National

Rakuten’s English drive a case study of success, but wider adoption by Japan Inc. much slower going

by Miya Tanaka

Staff Writer

Rakuten Inc. CEO Hiroshi Mikitani’s 2010 announcement of English becoming the official internal language of the online retailing giant shocked many of the firm’s employees, including Fumie Suzuki.

More than eight years have passed since Mikitani’s bold move and Suzuki, 34, has come to enjoy the company’s new linguistic environment. Her score on the 990-point TOEIC English-language proficiency test has improved from about 600 to over 800 thanks to language classes and overseas training experiences offered by the company, while her workplace has become increasingly diverse.

These are just some of the benefits of Rakuten’s “Englishnization,” a term coined by Mikitani, who has pushed ahead with the initiative in the belief that Japanese companies will not survive on the global stage without ensuring fast and efficient communication in English.

Rakuten has been touted as a role model and is now being used as a case study by classes at top U.S. business schools and some 145 universities around the world, according to Tsedal Neeley, a professor at Harvard Business School who studied the e-commerce firm’s case and detailed her findings in her 2017 book “The Language of Global Success.”

“Rakuten really stands out because it transformed itself in order to meet its globalization objectives. And many companies want to do that desperately, (but) they don’t know how,” Neeley said during an interview late last month with The Japan Times in Tokyo, where she gave a lecture to Rakuten employees the same day.

Rakuten, founded by Mikitani in 1997, operates in 30 countries and regions, with its services spanning from e-commerce to communication. It has 1.2 billion users and over 20 percent of its employees are foreign nationals, which represents a twentyfold jump in its foreign head count since 2010. Some 70 to 80 percent of the firm’s newly hired engineers in Japan are also non-Japanese.

“The level of global reach, the composition of the company has fundamentally changed,” so the policy can be called a success, Neeley said.

Some major Japanese companies have also switched their official corporate language to English, including Fast Retailing Co., the operator of the Uniqlo casual clothing chain, and, most recently in October, the headquarters of cosmetics maker Shiseido Co.

But uncertainties remain on whether such moves will pick up steam.

Yoko Okabe, a Kyoto Sangyo University professor specializing in organizational behavior, said efforts among Japanese companies to adopt English as an official language actually started around 20 years ago, but progress has been “quite slow.”

Even for Rakuten, the road hasn’t always been smooth.

Mikitani, regarded as a maverick in Japan’s business circles, took a top-down, fast and radical approach, according to Neeley. All Japanese employees — then numbering some 7,000 — were told to meet required TOEIC scores during a two-year transition period starting from 2010 or they could face demotion.

“At the very early stage … we struggled a lot. Everybody was a little bit mentally tired and started to question, ‘Hey Mickey, why do we need to do this?’ ‘Is this really good for the company?’ ‘I’m a salesman, why do I need to learn English?’ ” Mikitani, nicknamed Mickey, told the company gathering where Neeley delivered her lecture.

Some policy adjustments were made to minimize the backlash. Employees were offered English lessons at work for free, an about-face from Mikitani’s initial idea that they should learn at their own expense. The CEO also persistently encouraged middle managers to engage with the Englishnization process, returning 120 emails per week for a year to them as they sent weekly progress reports on the issue, according to Neeley’s book.

Japanese businesses have been able to cling to their native tongue because the country’s economy has been “so strong,” and they could find success by only catering to the domestic market “without having to shift to an environment where they have to collaborate with others globally,” Neeley said.

But that may no longer work as the Japanese domestic market shrinks in lockstep with the nation’s population, while globalization, according to Neeley, is expected to further advance through digital technologies.

According to Neeley, about 60 percent of multinationals strictly use English to do business, and that figure is actually lower than the true number as some companies unofficially operate in English because labor laws in many countries do not allow them to officially change the working language.

And with 300 million people actively studying English in China, the world’s second-largest economy, along with 100,000 native speakers living there, many of them as English teachers, English is likely to remain the world’s lingua franca going forward. In fact, “there are more English speakers in China than there are in the United States of America,” Neeley said during the lecture.

While Rakuten’s case study has highlighted the challenges any company may face through Englishnization and can provide a blueprint in overcoming them, the professor admits that simply mimicking the company’s methodology may not be the answer for other firms.

“So depending on your industry, depending on your business, you need to determine how fast you go. … In some instances, if you’ve made a certain decision, you may not need to go top-down, you may need a lot of insights from bottom-up because the frontline employees may be much more knowledgeable than you,” she noted.

“But you have to be clear about the choices that you need to make, and where you’re going to place yourself. And then once you’ve made that decision you’ve got to go all out and persistently pursue the shifts.”

As for what differentiates success from failure, the professor said that based on the companies she has communicated with, it can be summed up with one word: fear.

“One particular company leader said to me … ‘What if my employees rebel? I can’t risk that!’ Today, that leader is saying something very different, like, ‘Oh my gosh, how am I gonna catch up?’ ”

Englishnization is an ongoing process and there is no end to it. Neeley also said that once a company seeking to go global becomes able to operate in English, it will then face a problem any international company has to face, which is to ensure global collaborators are working cohesively and productively together.

“When people begin to speak to one another, trouble comes — cross-cultural clashes, cultural differences, all of those things. And so the next big step is to make sure that people become cross-culturally intelligent and competent in order to seize the opportunity to work in a diverse environment,” she said, calling on the importance of each individual to become more open and adaptable to differences they encounter, among other issues.

Okabe of Kyoto Sangyo University said she believes an organization-wide acquisition of high English-language proficiency will increase in significance not just for the country’s major firms but also among smaller businesses.

“English usage can be so critical (for smaller enterprises) to decide their fate because it can suddenly bring about new and big business chances. Those companies may already be headed by people who are educated abroad, but leaders can’t do all the work,” she said.

At the same time, Okabe pointed to the risks of losing people, who may be talented in management or other fields but feel that improving their linguistic skills is a tall order. She also said it may still be difficult to see Japanese companies quickly moving to mandate the use of English to their employees.

“Language is part of the culture and it affects individual’s pattern of thinking. I think it will take time to see a shift,” she said.