The world's easiest "management strategy" planning course Chapter 1
Self-styled management strategy that prevails in Japanese companies
Business owners who do not study get lost on the road
I often hear the word “business strategy”, but what is “strategy” in the first place?
This is essentially a military term. When this term is used in the management of a company, it means having a perspective that considers the direction of the company and corporate activities in the medium to long term, with a broad view of social, economic, and industry conditions.
If you compare a company to a ship, a business strategy is like a nautical chart or compass for the company.
If you leave the ship without carrying anything from the beginning, you may lose sight of your destination on the way. If you are unlucky and hit by a storm, the ship will sink instead of heading for land.
Similarly, if a company does not have a strategy, it can only respond randomly to changes in the surrounding environment, and in the worst case, all the employees who are “crew” will end up as “sea algae waste”. ..
A manager who leans the company and commits suicide due to overlapping debts, and a manager who suffers from illness due to the stress of poor management. I have seen such unfortunate people. I was reminded of the lesson that “slumping management is life-threatening.”
In the face of these facts and further deepening management research, I discovered that there is a common pattern among companies that go bankrupt, companies that are sluggish, and companies that stop growing.
That is, none of the companies in trouble had the “knowledge” for a business strategy that could respond to changes in the environment. It is basically the manager himself who formulates the management strategy. The owners of the troubled company are simply lacking in power.
More than 99% of companies in Japan are SMEs. The manager often starts a business from a sole proprietor, and has the idea that “company management = his own way”. Even if you are doing it alone, if you have employees and grow up as it is, you will be in a situation where you can not run the company only with your own thoughts and ideas.
However, if you do not notice it and continue the way you started, if you make a mistake, it will affect not only you but also the lives of your employees and their families.
In recent years, Japanese companies have been straying even in the first-class companies with “super”. This is evidence that Japanese executives lack a solid strategy.
Despite many examples such as the JAL revitalization of Mr. Kazuo Inamori, the founder of Kyocera Corporation, there are companies that are still in trouble, so the management is important as “management strategy”. You will want to tilt your head to see if you are facing the theme properly.
I think there are various individual reasons such as the way of thinking peculiar to Japanese people, the characteristics of the industry, and the history peculiar to the company, but the big problem in the management of Japanese companies is the “bias of successful experience” of the managers. I think.
“Bias of successful experience” is a state in which managers think that their own management strategies have contributed the most to past successful cases, and are unable to work on new strategic methods.
Take, for example, a business owner who has successfully sold your product. The products he developed have sold explosively and have continued to this day. I strongly believed that the reason for his success was the fruit of his own product development and sales capabilities.
However, sales gradually began to decline. There are various reasons for this, such as the widespread penetration of products, the emergence of similar and cheap products, and the obsolescence of advanced products. The manager believes that “the factor of success lies in the method he has used so far”, so he does not listen to the advice of others at all and focuses on product development and sales with the same idea as before.
I continued to do so, but I continued to fail, perhaps because I was impatient, and eventually the sales dropped to half of the heyday.
Yes, this type of business owner will fail. There is no guarantee that it will continue to succeed, but we are only looking at the immediate future.
Once faced with a “successful experience bias,” managers are confused and at a loss when faced with situations where traditional methods do not work. The owner, who thought he worked honestly and succeeded, eventually ran out of power here.
Good managers learn and find a cycle of success
Business owners who have knowledge of business strategy do not take this approach.
First, think about how to develop it at the start stage and put it into practice. If successful, we will analyze the factors and find the principle of successful sales. If you make a mistake, all you have to do is identify the cause of the failure, improve it, and try again.
Once you’ve succeeded and your company has grown, you’ll know exactly what’s driving it.
Looking back on the growth of the company, whether it was trendy, was it just liked by a large customer, was it a coincidence, or if it was inevitable, the product / service was good, or was it the result of a combination of them? Objectively pursue the cause of success, adding a little skeptical perspective.
By doing this analysis, we find out what factors contributed to its success. As a result, what was discovered is the “strength” of the company.
However, it is dangerous to rely solely on that “strength”. This is because, in aiming for the next growth, such as the growth process and response to crises, various issues cannot be solved by “strengths” alone.
After a thorough analysis of the principles of success, managers can investigate the next selling trend, set up a product development section in-house, etc. And plan and find the right direction. This is “making a compass so that corporate ships will not be wrecked.” In this way, good managers create a cycle for repeated success.
Many Japanese business owners are temporarily successful with their efforts and ideas, but they rarely look back, for better or for worse, and tend to look straight ahead and not look sideways. This is the point I want to raise the most, and is the “bias of successful experience” mentioned above. The managers who are swept away by this bias end up in a state of “looking at the trees, not looking at the forest”, losing sight of the big picture and pushing in the wrong direction.
In short, it is important for managers to dig deeper into their strengths, services, products, and other strengths, and not to rely solely on them, but to take a holistic view of overall management strategy. It’s really easy to say, but there are quite a lot of business owners who don’t know this common sense.
Why do you think the owner needs a license?
Along with the “successful experience bias”, the problem is the “strategic literacy” of the management, that is, the management knowledge and the inability to utilize it in this case. The current situation is that the lack of “strategic literacy” leads to the formulation of low-level management strategies and the selection of partner companies, resulting in failure.
Corporate partner companies mainly refer to companies that support corporate management such as consulting companies, advertising agencies, professionals such as tax accountants, and IT vendors. Many companies rely on these partners to increase sales and grow. However, in order to handle these companies, “strategic literacy” is still necessary. In other words, if you can’t make good use of your partner company, your business will be confused.
Handling ability is one of the important “strategic literacy” for managers.
Based on my own experience, I think that in order for managers to quickly develop their own “strategic literacy”, they must take the initiative in attending a business school and obtain a qualification such as MBA. MBA is an abbreviation for “Master of Business Administration”, which translates to “Business Administration” in Japanese.
If you study business management properly and master the technique well, your power as a manager will improve dramatically. A business school is essentially a place to improve your management skills.
