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12.14.2011

Case Study: The Subtle and Not So Subtle Signs a Leader Must Look Out For When The/His Ship Is About To Sink

A pilot once told me, just prior to the fatal accident that claimed the lives of JFK Junior and his wife, that it take a LOT of MANY THINGS to go wrong for a plane to actually crash.

We all also know that when we are actually in some kind of major accident, even if the incident lasts for a few seconds at most, we experience and recall all the minute details as if in slow motion.

The human brain is awesome that way.

But what I am experiencing right now feels a bit like the opposite.

I cannot disclose details for various reasons, but as a rather disastrous future seems to await us, time seems to be moving faster.

Perhaps I will actually write a book about this one day, but a few weeks ago, a very wise man said that our current situation "is like watching a car crash in slow motion."

I could not but help laughing out loud because it was just that -
we know that a car crash is going to happen;
it is slowly unfolding in front of our eyes;
and yet, none of us seem to be capable of stopping it.

Why?
Because the ship we are on is being deliberately and surely being steered in that direction.

"20-20 Hindsight" is an expression I tend to use quite often.
To me, that is the fruit of the mistakes we make, and the key to prevent their recurrence.

It is too early for us to do a "post mortem" yet on many fronts, but on others, the writing is on the wall - the outcome is evident.

One key sign is the lack of candid feedback to the CEO.

Whenever he hosts a meeting, his staff come to the meetings - some better prepared that others - but even when invited to speak, very few actually take the floor to say anything meaningful.

The dialogue is usually just an employee responding to a question posed to him, and not volunteering new information that the others, including the CEO, would benefit from knowing.
Be it competitive information or market intel, no one volunteers anything, let alone make suggestions on how to solve the problems on hand and overcome the challenges present.

The reason why this has happened is because the CEO always speaks down to his team and speaks as if to say, "I know better than any of you here."

By doing so, he negates the reason for having such a large team present as well as hiring such talent as he currently has.

Another key sign is the high staff turnover. 

The man loves to blame it on those who, in his words, "are running away."
He says they are weak or incapable of producing the kind of results he expected of them or that they do not justify sitting in the chairs they have.

But he conveniently forgets who hired them to begin with, and whether he has empowered them and given them the authority to do their jobs in addition to the obligations and demands he makes of them.

Related to this is that those who resigned are the happiest in their remaining days while those who are staying become more glum. 

One would think the writing is on the wall when those who resign become happier and happier as their last day nears; while those staying behind become obviously more unhappy in contrast.

Uncertainty is a major contributor to human unhappiness. Lack of clarity and direction create fear and make people lose confidence and focus.

It is easy to understand if one thinks about a race - the participant can pace themselves and plan to peak and build up to it once the goal is clear. But when one sees no end in sight, how can one plan for the race or even begin to push oneself harder towards a peak?

Any leader who does not understand this will just drive performance into the ground because there is no focus or sense of achievement to be had.

Perhaps the last but not the least is how his management team are very united - against him when he is not looking. 

He seems to have the illusion that his team is like a pack of fleas - jumping around all over the place.

His management style is to "divide and conquer" - he believes he is a master at breeding mistrust and a sense of competition among his team while sowing trust and loyalty to him and him alone.

But he forgets that his senior management team are highly intelligent, capable individuals who:
(a) can think for themselves and make up their own minds about their colleagues; and
(b) are perfectly capable of speaking among themselves to get to the truth about what one person has supposedly said, according to the big boss.

And when stories do not add up, one tends to believe what one hears from the horse's mouth, so the indirect information one is fed and the source of it becomes the party one tends to become suspicious of.

I like to say that bad leaders are actually great leaders if they are not just "lukewarm bad" but "really bad" because their being so bad provides his subordinates to unite against a common enemy thus creating a bond, synergies, and team spirit. 

Ironic, but it is true.

And seeing is believing.

11.26.2011

Redefining Luxury in a Mature Market

This month's SPUR (fashion trend setting glossy monthly; circulation 113,000) has a whole section dedicated to redefining luxury. 





