Japan has to offer and give it an outlet and means of engaging outside of Japan, represent an important part of the entrepreneurial evolution of this country.

Hailing from the U.K., where Richard Ellis was first established in 1773, Ben Duncan, Managing Director of CBRE Japan K.K. has now been in Japan for the past six and a half years, following an eight-year term in Hong Kong. He talked to the Journal about his experiences in Japan, and about the state of the commercial real estate market in the light of the events of the past few years.

Photography by Lorenzo Barassi

Journal: What differences did you notice when you arrived in Tokyo from Hong Kong?

Ben Duncan: The speed of the [Japanese] market is very different. In Hong Kong, you make decisions quickly. Everything moves fast. When I first arrived here from Hong Kong, I always tried to get into the lift [elevator] before other people got out. I found I had to adapt, be flexible, and learn to approach things differently. What takes two or three, or even four meetings to achieve in Tokyo might only take one meeting in Hong Kong. It’s often a concern by Japanese that foreigners come in from outside, not understanding Japan and the way of doing business here.

I don’t think it’s necessarily more difficult to do business here, but I don’t think you can just get off the plane and expect to operate the same way that you did in other cities.

Journal: What about the language?

Duncan: I still have what you might call “taxi Japanese.” I’d never try to conduct negotiations in Japanese, and I’ve had to surround myself with people who can communicate in the language. For example, if we’re representing an investment bank, I know the needs and requirements of the bank, but I need a partner to communicate those to the owner of the property. When you’re doing negotiations, you’re only as good as the Japanese partner you’re working with. You should also accept that there is such a thing as cultural affinity. As a result we have Japan desks in China and India and other parts of the world, so that Japanese clients in these places can deal with Japanese CBRE representatives.

We have a Japanese desk in Torrance, California, and one in New Jersey, because of Japanese investment in those areas. The same in China; we have Japanese desks in Hong Kong, Shanghai, and Beijing to assist Japanese customers setting up in China. As Japanese companies start to look away from the U.S. as a consumer market we’re looking towards India and Southeast Asian emerging markets and how to best help our Japanese customers as they move into these areas. We’ve invested heavily in Japan recently, because we see opportunities here, and a lot of people from outside perceive this as a stable market.

In addition, right now, corporations in Japan are looking to increase efficiency and outsource some non-core tasks and services.

Journal: So you’re taking work away from the internal property and facilities divisions?

Duncan: No, we’re not taking business away from our clients’ internal groups; we’re offering to partner with them. The option exists to outsource these divisions, whether it be facilities management, transaction management or portfolio management. We are experts in these fields and can see opportunities there.

We offer a huge range of options, which is one of our strengths; all the management of leased or owned buildings, or you might want to get some of those buildings off your balance sheet or lease them. We certainly want to have dialogs at the right level within the keiretsu, and we’re seeing a lot more of that. There’s often been quite a reluctance to let these functions go, sometimes because of various lifetime employment practices–though this is often unspoken. But we can offer to take these businesses off customers’ hands, and run them, including retraining of the existing staff.

Facilities management is a growing market globally, but particularly so in Japan, because of inefficiency within many companies, and the scale of operations here is enormous. Large Japanese companies are operating tens of millions of square feet in Tokyo alone, in contrast to other markets with about a million square feet. There’s a lot of low-hanging fruit in savings that companies can achieve fairly easily if they allow someone to help them. It’s a huge opportunity, and this opportunity is one of the reasons we’re committed to Japan. Our business here is nowhere near as big as it is in, say, the Tri-State area around New York, but Tokyo is at least as big a potential market.

Photography by Hiromi Iguchi

Journal: What does the job of Strategic Planning involve?

David McCaughan: You need to be able to understand local culture: What people are about, what drives and motivates them, what people really want, what our clients have to offer, and how to bring these together.

We have many people studying cultural factors—what people are learning from drama shows, from pop music, the effect that Korean drama shows have had on Japanese housewives, that sort of thing. Then we can look at how these influence people’s views of the world and their potential buying habits. Sometimes it’s simple things, reminding us of the basics.

Journal: Can you give examples?

McCaughan: There’s been a lot of talk over the past few years about aging society, and the over-60s. Many people think of these retired guys as tired old salarymen in a dark suit at the end of their working life. What we see is the original rock ‘n’ roll fan. In 2007, when this generation started to retire, one of the biggest growth industries in the country was electric guitars as these guys put together the bands they’d played in 35 or 40 years previously. But talking to marketers, they’re written off as old and dying.

