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Wednesday, Sep. 19, 2012

TECH_JAPAN

WEB

Yahoo! Japan's 'explosive speed' changes Web biz


This spring, Japanese Web titan Yahoo! Japan appointed a new CEO and new board members — the first big change to its board since the company was founded 16 years ago.

The new executive quickly implemented changes that have led to faster decision-making and a more aggressive approach to business — things not seen in the company for years.

While Google and Facebook are competing for the position of No. 1 Internet company in most countries these days, Yahoo! is basically seen as a lame-duck, uncool brand. Yahoo! Japan, however, is still the largest and the most powerful Web company in the country.

As you might know, Yahoo! Japan and U.S. Yahoo! are not the same company. Yahoo! owns 34 percent of Yahoo! Japan, but the top shareholder is Japanese cellphone carrier SoftBank, with 35 percent. The two Yahoo!s use similar systems but are different, so you cannot log-in to Yahoo! Japan with your U.S. Yahoo! account.

While Yahoo! has lost out to Google in the West, Yahoo! Japan has managed to hold on to the top spot for the last decade or so. That reign was led and maintained by the company's former CEO, Masahiro Inoue. His Yahoo! Japan kept increasing both sales and profits for 15 consecutive years — something not many other Web companies can match.

When a company is that successful, it's not easy to notice that it could, actually, have been more successful if it had been led by another person. But Yahoo! Japan's growth seems to have been stifled by a kind of big-company syndrome. Such things as having an overly bureaucratic system that required too many approval steps was one criticism. And while Google, Rakuten and other companies offered employees free meals, Yahoo! Japan removed water-coolers from its head office in Roppongi to cut costs — which did nothing to help motivate employees.

So, despite its continued successful streak, in a shock move this March, Yahoo! Japan announced the replacement of Inoue and other board members with much younger people. The new CEO, Manabu Miyasaka is 44 years old, while the average age of the board members has been lowered by over 10 years.

In its press release, Yahoo! Japan said that a younger leadership was needed to compete against other Internet companies as the industry itself is growing at such a rapid pace.

The new team's catchphrase is "Bakusoku," which combines the Japanese words bakuhatsu-sei (explosiveness) and sokudo (speed) to mean "very fast speed."

Miyasaka immediately reduced the company's eight-layer approval process for starting new projects to two-layers. And I've heard that the water-coolers are back in the office. Employees tell me that motivation levels are much higher under the new administration.

When the new team was named to the board they declared they would shut down many of Yahoo! Japan's subservices.

Yahoo! Japan had been spreading itself rather thin by trying to offer multiple services and this was no longer seen as feasible. As a result, in July, the user-generated summary service Y! Kukuru and the Y! Music service were closed. While in August, the Y! Net Banking and the Y! Recipe site ceased operation. And in September, the celebrity-based Y! Fan Club was scrapped.

Terminating several specialized Internet-TV services is another example of Yahoo! Japan giving up services that had not been so successful.

Instead of trying to handle such a diverse variety of services singlehandedly, Yahoo! Japan is now making alliances with several other top Internet companies. These include joining with top office-supply catalog shop Askul in April, in order to utilize Askul's logistics for other shopping services, and giving up its own Yahoo! Recipe service by shaking hands with Cookpad — the world's largest recipe community. In August, Yahoo! Japan also allied itself with Tabelog, the large online restaurant-review community.

Particularly noteworthy is the alliance with CCC, which runs the Tsutaya chain of video-rental stores and T-point Card, a reward-point system jointly used at several top-level chainstores. Yahoo! Japan will now allow use of T-points instead of its own virtual Yahoo! Points, and Tsutaya's online ID will be replaced with Yahoo! IDs. This alliance alone makes a network of more than 50 million consumers — both on- and offline.

It seems clear that Yahoo! Japan's new approach is to give up covering everything by itself, and to try to become the backbone for major category leaders — thereby circulating its large number of Web visitors.

The new Yahoo! Japan is also energizing start-up acquisition. In August, it purchased Crocos, a young Facebook-marketing company established in 2011. In September, it also acquired Community Factory, which offers a popular smartphone camera app to create printclub-photobooth-style images.

When people lament that the Japanese Web industry is less energetic than Silicon Valley's, it is often pointed out that in Japan, far fewer successful companies or people reinvest their money into new startups. Livedoor was a rare example of one that actively did. But after those aggressive acquisitions and investments turned out, in 2006, to be have been made with money earned in part through securities fraud, all the industry was affected through fear of being accused of playing the "money game."

Instead, in Japan, rather than purchase small startups to acquire new services or skilled employees — as Google did by purchasing YouTube or Yahoo! Inc. did when it bought Flickr — companies such as Yahoo! Japan preferred to have in-house employees create new services. Until now.

With Yahoo! Japan now showing increased initiative, it could lead beyond simply making something worthwhile for itself, but also by stimulating the whole Japanese Web scene. The new Yahoo! Japan is a must to watch.

Akky Akimoto writes for Asiajin.com, an English/Spanish blog on the Japanese Web scene. His Twitter account @akky is followed by 120,000 users.


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