In order to obtain an MBA, it is essential for corporate management such as marketing, management, finance, organizational behavior, HRM (human resource management = personnel management method that comprehensively manages not only individuals but also organizations through education and training).
In addition to learning the essence that cannot be done in general, through case studies, while learning various strategic cases of other companies, we continuously conduct training on “what kind of action I would think if I were myself”. increase. In other words, while repeating mock combat, you will thoroughly learn comprehensive knowledge in management activities.
However, there are some major problems here.
First, there are many cases where management does not trust MBA.
When I visit a client, I sometimes hear that “My company has an MBA, but I can’t use it very much.” Certainly, even if you only get a qualification, it is natural that you can not use it if you lack the ability as an organization person, but that is not directly related to MBA. Why does that lead to misunderstandings and prejudices against MBAs?
It is true that there are some types of business people who have obtained an MBA, imitated Western presentations, and proudly revealed their logic, but cannot do it.
As a result, the voice that “MBA holders cannot be used” has spread, causing allergies to business owners. Perhaps because of this, Japanese executives and executive candidates are less willing to take an MBA.
Even at the business school I attended, there were cases where it seemed unavoidable to have prejudice.
It is a type of group that works for a major company and aims to advance in the future by obtaining a degree. I’m good at studying because I should have graduated from a certain university.
This type is not positive for studying on the premise of practical application, as long as you get a degree. I will graduate by acquiring an MBA by making full use of my memorization ability, learning technique, and desk logic. I don’t know what happened after graduation, but I can guess that these people have probably become “a big-hearted type” and, as a result, have been criticized by business owners.
MBA is a qualification to study management knowledge, information, and know-how and put it to practical use, and human resources who can master it are “true MBA” holders. The point is the difference between studying and not studying for management. At overseas companies, if you do not have an MBA or higher degree, you may not even be invited to a meeting, let alone promote to an executive.
The difference is clear even in the study awareness survey of high school students in Japan, the United States, China and South Korea.
As for the future prospects of Japanese high school students, the number of high school students who want to go on to “up to 4th grade university” is overwhelmingly high, and the number of high school students aiming to “become a leader” is in the single digit range in Japan, compared to 50% or more in the United States.
There is a lot of water in China and South Korea. In the first place, Japanese people have low motivation to study, and it can be seen that they have almost no desire to become leaders.
Because of this trend, Japanese businessmen rarely study after graduating from university.
If you enter a good university and enter a first-class company, you may think that it is safe, but it is already clear that the idea is an illusion in Japan, where lifetime employment is at stake. It has become.
However, they tend to have the ultimate goal of joining the company. If you can join the company, all you have to do is think about how to survive in the company.
In Japan, there are few leaders, that is, business people who aim to become managers or executives, and other than those who require special qualifications or have a small number of aspirations, study where the goal of finding a job at a first-class company has been achieved. Will stop.
But is that all right?
Western managers know how important it is to hone their management skills through higher education such as MBA, and have put it into practice to this day.
In the past, Japanese people had the diligence, honesty, brains, and wisdom and skills to create high-quality products. For example, Sony’s “Walkman”, Nichia’s “Blue Light Emitting Diode”, Toshiba’s “Flash Memory”, and so on, there are many examples where Japanese ideas and technological capabilities have shocked the world.
After the war, the era of losing everything and growing through high economic growth has been managed with wisdom and technology, effort and guts. The managers at that time have a track record of challenging the world with their unique intuition, skills, and ability to act. However, such a period may be nearing the end.
Even if you are not a manager, the number of young people who want to contribute to the company as a leader and learn to improve is small, so the number of people who actually stand at the top is smaller than in other countries. It is natural that only one is born.
There is no future if we always think that Japan is the top in Asia. Elites from ASEAN countries such as China, South Korea, Singapore, and the Philippines speak English and engage in business negotiations as a matter of course. I hear that Japan is rather inward-looking and the study abroad rate is lower than before.
Looking at that point alone, we can see how Japanese cannot become an international human resource. The gap between ASEAN countries and Japan is widening year by year, and it can be expected that Japan will eventually become a “developing country in higher education” and Japan’s corporate management skills will steadily decline.
In the future, if you want to run a business that keeps up with the world, Japanese managers themselves must learn higher education such as MBA and acquire the ability to formulate management strategies. ..
In that respect, the difference in study motivation between Japanese and overseas executives is clear, and they are already lagging behind.
It is no exaggeration to say that most overseas business owners have an MBA. As with English conversation, MBA exists as a “common language” and “common understanding” for business owners, and is becoming an essential condition for becoming a business owner or executive candidate.
The MBA is no longer like a driver’s license for business owners. Many people may be unfamiliar with it, but overseas, the acquisition of a doctor of business administration (DBA) qualification, which is a higher-level concept of MBA, has become more active overseas these days.
I am. If the MBA is an ordinary driver’s license for automobiles, the DBA can be said to be positioned like a second-class driver’s license or a large special driver’s license. For companies that span the globe, DBA may become an essential requirement for business owners in order to aim for even higher levels.
There is a similar doctor of business administration (Ph.D.) in Japan, but the reality is different even for the same doctor. Ph.D. is an abbreviation for Doctor of Philosophy, and especially regarding management, it is called Doctor of Philosophy in Business Administration or Doctor of Philosophy in Management.
Philosophy, a doctoral degree derived from philosophy, has a strong meaning as a researcher and is very different from DBA, which targets practical work.
Japanese managers will not only hone their personal skills, but will eventually lag behind other countries if they do not work more aggressively on their proof degree.
Why Japanese business schools are bad
So far, I have talked about the importance of MBA, but I would like to share with you another surprising fact about MBA education in Japan.
There are many universities and affiliated business schools in Japan where you can get an MBA without having to study abroad. It seems that there are more than 30 schools at present, but only 3 of them have been officially certified by international certification bodies such as AACSB, which is an international certification and evaluation body for MBA education (2017). As of February).