There’s this disconnect between having the longest-lived population in the world, and writing them off at 60. An average 60-year-old woman in Tokyo today will live to be 93—she’s got a third of her life to go. It’s ridiculous to suggest that this is the end of her life.

Another example: 35-year-old women married for three or four years with 3-year-old kids. One thing we forget is that they were OLs for most of their life, members of one of the biggest spending groups in the world. Why is this pattern going to change when they’re married? Of course it doesn’t, which is why we see a range of fashion and products reaching married mothers which would have been unimaginable some 20 years ago. Women are playing more roles, and more fluid roles.

So we put this kind of thing together, and figure out new products and new ideas. A lot of this is done in-house. We publish reports, get out and conduct workshops and so on for our clients, explaining what’s going on.

Some of this is built into contracts, some of it is one-off commissioned work, and some of it is done to attract and grow business. This business has always been about bringing news to clients, you have to tell them about new ideas. If you just wait for people to walk in with a brief, you’d be out of business very quickly.

Journal: This is much more than being an advertising agency—more like being a marketing consultancy?

McCaughan: We try not to call ourselves an advertising agency, because we don’t believe we’re in the “ad agency” business. We like to define ourselves as being in the “demand creation” business. It’s our job to help create demand for our clients’ brands. It’s our job to go and find out what people are interested in, what they want, what they’re afraid of, and find out how the client’s brand is going to help answer those needs, and thereby create demand for the brand.

As an example, a few years back we went to the Acuvue contact lens company and said there was a demand here for a contact lens with a black ring embedded. “Why?” they asked. Because of the Japanese and Korean ideals of beauty related to larger eyes—gibberish if you live outside these societies, but producing this lens created a demand where people who wouldn’t normally buy contact lenses could enhance their looks without resorting to surgery.

Photography by Hiromi Iguchi

Journal: What is eSolia?

Rick Cogley: We have a core team of about ten people, with another ten consultants used regularly. They’re basically bi-cultural—mostly Japanese who have spent time overseas and are used to non-Japanese business practices. I’m the only non-Japanese member of the core team, but about half our consultants are not Japanese. We’ve had non-Japanese who’ve not been able to fit into the business culture here, and have had problems as a result. We need people who can “act Japanese” when necessary.

It’s important for our people to have good personality and language skills; it’s about communication. You can teach technical skills, but you can’t teach personality or cultural immersion.

Journal: Who are eSolia’s clients?

Cogley: Typically our clients are multinationals doing business here in Tokyo. We have had one or two Japanese clients, and we have done one or two projects within the region, but the majority of our work is done within Tokyo or Yokohama for business from outside Japan.

I’d say that between 20 and 30 percent of our customers are in financial services.

Journal: What services are you providing to your clients?

Cogley: There’s a full continuum. Sometimes the clients want a full IT service, where everything is outsourced, and we try to provide that if that’s what’s wanted. At the other end, it can be very simple, just a weekly, or even a monthly visit. In those last cases, you can’t do everything, so you have to rely on the IT department in Europe or the U.S. to do most of the heavy lifting and take care of day-to-day support. But even in these cases, we may do some small projects, such as office moves or upgrades.

We try to be good at communication and let the head office IT know what’s going on here, and we control the local vendors. We don’t sell everything—we can’t give big discounts on a lot of hardware—we’re not that sort of company and we don’t try to be, but we can coordinate and make sure that our clients get what they want. One of the things we said when we started out is that we didn’t want to be colored by any one vendor. We’ve got various certifications within our team, but we don’t push that sort of thing until we find out what the client’s requirements actually are. Being tied too tightly to a supplier can lead to deals that are less than honest—you’re under pressure to shift a set quantity of boxes in a set timeframe.

In many ways, we can be seen as implementors, with local knowledge to make things work in this particular Japanese environment. We’re also enforcers, making sure individuals don’t go down to Akihabara and buy random equipment.

Journal: Speaking of which, what sort of local competition do you face?

Cogley: Sometimes Japanese vendors are competing for the same business as us. But we’ve actually beaten some of these big Japanese vendors a number of times because we’re able to communicate with the IT departments and the management of the clients better than the Japanese vendors can.

