Platform and Alliance thinking for your success ~lessons from the success story of mobile payment service in Japan Professor at Business Breakthrough University, President, NetStrategy, Inc. Carl Atsushi HIRANO Carl Atsushi HIRANO is well-known as bestselling author in Japan and currently President and CEO of NetStrategy, Inc., Professor at Business Breakthrough University hosted by Kennichi Ohmae, guest speaker at the Harvard Business School, visiting professor of Okinawa Graduate School, world famous as the mastermind of the Osaifu-Kei tai mobile wallet credit system. Born in the United States, he has a B.A. in economics from the University of Tokyo. Joined the Industrial Bank of Japan (IBJ now merged to Mizuho Financial Group) in 1987, where he was a manager in the International and Investment Banking divisions. He moved to NTTDoCoMo in 1999. There, as head of i-mode strategic alliances, he was a core member of the core project for long-term growth and, embarked on the project to develop and popularize the Mobile Wallet. In 2006, he moved it forward with alliances involving credit card companies. In 2006, he joined Market Platform Dynamics as Senior Advisor. In 2007, he founded NetStrategy, Inc., a company providing support for strategic planning, with Dr. Andrei Hagiu , Associate Professor of Harvard Business School, who is well-known for his multi-sided platform theory or MSP. NetStrategy, Inc. http://netstrategy.co.jp/ Facebook https://www.facebook.com/carlhirano Foreword You try hard everyday, but your work doesn’t go well. Your sales figures are stagnant. Relationships with those around you are strained. You’re wondering whether you should change jobs. You’d like to launch collaborations with other companies or other new projects, but things just don’t go as planned. Perhaps you’re struggling with anxieties such as these. After working at The Industrial Bank of Japan (IBJ), the leading investment bank at that time, for 13 years, these were the sort of worries that I had to face up to when, 35-years-old and hopelessly out-of-touch with information technology, I arrived at NTT DoCoMo, the leading mobile operator in Japan. But mastering one certain skill enabled me to realize the massive project of launching the Osaifu-Keitai (“mobile wallet”) credit service, which was hitherto unchartered territory. Moreover, during the four years of the venture investment over 10 companies were able to gain a listing on the Tokyo Stock Exchange, and the company earn profits of over 10 billion yen. Now I’m Professor at BBT University teaching Corporate Strategy, Platform Strategy and also most of my six books were ranked in No1 in Amazon Japan bestselling ranking as bestsellers. The method that enables these formidable achievements and the subject of this case is what I call “Platform way of thinking and business alliance skills.” As I moved from financial institution, the idea hit me. What will happen if DoCoMo as Carrier entered Credit Card (not card) business? When we buy something at a convenience store, we take the money out of our wallets and pay for it. If our wallets are empty we use our cash cards to take some out of the ATM. We use a membership card when we rent a DVD, and various store cards when we shop at a department store. The same goes for restaurants, fast food joints, clothes shops, music stores and so on. If you think about it, our wallets are crammed full with cards of every description. Now these are all merged into a single mobile phone, enabling easy payment in every store and on every train. Don’t you think that sounds rather handy? It was the Osaifu-Keitai service that actually made this possible. note: Osaifu-Keitai is trade mark by NTTDoCoMo Osaifu-Keitai service is widely used as e-money, train ticket, point reward card, credit card, key etc. of many compaies such as drag stores, convenience stores etc which you can download to your mobile terminal by air. I was in charge of promoting Osaifu-Keitai service at NTTDoCoMo as the head of i-mode Alliance at i-mode Strategy Department then. Osaifu-Keitai Credit service is one of applications of Osaifu-Keitai services and it is Credit card service by NTTDoCoMo itself which you can use by download to your mobile terminal and what I made its original idea but many people were involved and help me to the nowadays success in four years. I subsequently went teaching at University, and accepted several positions as an external director or advisor to various companies. I'm currently Professor at BBT University hosted by Ohmae Kennichi, worldwide famous ex-consultant and also invited lecture at Harvard Business School, Okinawa Graduate School, and am involved in a wide range of activities including giving speeches and consulting. Also I’m President of strategic consulting firm, NetStrategy,Inc. and Senior Advisor at Market Platform Dynamics. The mass media outside of Japan have described me as the mastermind of credit service by NTTDoCoMo using mobile terminal, and introduced me as an internationally renowned