The three schools are Keio University, Nagoya University of Commerce, and Ritsumeikan Asia Pacific University (APU). It seems that some other universities, such as Waseda University and Hitotsubashi University, have reached a level that seems to reach international standards, but they have not yet received formal certification. To be honest, I was surprised that the university was not certified even though it was a very famous university in Japan. Even if you call yourself an “MBA holder”, you can say “I got an MBA!” Only after learning when you meet international quality standards.
Furthermore, the name of MBA is not unified in Japan.
I will omit the names of the universities, but there were actually 11 names, such as “Master of Business Administration”, “Master of International Management”, and “Master of Engineering Management”, just by confirming them.
Moreover, since they have not received international certification, even if they call themselves “MBA”, the content taught is not an MBA that has reached the official standard.
I don’t know the true reason why these are called “MBAs”, but in Japan, “self-proclaimed MBAs” are widespread, and no one has any doubts about this. When I asked an overseas MBA school official about this situation, he said, “It is safe to be sued.”
There is also such an example.
A person who is looking for a job explained his MBA when he took an entrance examination for a foreign-affiliated company. This school was a Japanese MBA school that has not received international certification. The desperate appeal was also empty, and the person was told that his resume was “not worthy of evaluation”. Several of my friends who completed the same domestic MBA were very disappointed to find out about this fact. When he got angry at the school, neither the professor nor the secretariat knew this fact.
Furthermore, many Japanese Master of Business Administration professors are researchers via Ph.D., and few have experience in business strategy practice. As a result, lessons have a higher academic component and are becoming more and more divergent from business.
When faced with such a reality, it is not unclear that you will not want to trust your MBA. And it is understandable that if there is an MBA that cannot actually be used in the company, the distrust of the MBA by the management and executives will turn into conviction.
Choosing a partner company full of mistakes destroys the company
Can Partner Companies Really Become Corporate Partners?
Needless to say, there are several partner companies that support business activities. For example, a consulting company that plans and designs management strategies on behalf of a company, an advertising agency that works through advertising production of media such as TV CM, newspapers / magazines, and the Web for corporate products and services, and even recruitment of human resources.
IT vendors who build core systems and IT infrastructure of companies. In addition to partner companies, there are also partner companies such as tax accountants, lawyers, and patent attorneys who use their professional qualifications to support the management activities of a company from the side.
What I would like to discuss here is the actual situation of partner companies and how to select them. Of particular importance are consulting companies, advertising agencies, and IT vendors.
This is because these partner companies can have a significant impact on their business performance, depending on how they are involved.
Top-tier companies with abundant funds have set up departments equivalent to these partner companies, scouting human resources and securing them in-house. Even so, for example, when you hit a commercial, you should be indebted to a major advertising agency.
And most companies except “rich companies” will ask the necessary partner companies according to the budget, time, issues, etc.
However, partner companies do not have the absolute management strategy know-how to support client companies. Still, why can we exist as a strategic partner for a company?
The reason is that partner companies aim to make a profit only in the department they are in charge of. As Brain, I can give you some advice, but it is the job of the management, not the role of the partner company, to formulate a management strategy from a bird’s-eye view of the entire industry.
Well-known partner companies attract talented people. Among them, major companies have a track record of making profits with the support of first-class companies, so newcomers will form a “team” with their seniors to meet the demands of the company. The education at that time is similar to the apprenticeship system of “stealing skills” like Japanese craftsmen, and it is quite difficult for one senior employee to raise many juniors.
The demands of these “teams” from companies differ from person to person, so if you have a certain level of common know-how, you can succeed in dealing with the field.
By repeating this process, individual experience points will increase, but I think you are not aiming to improve the skills of the entire company by sharing the know-how learned there in a horizontal connection. As a result, employee quality tends to fall apart. I guess so.
In addition, there may be partner companies that find the fault of the other party and grin. When you find multiple problems in a company, you can solve only one point and make a profit, but since you have not solved the other causes, the performance of the client company does not improve at all.
In that case, it is normal to consult with the partner company that you requested once again.
Now, if you point out a new problem and solve it, you can have delicious feelings over and over again. In fact, I’ve seen many examples of partner companies doing this kind of business.
What is the actual situation of a consulting company?
When I visit a company to support its business strategy, I often hear that it has failed using another consulting firm before. Such a story is not new.
I’ve been wondering why consulting companies are disliked since I was working for an advertising company, so I still listen to the details every time I talk about it.
There are many reasons, but let me give you an example. It’s a story about a certain electric railway company.
When I was talking in a department called the Corporate Planning Office, I was shown a business plan created by a previous consulting company. There were two copies of the plan, each proposed by a different company.
Both were created by a major consulting company that everyone knows. The plan was thick, probably about 300 pages.
I flipped through it and looked at it, but to be honest, I sighed unintentionally, saying, “It’s terrible.” From the time I was a newcomer to the present day, I have created various plans and plans, so I can understand the quality of the documents just by reading a few pages.
The main reason I thought the business plan was a terrible thing was that it was clear that it was created by multiple people, and the whole thing was inconsistent and the content was not connected at the beginning and the second half.
Probably because of the division of labor, each person in charge has a “color”, the claims are slightly different, and because I created a lot of my part to compete, it became a strange amount. .. Even if I truly took this and tried to put it into practice, it seemed impossible to achieve it.
The person in charge of the Corporate Planning Office also noticed the inconsistency and lamented, “This is not very usable.” When asked about the price of this business plan, one company cost 100 million yen and the other cost 30 million yen.
Since it was a large company with money, it may be enough to dispose of it to the person in charge because it failed this time, but it is a mistake if this is a small and medium-sized company. is not.
However, what is really scary is when you trust and practice a business plan of this quality. If you spend a lot of money on something that shouldn’t work, the loss is immeasurable.
When I thought about it, my spine became cold. In a sense, it can be said that the decision of the Corporate Planning Office that made the stop was correct because the damage was minimal.
The other day, I was asked to design a management strategy by a company with annual sales of about 20 billion yen. Of course, at this scale, consulting companies should have intervened in the past.
