No. 8: Stay away from the trendy business.

The Japanese government started the specified health examination as a measure for metabolic syndrome about two years ago. Buck then, consumption of products related to dieting was a social phenomenon, but the enthusiasm consumers showed two years ago has faded away drastically these days. Neither instruments to strengthen abdominal muscle nor products to prevent metabolic syndrome sell fast today. Seeing the trend of government policy, many companies rush into new business that seems promising to keep abreast of others. Today, many companies go into business for children in anticipation of the benefits for children to be provided by the government. Taking advantage of the gourmet boom, an increasing number of companies branch out into the gourmet business. When the zeal subsides, a company that has the smallest sales is the first to quit the market, and most companies quit the market with reflective consciousness that they should have exerted much energy in the core business. In whatever kind of business, only a few companies that went into the market in the initial stage and that have enough capital to compete in the highly competitive market can survive. When the zeal ends, mass medial makes a lot of noise without mentioning the fact that it fed the boom. No one can tell precisely what the policy enacted only for the election will be if the regime changes. It is a perfect opportunity for a company to beat its competitors if they branch into trendy business that offers no synergy effect.

No. 7: You can get through a crisis as long as you stick with technology.

Apple has been growing in full flood. Its aggregate market value is about 20 trillion yen that is more than six times as much as that of Panasonic and Sony, and it is approaching Microsoft’s aggregate market value of about 23 trillion yen. The source of Apple’s tremendous success lies in its identity that no other company can imitate. It is only in the high-growth period that a company can increase its revenue by doing the same thing that other are doing. The true competitive edge lies in the uncompromising pursuit of identity. Then, what matters most is to decide in which area a company should pursue its identity. An old company that produces gold and silver leaves and flours reduced the factory utilization rate to as low as 20% because the auto-related business slackened in 2008. The auto-related business accounted for 60% of the revenue of this company founded in 1700. This long-established company desperately looked for the field in which its traditional technology would be utilized, and decided to venture into the battery business. The company exhibited its self-developed perforated electrolytic copper foils in the secondary battery exhibition held last March. It products attracted wide attention from the visitors as the state-of-the-art technology developed by a well-established company. President of this company said with confidence, “We are not outdone by others in the technology to thin and break up a thing. As long as we excel others in this technology, we can get through a crisis.” The company that drops its guard loses in technology innovation. When your company has a difficult time, every company also has a difficult time. Knowing that your competitors are making more efforts that you are making, you have to make strenuous and unremitting efforts. Otherwise, you will be left in the dust created by your competitors.

No. 6: Essential of business

Starbucks moved into the instant coffee business and introduced packaged instant coffee under the brand name of VIA in the U.S. and Canada. As part of the strategy to shore up the sluggish sales cause by stagnant economy worldwide, the company introduced packaged instant coffee for less than one dollar per package, appealing the low price and convenience to consumers. The company sells this product not only at its coffee shops but also at retailers. When the main business slackens, many companies often plan to sell a new product outside of its business domain to the existing customers, and they mostly introduce a reasonably-priced product in the initial stage. Occasionally, however, the popular-priced product impairs the brand image that the company established after many years’ hardship.

A company is often too proud to ask itself if a new product that bears the same brand name but does not belong to the existing business domain attracts consumers. Starbucks coffee is not the same coffee offered by McDonald’s. The former is higher in price than the latter because consumer can enjoy it in the refined and polished atmosphere in exchange for a little bit higher price. That is, Starbucks’ coffee is a product organized by coffee and the atmosphere created by customers. You can drink instant coffee in office and extract coffee using imported coffee beans at home. What is more, Starbucks has to consider seriously the profit margin it has to pay to distributors, wholesalers, and retailers. It is absolutely necessary to give them a good profit margin to make them profitable. None of the three players are interested in a product that cannot give them a fancy profit margin. That is, a low-priced product cannot impress them well because it gives them a low profit margin. It is important to know that marketing packaged instant coffee through the distribution channel is essentially different from making consumers enjoy delicious coffee in the well-organized atmosphere.

No. 5: Establish a regional brand

Dentsu, Japan’s giant ad agency, will launch business to help regional organizations and tourism-related groups establish a regional brand. The company will subcontract several operations that include conducting sightseeing resources survey and image research, establishing a regional brand to attract more tourists, and constructing a system to dispatch regional information. In the Japanese political world, Diet members had once heated discussions on establishing a new regional system in Japan, but the discussions are now a thing of past. Instead, regional vitalization has grown to be a hot issue in Japan. An increasing number of prefectures opened their antenna shops inside Tokyo, and some of them plan to open an integrated antenna shop abroad in cooperation. They are, however, not beyond the boundary of an outlet that markets regional products. The antenna shop has its own limit should it be defined as a commercial museum.

Everyone can see photos and images of every corner of the world on the Internet without going there and can buy products of regions across Japan easily via the Internet. Because economy is sluggish, it is a vital strategy to let people visit the region and have experiences they cannot enjoy unless they go there. That is, change of thought from demand pull to market creating is indispensable. The underlying concepts are market segmentation and differentiation. Segment a prefecture into municipalities, emphasize the identity of each municipality, and dispatch information. If each prefecture defines the information recipient as people all over the world, it can offer lots of varieties of subjects attractive to them. In that sense, a brand name that is short and impressive enough to strike people’s hearts like New York’s Big Apple is indispensable.