We were called in once at the last minute to provide bilingual liaison services at a meeting where the overseas IT department was coming to Japan to meet a large vendor who had been talking to the somubu (general affairs, or operations department) and were feeding them a line of absolute garbage. They weren’t taking any notice of their client’s internal standards and were recommending the wrong kit and solutions. The somubu were just about to sign up at the end of the meeting and I held up my hand and said “Wait,” but they [the somubu] wanted to discuss all this in front of the vendor—most unusual for Japan—because they’d been talking with the vendor for the previous six months and they were ready to sign. We took over the local management of the project at the request of the IT department, and the vendor didn’t like this at all!

We told them that we weren’t going to cut them out, but we wanted good prices. We told them that we understand prices are more expensive in Japan, but they don’t have to be triple the U.S. prices. We changed one component where they were quoting a local alternative to the corporate global standard and knocked the quote on this approved system down from 25 million yen to 14 million, via a rival quote at 12 million. I asked them how they could just eliminate that much profit, but I never got an answer.

Since coming to Japan, Mawer has been working as an independent financial adviser, with around 16 years at Pinnacle Wealth Management, one of the oldest Tokyo-based firms of independent financial advisers. Pinnacle, originally a UK-based company, has been through a number of name changes in its time, starting life as Ross Alexander, to Lamsdorff, before its current label. However, as Mawer points out, the premises and the basic staff composition have remained unchanged throughout this period.

Mawer currently serves as the Vice-Chair of the Membership Relations Committee of the ACCJ.

photography by hiromi iguchi

Journal: You describe yourself as an “Independent Financial adviser” (IFA). Do I detect an emphasis on the “I”?

Lee Mawer: Yes. The thing about our type of company is that we are not tied to one particular broker. When I was working at another firm in the past, we were tied to their products only. And the same when I was working in the bank in Canada, I was tied to whatever funds the bank was offering.

In Tokyo, about a third to a half of the smaller advisers are tied in this way. Here at Pinnacle we’re free to choose the best product for the client.

Journal: So that’s one difference between working at a bank and working as an IFA?

Mawer: Yes, we have a huge range of products here. The other major difference is in evaluating the client. You have to gauge the client’s risk appetite, the paradigms of their thinking, and so on. For instance, clients may want to have a good return, but at the same time don’t want the risk entailed, so you have to be aware of this thinking.

You’ve got to be able to ask them questions like “How would you feel if you lost 5 percent, 10 percent, whatever, of your investment?” and tailor a strategy for them, depending on the answer. Over the years, I’ve learned to take clients’ concerns into serious consideration—it is their money, after all!

Journal: Do you need several meetings with clients before you can advise them properly?

Mawer: Certainly, it takes some time before I can feel comfortable advising them. More importantly, they should feel comfortable working with me. I think that’s the clear difference between a fund salesman and a financial adviser. The salesman just wants to shift funds with no regard to the client’s needs in order to make a profit. Just showing the client some funds isn’t really ethical to me. A value-oriented financial adviser should be looking at creating value for the client.

I had a client the other day (a lawyer) who had been disappointed by various financial advisers, and his expectations were very low when he walked in. He wanted answers to the question “Can you add value for me?” I could give him specific answers to some very hard questions, taking a holistic approach based on his current positions which would add value, and he was very happy in the end. Basically I want to help people, and add value.

Photography by Hiromi Iguchi

Journal: Tell us about your current activities in relation to InTecur.

William Saito: I am the founder and CEO. The company was organized to promote entrepreneurs and ventures on a global level. Whether it is helping start-up companies grow by providing incubator space, or assisting foreign companies trying to establish themselves in Japan, or large Japanese companies trying to develop a new, innovative and entrepreneurial business line or product, InTecur is the driving force behind turning that innovation into a globally viable product and/or company.

Journal: Why did you decide to move to Japan after finding success in America? Was the move culturally driven based on your Japanese background, or strictly related to business trend forecasting/insight?

Saito: My former company, I/O Software, had a lot of connections to Japan, and we were able to grow and succeed thanks to the assistance of many Japanese companies. After the successful sale of the company, I wanted to come back to Japan and see how I could help the country become more entrepreneurial and globally innovative like it once was. Therefore, the move was partly culturally driven since I understand the business process in Japan and what is needed to succeed, but also because I realize there is significant business potential lying dormant here.

Journal: As a bicultural businessperson, what in your view is the key element many Western businesspeople get wrong and should work to correct when doing business with Japanese businesses/businesspeople?