When I asked him about that, he said, “Well, I asked a major consulting company for about 30 million yen, but it was no longer usable. The output that came out was,” Your strength is your human resources.
The president was also angry when he saw this. ”There are cases where the consulting company was used well and the proposals were addicted to it, and the business performance of the company improved, but this is often the case. Failures are actually happening.
Previously, I talked to several people to find out the reality of a consulting company. One of them is a professor at the MBA school I belonged to.
He worked for a major consulting firm before teaching at the school. So he frankly asked what was actually happening at the consulting firm.
In the first place, highly educated human resources are appointed to major consulting companies. In addition, it seems that there is a systematic training system for training new employees, but there is no unified basic rule or know-how in formulating management plans.
After the training, senior employees teach us through practice, but since everyone is smart in the first place, it seems that the education is centered on “learning in the field.”
As a result, since it becomes individual guidance, the output business plan depends on individual ability, talented human resources create a good business plan, and non-qualified human resources have a poor plan.
Produce a book. The point was that even at a major consulting company, the quality of consulting was uneven depending on the person in charge.
Another habit is that business owners who dislike consulting companies say. That is, “they can formulate a strategy, but they can’t tell you the tactics.” This has a very deep meaning.
The difference between strategy and tactics doesn’t need to be explained anymore.
No matter how good a strategy is, tactics, that is, strategic design that does not take into account practical methods, is just an empty theory. In other words, it’s just an ideal theory and not realistic.
Consulting companies make a profit by making strategic designs. What’s more, if you can charge a higher cost, you will be evaluated as having done a good job. At the extreme, you just need to have the ability to create plans and plans that look like they can be bought for a high price. The site does not matter.
This is because it will be difficult to get out of hand if you provide such vivid support. Of course, there will be almost no on-site experience. Because I’m not working for that company.
In this way, people who are not familiar with the site and have different abilities put together a desk theory and put it together into one plan. That is the true nature of the expensive strategic design document.
Of course, my acquaintances and colleagues have a number of excellent management consultants, and the results are worth the cost. However, dispelling the negative image that management says is an important theme that must be reconsidered throughout the consulting industry.
So how do you avoid wasting money and choose a good consulting firm?
After all, there is no choice but to acquire the ability for managers and executives to improve their knowledge and skills, to formulate and implement their own management strategies. That is the job of the manager. It fails because it is thrown to another company.
If the manager himself raises the literacy of the management strategy, then he can ask the consulting company to provide partial support only where necessary. If the support content is a little strange, you can stop there and have it corrected, or change to a different company.
If you have a keen eye for support, you will be able to realize your business strategy by keeping costs low without spreading damage.
The anguish of advertising agencies
While writing this book, there were some major incidents that shook the credibility of the advertising agency industry.
I don’t advocate it, but now that I’ve started a business, my company is sometimes asked to formulate a strategy for the advertising agency itself, so I know the circumstances behind it, so the distress of the advertising agency owners You can guess.
What is the anguish of an advertising agency? It’s less cost-effective and can’t keep up with the diversification of media for providing information. Let me explain in a little more detail.
Normally, when a client company wants to place an advertisement, the advertising agency undertakes the entire process from advertisement production to placement, but the fact is that the word “advertisement” and its existence are no longer suitable for the times.
Advertising, as the name implies, widely informs consumers about a company’s products and services.
In the olden days, products and services were seen directly at nearby stores, sold by salespeople, or word-of-mouth. In addition, budgeted companies have used mass advertising in newspapers, radio and magazines to increase sales.
And it was the spread of television that made large companies even bigger during the period of high economic growth from the 1955’s. It was an era when family and friends gathered in front of the TV, and the next day, the topic of TV was lively at school and at work. A listed company was born just by one successful TV commercial, and the impact of advertising was enormous.
However, nowadays, family lives are separated even under the same roof due to reasons such as overtime work, increased earning, and diversification of entertainment other than television.
Furthermore, with the enhancement of the Internet environment and the spread of SNS (Social Networking Service), good products and services have become widespread by word-of-mouth information. Similarly, “hype” is quickly spotted as a lie and spread.
There is also a bad example of believing that the hoax spoken in a straightforward manner is true and spreading it further. If there are mistakes or mistakes, they will quickly catch fire on social media, and companies will often be overwhelmed until they cannot easily recover.
Then, companies will start “self-regulation” that puts safety first, and the impact of advertising will be weakened. Another major reason is that the income of the people is steadily declining and they are no longer spending money on things.
From these various factors, it is being reviewed whether the advertisement itself is meaningful, and more and more companies are working to optimize or reduce advertising costs.
So far, it’s a long time ago, but in fact, the advertising budget of companies has increased since the “Lehman Shock”.
Although it is not possible to make a simple comparison due to reasons such as rising advertising costs, advertising costs themselves have increased since the “bubble” era. Instead of cutting marketing and promotion budgets, some are spending a lot of money.
Especially noticeable is the cost of advertising on the Internet. Internet advertising spending has continued to rise since the mid-zeros, just as it costs TV advertising.
Mass advertisements on TV, newspapers, magazines, etc. (* Do you want to explain mass advertisements) have decreased, but there was no such thing as directing from mass advertisements to the WEB just by changing the direction of advertising. With the advent of new advertising design models, corporate advertising design methods have changed.
However, the owners of advertising agencies are having a hard time getting started. Here is the weakness of traditional advertising agencies.
The reason is that, first of all, the competition for a certain amount of pies that are the target of mass advertising has begun, and the number of companies that can hit mass advertising has become limited.
One of the causes is the decrease in TV viewing time as mentioned above. Television is viewed frequently, especially among middle-aged and older people, but the use of smartphones is overwhelmingly higher than that of television among the younger generation under the age of 30. The time I spend in contact with the media hasn’t changed much in the past, but the direction has changed significantly.
