Congratulations to Toyota’s Akio Toyoda for being voted CEO of the year by Japan’s small business leaders. The honor comes after 12 challenging months of steering around a bumpy economy and massive recalls on the way to record profits.
But with all due respect, the corporate establishment is celebrating the wrong man at the wrong moment. The real accolades should go to a bone fide maverick blazing a trail the rest of the Japan Inc. should be following. And that can only mean Masayoshi Son, who got less than half as many votes as Toyoda in the Sanno Institute of Management’s poll of 464 business leaders.
The SoftBank billionaire’s bold global investments, staffing choices, inclination to break with the groupthink that pervades Tokyo and vision of where growth opportunities lay make him a fascinating outlier. He also personifies the very thinking Prime Minister Shinzo Abe claims executives need for Japan to thrive.
While Toyoda had a decent year, he mostly reaped the benefits of a weak yen (about $18 billion per year) without sharing them with workers. Son, by contrast, is pursuing an ambitious and gutsy strategy far beyond the risk tolerance of contemporaries playing it safe. Toyoda even beat out Apple’s Tim Cook, who many would agree blew the doors off his auto company.
What gives? Conservatism reigns at a time when Japan Inc. needs to be taking greater risks. Son, admittedly, had a complicated year making his $22 billion purchase of Sprint Nextel from 2013 work. He also faces an $8.6 billion dilemma over Yahoo Japan, in which SoftBank is the largest investor. That’s the amount Marissa Mayer’s Yahoo Inc. may soon dispose of, forcing Son to spend more to maintain his control over the Japanese portal.
But the audacity behind these challenges should be winning applause, not seeing Son play second-fiddle to CEOs on cruise control. If Japan is to stay relevant in the age of China, it needs several more doses of Son’s daring. Here are four things CEOs should be learning from SoftBank.
Swing for the fences: Son has few peers in his search for the next big thing. And given the nation’s aging population and shrinking workforce, that means looking outside the confines of a claustrophobic business culture and scouring the globe for growth. Son did that in 2006 with a $16 billion Vodafone deal and again seven years later with Sprint.
More recently, he’s dabbled in everything from Snapdeal (an e-commerce platform some hail as a India’s Alibaba) to GrabTaxi (Southeast Asia’s answer to Uber) to South Korean online retailer Coupang to leading a fundraising round for American online lender Social Finance.
Unearthing the next Alibaba has great resonance for a man who in 2000 had the foresight to invest $20 million in Jack Ma. Fourteen years later, that single gamble reaped Son $60 billion. Son often acts more like a Silicon Valley venture capitalist than a gray-suit wearing drone, something of which Japan has in depressing surplus.
Don’t fear the gaijin: As aging titans like Uniqlo’s Tadashi Yanai, 66, cling to power at all costs, Son, 58, is grooming a successor. Not just any heir, but an Indian-born, 47-year-old outsider. It’s hard to exaggerate how revolutionary Son’s embrace of former Google executive Nikesh Arora is among Japan Inc. ranks. Whereas Toyoda is the scion of a family dynasty, Arora started out as an air force kid in the northern city of Ghaziabad.
Arora embodies Son’s desire to harness the developing world’s innovative energy and economic potential. Gaijin aren’t necessary smarter, but their life experience injects new thinking and perspectives into boardroom discussions. Son’s heir apparent even took a page from Silicon Valley rock star Elon Musk in grabbing a $483 million personal stake in SoftBank shares. Few Japanese corporate chieftains have real financial skin in the game, skewing their priorities. SoftBank thriving is now just as personal for Arora as it is for his boss.
Energy is everything: The University of California, Berkley-educated Son has never minded ruffling feathers. Some here quip it’s all part of his Korean lineage. There are times, though, when Japan Inc. should be following his lead. Case in point: Son’s efforts to focus Tokyo on renewable energy. After the 2011 Fukushima crisis, Son grew frustrated by the government’s obsession with nuclear power.
He shamed Tokyo with a personal $200 million investment in renewables (including 10 mega-solar plants) — and with a controversial request that he be allowed to tap national power grids. As Son awaits an answer from bureaucrats, he’s publicly urging Tokyo to halt reactor restarts. Also, he’s championing a regional electricity “super grid,” investing more than $10 billion in India solar projects and increasing investments in battery technology and robotics.
Fire your own third arrow: Three years on, Abenomics has had some modest victories like encouraging companies to be more shareholder friendly. Mostly, though, the enterprise has filled the pockets of corporate elite like Toyoda, not average Japanese. Abe promised three pro-growth “arrows” — monetary easing, fiscal spending and deregulation. While the first two were fired early on, the third and most vital one remains in the quiver.
Count Son among the private-sector leaders racing ahead of deregulation steps. Ditto for Hiroshi Mikitani, who heads e-commerce giant Rakuten. Mikitani is working to change mindsets by expanding globally, leveling playing fields across sectors and forcing employees to speak English.
He’s crafting a “knowledge ecosystem” where young entrepreneurs can meet, brainstorm and seek financing. Mikitani even left Keidanren, the main business lobby, and started a competing organization to upend the status quo. It’s been a long, long time since Toyota did that.
I don’t mean to be unfair to CEO Toyoda. This 59-year-old is indeed investing in electric and self-driving cars. Toyota plans to spend at least $1 billion in Silicon Valley to divine the future of robotics and autonomous vehicles, an effort that could bear considerable fruit. But today, its stinginess on wages is undermining Abe’s efforts to revive the economy. At a time when top-down Japan requires nothing less than a ground-up revolution, Son’s gambles are the biggest, smartest and most laudable around.
William Pesek is executive editor of Barron’s Asia. www.barronsasia.com
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