![]()
Chapter 1
SUCCEEDING BY DESTROYING A GROWTH MODEL
Kanemasa Haraguchi
Executive Vice Chairman Secom Co., Ltd.
Born August 1950, Kyoto. Graduated March 1974 from Musashino Institute of Technology (renamed Tokyo City University) with a degree in telecommunications engineering from the engineering department. Joined Nihon Keibi Hosho K.K. (renamed Secom Co., Ltd.) in April 1974. Appointed vice-president in 2002, president in 2005 and executive vice chairman in January 2010. Viewed as both managerial and spiritual successor to company founder, Makoto Iida, with the technocratic background to lead the company to new prosperity and growth in the information age.
Always Re-examine Your Values
Personal security is a relatively new concept in Japan. Long considered one of the safest countries in the world, Japan had until recent years managed to avoid the rising crime rates that had accompanied industrial development in many of its Western counterparts. Social scientists like to point to a variety of factors for this, including relative income equality and stability, near homogeneity of raceâwhich breeds shared norms and moresâand social behavior dictated less by religious beliefs or universal codes of conduct than by the particular demands and exigencies of sustaining harmony in the small groupings to which people belong, such as family, schools, neighborhoods, and places of employment. People moved in relatively small social circles; and that perhaps more than anything else may have reinforced the day-to-day standards of propriety and moral guidance to feed and maintain social order.
But with the advance of globalization, freer movement of goods, services, and particularly labor, this once relatively isolated island country is gradually evolving into a more open and pluralistic citizen of the world. Greater mobility, as well as increasing diversity of demand and lifestyles and Japanâs shrinking population, in particular, augur perhaps greater immigration in the coming years to sustain the countryâs social and economic infrastructure. With increased plurality of interests and values, and growing detachment or accountability to local social circles, individual and impersonal crimes motivated more by self-interest and economic gain than by malfunctioning relationships have been on a steady incline in Japan.
Security, in a variety of forms, is therefore a growth industry. But security against crime is only part of the story in a country that is rapidly aging. Companies such as Secom that are on top of the changes taking place in the country demographically and economically are finding themselves constantly expanding and refining the meaning of their businesses as they seek to overcome new challenges and exploit new opportunities, both at home and abroad.
Secom company founder Makoto Iida is widely credited as the founding father of the security industry in Japan. Iida was the fifth son of a sake merchant in one of Tokyoâs oldest quarters, Nihombashi, and the Iida family had gained a modest level of local respect as a supplier of spirits and beverages to restaurants and guesthouses.
Because Makoto was the fifth son, he was exempt from any expectations of one day taking over the family business, and therefore grew up largely free and unfettered. His parents even encouraged him to actively pursue his every interest. They didnât spoil him, but insisted that he have a serious and active approach to whatever he did, and possess meaningful objectives.
Iida recalls as a youngster being severely reprimanded by his father for merely walking with his head down, or crouching lackadaisically in public. To his father, it was a disgrace to appear publicly as downcast and aimless.
Indeed, Iidaâs father was a man of open and forthright disposition, and was always lecturing his children about the role that oneâs psychology has in affecting what happens in real life.
On another occasion, Iida recalls his mother admonishing him for sighing in exasperation. âWhen you sigh, you allow happiness to escape,â she told him. The young Iida found something very convincing and fathomable about that imagery, and says he has been mindful of sighing ever since.
Owing to the accessible wisdom imparted by his parents, Iida grew up generally trusting the counsel of adults. But it wasnât a blind universal trust. Otherwise, how could he eventually pioneer a business that was implicitly built around a suspicion of trust, much less rise to the top of that industry?
Safety is Not Free
This quote perhaps best captures the personality and business philosophy of Makoto Iida. Iida treats risk as a given. Everyone has their share of both successes and failures, and Iida believes that any business action is predicated upon an acknowledgment and embracing of risk. âIf all you do is stick to what is safe, there is little incentive to act with any resolve and you diffuse any expectation of progress.â
Iida indeed undertook an immense risk in deciding to build a business out of something that had long been considered free: peace of mind. He believed that greater safety and security, and consequently peace of mind, could be purchased. As mentioned at the outset of this chapter, the security business is still quite young in Japan, at least as a private sector endeavor. The government, of course, provided public security through the national police force. But with the exception of providing against some external threat, most Japanese prided themselves on the notion that theirs was for the most part a âsafe, peaceful and orderlyâ country; one where people implicitly respected each otherâs possessions and privacy. Safety was therefore taken for granted, like oxygen. Offering security as a commercial commodity never really occurred to anyone as necessary or desirable.