As I am now dealing with a brand who claims to own the "affordable luxury" space in fine jewelry (no, it is not an oxymoron according to the brand)
and we are mapping out the marketing and media plan for 2012, 
I have a very keen interest in this topic, 
not to mention that I believe it will become a core element defining consumer attitudes and the market in Japan in 2012.


Already two years ago, when WWD Japan ran a feature asking key trend making, influential people in the fashion industry 
"What would you buy if you won the lottery today?"
it was rather interesting to read that most of the people said, 
"I already own pretty much of what I wan that money can buy. What I really want today cannot be measured in monetary values."


For the longest time it feels like we have been saying that consumers today are cash rich and time poor. 


Especially in Japan, that has led to convenience being a key consumption driver. 


Leading underwear maker Gunze told me that their peak consumption time is around midnight in convenience stores - consumers realize just as they are going to bed that they have run out of clean underwear for the following day and rush to their neighborhood convenience stores to purchase a pair of underwear at full price. 


If you thought underwear sold best in discounted packs of seven - one for each day of the week - then think again. 


In SPUR, new luxury is defined as an attitude and a way of life.


Yes, being a fashion brand, it features brands like Loewe and trend makers like Tilda Swinton wearing Raf Simons in "Io sono l'amore," as well as Karl Lagerfeld's latest short film.


The headlines in the feature say,
"what we really want now is high quality daily clothing" or
"wearable art - fine jewelry" and
there is also a write up on Carine Roitfeld's book, irreverent and how she defines luxury as an attitude, which sums up the whole feature theme. 





When she speaks of luxury, she talks about time and travel. 
"to know what is valuable; knowing that some things like wine and crocodile skin are made of material that become better with time and to have that time to wait."
Personally, she says luxury for her is to be able to travel whenever she wants, so what she wants is a private jet!


Ordinary consumers will probably not go quite that far.


But with the scars from the 3.11 earthquake being still rather raw,
and the fear of radioactive contamination of food and water gripping many citizens,
luxury is about safety and knowing that the things one consume are safe. 


Where perhaps the affluent western consumer today buys organic food in hopes to enjoy a better quality of life as a result of eating better, 
the Japanese consumer will pay for safe food produced as far away from the nuclear reactor as possible. 


The shock of the massive disaster that came out of nowhere still has people valuing their loved ones and strengthening that bond with their loved ones. 


From spring through to autumn, bridal jewelry has been selling extremely well. 
And especially sales of engagement rings have picked up, where until the disaster, the market was dominated by couples going straight for the wedding rings and skipping the diamond (to save money as a reaction to the Lehman Shock).


Another luxury item seems to be time - and time spent with loved ones. 


I like asking my team point blank what motivates them, 
and more than a handful have said "spending time with family" or close friends. 


I believe that in 2012, any brand that is vulgar enough to push logos and icons will lose market share in Japan. 
Those who will rise are the brands that take the time to build a rapport with the customers and to offer them a sense of luxury not just in the quality of service (that is a given in Japan), the material, or the store, but also in the time they spend at the store be it online or off line. 


The Japanese consumer today is very sophisticated.


So brands won't be able to push products onto them just because they are branded. 
They can do that in neighboring China, where there are about 10 times more consumers who will be happy to devour such items. 


In this market, brands are going to have to work much harder to get a share of the wallet. 
And they must be mindful that the consumer here values intangible things as true luxury now - time, bonding with family and loved ones, and the experience. 

11.23.2011

Leading is Living with Solitude

A short while ago, as I became COO, I was told,
"I am really curious to see who you decide to team up with."

Then, the very same person came back in two weeks to URGE me to pick my "side kick."

I figured this guy just doesn't get it.

To me, being a leader is about standing alone up front
or at the back;
wherever the buck stops. 
And that means ALONE.

Some wise man once asked:
"Have you ever seen statues of committees?"

It sure made me laugh.

Charismatic and powerful leaders make it very clear who the leader is.
And how decisions are made; and when decisions are made.

