How do you create a strong management team? Japanese internet execs discuss.


japanese executives

See the original story in Japanese. Below is a condensed, translated version.

For startups in their launching phase, sometimes the founders may have interpersonal issues, and the team may fall apart as a result. In order to find some insight from some of Japan’s more successful companies, we recently heard from the executives of three Japanese internet giants, giving us a behind-the-scenes look at their management systems. The panel, which took place at last week’s Infinity Ventures Summit, included:

  • Yoshikazu Tanaka, CEO at GREE
  • Kotaro Yamagishi, executive vice president at GREE
  • Yusuke Hidaka, vice president at CyberAgent
  • Tetesuhito Soyama, managing director at CyberAgent
  • Yasuhiro Hagino, managing director at Mixi
  • Yuichi Kawasaki, executive officer at Mixi
  • Moderator: Etsuko Okajima, CEO at Pronova

Most executives at GREE have been working together for a long time. Yoshikazu Tanaka, the company’s CEO explains:

GREE’s Tanaka: At some companies, growth heavily relies on the founder’s effort. I previously worked at Rakuten where I saw how Hiroshi Mikitani managed the company, I sometimes wanted to work in a way that followed his management style. From my perspective, mobility of personnel is not essential as long as the company keeps growing. But for a startup founder, if you still keep a large stake in your company, your management board does not work anymore – because all the other board members do is just follow your judgment.

To avoid this particular issue, GREE is working on adding external people to its board of directors.

GREE’s Yamagishi: Our business has been rapidly expanding in the last few years, we actually have many issues to address in our management process. Recently we invited someone new to our board of directors, and asked him to provide some general business advice. He’s 65 years old but has been working in the global manufacturing business.

CEO Tanaka described the external director as a sort of mirror, since he can restrain himself based on things that person points out. When asked by the moderator about a possible change of board members, Tanaka responded he would add more people as the company becomes larger.

In a contrast with GREE, CyberAgent takes a different approach to deliver a improved and efficient management. The system is called CA8, and changes the board members every two years. This was deployed to eliminate employees’ anxiety that they might have no chance to join the board of directors in the future.

CyberAgent’s Hidaka: Our CEO Fujita has alone decided everything about the CA8 system. He said we would create the rules of personnel management and employee welfare from the scratch. If a rule works appropriately, we’ll keep using it in the company. To be honest, the system has some negative effects, but the positive aspects surpass the negative one.

A person from the audience asked if the company has any intention to invite a non-employee to become an executive at a future subsidiary. In response, Hidaka explained:

CyberAgent’s Hidaka: For an entrepreneur running a startup, if you can understand our corporate culture, we can acquire your startup and invite you to our team, which will work well. We haven’t yet done this because we haven’t found such a high-potential talent or startup. We are used to growing a business with our own employees rather than acquiring new business from outside the company. This trend will continue.

Perhaps by this he means that the company requires no drastic changes as long as its business keeps growing.

Mixi’s Ogino: Unlike the other two companies, our growth is in a crucial stage right now. In this situation, some of our employees started to stand in the way of their most competitive colleagues. That is unfortunate. In the beginning of 2010, my previous company was acquired and I joined the team. At that time our people were always following what their boss said, and they had no interest in competing with other internet companies or aiming for the top in the global markets.

In the crucial moments for management or executives, unless you change your mind significantly, your people are likely to see that you are not seriously determined to make things happen. But I learned the entire company may change if a small number of people change their mind.

Mixi acquired Naked Technology back in 2011, and Kamado in 2012. Those startups’ co-founders Yusuke Asakura and Yuichi Kawasaki joined Mixi, and now its board is filled with experienced entrepreneurs.