In addition, because the income of the younger generation does not increase, overtime work delays the time to return home, and even if you get married, you cannot have children by earning money together, and the marriage itself is no longer possible. I can’t afford to watch TV during the so-called “golden time” from 7pm to 9pm.
Automobiles, which are Japan’s core industry, are also different from rural areas, but in metropolitan areas, an increasing number of people think that they do not have or do not need a car.
If the number of people who buy things decreases, the sales of the company will only decrease. It’s a simple story, and if the population does not increase due to the declining birthrate and aging population, the number of purchasers will be limited even if advertisements are placed.
Another weakness is the lack of know-how in creating online advertisements.
In recent years, the number of start-up companies that are better at producing online advertisements has increased rapidly than the advertising agencies that have produced traditional TV, newspaper, and magazine advertisements.
Internet mass advertisements can be produced cheaper than TV commercials. This put mid-sized advertising agencies in trouble, following the old way.
In addition, the cost-effectiveness of TV commercials can basically be measured only roughly by comparing the audience rating and sales, but with online advertising, which has also evolved data analysis, detailed cost-effectiveness can be measured by tracing the browsing history of customers. The effect is becoming measurable. Perhaps because of this, some companies have begun to question the huge cost of commercials on TV.
Currently, it is said that there are about 7,500 commercials and services that are aired on TV each year. Multiple advertising agencies are fiercely competing for just 7,500 stocks.
In marketing terms, there is the term “red ocean” in which the competitive environment becomes fierce and there is a bloody battle, but the advertising industry is truly a “sea of blood.”
There is also a problem with the advertising production system of advertising agencies. When an advertising agency receives an order for an advertisement from a client, it outsources most of the planning and advertising production work such as various market research and commercials to an outside contractor.
Then what will happen? The business know-how of “creating advertisements” is not accumulated in the original advertising agency, and the “strength” of production power is passed on to external vendors.
Major advertising agencies have only sales-oriented functions, which significantly weakens their in-house production capabilities. If a new advertising agency, which is also good at IT production, enters the market, the advertising agency will have no choice but to engage in sales service battles with client companies. It is becoming more and more excessive.
In order to develop new business partners, advertising agencies are also expanding their sales activities to small and medium-sized enterprises that have not received much attention.
However, SMEs have not been involved with major advertising agencies so much, so they may ask for support not only in advertising but also in management strategy. I dare to mention it here because these examples occur occasionally around me and most of them fail.
As explained in Chapter 2, there are six stages in business strategy, including marketing, management, and operations.
Marketing, which is one of them, is classified into 4P (product, price, promotion, place).
Of these, the promotion is further subdivided, and advertising is only a small part of it. Advertising is just one activity element from the perspective of overall management strategy activities, let alone advertising alone cannot solve management issues.
Even if it is a major company, advertising agencies do not have the know-how to support business strategy, so if you easily ask for business strategy support, you will be in trouble.
Amazing alchemy of IT vendors
Finally, I would like to explain the current status of IT vendors as corporate partners.
When a company reaches a certain size, it begins to introduce IT systems in search of efficiency. The scale will increase from a small accounting system to a system with various purposes such as sales management and customer management.
In recent years, the software itself has evolved significantly. Some are packaged software, while others are inexpensive using cloud systems. There is also a method called “scratch” that builds the system from scratch so that it fits the business system and needs of the company.
However, the introduction of this IT system also suffers from failures at a considerable rate.
IT order amounts range from millions to tens of millions to hundreds of millions, so the cost is not stupid.
Generally, the cost is calculated from the process required for system production and the “man-hours” such as the number of people and the number of days, but it depends on the other party’s argument. Moreover, depending on the content of development, it may take half a year to several years, which takes time and money.
However, there are many systems that simply become “water bubbles” that cannot be used once they are completed. In some cases, this has led to proceedings, which can have a significant negative impact on corporate management.
So why does the introduction of IT solutions fail in this way?
That is, the ordering company does not know how to use the IT vendor, and the ordering IT vendor cannot understand the needs of the company. Due to these two factors, IT implementation often fails.
First, let’s start with the problems on the corporate side.
The story is different if there are employees who have knowledge and experience in introducing IT solutions in-house, but most small and medium-sized enterprises do not have experience in introducing IT solutions, so first select an IT vendor as an ordering party. I have a hard time.
Here, companies face three main choices.
One is a pattern called “scratch” created from the above. When making this choice, it starts with hearing about the business content and organizing necessary items, so it is costly and the development period is long. Since you are creating a program that has never existed before, the risk of failure is high.
The second is the pattern of purchasing packaged software. If you buy software that suits your company’s challenges and needs, it’s relatively cheap and less likely to fail. However, even at the level of accounting software, it can cost hundreds of millions of yen to install a core system class package.
Packaged software can usually be “customized” to suit your needs. However, customization is an extra charge, which is extremely expensive. I often hear that you should have bought packaged software cheaply, but it was incredibly expensive to customize.
The last is a pattern using the “cloud”, which has been increasing rapidly in recent years. Until then, it was natural to install and use a large computer system in-house. Most of the scratches mentioned above are of this type.
“Cloud” means “cloud”, but it is collectively managed by a server located in a system center that is strictly managed somewhere outside the company, and is used by running software in the cloud.
The installation location will not be disclosed at all. Since all software is used via the Internet, it can be easily used not only inside the company but also from outside the company on notebook PCs, tablet terminals, smartphones, etc. Although the cost performance is high, the usability of the software is not always good because it is not made for our company like the packaged software.
Since it is a case-by-case basis, it is difficult to judge whether it is good or bad, but let me explain the general points to note based on the cases I have experienced.
This is the case when I used to be an executive of an advertising company. For two years after starting a business, I asked a tax accountant to input accounting software. After that, the company’s sales reached several hundred million yen, so we decided to hire personnel in charge of accounting within the company and select accounting software.
The company that came to market here is a listed company that is a major accounting software company. Although I was involved in management at that time, I was an outsider when it came to accounting software. Therefore, the decision to introduce this software was made by President Matter.
