Vision in Japanese Entrepreneurship

The Evolution of a Security Enterprise

H.T. Shimazaki

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9780429787676
• Topic: Business
• Subtopic: Business General
• Index: Business

The service sector occupies a dominant position in the Japanese economy, yet few studies have looked at the way the industry developed. This book, first published in 1992, focuses on the growth and development of a major world security and communications corporation, SECOM. The success of the company has been rooted in the management strategies of Makoto Iida, who has shaped the company from a small localized business to an international industry at the forefront of innovation. The book first looks at the background of Makoto Iida, offering an insight into the nature of an entrepreneur and the issues this raises within the context of Japanese management styles. It then follows the company development stage by stage, assessing the importance of individual creativity in adapting and implementing traditional management techniques. It shows how strategies for human resources, service quality, new technology, globalization and corporate restructuring evolve within the context of a growing organization, and includes an analysis of the innovative marketing techniques and product development processes needed to sell security services to one of the world's safest countries.

1 Introduction

This book focuses on Makoto Iida, Japanese entrepreneur, and SECOM, the company he founded, Japan’s first and, today, largest security corporation. A study of one illustration of Japanese entrepreneurship, it also encompasses elements of a biography of Makoto Iida and a business history of his company.

Various influences were at play in my selection of SECOM as the subject of my present study. SECOM forms part of the service sector industry. While some investigation has been carried out on entrepreneurial endeavour in the manufacturing sector in Japan – studies on Soichiro Honda, Akio Morita of Sony, Tadao Yoshida of YKK, Kazuo Inamori of Kyocera, Takeshi Mitarai of Canon, and Konosuke Matsushita of Panasonic come to mind – in the English language literature little has been reported on the service sector.¹ This oversight is surprising given the growing importance of the service sector. In recent years there has been a reversal in the relative size of the primary and tertiary industries with the service sector now dominating the economic scene. In 1990 The Economist reported that when the agricultural sector is excluded, of Japan’s 6.5 million businesses, more than 5.5 million are in services and other tertiary fields.² Led by Japan, the service sector in the Pacific region is rapidly becoming a new foundation for economic development destined to have a profound global impact.³

Having determined to study entrepreneurship within the service sector, I chose to focus on SECOM, a comprehensive security/communications firm. Japan is recognized both domestically and abroad as one of the world’s safest industrialized nations. SECOM’s phenomenal success in marketing security measures in a country where there was little perceived need for them before their introduction was a strong indication of entrepreneurial processes at work. My interest as a cultural geographer in people’s creative responses to their surroundings and events triggered a desire to learn about the person or people behind these processes.

The phenomenal success of certain Japanese companies has captured the attention of business leaders around the world. As interest in Japanese management has widened, English language publications about Japanese business have multiplied. Some attempt has been made to explain the nature of Japanese corporate behaviour and its economic success emphasizing particularly static institutional factors and operational excellence. On the macro level, discussion has centred on ‘Japan Inc.’, the economic machine created out of the partnership between government, academic institutions, industry, and business associations. A lack of innovativeness and ‘copy cat mentality’ are often said to characterize the Japanese industrial circle. Likewise, much of the discussion on Japanese management has focused on bottom-up rather than top-down decision making.⁴ What has been neglected is an appreciation of the vibrant entrepreneurial activity within the contemporary Japanese business world. The participation of Japanese entrepreneurs in the creation of new economic activities in the service sector in particular and the implementation and actualization of entrepreneurial aspirations deserves more attention.

‘Man makes himself.’⁵ The world is transformed by the decisions and actions of individuals and their institutions. One such individual, found in small and large businesses alike, is the entrepreneur – a person who is typically characterized by vision, creativity, vitality, confidence to act on new opportunities, adaptability to altered conditions and, most of all, the ability to initiate and implement change through innovation and imagination.⁶ Such traits are also found within the managerial team of the innovative corporation.⁷ It is this combination of characteristics that is generally accepted as comprising entrepreneurship.

The phenomenon of entrepreneurship as a distinctive human capability has attracted scholarly attention. The fact that entrepreneurs play an increasingly important role in shaping the economic and cultural landscape at corporate, national, and international levels has made entrepreneurship the frequent subject of studies in the social sciences (see Appendix, page 242).

