Companies are facing a challenging time due to the spread of COVID-19. There is an urgent need for business transformation, as in many cases it is difficult to foresee business growth and evolution by following the traditional ways.
But conversely speaking, now that our traditional values are being overturned, I cannot help but think that it is the greatest chance for those who are taking on the challenge of the future.
I would like to talk about a concept called “Shuhari”, which will serve as a very useful reference under these circumstances. This concept incorporates hints that we should keep in mind in this time of change.
During the Showa Era, many companies were established in Japan and a number of them developed into globally-known companies. On the other hand, only a few of these major companies were established during the Heisei Era. Of course, it’s not appropriate to simply compare the two eras as there is a difference in the number of years—Showa lasting 61 years and Heisei 30 years. However, during the so-called Bubble Period of the Japanese economy (1986-91), which continued from toward the end of Showa to the beginning of Heisei, many Japanese companies were at the top of the world rankings in terms of market capitalization.
Today, while the rankings include many companies established after 1990, for instance, GAFA in the U.S. and Chinese IT companies, it is sad to see that there are hardly any Japanese companies in the rankings.
There are many factors behind this decline by Japanese companies, but I think that the biggest one is the notable lack of experience and thinking processes based on “Shuhari”, which used to be naturally embedded in Japanese companies.
Have you ever heard of the term “Shuhari”? This term is used to describe the ideal relationship between master and pupil in the world of martial arts and art, but I think it will also become an important keyword in the world of business.
This term is said to originate from the waka poem “Discipline; protect, detach and leave but do not forget the basic” read by Sen-no-Rikyu, a well-known master of tea ceremony during the Sengoku Era and Azuchi Momoyama Era in the 1500s. It is said to indicate the process of the first phase, which is to “protect” the teachings of the master, moving on to the next phase, which is to “detach” from the master’s style and create one’s own style, and the last phase, which is to “leave” the master with the style one has newly created.
If we apply this phrase “Shuhari” to business, there are things that make sense. After starting to work, we acquire the basics of work from our superiors and learn to carry out our own work, which is the “Shu=protect” phase. The “Ha=detach” phase is to devise and establish our own working style based on what we learned from our superiors and to determine the direction based on our own will. And the “Ri= leave” stage is to further promote our own style, become entirely independent from our superiors and be able to provide our own value. As you can see, it applies perfectly to business.
I remember encountering this phrase “Shuhari” in a book on Japanese martial arts, which I picked up when I just started to work. From that time, I didn’t think about this phrase for a while but I came to realize its meaning when I became the head of game platform development.
Model changeovers of game platforms, which are carried out once every 5-6 years, are major business projects that require an outlook of a 10-year life-span after their launch. This process to create a new model that delivers new value while studying and maintaining the advantages of the previous model indeed embodies “Shuhari”.
When we conduct reviews, we tend to be excessively conscious of the trends and streams of the times, but we actually started by looking back on the history from the time of establishment. We started developing the platform after clearly defining the identity of the game platform.
We were inspired by the President at the time who always used to deliver words that were associated with teachings such as “it is the duty of children to surpass their parents” and “Shuhari”. In order to surpass our parents, it is essential that we understand them.
Looking back, I think that the game industry at the time was facing a major turning point. With the dramatic evolution of the network environment, online content distribution and service provision had become extremely smooth, which in turn, had expanded the scope of development.
However, even amid such a trend, we reflected on our belief since the establishment of the company, which was to further enrich the experience of “enjoying playing games”, rather than focusing only on new technologies. This enabled us to create new elements to “surpass our parents” and to deliver new value.
As a result, we were able to build network delivery infrastructure on a global scale and provide network content in addition to package content utilizing conventional optical disks.
I am truly happy that this platform, which was created in this way, grew to scales of business and revenue that far exceeded those of the time of establishment. The reason why we were able to achieve such outcomes, I think, was that the concept of this “Shuhari” had thoroughly permeated not only me but the team members as well.
Many businesspeople are probably going about their daily tasks with some respect for the founding generation that established and expanded the company. This may relate to the issue of identity, as this is a task to validate oneself in society by adopting the intentions of the founder as one’s own and finding ways to face and contribute to society.
To have respect for the founding generation is obviously very important. However, I believe that if this feeling is worship or if you cling on to this feeling, you will not be able to contribute to the growth of the company nor the development of society.
From the viewpoint of the founding generation, they are probably hoping that the younger generations will surpass them soon, create businesses that will overwhelm the world and deliver new value to society. It is not easy to surpass the accomplishments of the founder in one leap, but we can easily imagine the downsizing of a company if the successors cannot rival the accomplishments of the founding generation.
The current business environment is changing at a blistering pace and events that bring about major changes and fundamental changes that sometimes defy conventional wisdom are also emerging. In this period of drastic change, we will not be able to surmount this large wave just by operating businesses monotonously. Currently in many Japanese companies, the younger generations are blindly following the teachings of their predecessors or superiors and simply “operating businesses” rather than “managing businesses”.
As long as we are pursuing business, we must firstly aim to surpass our predecessors, secondly our superiors, then the executives and president of the time we joined the company, and ultimately the accomplishments of the founder. We do not have to stick to the same business domain but can depart from the company and take on a challenge in a new company. It may also be a good idea to move to a subsidiary and develop it to surpass the parent company.
In this modern age where diverse careers and working styles are accepted, the options of challenges are expanding infinitely.
The years after the collapse of the bubble economy are referred to as the “lost 30 years” but in recent years, angel investments and investments by venture capitalists, which were non-existent in Japan decades ago, are becoming active and numerous prospective startups are also being established.
Various new attempts with unique perspectives and unknown markets are being made and startups that have developed to so-called unicorn companies are emerging one after another. I have high expectations for them and cannot help but look forward to their achievements going forward.
I hope that you will also take this “Shuhari” to your heart and endeavor to create new businesses that surpass the value of our current business. Now that many businesses are having difficulty growing and evolving in the context of past operations and also because our traditional values are being overturned, this is the greatest chance for those who are taking on new challenges.
※This article was published in "Forbes JAPAN posted on July 28th, 2020". This article has been licensed by Forbes Japan. Copying or reprinting without permission is prohibited.
KPMG Ignition Tokyo
President and CEO
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