Vol.12

NewsPicks Studios CEO
Shunsuke Kanaizumi（part 2）

GDP has been considered an indicator of the country’s abundance. But now, this conventional wisdom is brought into question. Japan, the country that used to be the second largest economy in the world, has faced various issues, including a long stagnated economy, an aging society with a low birthrate, and growing economic inequality. As a result, the country ranks in the 50s in the World Happiness Ranking, behind countries such as Argentina and Kazakhstan. An ancient Greek philosopher, Aristotle, said the state exists to ensure the happy and honorable lives of its citizens, but if that is the case, is today’s Japan doing enough to ensure it? Inviting Shunsuke Kanaizumi, the CEO of NewsPicks Studios, which set its slogan to “Make the economy more interesting through the power of images,” as a guest, we talked about the hints to obtain abundance in an essential sense and idea of happiness that can not be measure by economic figures.

(Click here for the first half of the interview.)

“Keeping the good aspects of ‘Galapagosization’ and adapting to globalization simultaneously: the winning strategy for Japan is the combination of the two.” (Kanaizumi)

Masakazu Shigeta: These days, I strongly feel that the media and distribution can no longer make breakthroughs. All media outlets just try to get already evident information and distribute it even without editing. The same is true of the distribution. Their original role was to assess the various goods in the market, edit them, and provide them to the consumers. However, all they do now is to check the POS information of other companies and procure them. As a result, every store has a similar lineup, making consumers think cheaper is better if there is little difference. There is no future for the distribution there. That is an example of the business model of “cutting one’s own throat.”

Shunsuke Kanaizumi: You can find the same situation in the publishing industry. They refer to POS information and copy the projects that sold well. Naturally, the number of similar books increases and the sales per item decreases. Will the Japanese publishing industry continue to decline, or will it reform itself and encourage the emergence of American-style bookstores that can work as a third place and a social infrastructure for the community? I think we are at a crossroads now.

Shigeta: Speaking of access to information, we have gone from an era where TV unilaterally pushed information to an era where you can proactively seek it through search engines, and now, I think we are in a situation where information is pushed via SNS according to the interests of individuals. What is happening as a result is a situation where people are divided by generations and values. Even if young people try to gather information through the media they are interested in, since that information is distributed following their interests, their understanding of other generations remains the same.

Once social divisions emerge and deepen, it becomes challenging to align the vectors. As the power disperses, you can not win what you should be able to win. I have such a feeling of danger. So, the role of media to provide information is quite important.

Kanaizumi: Before Japan experienced the “Information Big Bang” caused by the IT revolution, there was still an environment where people could share the same direction in a form like a shared illusion. The internet tends to fall into the trap of the echo chamber of information, so it is no wonder that there are pros and cons against it. However, I think there is a fact that it has a certain influence that encourages people to make their own choices in the world with information overflown. One of the best achievements that the IT revolution brought about is the potential for a small number of people to change things.

Shigeta: As with the earlier talk about marketing, I’m afraid that if Japan continues to use a different operation system than the world, Japan will experience “Galapagosization,” or the isolated development of products and culture of Japan from the rest of the world, even more. But if we can see the bright future at the end of Galapagonization, it is not necessarily a bad thing.

Kanaizumi: There should be upsides to “Galapagosization.” Japanese-style hospitality and services are one of the best examples of Japanese culture, and it developed due to “Galapagosization.” There is no other country that can provide detailed hospitality to guests. I think the winning strategy for Japan is the combination of keeping the good aspects of “Galapagosization” and adapting to globalization simultaneously.

Shigeta: Then, the tourism industry looks promising.

Kanaizumi: I think Japan should aim to become a tourism-oriented country. Tourism-oriented countries can spread their culture and products throughout the world. Although the percentage in GDP is still small, IP content such as anime and games is also promising. Today’s inbound tourism is achieved because Japanese IP has spread around the world. To avoid limiting Japan’s potential as just “an exotic country in the East,” we should incorporate tourism and IP to enhance people’s need to “visit” and “experience” Japan.

——Are there any other industries that you think are prominent, apart from tourism and IP?

Kanaizumi: That is food culture. It is said that Japanese restaurants account for the highest percentage of the increase in restaurants around the world over the past 10 years. Chain restaurants such as Marugame Seimen and Kura Sushi are expanding overseas at a surprising pace. If this trend continues, we can make Japanese rice as an export item. Japan used to impose a tariff on rice from overseas because there was a huge gap in price between the two. But we don’t have to do it now because the price of rice overseas has risen. We can compete in the global market by stopping “the policy of reducing acreage” and making rice an export product. By making it an export item, you can increase the amount of production, which is positive for food security in terms of reserve stock and countermeasures against natural disasters.

——Food goes well with toursims, doesn’t it?

Kanaizumi: Exactly. Someone once said the future model for Japan is Italy at best, but if it fails, then Greece. Italy exports a lot of pasta, wine, and olive oil, and the manufacturing industry, such as cars and apparel, is relatively strong.