Decisions are not taken by faceless committees or behind closed doors through a vote.
(The Catholic church takes it to an extreme with the Conclave process... but then again, the cardinals are not allowed to come out until a decision is made, so I guess that is an exception.)

Ever since I was a child, my hero and ideal leader has been Napoleon Bonaparte I.

He was charismatic,
a workaholic,
and a man who was able to fight among the lowest ranking men
while taking ultimate responsibility for the strategic directions for his troops.

OK, one may say he had some raw luck with the woman he fell in love with,
but no one is perfect, right?

As a leader, I have a reputation for being tough but fair

As a young, aspiring manager, I was known for being rather ruthless with my "high standards" that I forced on everyone.
(At the time, it was hard for me to accept that my manager could give me a bad performance review for "having standards that are too high."This is a true story!)

Thanks to motherhood and age, I have become much more tolerant and less tenacious,
though I doubt anyone would call me a pushover or a softie.

In fact, I believe all managers should try to bring up a family - preferably with more than one child as children surely teach us a lot about about being better people, understanding how best to nurture and guide talent, and also to discipline both oneself and the children.

I know a leader who has the chutzpah, if that is the right word, to ask of his executive assistant,
"What do other CEOs do in a situation like this?"
or
"What should I do next?"

I am constantly making decisions - as that is what we all do - but I tend to believe that leaders need to do that alone.

The top guy has risen above his peers - that is why he is the top guy.

And living with solitude is part and parcel with - or rather, an integral part - of being a leader.

When I was working the diplomatic circuits, I was always blown away by how everyone seems to manage to keep track of who was sitting with whom at lunch or who was talking to who over coffee at every break and lunch!

That is because everyone knows that the real negotiations happen during coffee breaks and meals, not at the official negotiation tables.

In the same token, I am very conscious of how staff members keep track of who the leader takes out for lunch, coffee, or a smoke.

That is why I NEVER go out with the same people twice in a week.

Some days, I prefer just to go out on my own or with people from a different division or business to refresh my mind and reset my thinking.

Leading is a lonely business.
And often, the critics are louder than the supporters because as with many other jobs,
you are expected to keep things running smoothly, so there is no pat on the back for leading without a glitch for some time.
But the moment something goes wrong,
everyone has a field day pointing fingers at you.
And you have to bear that alone.

Perhaps that is why many entrepreneurial leaders like to run or compete in triathlons.
They are a great way to enjoy solitude and working with onself.

For me, once I slip into my dobok and tie that black belt around my waist,
everything else disappears.
It is a silent battle with myself in both the physical and mental sense.
Yes, in sparring, I have an opponent,
but during the two rounds of two minutes, I am fighting my fear, my fatigue, my doubts and
taking decisions in split seconds and getting feedback on the consequences of those decisions.

I appreciate and respect the fact that every man stands in the ring on his own,
his self doubt and any self restrictions being his worst enemies, not the opponent.

If there is any leader who can challenge me and prove me wrong about the need to live with solitude as a leader,
it would be a pleasant surprise and major eye-opener to be corrected.






11.11.2011

Isetan Mitsukoshi to Open Stores in Lumine and Haneda Airport

The Isetan Mitsukoshi Group, who owns Japan's No.1 Department Store, the Shinjuku Isetan Store, announced today that come spring 2012, they will open a cosmetics store in Shinjuku's Lumine, a station building operated by JR East, the former Japan National Railway who is now Japan's 3rd largest retailer.

As early as 2004, when I returned to Japan from my seven-year stint overseas (I was in Australia, Singapore, Dubai, then Singapore again) I was seeing market research results that showed that year by year, a growing number of F1 women (It is marketing jargon common in Japan and refers to women aged 20 to 34) had "never shopped in a department store."

With the easing of our Large Scale Retailers Law, and with the rise of a barrage of uniquely Japanese commercial alternatives, the department stores have been and continue to flounder and shrink.

In addition to malls, Japan has in-station shopping that is not just small kiosks selling coffee and sandwiches, but book stores, family restaurants, cosmetics stores, boutiques, and the likes of UNIQLO.