Perhaps much of the nation was too busy rebuilding their country after their defeat in World War II to think about protecting what little they had. By the early 1960s, when disparities in material wealth were beginning to emerge, Makoto Iida took notice of the rising number of reported crimes each year, and began thinking that âeventually, the time would come when Japan, too, would see peace of mind security as something to be purchased.â
Public safetyâto be distinguished from private securityâwas the domain of the police, who were stationed in local police booths in every community across the country. They conducted local censuses, patrolled neighborhoods on foot or on bicycles, helped people with directions, and even on occasion lent out cash. To their credit, they still do all of this. But there have always been those nooks and crannies that inevitably escape or exceed their reach. It is precisely those areas that Iida saw as increasingly vulnerable to exploitation, particularly on private or commercial property.
Iida believed that if he could offer an added level of safety and peace of mind as a service, there must surely be businesses that would feel the need for it. So at 29, Iida ignored the many naysayers around him and established the Keibi Hosho (âsecurity guaranteeâ) company, forerunner to Secom Co., Ltd.
Iidaâs vision proved prescient. As Japan grew into the worldâs second-richest nation, followed by growing demands for home-market liberalization, deregulation, and freer immigration, new types of crime emerged alongside existing ones, as did their frequency and intensity. Thus followed a dramatic increase in business demand for protective and preventive security measures.
Secom grew into the largest provider of private security systems, for both corporate clients and households, with a whopping 60 percent share of a market that is currently swamped with some 10,000 rival companies, large and small, across the nation.
Be Mindful of Constant Changes in Your Situation
Iidaâs venture began with a suspicion that Japanâs reputation as the worldâs safest country was either a myth or a phenomenon that simply couldnât last. He then parlayed that foresight into a new kind of business that proved adept at mining a hidden demand and winning acceptance. But he didnât act on a whim. Iida may have gone with his gut instinct in coming up with a business premise, but he then looked to verify it through extensive research before ultimately coming to a decision. Even so, he met with stiff resistance.
The secret to Iidaâs entrepreneurial strength lay in his acceptance of risk in a forthright pursuit of an interest that he viewed as having meaningful objectives. This is precisely what his parents had taught him, and it served him well, as he found himself running a company that was riding the crest of changing times.
Secom continues to run far ahead of the curve, and its competition. One of those reasons has to do with current company president, Kanemasa Haraguchi, who is viewed as a natural successor to Iida and the right leader for carrying forward and building upon the founderâs philosophy.
Since becoming Secom president in 2004, Haraguchi has taken a business that owed its remarkable growth primarily to corporate security services, and aggressively worked to expand demand for its services to a still largely untapped market for individual security. While Iida had moved the focus of the companyâs services away from manned security (security guards) to IT-based systems, Haraguchi has worked to strengthen programs that build and maintain strong human resources as the surest way to sustain a high level of service quality.
âI feel the strong influence of our founder, Makoto Iida, every day,â says Haraguchi. âThat is because his beliefs are embodied in the Secom philosophy itself, such as always endeavoring to do what you believe is right and never flinching from new challenges, both of which may require you to break with the past. This is why instead of apprehensions, there are high expectations inside our company that we are embarking upon a brilliant new chapter in our history as we embrace the rapid changes and opportunities of the information age.â
Haraguchi is clear about what will keep Secom viable going forward:
When Secom was awarded the job of providing security to athletes during the 1964 Tokyo Olympics, just two years after the companyâs inception, it was a breakout moment. The sudden exposure Secom received was tremendous, and most of the Japanese public had been unfamiliar with the very concept of the business. With the Olympic games, private security entered the national consciousness to such a degree that Secom served as a model for a popular television miniseries the next year about the life of a security guard. Until then, the job of a security guard, and the security business overall, had either gone largely unnoticed or struck people as a peculiar novelty.
Shrinking a Growth Business by Design
It was precisely when business was soaring and the sky seemed the limit when Secom founder, Makoto Iida, decided to raise a red flag. His trusted successor, Haraguchi, can attest to that:
Secom at the time of the announcement had a workforce of several thousand employees. Iida was convinced that if it continued on a linear trajectory, the companyâs survival would only become increasingly threatened with the emergence of more competitors following similar models.
âViewed in hindsight, it was the right move,â remarks Iida. âBut at the time, the general telecom infrastructure was not amply in place in Japan, so we began by having to install dedicated lines of our own. Though costly, the advantage was that nobody else was doing it. So we were able to gain considerable lead time over our competitors, and able to keep coming up with new ideas to leverage that lead.â
Behind this change in management policy, by all measures quite revolutionary, lay a fundamental precept in Iidaâs business philosophy:
One has to be driven by either tremendous courage or supreme folly to want to dismantle a successful business model that has taken years to build. But Iida, in his inimitable penchant for self-examination, found himself once again questioning some basic assumptions about his business. Instead of relying ...