figure. But as I’ve just stated, when I started out at DoCoMo I had virtually no knowledge about information technology, let alone mobile phones. Needless to say, I brushed up my basic knowledge upon joining DoCoMo, but I can assure you that when I entered the company I was a complete and utter novice. Since I managed to create the credit card services by Telecommunication Carrier using mobile, that is, Osaifu-Keitai credit service, perhaps you imagine that I happened to excel at coming up with ideas. No, neither was that the case. In fact, imagining how nice it would be to be able to pay for everything with just one mobile phone is the sort of idea that anybody could have come up with. So how come it was me that turned this idea into a reality? I think that in the final analysis it was because I involved lots of other people in the idea or put them on my Platform and got them to help me. It is the same thoughts that have helped me throughout my entire career. The core philosophy that flows through the business alliance skills that I want to explain in this book is: if you don’t know, become the sort of person who those that do know will help and for that, you be have your own Platform. However, I don’t believe that those around you will rally to your rescue if you just sit there creating a fuss about what you’re going to do. Becoming the sort of person that others will help requires a degree of know-how and a shift in your thinking; it’s not just a simple question of networking or improving your character. There’s no need to slavishly network, no need to work flat out on your self-development. All you will have to do is change the way that you think, and carry out the methods I will tell you about in this book. If you actually listen to the story of those who have achieved success, you will often find that these people, far from being fountains of ideas, are in fact quite ordinary. But without exception, one of the major factors behind their success is always that they gained the help of others. Until now, perhaps you have feverishly sought to sharpen skills that you don’t possess because you want to be a capable worker, to realize your ambitions, or be successful. But I’d like you to try to discard all these thoughts while you read this book. All you have to do is become the sort of person who others help. If you can do so, somebody who wants to help you will solve all the problems that you cannot. Then you’ll suddenly realize that all your ambitions have been fulfilled. Wouldn’t that be marvelous? But that’s exactly what happened to me, so it ought to possible for anybody. Now read on, and let me tell you about this method in detail. Carl Atsushi HIRANO, Professor at Business Breakthrough University Chapter 1 Make your own Platform and Alliances will dramatically change your work and your life What exactly is an alliance? An alliance can also be described as a union or a federation; as it suggests the joining of forces and mutual collaboration of people or groups with differing positions, it is often used in the business world in the sense of corporate tie-ups or merger and acquisitions. Now I’d like you to think about what forming an alliance between individuals means. Let’s say your company is disinterested in environmental issues. If you can bring together, for example, senior colleagues from other departments or people who have just joined the company and who think that it should take environmental issues more seriously, then you can create an “alliance relationship.” Involving large numbers of people to tell the company’s management that they should take environmental issues seriously and make a company that is respected by society rather than just pursuing profit, will have a far greater effect than just ranting about it on your own. Business alliance skills are the art of cleverly controlling the relationships of people —some who are business-like, some who are more intimate—while taking into consideration all their ulterior motives, and using this to get people to make the most of you for the sake of your own self-realization and growth. The alliance relationship will fluctuate and change according to the degree of success you achieve in this. For example, perhaps your success in making your company more environmentally aware will earn some words of praise from your boss, and your subordinates set you up as a leadership figure. The size of the alliance may grow as a result, and it is quite possible that it will go on to attach itself to another alliance. Let’s say that the online shopping alliance proved to be a huge hit as a business, and you end up launching a company. Naturally the alliance relationship evolves into something else at this point. Business alliance skills cultivate the success of all those involved while developing an inherent win-win relationship. This is why it is possible for somebody with just a modicum of talent to become a huge success. An alliance triggered the birth of the Osaifu-Keitai credit service I was able to achieve success with