The salesman’s persuasive presentation was fruitful, and I decided to purchase a package of accounting software handled by this company. I remember that the purchase price was 4 million yen and the running fee was tens of thousands of yen a month. If you add the recruitment of accounting personnel, the total monthly cost will increase by 300,000 yen. Originally, this should have solved everything.
However, it was later discovered that this accounting software was not suitable for the company’s business. Also, the software is quite sophisticated and difficult to handle, and I have come to see the accounting department confused. In the end, it took almost two years for this accounting software to work reasonably well.
I thought this was bad, though I was late, and when I consulted with a system company I knew, he told me that this software was not suitable for my company’s scale and that there was a simpler accounting software. When I bought the recommended accounting software and tried it out, the problems I had had were solved in no time. In the end, the original accounting software was abolished, and the running contract with the company was suspended. This was a misjudgment between the president and us officers, and I feel sorry for the accounting department.
After this incident, I started paying attention to the marketing of external companies.
Let me give you another example. This is rather recent. The company that we decided to support in formulating a business strategy used a certain company’s cloud-based customer relationship management (CRM) software.
It is a type that charges according to the number of people, and the usage fee is 10,000 yen per person. Since I applied for 40 people, it will be 400,000 yen a month, or about 5 million yen a year. The reason for introducing this software is the same as my experience, and he said that he was convinced by the presentation and sales talk and made a contract.
However, CRM requires some know-how, and the skills of the employees of this company were too early to handle. CRM is just a tool, and if you can’t master it, it’s worthless. Apparently, it was explained that the introduction would dramatically increase sales, but when I tried it, it was not easy to handle.
I quickly proposed to this company to cancel the customer management software, taught the customer management method using simple mail software, and succeeded in reducing costs as a result.
Finally, I would like to mention one more case of a company’s failure to implement.
After consulting with this company, I participated in a presentation by a major IT vendor together with a client company regarding the introduction of a core system, and received an explanation.
About 10 people came to the company from the IT vendor side, and the presentation started with the past achievements and high industry share. While receiving the explanation, the presidents on the customer side showed interest, and it became an atmosphere that it seemed to decide on this IT vendor.
However, I was the only one who wanted to oppose the introduction of this company’s system. That’s because my experience has given me some reasons to oppose it.
Large IT vendors usually have very good business models. One of our achievements is that we received a request from a company to create a program for an expensive IT solution and completed it. But it doesn’t end there. The completed system is copied, adjusted for general sale, and secondarily sold as packaged software. We have a lineup of general-purpose packaged software, ranging from hundreds of thousands of yen to hundreds of millions of yen. From the next project, you can use this package software and customize it according to your needs. If you customize it, you will be charged again. In this way, it is a mechanism to generate sales in steps like alchemy.
However, it does not raise any issues with this business model. The problem then arises.
Fast-growing and successful IT vendors are constantly struggling with a shortage of skilled system engineers and sales people who are familiar with IT solutions. In such a situation, if it is a scratch from scratch where a large amount of money moves, the IT vendor side will also assign excellent human resources, but if it seems that only customization of package software is enough, it is decided that inexperienced human resources can be in charge. increase.
As mentioned earlier, companies are not good at making clear orders about where and how to modify packaged software. It is easy to fall into discussions between human resources who lack knowledge and experience with each other.
IT vendors create a document called a “requirement definition document” to protect themselves from such ambiguous orders. This document is a compilation of corrections made from the order of the company.
This is a natural process for business, but the requirement definition document has the back purpose of protecting the IT vendor as a kind of contract.
Companies make various requests for what kind of program they want, but due to lack of expertise, the content of the request tends to be ambiguous. The IT vendor compiles this into a requirement definition document as an order from the company side and finishes it as told. When I actually operate the completed program, I get some dissatisfaction, such as “difficult to use” or “lack of functions”.
This is where the requirements definition document you created first comes into play. The IT vendor claims that it was “created exactly as it appears in the requirements definition document.
” Problems and dissatisfactions that occur after that will be “another matter” that is not included in the requirement definition document. Companies have no choice but to put up with difficult-to-use programs or place additional orders as new deals. If you make an additional order there, it will be a new order and a large amount of cost will be incurred. In this way, the requirement definition document becomes insurance for the IT vendor. This is the reality of introducing IT solutions.
The reason I objected to the IT vendor mentioned above is that there were many visitors from the IT vendor side at the time of the presentation. When a lot of people come, the company tends to think that they are “working hard”, but in reality, there is a high possibility that there is no coordinator, just because the roles are divided. If you have a coordinator, that person should be able to speak everything, and you don’t have to bring in as many as ten.
Also, when I first talked about shares and achievements, I was not confident about the contents, and in fact, the content of the presentation seemed to correspond to that. That’s why I opposed it.
However, this company decided to hire an IT vendor without hearing my advice, and probably because it voiced opposition, it stopped listening to other advice, so I quit the transaction with this company.
After that, as I expected, the software of this IT vendor was not introduced, and I heard that the cost of about 200 million yen became a bubble. Corporate performance has since declined.
In order to avoid failure in IT solutions, it is desirable to appoint a consultant who understands the needs and issues of the company, understands the characteristics and programs of IT vendors, and connects both sides well, but it is a good consultant. Is not so easy to find. There are increasing calls for cost reduction through the introduction of IT, but it is only if you can master IT. What kind of choice you make here and how to introduce IT well is the difference between light and dark.
Overwhelmingly disadvantageous Japanese business environment
World-class innovation will not be born in Japan
By the way, what I will explain from now on is the unfavorable business environment in Japan that I discovered and felt through my experience in management support and studying business administration. Compared to other countries, Japan’s business environment is not good at all. It’s rather hopeless.
However, there are too many business owners who are unaware of such a situation. That is why we must accurately understand the business environment of our own country before we bring it to the world level.
First of all, I would like to take up the difference in the way of thinking and approach to “innovation” between the world and Japan.