JR Shinagawa Station is one such station, and when they opened their shopping complex inside the ticket gates, there was a 250% increase in the number of consumers paying 130 yen to buy a ticket that gave them the right to get inside the station! (The said ticket will not allow the user to travel on the trains)

- Imagine being able to charge every customer who wants to walk through your store's door.
How profitable can that be?

Another uniquely Japanese retail format is the "station buildings" - commercial multi-storey properties adjacent to terminal stations such as Shinjuku in Tokyo.

Shinjuku is not just another train station.
It is in the Guiness Book of World Records as the busiest station in the world - with a daily average of 3.64 million people passing through it, and with 200 exits.

At each of its exits, there are major department stores and shopping complexes -
South Exit leads to Odakyu Department Store and My City;
West Exit leads to Keio Department Store and the municipal building (that is rumoured to have a 200 million yen Mayor's Office);
East Exit leads to Isetan and Mitsukoshi Department Stores, Marui, LUMINE, and Kinokuniya as well as underground shopping mall, the Subnard;
New South Exit (Southern Terrace) leads to Takashimaya;
and so on...

But department stores have always looked down on the newer retail formats as being less classy and cheap.

I am currently overseeing the roll out of a "newbie brand" - to the Japanese market - and have been told repeatedly how we would be signing our death warrant if we opened up in malls and station buildings.

Some people tell me that the average basket size at station buildings is only 3,000 yen;
while the department stores sell an average of 15,000 yen.

But I would much rather have customers visit my store 3 times a month to purchase 3,000 yen each time, than for them to only come once a year and spend 15,000 yen as they do at the jewelry stores in department stores on the ground floor (luxury jewelry brands are usually on the fourth or higher floors).

Inditex blew the world away when it was made clear that the average Zara customer visits their stores 17 times a year on average vs the three for competing brands. 

At our business, we may not be getting customers to come back quite as often on average, but to date, our repeat customers come within 30.2 days of their first purchase, with some coming back as early as TWO DAYS after their initial purchase.

I like to tell my team that "if we sell well, we are the law."
To mean that if we can prove that it can work by having fabulous sell out, we can persuade the brand owners that jumping only on sinking ships - i.e. department stores - will not increase their brand equity.

For the last six months, rumours have been abound that the super brands will start opening up outside of department stores and in malls.

But now that a department store - or rather, THE department store - is moving out of its own comfortable kingdom and renting space in their once belittled competitors, retail in Japan has taken yet another turn down the road of no return.

Retail in Japan will never be the same again.

10.30.2011

It's Halloween and 20 Degrees

October is almost finished and it is 20 degrees. I have not had the urge whatsoever to wear a coat let alone buy one.

But the fashion conscious in Japan are updating their wardrobe and look with winter scarf and stole patterns.

Photos are of ladies on a train in Osaka this morning... All are wearing wintery stoles/scarves. But are dressed very lightly.

This week's weather forecast says it will continue to hover around 18 to 20.
It is wonderful from an energy conservation perspective. But winter fashion is struggling to find buyers. And with Christmas kicking off in all major commercial centers in the next two weeks, who wouldn't think to wait for mark downs?

8.18.2011

Customers are Kings, They Make Paydays Possible - even in B2B

It has been a while since I worked for a week and felt like I had worked a month.

It has also been a while since I have been in an environment where reality everyday is stranger than fiction.

The latest episode is when a supplier basically tried to dictate who we as a company and client can or cannot hire to be our liaison with them.

It is a long story, but to cut it short, allow me to say that my initial and final reaction to that was:
"Customers are Kings. If you are not part of the solution, you are a problem and I am NOT going to invest in monthly retainers to buy problems."

What of the above is not clear?

7.26.2011

How exactly does Swarovski justify a $200 price difference on a $270 (in the US) ring?

I have been a rather passionate patron of Swarovski jewelry to date.

And I was blissfully browsing in a Swarovski boutique recently, admiring their 2011 A/W collection, when this very chic ring caught my eye.