the Osaifu-Keitai credit service because I used the power of the alliance to its optimum. The Osaifu-Keitai credit service was something that I wanted to do for four years, right since I joined NTT DoCoMo. Our wallets are overflowing with point cards, and the stamp cards they hand out at restaurants et cetera, I thought. Digging them out everyday is a pain, and eventually you lose track of them…. This was the basis for my thoughts, but it would be rather dubious of me to claim that I was the very first person to make such a suggestion. Right from the start of the popularization of the Internet and mobile phone contents, there was talk of the “IT revolution” and the idea of this sort of mobile credit was being mentioned in every quarter. Even that Bill Gates apparently said that he wanted to make computers smaller and turn them into wallets. But I was working at DoCoMo—the very best place to actually make this happen. I therefore made some suggestions within the company, but unfortunately, since it is a very large organization, I made little progress. Everyone dismissed the idea as being unfeasible, or said that credit wasn’t really the business of a telecoms company. I think the reason for these negative attitudes is that, since nearly all the company’s staff were from NTT, they weren’t really interested in things like credit services and finance. Perhaps another reason was the fact that the competitive environment was not as fierce then as it is now. And the i-mode, launched in 1999, was gaining a degree of success that drew attention from around the world. What I used at this point was the alliance method. Of course I wasn’t thinking in terms of alliances at the time; the idea was “if this can’t be done within the company, I’ll try to discuss it with people outside.” Ever since i-mode was launched, we always talked over the formulation of strategies with The Boston Consulting Group, so I took my idea to some skillful consultants. I was also invited to a great many study groups at the time, and sometimes spoke myself, so I decided to consult a certain analyst too. “It’s just my idea, but what do you think about a telecoms company offering a credit service?” I asked. “That sounds interesting! Let me think about it,” came the reply—the alliance was formed. Amazingly, he immediately compiled a report on the theme of what would happen if a telecoms company entered the credit sector. I must say that this completely took me aback. However, what surprised me even more, was the result that this had. Once I had the advice of The Boston Consulting Group and the report of the external analyst, the mobile phone credit service concept suddenly started to move with a sense of realism. Of course, the process leading up to realization was long and demanding. Surmounting such difficulties required more than just bringing together a handful of people—I needed to involve more people, and build a large alliance. DoCoMo, Sony and Mitsui Sumitomo—how the power of an individual moved mammoth companies Before I joined NTT DoCoMo, I used to work for the Industrial Bank of Japan (IBJ), which is now part of the Mizuho Financial Group. Though IBJ is now defunct, it was once known as a “King among banks,” an elite company that promised an assured future. I’ll explain later the details of why it was that I came to leave such a company and join NTT DoCoMo. Anyway, I heard about the job from an acquaintance, went for an interview in response to the advertisement, and then joined DoCoMo. I was first assigned to the new investment project team that they were setting up. The team was later to merge with the i-mode project. I suppose that when the start-up of i-mode is mentioned most people would imagine technicians, creators. But I didn’t really fit into any of those categories. I think that the reason why a humdrum individual such as myself was asked to take part was because I was one of the few people at DoCoMo who had experience of finance. The area where that experience is useful is business tie-ups—in other words, alliances. DoCoMo first assigned me to the team which had just been separated from the Business Planing Division, and dealt with managing investee companies and making investments. The then general manager, told me, “There’s nothing fixed about the job, think for yourself and do whatever you want.” I started work with the feeling that changing jobs might have been a disastrous mistake, and that while my annual pay had dropped by three million yen, I couldn’t very well go back to IBJ now. I was stuck. I was just a manager with one subordinate, but luckily my boss was a very kind person, and introduced me to i-mode team persons. At the time, i-mode had only been available for about three months. It was way off the target subscriber number of one million, and to be perfectly honest it was not considered to have been much of a success. But we were already mulling over next move. As the media continued to develop, what became necessary was know-how that DoCoMo didn’t possess. This meant the