The word “innovation” advocated by Austrian economist Joseph Schumpeter has long been translated as “technological innovation” in Japan. However, Schumpeter’s intention is to create new value and make a big social change by creating “new innovations”, “new perspectives”, “new ways of thinking”, and “new ways of using” things. , Has a bigger interpretation.
Since Japan has only considered “technological innovation” in one aspect, economic development is either a process innovation type represented by Toyota Motor’s so-called “Kaizen”, or a transistor radio or “Walkman”. The focus is on innovation (product innovation), which creates new products such as development, and it has been well addicted to creating strong competitiveness. Since the company that adopted such “innovation as technological innovation” has made a profit, the direction of corporate management has been fixed and it continues to this day.
However, in recent years, the economy has become global and technological innovations such as the Internet have progressed rapidly, making it possible for anyone to use cutting-edge technology, and the hurdles for developing products and services using IT technology have dropped significantly.
rice field. In contrast to companies that have aggressively expanded overseas, companies that have managed to come inwardly are becoming more and more deadlocked.
Today’s Japanese society is a soil where it is difficult to create innovations advocated by Schumpeter, and it is always behind Western countries. With the rapid progress of globalization, the weakness of innovation creation also brings about the decline of national power and even the crisis.
In this way, the current situation is that the international competitiveness of Japan’s innovation is declining year by year.
Originally, Japanese R & D investment was centered on private companies, but it has dropped sharply since the “Lehman Shock.” Regarding the government’s investment in private companies, investment in large companies is prioritized over ventures and small and medium-sized companies, and the amount of investment remains almost unchanged.
Until now, development for Japan has focused on “making up for shortages,” “improving efficiency,” and “creating better and more comfortable products,” but when it reaches a certain level, , I have come to include it to the point where I think “Is that function necessary?” Although the performance has been improved, the price has increased and it has become difficult to use it.
In that respect, South Korea and Taiwan, which recognized that the domestic market was small, aimed overseas from the beginning and prioritized a global perspective. As a result, on the contrary, we have acquired new targets by developing products that are simple, easy to use for people of any country and generation, and are inexpensive, and have made great strides toward globalization. Japan was unable to respond to changes in global needs and lacked a long-term vision, and as a result, it allowed companies in Asia as well as Europe and the United States to take the lead.
At the same time, in product development, there are conspicuous movements by large companies to own technology developed by third parties, such as M & A of venture companies and small and medium-sized companies with technology, and purchase of technology itself from universities and other companies. Has been evaluated by foreign countries as having a weak positive attitude toward global joint research and development.
No entrepreneur is born in Japan
In order to realize actual commercialization, it is necessary to have specialists in public relations strategy, intellectual property strategy, and standardization strategy as well as researchers and entrepreneurs.
However, in Japan, there are only a small number of supporters such as venture capitalists who are the sources of the funds.
Therefore, even if there are talented people who are likely to succeed if they start a business, it is difficult to bring them to the forefront and challenge them.
Among the government policies, “national projects” related to research and development are funded by taxes from the people. Of course, there is a bias that failure is unacceptable.
Fear of failure can set the goal hurdles low enough to ensure they are achieved. As a result, although the national project has landed safely, it has not led to the great achievement of creating new industries. Furthermore, in recent years, the focus on traditional heavy industry and construction industries, such as urban development, railways, and promotion of nuclear power plants, has tended to be prioritized.
In this way, the number of people aiming to start a business is decreasing, and we are in a vicious circle where the number of entrepreneurial cases does not increase.
This is the unique economic environment of Japan that I am worried about. Since the creation of innovation and the development of entrepreneurs are being hindered, nothing new that “this is” is born.
In the current environment, it is difficult to work on a novel business model in order to emphasize immediate profit and loss, and legally, the examination process for commercialization and service becomes too complicated and can be stopped. The challenge itself to new business is becoming difficult. I can only think that I am strangling myself.
In recent years, with the change in the system to mark-to-market accounting, which is becoming a global standard, there is an increasing tendency not only for economic activities but for society as a whole to seek short-term results.
Under these circumstances, it is almost impossible to find a person who will fund R & D from a long-term perspective in the private sector. In Japan today, long-term efforts that do not know when the results will come out are neglected.
Under these circumstances, no one like Steve Jobs or Mark Zuckerberg would be born in Japan.
Special circumstances in Japan where start-up companies are difficult to grow
In an overseas study conducted decades ago, it was announced that companies could be divided into three types: small “rats,” giant “elephants,” and deer-like herbivores, “gazelles.” A “mouse” is a small company that does not grow significantly, and an “elephant” is a long-established and large company that cannot respond quickly to changes.
And “Gazelle” is a company that can be expected to grow, as it is equivalent to an emerging venture company because it jumps easily.
Following this study, prominent US business consultant David Birch states that more than half of new employment in the West since the 1970s has been supported by “Gazelle companies.”
Applying what David Birch said to Japan today, the “mouse” is a small family-owned business found in shops and factories in the city. “Elephant” is a large company such as Panasonic and Mitsubishi Heavy Industries. It was once thought to be safe, but some of these large companies, such as Toshiba and Sharp, are in dire straits. In fact, in the United States, only 11 of the top 100 companies in 1970 are still in the top 500.
On the other hand, when you think of a “Gazelle” company in Japan, there used to be a company like Livedoor, whether good or bad. Also, although it was a while ago, it seems that Rakuten, mixi, DeNA, and recently Mercari are equivalent to “Gazelle”.
The table shows the results of the “Global 100 Most Sustainable Corporations in the World” (Global 100 Index), which attracts attention every year at the 2017 World Economic Forum (Davos Conference).
From a sustainability perspective, Canadian publisher Corporate Knights has announced it as “the 100 most sustainable companies in the world.” Thing. Let’s take a look at it.
From Japan, only four companies, Takeda Pharmaceutical Company, Sysmex, Astellas Pharma, and NEC, are ranked in the 100 companies. The characteristic of this ranking is that large companies classified as “elephants” do not always enter.