Saito: Every company I know, large or small, requires a good Japanese partner to succeed in Japan. In my experience, Japanese companies, or customers, have been the most specific, precise and demanding customers compared to any other country. Therefore, the partner’s role is not only as a guide, but must also be someone the customer can feel confident about in addressing their needs in both the local language and time zone. This means that the process of developing the relationship becomes more important than the deal itself, and rushing this step can create a lot of problems for both parties.

Journal: After the SecureSuite deal, have you essentially ceased your activities in relation to software development?

Saito: SecureSuite was one of a variety of products we developed at my former company, I/O Software. I sold the company to Microsoft prior to coming to Japan. This product now manifests itself most prominently as the “Biometric” control panel option under Microsoft’s latest operating system “Windows 7.” I am still a “software guy” so I have taught several courses on secure software development, and I currently invest in several companies that develop various kinds of software. Personally, the last time I actually programmed any software was probably over 15 years ago.

Journal: Regarding biometric authentication systems, do you envision a future dominated by fingerprint, iris scan, or voice authentication?

Saito: Yes, I think the area of biometrics has already become an integral part of our lives. Whether it is scanning your fingerprints at Narita customs, scanning your palm veins for large ATM transactions, voice authentication for computer access or even iris scanning for at-a-distance identification of people, biometrics has started making everyone’s daily lives easier, more convenient and more secure.

This is an important concept, because many people believe that just making things more secure (e.g., using longer passwords that change every 6 months) is actually not secure if you also don’t make things more convenient and easier to use (otherwise people end up writing passwords on Post-It notes—the least secure option). Furthermore, biometrics is one of the only technologies that one can use to positively authenticate someone. This will become more important in the increasingly online world of the Internet. Finally, this type of technology is not only useful for authentication but for other statistical-based applications.

For a foreign interest, breaking into the business of Japanese interior design can be something like attempting to penetrate one of the most exclusive, private clubs on the planet. Renowned for meticulous, nearly obsessive attention to detail, the field of furnishing the interiors of Japan’s most important spaces is a job the country’s design professionals tend to view as a calling rather than a mere vocation. Such an unforgiving business environment makes the success of American entrepreneur Greg Lyon in Japan all the more inspiring.

With an international personal history that includes MBAs from both the National University of Singapore, and UCLA’s Anderson School of Management in Los Angeles, California, as well as stints in Seoul, Korea and Tokyo, Japan leading the efforts of legendary American furniture manufacturer Herman Miller, Lyon’s path has been typified by meeting new challenges head on. It was in that spirit that Lyon established his own furniture distribution concern in 2008 called Gregory Lyon, Inc., servicing the needs of some of the largest corporate and private customers in the country.

Journal: Describe how you got your start in the furniture business in Japan.

Greg Lyon: I had been working for a regional MNC in Tokyo who offered B2B & B2C shipping services. I wanted to get involved with manufacturing and importing products to Japan. When I learned of an opportunity to work at Herman Miller, I was very interested. In fact, while I was employed in Japan, my main responsibility was to cover the Korean market from Tokyo. I wasn’t as interested in covering Korea as I was working for Herman Miller, but after about 18 months I moved to Seoul and that was by far the best experience I could have gotten at the time.

Journal: What exactly is your connection to Herman Miller Japan (www.hermanmiller.co.jp) organizationally?

Lyon: I run an independent Herman Miller dealership that focuses on managing projects for MNCs. Herman Miller typically focuses on research, design, manufacturing and some marketing, while the bulk of the technical project work happens at dealerships such as mine. This is a new business model for Herman Miller in the Japanese market. I specifically employ bilingual staff, all of whom have lived overseas for significant amounts of time, in order to assist our clients (Japanese and non-Japanese staff and management). Often our clients have decision makers who are based overseas, but it is the local staff who need to implement new office projects. As such we aim to exceed expectations from multiple stakeholders who have different backgrounds.

Journal: What is the general size of the market in which you operate in terms of yearly revenue from all furniture suppliers in Japan?

Lyon: Since Japan is the second largest economy in the world, the furniture market is large and sophisticated. The size of the market that we operate in specifically (i.e. MNCs and firms who appreciate design and see the office environment as a strategic tool) is worth approximately $400 million per year, although the overall market is much larger.

Journal: What percentage of that revenue represents American-made and designed products?