It is everything I love in colour - deep purple and kingfisher!

And I have its cousins in red and black (featuring star shaped crystals).

But what made my blood freeze is the price.

The US price is $270.

The Japanese price is 36,700yen, or US$470.

Just how does Swarovski plan to justify that price difference???

OK, we are used to brands charging a 30% premium, or maybe even 50%.

But 74%???

What do they take us Japanese girls for???

And they wonder why consumption in Japan is going down. ARGH!

I am totally ticked off by this and feel absolutely offended!!!

7.25.2011

36.9 million E-Commerce users buy on PCs + 10.3 million buy on mobile [JAPAN e-commerce]

What makes the Japanese e-commerce market stand out from the other markets? 
I think it is still mobile commerce. 

According to a survey by Japan's Ministry of Internal Affairs and Communications, 36.9 million E-Commerce users buy on PCs + 10.3 million buy on mobile.

And Japan's B2C e-commerce market is back on track after the slowdown thanks to the Lehman Shock.

Yes, the 3.11 Great East Japan Earthquake had a significant impact on consumer confidence and consumption, but industry insiders say there was a fundamental shift in consumer mindset on HOW they want to consume as well as the WHAT.

The HOW is that the "cheaper is better" craze is passing. 

Perhaps the fact that Groupon Japan sales have begun to shrink on a month on month basis since January 2011 is one indication. 

I managed a flash sales site myself (sold now and rebranded), but it is evident that the people I used to compete with, like Gilt Japan, as well as sites that push heavily discounted branded goods like Javari, are struggling to grow their membership base and increase their sales. 

In a mature market like Japan, there are no "needs" to be met in anything that is consumed as a "fashion purchase." 

No Japanese woman NEEDS another bag, pair of shoes, dress, set of lingerie, fragrance, or piece of jewelry. 

All these items are consumed driven by WANTS.

And if a consumer does not WANT your product, you won't be able to give it away. So what makes brands think that they can recover their procurement costs by selling them off at 70% off full retail?

Keep on dreaming. 

And since 22% (10.3 million consumers out of a total of 47.2 million who shop online) of e-commerce purchases are made on the mobile phone, if you cannot appeal to consumers on their mobile screens, or if your product is not searchable on mobile, you are pretty much dead in the water. 

A survey by the Ministry of Economy, Trade, and Industry comparing Chinese, Japanese, and American e-commerce buyers indicated clearly that Japanese consumers still rely heavily on search results when looking for things to buy online, as well as review sites. (blue is Chinese, red is Japanese, and white is American in the graph below)

And another interesting thing for marketing professionals to note is how low TV ads rate for the Japanese consumers compared to both the US and China. 

Bill boards for the Japanese are dead.

According to this survey, ezines rate much lower in Japan and the US compared to China, but one should note that in Japan, if 7% of your emails are actually read by the people who sign up for your e-newsletters, we see double that number for mobile email newsletters

In Japan, we are on CDMA and not on GSM, so SMS is not at all common. Everyone has a mobile email address provided by their mobile phone service providers. These email addresses are capable of receiving emails as long as those received on PCs. And they are a primary personal email address for many consumers. On top of that, many phones do not let the user delete messages unless they open them first. So if you are not blocked as a sender, you have a higher chance of having your emails read on the mobile vs. the PC.

If you are serious about enhancing brand and product awareness in this market, please remember:
if the consumer cannot find you on her mobile phone search, you don't exist for her.

3.28.2011

The Tohoku-Taiheiyo Earthquake and Social Networking

When the 1995 earthquake devastated the area I call home today, digital cameras were the heros that delivered footage of the devastation to central government. And it was the only way news could travel that fast as many of the communications networks were knocked out by the devastation. 




The digital cameras were very crude back then using analogue lines for transmission (remember that weird sound the modems used to make?) but our self defense force planes took aerial photos and transmitted them. 




That was the catalyst that led to rapid proliferation of digital photography back then. I know because I was in the camera industry selling the early digital cameras at Olympus.


