Tuesday, October 8, 2013
Japanese Firms Need Audacious Goals Under Abenomics
TOKYO (Nikkei)--If a company is to become great, it sometimes needs to set a target that appears reckless to outsiders.
James Collins, an American business scholar, coined the term "big hairy audacious goal," or BHAG, for such ambitions.
Dreams And Determination
Many people now regarded as great entrepreneurs have set and cleared such goals. Eiji Toyoda, honorary adviser to Toyota Motor Corp. (7203) who passed away last month, strove to "spark the motorization of Japan."
The number of automobile owners in Japan began to increase sharply from around 1965, but the development was not brought about simply by the changing times. The massive wave of motorization occurred because of Toyoda's determination to realize it.
Toyoda decided to build a new plant to produce the Toyota Corolla even before the automaker figured out the concept of the future best seller in the process of development. The company acquired a huge land lot for the plant on a hilly area west of its head office and set a production target of 20,000 units per month, a truly audacious goal at the time and one which astounded Toyota's rivals.
Without Toyoda's decision, there might have been a delay of several years in the motorization of Japan, allowing foreign automakers to overwhelm the nascent domestic industry. Or Toyota's leading position in the Japanese auto industry might have been taken over by rivals at home, such as Nissan Motor Co. (7201).
In any case, Toyota would not have become the world's biggest automaker in terms of new car sales without the decision.
Time To Dare
Do Japanese companies have any BHAGs now? They have had to address backward-looking tasks, such as cutting back on excess capacity or debt, over the past two decades, making it difficult to set ambitious goals. As a result, it appears that only middle-of-the-road companies who play it safe have thrived.
An exception is Central Japan Railway Co. (9022), whose goal is to link Tokyo and Nagoya in 40 minutes with a magnetically levitated train system to be built at a cost of more than 5 trillion yen.
Mitsubishi Heavy Industries Ltd.'s (7011) Mitsubishi Regional Jet project should also be considered a BHAG, as it is aimed at challenging the U.S. and European makers dominating the passenger aircraft market.
The goal for automakers should be to accelerate technological development to eliminate fatal accidents.
Companies with audacious targets are emerging in the services sector as well. For example, SoftBank Corp. (9984) is planning mobile phone services that cover both Japan and the U.S., while Yamato Holdings Co. (9064) is building a door-to-door parcel delivery service network across Asia.
Needless to say, company management needs to craft careful strategies. But as Japanese companies are finding themselves in a better situation thanks to the success of Abenomics, it is time to pull away from a purely defensive management style and assume a more audacious stance. It is time, in other words, to bring back the spirit of entrepreneurship.
--Translated from an article by senior Nikkei staff writer Kunio Saijo
(The Nikkei, Oct. 8 morning edition)