need for alliances tying in other businesses with DoCoMo. This is how, after joining DoCoMo in May 1999, I became a member of the i-mode growth strategy project that sought to examine how to nurture the brand in the future. Every evening, over a round of hamburgers from McDonalds, a team composed of five or so of us held meetings late into the night. For example, we decided to run an advertizing campaign once the number of subscribers reached one million, something which would necessitate a fully-fledged collaboration with a company that understood advertisements. Examining the issue with person of Dentsu (a leading advertizing agency), led to the establishment of D2 Communications, a combined company owned by Dentsu and DoCoMo. I subsequently had the chance to spearhead an array of alliances. These included projects with DoCoMo.Com, who specialize in contents advice and venture investments; a combined company established in conjunction with Lawson, a convenience store chain; with Coca-Cola Japan and Itochu Corporation, a trading house, in the C-mode project that enabled people to buy Coke with their mobile phones; a collaboration between the Fuji Television and NTV television networks; collaborations between all the domestic convenience store chains; a collaboration involving Sony, Rakuten and JR East; the buyout of Tower Records, and the huge investment in Mitsui SumitomoCredit Card. Through the work of negotiating with other businesses, I came to the conclusion that alliances between companies are nothing more than alliances between people. Which company should you build an alliance with? I realized that in actual fact, it’s rather a question of which people at that company should you work with that is the most vital factor in a successful project. “I’m really glad we trusted you, Mr. Hirano.” I still clearly remember the words of then general manager at Mitsui Sumitomo Bank, the partner bank when we made the huge investment of around 100 billion yen in Mitsui Sumitomo Card, and launched the new iD credit brand. There were frequent stormy scenes during the seven-month negotiations. Being told several times by the despondent leader of negotiations at Mitsui Sumitomo Card that the collaboration would probably collapse, suddenly swept away all the exhaustion that had been building up inside me. Now let’s return to the dawn of the mobile phone credit service. As I have mentioned, we had advice from outside, and forward-looking considerations were beginning to be held within DoCoMo. At the time, my title was Head of i-mode business alliance, and I had 10 or so people working under me. Osaifu-Keitai (without Credit service by DoCoMo at that time) sales were increasing nicely, but the number of places where they could be used was extremely limited. Our team was given the task of developing places where they could be used. We eagerly entered into alliances with companies running convenience stores—places where most people go at least once a week and payment amount is around 3~5 US$. I also gave over 50 talks a year in Japan and overseas in an effort to raise awareness of the Osaifu-Keitai. Since Edy was the only form of e-money that could be used with the Osaifu-Keitai at the time, we cooperated with Bit Wallet (the company that operates Edy) in steadily developing new partners, company by company. However, most retailers were extremely reluctant to invest in reader and writer devices that would enable use of the Osaifu-Keitai, or set aside space in their stores for its installation. This is where I started to look at the credit card terminals located in most stores. “That’s it!” I thought—if we can configure the credit card terminals so they accept the Osaifu- Keitai, the phone will take off immediately. Full of high spirits, our team embarked on a campaign to create an alliance with a credit card company. The totally new and promising business of mobile credit. I thought that if we went round all the credit card companies telling them about the plans of DoCoMo, whose share of the mobile phone market is over 50%, we would be sure to attract many sponsors. But what actually happened was completely the opposite. I had totally miscalculated. What I had thought would be a mouth-watering idea for the credit card companies was met with point-blank refusals. Most of the companies responded along the lines of, “Well, that’s certainly an interesting idea, Mr. Hirano. Perhaps that day will come some time. But it’s still a little early…What do the other companies say?” It was at this point that I turned to an alliance from my days at IBJ. Probably the most famous former employee of IBJ is Hiroshi Mikitani, the CEO and chairman of Rakuten Inc. By a stroke of luck, he also happened to be a former junior colleague of mine at IBJ, and we are a still close enough to occasionally have a chat on the phone. Mikitani did the accounts for the gymnastics club at his university, and always responded graciously to any request that I, his senior, made to him. He kindly participated twice as a panelist at a couple of large symposiums on mobile phone-related themes. Though he is often presented in certain quarters as being a charismatic type, having known him for many years since we worked at IBJ, I see him as a serious business leader who is always thinking of the growth of his company and his employees. Following on from this, the next person to whom I gained an introduction was [...]