Japan is No Galapagos

Galapagos syndrome refers to a product or service developed in isolation to be so distinct as to be incompatible with the rest of the world. Like the isolated Galapagos Islands and their distinct fauna made famous by Charles Darwin, Japan is often called a kind of Galapagos. For example, until recently, Japan’s mobile phones had been unusable outside Japan because of their unique technology developed in isolation from the rest of the world.

However, while Galapagos may have been an apt metaphor for Japan in the past, it is no longer so today. More often than not, Galapagos these days is far more a state of mind than astate of affairs, and Galapagos syndrome is self-imposed.

For example, an executive of a Japanese airline once lamented to me how his company’s initiative to increase non-Japanese customers had been stalled from the start because no one in marketing had any idea of what might appeal to foreign customers as opposed to Japanese.

“Why do you feel the two must be different?” I asked. Shocked, he told me the possibility both might be the same had never occurred to him.

Japan is no Galapagos. Rather, today Japan is a Leadville. Because of Leadville’s high elevation deep in the Rocky Mountains of Colorado in the United States, the town is the ideal rigorous training ground for sports like cycling, running and even swimming. If an athlete can perform well in Leadville, he or she can perform even better just about anywhere else in the world. For that reason, many of the world’s elite athletes train in Leadville, including Olympians.

Business leaders of some of the world’s most successful companies use Japan for their global businesses in the same way athletes use Leadville for their sport. If a product or service can perform well in Japan, chances are it can perform even better in other parts of the world. I call this phenomenon Leadville syndrome.

For example, adidas Japan, local subsidiary of the German company best known for its athletic shoes, regularly develops in Japan for Japanese consumers premium running shoes. The same models are frequently successful globally, commanding premium prices.

Similarly, the France-based global seed company Vilmorin has captured over thirty-percent of the world’s carrot seed market with product its Japanese subsidiary’s R&D developed to meet the demands of Japanese customers. Despite the premium price, the Japanese seed sells well even in price-sensitive markets like China.

Leadville syndrome is not unique to just foreign businesses. Japanese companies like Fast Retailing, best known for its Uniqlo clothing brand, and Ryohin Keikaku, best known for its Muji brand of home furnishings and stationary, have also succeeded in their overseas businesses essentially by unapologetically duplicating oversees their success in Japan. Products of both companies command significantly higher prices overseas than in Japan.

What can you do in your business? In my experience, CEOs of successful Leadville syndrome companies share four practices in common.

  1. They banish Galapagos from their thinking. They start from the assumption that what succeeds in Japan can certainly do even better overseas.
  2. They use Japan as their Leadville—an arduous preparation ground for developing and honing excellent, world-class products and services.
  3. They exploit Japan-based R&D and technology to develop innovative, market-disrupting, premium quality products for Japan with an eye to launch them in the rest of the world.
  4. They unapologetically retain the Japaneseness of their products and methods overseas, as it is their Japaneseness that leads to success.

Increasing numbers of business leaders in Japan are learning from the success of their peers. The highly successful and distinctly Japanese Hoshinoya chain of luxury resorts recently opened its first hotel in Bali. CEO Yoshiharu Hoshino made no changes to the company’s Japanese business model. Will Mr. Hoshino achieve global success? In my view, yes, because like an elite athlete who has trained in Leadville, he too is at the top of his game.

A condensed version of this article appeared in Nikon Keizan Shimbun, June 5, 2017.
http://www.nikkei.com/article/DGXMZO17223070S7A600C1SHE000/