The Dale Carnegie company is one of the worlds most successful franchise-based training businesses. Founded in 1912 by Dale Carnegie, the firm now provides its programs in more than 80 countries and its courses have been attended by more than 8 million people.
Not many people know that Dale Carnegie and Japan have a close connection. Back in 1939, Dale Carnegie personally traveled to Japan at the request of the government at the time to improve cultural relations with the USA. He gave a talk at the Tokyo American Club, and met with various government representatives, forging a relationship that would resume after the war. In 1963 the company’s training courses were launched in Japan through Hawaii-based Edwin Whitlow, who sponsored Frank Mochizuki locally, and the company has been active here ever since.
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.