Despite the extensive examination of entrepreneurship from various academic perspectives little has been said about the specific function of entrepreneurial vision. ‘Mankind’s greatest achievements are the product of vision.’⁸ Vision in the business context may be defined as the dynamic mental process through which innovation is initiated and implemented through the formulation of a corporate culture which guides the business direction and activities. As Gifford Pinchot III points out,

vision is not just a vague idea of a goal, nor is it just a clear picture of the product or service. It is a working model of all aspects of the business being created and the steps needed to make them happen.⁹

In the book Personality in Industry: The Human Side of a Japanese Enterprise (published under the name Hiroshi Tanaka) I identified the fact that Japanese culture and ethics are deeply rooted in cultural values and explained how influential these dimensions are in the Japanese economy.¹⁰ Through my inquiry it became apparent that entrepreneurial vision plays a crucial role in corporate strategic design and implementation. Vision guides the organization in determination of direction in terms of products, markets, resources, and capabilities. Corporate success demands appropriate strategic thinking as much as effectiveness of operations.¹¹ In the present study I have identified entrepreneurial vision as the driving energy behind corporate development. I have tried to describe the reality of entrepreneurial practice as viewed and experienced by the participants themselves.

Within the rapidly changing business world of Japan, not only are many of the well-established traditional corporations adjusting to the new economic climate, many entirely new companies are emerging.¹² Moreover, many of the latter companies are now comparable in performance and size and often excel in vision and in potential, surpassing their older counterparts. Of the 1,600 corporations presently listed on the Tokyo Stock Exchange, only four have consistently shown an increase in total sales and in profits every year since 1962, the year SECOM, the company on which this book focuses, was established. SECOM is one of these four.¹³ Within the Japanese business world SECOM is referred to as one of the country’s ‘miracle’ service companies.¹⁴

Entrepreneurial behaviour is the antithesis of administrative behaviour.¹⁵ Administrative behaviour is designed to optimize current operations while entrepreneurial behaviour creates change and renewal. Entrepreneurial behaviour creates profit potential while competitive behaviour exploits it.¹⁶ In developing a corporate vision the successful entrepreneur must realize a balance between administrative functions and entrepreneurial action. Without denying the existence of administrative behaviour, Makoto Iida embodies many of the behaviourial characteristics of a successful entrepreneur. All of these characteristics are integrated into the formulation of business strategies and policies.

A 1983 study of American high-tech businesses determined that, irrespective of business size, product, and technology employed, leaders of successful high technology-based companies are confronted with the same dilemma: ‘how to unleash the creativity that promotes growth and change without being fragmented by it, and how to control innovation without stifling it.’¹⁷ The present study examines the way in which Makoto Iida has chosen to tackle this dilemma associated with corporate growth.

The book demonstrates that SECOM’s progress depends largely on the corporate culture which has made possible the continuous exploration of the concept and value of safety and the corresponding development of effective and economical safety measures. SECOM’s corporate culture originates in Makoto Iida and is supported by the organizational members who share his values and the corporate philosophy. As seen in this account, Iida has created, embedded, and strengthened the corporate culture through the repeated articulation of his own vision. The derivation of the company’s success from the formulation and implementation of Iida’s vision is demonstrated. The corporate vision provides the shared basic assumptions about the nature of the corporate mission, the product, the market, and other factors which may influence corporate development. By tracing the relationship between the ideas and behaviour of Iida and his business associates, and the realities of corporate activities, SECOM’s evolution is examined.

At the time that the firm was founded the idea of peace of mind as a marketable commodity had not yet entered the Japanese collective consciousness. It would be necessary for Iida to generate a perceived need for SECOM’s services. The company began with the provision of human-based, round-the-clock security. However, Iida soon recognized the limitations of this type of service and introduced a security system integrating people and technology, incorporating remote sensors at a time when such an idea was ridiculed by those engaged in security businesses world-wide. How Iida came to visualize and finally actualize the concept of machine security with limited resources is described. Expansion into machine security provided the opportunity for entry into a variety of new fields. The coordination of research and development, marketing, production, and maintenance as it relates to Iida’s vision is discussed and shown to be crucial to SECOM’s success in the provision of better quality service and its diversification.

From the outset, Iida acted in the international arena. Corporate establishment was made possible by an infusion of foreign currency. Although the idea of establishing a security service came from the West initially, Iida studiously rejected exposure to western security concepts and methods in a deliberate attempt to avoid imitation. Nevertheless, once a firm foundation had been established he began preparing for eventual foreign expansion. Today SECOM has expanded into seven countries including the United States, Korea, Taiwan, and Thailand. International expansion was never without difficulty and the processes through which successes were eventually achieved are outlined.