According to David Birch, the real value of “Gazelle” is its ability to turn a small business into a highly productive company in a short period of time, just like a gazelle jumps. That is the momentum of start-up companies.
However, the key to start-up companies is whether they can survive. In the United States, half of start-up companies can survive for more than 5 years, and only about one-third can survive for more than 10 years. On the other hand, if they can survive, the company can prosper and threaten existing companies. This is exactly what Facebook and others are.
In other words, as David Birch says, what Japan should do now is to come up with a plan to create a large number of start-up companies that have the potential to grow into “Gazelle.”
If a heavy and long existing industry is left to take “life-prolonging measures” while maintaining low productivity, it will not lead to the development of national power.
The OECD surveyed Gazelle’s trends in 10 industrialized countries, excluding Japan, and found that 40% of productivity growth was replaced by start-ups, some of which took inefficient shares of existing companies. I am announcing.
In contrast, in Japan, the old and new companies are rarely replaced. The job hunting activities of university students are also “the shadow of a big tree if you come by”.
Furthermore, it seems that it is even best to become a civil servant. The era of lifetime employment has come to an end, and in the employment situation where it is declining to become a regular employee from anywhere, the number of “ambitious people” who want to create new things has diminished.
Rather, it seems that motivated people, such as NPO corporations, are moving toward improving social activities rather than economic activities, perhaps due to the effects of heightened social unrest such as the Great East Japan Earthquake, declining birthrate and aging population, and poverty.
In order to bring about new innovation in Japan, “destruction” to create “creation” is necessary, and start-up companies play that role. It is more important to foster start-up companies that can be expected to grow than low-productivity companies.
It’s easy to see from this survey that the withdrawal rate and new entrant rate of Japanese companies are very low. Similar results can be seen in another study. Looking at the Ministry of Economy, Trade and Industry’s Comprehensive Entrepreneurship Index (TEA), the entry rate of new companies in Japan was 4.8%, an increase from the previous year (3.8%), but it is the lowest among 61 countries.
Also, it is very unlikely that a new company will grow significantly in Japan. According to the Global Entrepreneurship Monitor (GEM), companies that have been in business for two years have an average of 5 employees in Japan, compared to an average of 10 in the United States, and 10 years from now. Looking at it, the gap is much larger, for example, in the manufacturing industry, the number is eight times that in the United States, while in Japan it is only doubled to 10 people, and the difference becomes even more pronounced in the service industry.
“Protecting employment” is important. However, if you take a policy that gives preferential treatment only to large companies like Japan, “Gazelle” will not be born. At this rate, it is clear that the speed at which Japan’s national power declines will increase.
In order for the Japanese economy to regain its vitality and resurface, I think it is more important to create an environment in which start-up companies can be created and nurtured.
SMEs that are indifferent to the government and partner companies
Let me explain the business environment of Japanese SMEs.
The definition of “small and medium-sized enterprises” differs depending on the type of business, but according to the “2016 White Paper on Small and Medium-sized Enterprises” compiled by the Small and Medium Enterprise Agency, only 0.3% (10,000) of companies in Japan are equivalent to “large enterprises”. There are only 1000 companies).
The number of other SMEs (total of medium-sized enterprises and small businesses) is about 3,809,000, which accounts for 99.7% of the total number of enterprises. In other words, most Japanese companies are SMEs.
However, when it comes to business, it’s easy to think that big companies are the main players in the economy.
Certainly, there is an image that SMEs are “subcontractors of large companies”, but conversely, the business of large companies is established because there are small and medium-sized companies that are subcontractors. For example, it is said that more than half of the parts used in Apple’s iPhone are made in Japan. In addition, recently, due to the effect of online shops, it is possible to sell small products directly to consumers, and it is a fact that the number of small and medium-sized enterprises that can be independently managed is increasing dramatically.
From a different point of view, the reality that SMEs are the protagonists of Japan becomes clear.
However, the government’s measures to revitalize small and medium-sized enterprises are weak, and as a result, the emphasis is on measures that give preferential treatment to large enterprises, such as deregulation and corporate tax cuts.
Even if the owners of small and medium-sized enterprises seek various management strategies, they cannot find a budget, so they do not look at partner companies that cooperate with the corporate strategy, and they cannot voluntarily ask a management consultant. .. As a result, managers have no choice but to voluntarily learn and implement business strategies, such as purchasing books and studying independently or attending seminars related to business strategies.
Small business owners cannot always gather information on their own or have a random short-term outlook because they cannot have the awareness and time to think about the importance of corporate strategy and the support system, and they can only have a long-term perspective. A management method from the perspective has not been established.
It was four years before I started my current company that I was made aware of the fact that the government is neglecting small and medium-sized enterprises. I won’t go into details, but I bought the business of the company I used to work for and started a business. He steadily raised money and invested most of it to buy the business.
But this was a complete mistake. Immediately after I started my business, I started working one after another, but I didn’t have working capital. I needed money and rushed to the bank. But if you’re just starting a business, haven’t settled, or are too busy to make a trial balance, and you’re offered a loan, the bank shouldn’t nod.
When I consulted with a bank representative, I was asked about my sales target. I answered “100 million yen in the first year” quite modestly, but I was laughed at by my nose. It wasn’t trusted at all. In the end, the loan was turned down.
Upon closer examination, a system for financing immediately after starting a business was not in place in Japan. For public financing and bank financing, the stance of the government and banks is rather before the establishment or after the second term of settlement. Of course, there are many other ways to raise funds, but the presidential business at startup was busy and I didn’t have time to think about how to raise funds.
Growing companies use the most fuel until they get into orbit, just like launching a rocket. If you can’t supply fuel, it just falls. Fortunately, I managed to finish the first term of settlement without crashing, and I was able to achieve the sales I expected. However, our tax accountant found out that he had a relationship with the bank he had consulted with before, and reported the results just in case.
The bank seems to be surprised. He apologized at a later date.
Since then, I have had a good relationship with this bank. In this way, I was keenly aware that there are many problems with SME policies in Japan.