The massive quake and tsunami on 3-11 (11 March) once again knocked out the usual comms netwoks of telephony and land line based technology. But Twitter, FaceBook, and other mobile computing-based real time uploading of information gave the nation and its authorities quick feed of information on who was doing what.


I spent almost all night and the wee hours of the morning on 11 and 12 March tweeting about public evacuation points, how Suntory released their vending machines so that drinks could be dispensed without money, how Bic Camera (a major chain) was offering people free mobile phone charging services at their stores, and more importantly, pleas for help using geo tags and hash tags on Twitter. I just hope that access to technology did not make the difference for some people between life and death.


There were journalists and TV and radio stations calling for tweets about food distribution points, shelters, and rescue pleas.


While the red cross struggled to get a donation account up for three days, CyberAgent's ameba (JP version of twitter and Blogger combined) set up a donation account as well as Groupon.


If there is anyone in Japan who still does not believe in the power of SNS and twitter type services, the quake here sure was a loud wake up call.


And I am reminded that it is not just military budgets and demands that drive technological innovation, but disasters, too, force the powers that be to embrace new technology.


I feel that the way SNS and twitter type services were used this time will further push the penetration of smart phones usage in Japan, an already high-value mobile devices market. This will change consumer behavior yet again. 


Just some thoughts as I thank you all again for caring and thinking of us in Japan

1.25.2011

Yamato Holdings Names New President

According to the Nikkei dated 21 January 2011, Yamato Holdings announced on 20 January that Makoto Kigwawa, President of Yamato Transport, will become the new President of the holdings company as at 1 April 2011.

The moment I read the sub-heading, "Transport" President to Focus on Overseas Business Expansion, I knew he could not possibly be someone who came through the ranks of very Japan-focused Yamato. I know a man who was overlooked for a promotion via exam at Yamato because he is a customs management specialist and not well-heeled in the domestic part of the business. (In Japan, you can be promoted in rank without really being promoted to a new position based on your seniority and if you meet the criteria. For management, it often requires both written and oral exams; and once you pass, you may be doing the same old job you were doing before but your salary would be a bit higher, though some benefits meant for non-management may be taken away.)

The Nikkei explains that Kigawa is the first ever President to have come from outside Yamato. The current President, Kaoru Seto, will become Representative Chairman. Kigawa will continue on with Seto's direction to expand overseas, but accelerate it, according to the article.

The following is my unofficial translation of parts of the article:

Kigawa is formerly of the Mizuho Financial Group and joined Yamato Holdings in 2005. Yamato has a sound financial structure, but as the group transformed to a holdings company structure, Kigawa was invited to expand the business scope of Yamato. From 2007, Kigawa became President of mainstay business Yamato Transport and established himself in enhancing the "takkyubin" or home parcels delivery business. 


On 20 January, at the press conference, Kigawa expressed his ambitions in the new role by saying, "I wish to continue on down the tracks laid by Mr. Seto (in expanding the "takkyubin" business abroad), and generate new growth elements within Yamato." The domestic small parcels home delivery business is shrinking due in part to the low birth rate, but he says,, "the entire market still has room to grow if we develop new services."


Yamato Holdings is in the process of establishing their new three-year plan that commences from fiscal 2011 (starting 1 April 2011). The core of that medium-term plan is to enhance the "takkyubin" business in both Japan and abroad. Kigawa plans to expand the business scope to Hong Kong (February) and Malaysia (September).


In Japan, Yamato plans to invest approximately 140 billion yen to launch the company's largest logistics center "Haneda Logistics Terminal" in mid-October 2012, and sees the need to create new logistics hubs to fulfill the requirements of their corporate and private customers. 

###

Yamato Transport is capitalized at 50 billion yen and has just under 140,000 employees.

Yamato Holdings is capitaized at 1.272 trillion yen and currently estimates to finish the financial year at 31 March 2011 with revenue of 1.228 trillion yen, an operating profit of 64.0 billion yen, a recurring profit of 66.0 billion yen and a net profit of 34.0 billion yen.