Japan has also started to focus on exporting Japanese sake recently, but wine is accepted worldwide because the nobles rated and classified vineyards and chateaus to determine their value. In Japan, the abolishment of the grading system created a situation where you can make it anywhere with rice and water. The overseas demand will increase further if the government and industry take the initiative to establish an add-value system.

“After all, whether or not a person can survive in society depends on the ability to come up with ideas.” (Shigeta)

Kanaizumi: In tourism, I want to share an example of bad Galapagosization that can cause the cycle of misfortune. Local governments in Japan usually have a tourism division, and people there are highly dependent on staff from major travel agencies. They provide everything related to tourism, from how to build roadside stations to the website design. Since the local government members are not tourism professionals, they tend to accept every proposal by the travel agencies without question. As a result, there are more and more similar buildings and tours all across Japan that do not leverage the potential of their local characteristics.

Although people emphasize the impact of inbound tourism, statistics show that nearly 70% of the total amount of travel and tourism-related spending is domestic demand. So, it is inevitable that the tour contents and facilities designed by travel agencies are standardized to target Japanese people, which makes them less appealing to tourists from overseas who expect locality. We must do something about this sort of bad Galapagosization, which destroys the individuality of each region, as soon as possible. So, we collaborate with people who have the same idea to stop this trend and revitalize the regions.

Shigeta: After all, I think whether or not a person can survive in society depends on the ability to come up with ideas. The mindset that you can survive if you can do more than the average is no longer valid, and the ability to develop ideas and creativity is required in everything you do. The same can be said for the work of public officers. However, in Japan, there remains a system where your life is secured until retirement once you are employed. In such circumstances, it is just natural that nobody tries to bring innovation by taking risks, and there is no need to create ideas, either.

As for the subsidy system in Japan, I think it is strange to obtain money once you complete the application form properly. I was once interviewed by people from the government about the subsidy system. So, I pointed out that the Japanese subsidy system is based on the premise of success from the beginning. Businesses do not succeed 10 times out of 10, and the probability of success might be less than 10%. So, it is strange that the application style is based on the assumption that the business will be successful.

Failure is fairly important, actually. It is important to fail properly and change the failure into your assets. If local governments could accumulate information on the failure of subsidy projects, they could be able to judge if it is appropriate to support the projects in front of them, or they could even be able to judge if they should get involved with the projects by providing hands-on support.

Kanaizumi: That is exactly an example of “bad moderation.” When we say decision-making is important in business, what we mean is that we need ideas, and we lack them in every aspect. The other day, Mr. Satoshi Nakajima, the legendary programmer who was involved in the development of Windows 95, mentioned the reason why he thought big Japanese manufacturers were no good. He said Japanese manufacturers outsource all the important parts without thinking for themselves. While Microsoft develops products and software by method of vertical integration, Japanese manufacturers just leave the development to subcontractors with order sheets, and there is no chance of winning.

Shigeta: I think we can say the same thing about outsourcing marketing. You may outsource part of your strategy, but it is questionable if you leave every process of strategy-making to other people. Even if the business could succeed, I don’t think you can call it your business with pride if you leave everything about business strategy to external companies.

Kanaizumi: I agree with your opinion. Even though they have excellent human resources with skills and knowledge, large companies in Japan outsource the formulation of important strategies, which I think is a problem.

Shigeta: Business consultants are also clever. All they would need was financial statements, but once communication design became an important issue, they started to hire talented creative designers thoroughly with capital strength. By making creative directors disappear from the market, they created a situation where companies have to rely on them.

Kanaizumi: Business consultants prepare everything so that companies do not need to make decisions on their own. However, I’m afraid this is the beginning of the end. I think Japanese enterprise companies are coming to notice that they can do it on their own.

Shigeta: If that is the case, what we need to focus on is the education and training of human resources. Japanese education tends to focus on improving expertise, but if you try to obtain a Ph.D overseas, you have to have broader perspectives in addition to expertise. Can Japanese business managers have such a perspective on human resource development? In this regard, I believe there should be a place where business people can learn, like temple schools in the Edo era.

Kanaizumi: Once the social mobility of human resources increases, I think the situation will naturally move in that direction. However, it is possible on the condition that the employment system is reviewed, including the ease of dismissal regulations. The biggest reason why employees in their 50s and above try to stay in the company is retirement money. In Japan, the amount of retirement money sharply rises as the number of years increases, and those who have longer company history try to benefit from it. It is supposed to increase linearly. If we could improve that part, there would be more talented people with broader perspectives and experiences of business through their careers. As they play an active role in a wide range of business fields, the management level can start to think about utilizing internal human resources before they rely on business consultants.

Shigeta: The solution for Japan to become a country with a higher level of happiness will come down to human resource education and creating the system for achieving it.