SECOM’s entry into the high technology-based, on-line security system made it possible for Iida to delve into what he terms the ‘social system industry’. This includes database services, VAN (value added network) service, and computer security. He has also expanded into transportation and medical services. The extent and nature of these activities are outlined.

Preparing to meet the emerging age of integrated multimedia services, today the SECOM Group consists of SECOM, thirteen domestic subsidiaries, forty-seven associated corporations, and seven foreign establishments. Total sales for 1990 approached 188 billion yen, one-ninth of the total sales of the security industry in Japan. Net profit reached 11.4 billion yen in the same year. SECOM’s employees number more than 16,000. The 360,000 domestic and foreign users of SECOM’s services include private households, retail stores, hotels, private and government offices, factories, schools, hospitals, banks, art galleries, museums, zoos, Buddhist temples and Shinto shrines, castles, blood banks, fish cultivation sites, industrial complexes, hydroelectric dams, airports, and nuclear plants.

It goes without saying that resources are necessary for the achievement of corporate progress, be they capital, material, people, skills, information, experience, etc. What distinguishes the entrepreneur is the ability to engage successfully in innovative ventures, even with an apparent scarcity of resources. Resources are inert. To the question, ‘What is the indispensable psychic act which gives them meaning as resources?’, Shackle answers, ‘It is imagination, the ultimate creative act of thought in which men are tempted, with some excuse, to find their apotheosis, to see themselves as plenipotentiaries of divine power.’¹⁸ As illustrated in this account, even mistakes and apparent setbacks can become entrepreneurial resources for growth and renewal. It is Iida’s imagination and vision in the recognition of resource potential that has made SECOM’s steady progress possible.

SECOM is a security firm and therefore I had to agree, at the outset of the investigation, to respect designated boundaries beyond which data collection could not proceed. Airport security, nuclear security, and computer security are three examples of areas about which I would have liked to have provided a more comprehensive portrayal but was unable to do so because of data limitations.

Another condition of the study was that the finished manuscript would be read, and its contents approved by SECOM personnel before publication. This ensured accuracy of the facts and figures from the corporate viewpoint. I was asked to delete only one section – the narration of events leading up to the extraction of the company from foreign ownership. This request came from both Erik Philip Sorensen, whose investment allowed the company to come into being initially, and Makoto Iida.

A major obstacle I encountered in my exploration was the lack of published material on the Japanese security industry. I had intended to place SECOM within the broader context of the security industry in Japan but, with the exception of the minimal data which I have incorporated into the text, the information required to do this was unobtainable. My search of the National Diet Library, a depository for all materials published in Japan, for information on corporate behaviour within the security industry, turned up next to nothing.

The alternative avenue appeared to be interviews with key personnel among SECOM’s competitors. Japanese social custom prescribes that this type of meeting, like all business meetings between parties previously unknown to each other, be arranged through a third party known to both sides. I was fortunate to have made the acquaintance of a senior researcher/administrator at the National Research Institute of Police Science and with his help interviews were arranged with senior executives in other security firms. These, however, did not bear fruit. Neither did they broaden my understanding of the particular question nor disclose how SECOM is viewed in the eyes of its competitors.

Similarly, I could elicit no criticism of SECOM from the three dozen company personnel I interviewed in Japan and abroad. Had I been wearing a journalist’s hat it might have been possible to enter the corporate domain through the ‘back door’ without corporate endorsement and to elicit from the workers their ‘honest’ feelings and opinions. But my focus was on Makoto Iida so I had no choice but to enter by the ‘front door’. While Iida’s endorsement of the project opened many doors, allowed me to see at close range his business style, and provided access to a cross-section of the company’s executives, it no doubt inhibited the objectivity of the data procured.

At the time of establishment in 1962, the company was named Nihon Keibi Hosho. Twenty-one years later the name was changed to SECOM (Security Communication). Throughout the text Nihon Keibi Hosho is used in reference to corporate activities prior to the 1983 name change and SECOM is used...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Contents
• List of illustrations
• Acknowledgements
• 1 Introduction
• 2 Early years
• 3 Business experience
• 4 Originating an industry
• 5 Technology-based innovation
• 6 Internal and societal adjustments
• 7 Cultivation of human resources
• 8 Innovative ventures
• 9 Vertical integration
• 10 Internationalization
• 11 Research - foundation for growth
• 12 Making history
• 13 Conclusion
• Appendix: A social scientist’s summary of entrepreneurship
• Notes
• Index