... in other words, the company This sort of “managerial aesthetic” of looking at things from the company’s perspective is a vital part of Platform and alliance thinking. ” Your real job is to turn the impossible into the possible Now let’s turn our thoughts towards the significance of making an alliance for making your platform The reason that ideas, proposals, wishes and dreams go unfulfilled is the. .. talented people from every part of DoCoMo, and the problems that our team had struggled with were solved in rapid succession If the project had been conducted by the i-mode team alone I don’t think it would have been possible for us to pull off such a massive task The launch of the study group led in the end to the greatest effect As you can see, the methodology of the Platform and alliance thinking idea... thinking is the difference between the success or the failure of a large enterprise Whether it’s a new product, a sales plan, or a proposal for improving business, in the final analysis no progress will be made unless the participation of a large number of people is obtained Moreover, the participants are not working for the sake of the person who has made the proposal—they are working for the good of the. .. develop themselves Even then, the person that is going to benefit most at the end of the day is the original creator of the platform And these people will, quite naturally, be the big winners of the 21st century How much of a “place” can you offer to people? Now it’s not just the corporate business model—we have already entered a day and age in which even individuals and single projects have created a platform. .. the obstacle of human relationships But all you have to do is use Platform and alliance thinking to reverse your thoughts on this matter This is not a matter of “persuading” those who are against you, more a case of getting them into your platform by alliance, in other words, of making them your partners And how do you that? Instead of telling your clients or subordinates that “This is the situation,... one of “give, give, give and take,” in other words, for every merit you gain for yourself try to give three more to your partners Quite naturally, the other party will also start to seek their own benefits, and when these merge, the benefits for you will be considerable Chapter 3 Alliance information sorting skills Change yourself into a magnet for information Become a magnet for information! With the. .. created a platform and reaped success And in actual fact, a great many of these people who have achieved success have done so on an individual basis a successful author and friend of mine runs a website supporting women and has become a charismatic figure among many working women The company that is making the most of this format of success through alliances in terms of the way that each of its employees... They are formulated logically and then proposed Platform and Alliance thinking begins with the arguments of “why don’t they make this? This would be useful,” not a sense of “I want to do this.” If you gain a consensus at this point, the process will snowball and plans to make a reality of the idea will start to take shape New, unheard of businesses, are a question of predictions about the future, and. .. with the plan, regarding the original suggestion as their own It is probable that i-mode too, started as a little idea The origins were a simple instruction to my boss and the leader of the i-mode team, by the then president of DoCoMo, to look at ways of making money other than telephone charges The leader then consulted the director of a friend’s company He was introduced to lady of the editor of the. .. expert on the matter,” and pass the information on to Mr A, a junior colleague Of course, if there is a Mr B who is desperately keen to the work, you give the documents to Mr B In other words, once I have gained the information and briefly chewed it over, I decide which part of the alliance should keep or store the information, rather than sorting it on my own In this way the stream of new information . Platform and Alliance thinking for your success ~lessons from the success story of mobile payment service in Japan Professor at Business Breakthrough University, . benefit most at the end of the day is the original creator of the platform. And these people will, quite naturally, be the big winners of the 21st century. How much of a “place” can you offer to people? Now. bestsellers. The method that enables these formidable achievements and the subject of this case is what I call Platform way of thinking and business alliance skills.” As I moved from financial