Lyon: Herman Miller has produced some of the most classical and universally recognized products from the past one hundred years. As such there is a steady demand for what we offer. The percentage that accounts for American-made and designed products is growing. This is due to a change in perception of what an office in Japan should be, plus the fact that today’s generation of employees is quite different from that of even 10 years ago.

Potential employees, especially for globally competitive firms, need and look for more than just a paycheck. Part of their decision making process in determining whether they will join an organization is the quality of the working environment offered by the employer. In any market, an office can depict whether a firm is creative, supportive and humane or if it’s lifeless, dreary, and authoritarian.

In both scenarios, work still needs to get done but I think most people prefer the former as a backdrop to their best work. I’ve been operating for close to 18 months and revenue is growing as people become more familiar with my organization. Including myself, there are six card-carrying members of Gregory Lyon, Inc. In my time covering Korea, our revenue grew about 700 percent in five years. While Japan is a more sophisticated and highly competitive market, I have a more experienced team, a much better connection to existing accounts, and the overall market here is much larger than in Seoul. I therefore expect to see similar growth this time around, especially once the global economy picks up again.

Photography by Hiromi Iguchi

One of the primary hurdles facing foreigners doing business in Japan are the major differences in corporate culture. Acting as a kind of cultural liaison, Kiichiro Katsumata has made it his mission to translate the mission and message of Microsoft to the PC industry in Japan.

An 18-year veteran of Microsoft’s Japan effort, 11 years as a salesperson, Katsumata is also involved in a volunteer organization called the Wagokoro Company, a group focused on educating the foreign community on Japanese business culture through a series of workshops and events. As the relationship between the U.S. and Japan matures in the shadow of a major global economic shift, Katsumata discusses his passion for connecting the future business interests of the two nations.

Journal: How would you describe your role at Microsoft?

Kiichiro Katsumata: My role is to execute marketing sales for Microsoft operating systems such as Windows 7, Vista, XP, Windows Server 2008 and many other products. My work also involves licensing Windows to personal computer makers including NEC, Fujitsu, Toshiba, HP and a few others. I play a leading role in the planning and sales division in order to promote Windows to companies manufacturing computers.

Right now, Windows 7 is doing very well in this market. One of the big features of computers bundled with the Windows 7 operating system is the multi-touch function. This function allows people to touch the computer screen and have direct control of the operating system.

I encourage my partner vendors to create and develop software, hardware and content that takes advantage of the multi-touch system. I also work with our partner vendors to get the message across that the multi-touch platform enables consumers to understand and use their computers much more easily. Our aim is to make the consumer’s digital life better.

J: What was your most challenging moment in terms of marketing in Japan?

K K: I have to say that it was probably when we released Windows 3.1 in 1993. Windows 3.1 became the base for Windows 95 although Windows 95 has become very well known. If you buy computers now, nearly all of them come with Windows except Apple.

Today it is very common to see computers using the Windows operating system; this process started when Windows 3.1 was released. But the marketing and sales jobs I did around that time were the most challenging. Now the Windows operating system is nearly ubiquitous, so consumers can use many different kinds of software packages for use on the operating system, and easily connect various printers, digital cameras and peripherals. Until Windows 3.1 was released, people had to buy different types of peripheral equipment for each computer and the related software. My job was to negotiate with several software and peripheral equipment companies, as well as PC manufacturers. I carried out many different types of marketing strategies in order to make Windows 3.1 a standard in Japan.

I executed various marketing approaches to make sure our overall message was heard. For example, when Bill Gates visited Japan, we held major press conferences and events. Our marketing efforts were primarily directed toward influential individuals in the political arena, the financial community and in academia. After these press conferences and events, we distributed strategy updates to the major CEOs of the computer industry. Subsequently, we used this information and access to convince the top computer, peripheral and software manufacturers to implement Windows in their products.

J: Please explain the concept and meaning behind your volunteer work with the Wagokoro initiative.

K K: Wagokoro refers to the Japanese spirit, which is focused on the prosperity and welfare of others. This is a traditional value that has been espoused by the Japanese for many years. I now believe that we have entered a new age in which this wagokoro will become a new core value to us. For example, we have ukeireru kokoro, which is the spirit related to accepting something good coming from outside of Japan, such as Christmas or Valentine’s Day.

Another traditional spirit-based notion is that of tekiou suru kokoro, which refers to adaptation. Japanese people often adopt external things, allow them to evolve and then make their own versions of these things. This routine has been present in the Japanese mindset since the Edo period, and possibly even before that time.