It was Sony’s Akio Morita who first admonished us to “Think globally but act locally” in business, and this became a kind of mantra for building global business. Morita’s Sony has since fallen from grace. Twenty-some odd years later, in our global business world, is this adage still valid? Perhaps.
But in today’s world, it is backwards. We must act globally but think locally.
Many have interpreted the “act local” part of the old adage as accommodating the local needs, customs, culture and tastes of the foreign market to the point where the entrant doesn’t seem “foreign.” Morita himself proclaimed that in America he was American, but in Japan he was Japanese.
However, do people really want another “local” business, just like the ones that we are used to? Is it sameness and familiarity that leads to acceptance and success?
Years ago shortly after Renault had acquired a majority stake in Nissan, NHK sent a camera crew to follow around a Japanese Nissan employee to see how well he was getting along with his new French managers and colleagues. Planning the launch of a television ad campaign for the Mégane, the French managers, in true “think global act local” fashion, proposed shots of a typical Japanese family with the car. The Japanese managers however recognized the powerful brand attraction Renault would have with Japanese consumers precisely because it is foreign and French. The Japanese managers argued that an ad showing a typical French family with the car would have far more impact.
The Japanese team’s contrarian view was act global think local. Acting global in this case means emphasizing the French identity rather than masking it because, they reasoned, if we don’t, what will differentiate us from every other Japanese car brand in the local market?
Thinking local means understanding that this French identity is a powerful influence among Japanese consumers in way that would be lost on the French or other consumers in Europe. The Mégane is successful in France, but for more practical reasons. Many French might even view the car as mundane. (Sorry, Renault.) To the Japanese it is exotic, indicating a certain taste and status.
The French managers simply could not understand. They were adamant about Renault-Nissan being viewed as a local “Japanese” company, not a foreign one. The Japanese team lost the debate, and Renault lost an opportunity.
The Japanese managers were of course correct, and most Japanese business people would have agreed with them. Indeed, this is common sense in Japan. But if it is common sense in Japan, why is it lost on so many Japanese businesses when going overseas?
Tadashi Yanai, the daring entrepreneur CEO of Fast Retailing that owns the highly successful Uniqlo clothing store chain, writes in Reimagining Japan of his mistakes in setting up shop in the UK.
“We failed spectacularly…Our biggest mistake was trying to do things the British way. We never capitalized on our strengths…The one thing Japan has to get rid of is the idea that things are one way here and different everywhere else.”
Yanai argues that we need Japanese “who don’t distinguish between here and away.”
Yanai’s lesson has not been lost on all Japanese companies. Seibu Group’s Japanese home furnishings retailer Muji, a business started at the height of the Japanese recession in the 1990s, enjoyed relative success in Japan with its “no brand” and simple, clean product designs. (Muji is short for Mujirushi Ryohin 無印良品 meaning literally “no-brand goods.”) Muji has since been wildly successful in Europe, with their products selling at prices 1.5 times higher than in Japan.
Muji capitlized on its strengths of design. Many people the world over have been seduced by Japanese sense of esthetic and design, including Japan’s Zen minimalism. Muji did not consciously set out seduce Japanese consumers in the home furnishings market with minimalist design, but the minimalist influence is clearly there. Japanese consumers do not necessarily explicitly value minimalism. For Europeans however minimalism is exotic, seductive and fashionable.
Muji makes no attempt to mask its Japaneseness in Europe. To the contrary, Muji emphasizes it, and it is precisely its Japaneseness that Muji’s overseas customers value Muji so highly. Ironically, many Japanese would not be conscious of Muji’s Japaneseness. They buy the products for other reasons.
So, what lesson about developing global business can we learn from this?
- Don’t assume that you need to change your national identity, values and way of doing business to match what may be the norm overseas. Your foreignness may be precisely what your customers value.
- Understand your customers and your market. What differentiates your business in the foreign market may be completely different from what differentiates your business at home. Don’t hesitate to play to your strengths overseas just because they are different from what you are accustomed to at home.
- Your customers may value aspects of your business that are not appreciated in the same way by your customers in your home market. You may find yourself able to charge a premium overseas that you cannot at home. Indeed, seek out such opportunities.
- Particularly if you are a service business, you may find that your most profitable products and services are very different from those that you offer at home. In fact, you may have a completely different offering in the foreign market.
- Have confidence in your Japaneseness (if you are Japanese). It can be your strength. Who you are has appeal outside of Japan.