No. 4: On the cluster phenomenon

Samsung Electronics of Korea has been growing remarkably by focusing its management resources on the LCD TV that incorporates light-emitting diodes for backlight. Because the LCD TV is positioned as a high-end product, it is rarely subject to discount besides being rather profitable. In the North American market, the LCD TV allows Samsung Electronics to have a higher average sales price than Sony in the North American market in the flat-screen TV business. When we Japanese see advertising on the TV, we presume that Japanese makers are dominant in the world market. However, the fact is that Samsung is the market leader with 24% share. It is followed by Sony with 15%, LG Electronics of Korea with 12%, and Sharp with 8%. The leading four makers account for nearly 60% in the world market.

Panasonic is behind Samsung in the world market, and its two strategies aiming at the world market, “Focus on the world as one market” and “Provide all electronics to every household,” are not working well. In fact, Panasonic’s ratio of foreign sales is 46%, while Sony and Samsung secure more than 80% of sales from the foreign market. At the present time, it is clear that Samsung strategy to sell selected items in the world market is working better. As element technology grows more sophisticated and its base grows wider, it grown more conspicuous that a specific area specializes in a certain technology, and companies involved in the industry cluster. For example, the software industry clusters in the U.S., and the flat screen TV clusters in Japan and Korea. As competition of technology development intensifies, focusing on specific technological field grows more important and the cluster phenomenon will grow more conspicuous.

No. 3: What is necessary in business

All products are destined to be wiped out from the market, and it is imperative to continue putting new products on the market incessantly. Creative destruction is out of the question if you think regretfully of products. The same is true of business. Your business may be replaced by new innovate business some time in the future. Keep innovating and have courage to abandon unprofitable and unpromising business as needed. However, people are conservative by nature and liable to avoid a change.

There are three major obstacles to the decision on withdrawal. The greatest obstacle is rivalry. Think about Toyota and Nissan back in 1999. Back then, Toyota was called Toyota Bank because it was a super excellent cash-rich company, while Nissan had as much as 2 trillion yen interest-bearing debts. Even with these huge deficits, Nissan gave a big command to employees, asking them to try harder to catch up with and overtake Toyota. Because of this reckless command, Nissan finally had no way left but to ask Renault for financial help. What Nissan should have done is to abandon unsalable and unprofitable models, but it couldn’t.

The second is sticking with the traditional business domain, saying that this is our company’s DNA. Railway companies faded out in the U.S. in the early 20th century because they defined their business as transportation. Japan’s the great Ichizo Kobayashi, founder of Hankyu Railway, defined the railways business as the business to provide people with communication places materialized by the railway. He famously said, “If you need a customer, you try to create a customer.” His comment has something in common with Peter Drucker’s famous definition: “Business is to create and keep a customer.”

The third is the perceived notion that this business will be profitable some day in the future. This is often observed in medium-sized companies, and the business is usually a pet project of the president. Often, the president grumbles about the stagnant sales and attributes them to the insufficient efforts of his employees. The fact remains, however, that employees are trying very hard to make the president happy, but in vain.

Every company has it own capacity in terms of financial resources, management resources, etc. Even Toyota does not have infinite capacity. The super computer has grown competent enough to beat the world champion in chess. This is not a surprise. The competency of a computer increases as the data stored inside it increases. If a computer becomes too small to store the increasing data, what you need to do is to build a bigger and powerful computer. However, a human brain has a totally different story from a computer. No brain can be made bigger, nor can it be made more powerful over a short amount of time. Accordingly, human has no way but to abandon old pieces of information to incorporate new pieces of information.

Every company wishes to beat its competitors in its traditional business domain with products that sell forever. However, this hardly comes true. What is important is to analyze the reality and make a change as needed. Management is reorganizing a company to cope with ever-changing business environment.

No. 2: Creativity and Serendipity

The employment situation hardly improves in Japan. As the current government promotes policies that pay little attention to the supply side, company’s competitive edge has deteriorated, and lots of seniors scheduled to graduate from college next spring have been spending gloomy days because they have never got an official job offer. This creates a grave situation and affects their future badly. Under the current business conditions, companies find it hard to increase employments and try to find a means of survival by creating innovation. As a result, business management is growing to be a complex system endlessly. In the days like this, serendipity that is the ability to make an accidental discovery grows important. It is vital to recombine multiple matters and correlate them in the process to create innovation. The harder it is to find the correlations, the bigger intellectual gaps needs to be filled for recombination. Accordingly, the role played by what is unforeseen grows bigger. Simply put, serendipity is the ability to find unforeseen issues, and it is of great help to the evolution of living matters. Evolution means being creative, and the driving force of creativity is random by nature and redundancy. Therefore, it is not a good idea to eliminate the redundancy to the utmost limit. Without redundancy, living matters optimize themselves only to the present environment, and they are tapped once they fail to implement a plan faithfully.

No. 1: Marketing Speaks for Itself

NTT DoCoMo starts to standardize the core mobile phone software in collaboration with five Japanese companies from the consumer-electronics industry and semiconductor industry with a view to expanding the technology infrastructure and changing greatly the Japanese mobile phone business frequently dubbed the “Galapagos” phenomenon. The company carried out the same kind of strategy aiming at the global market 10 years ago. Back then, Apple achieved tremendous success in the global market, while DoCoMo withdrew from the global market. What decided their outcomes is marketing. Apple allied with carriers worldwide and opened the infrastructure of information distribution to them, while DoCoMo allied with mobile phone makers and contents developers. In fact, DoCoMo failed to show presence in the global market, and the idiosyncrasy of the Japanese market grew more conspicuous. This time the five companies asked to collaborate with DoCoMo are all Japanese and so-called DoCoMo’s family companies. Part of the base of Apple’s technology is made up of Sony’s Walkman and DoCoMo’s i-mode. The difference in strategy between Apple focusing on the global market and DoCoMo protecting the right and interest of its family companies is great.