Standing up to compete

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A facsinating article on Sachio Semmoto, who left giant Nippon Telegraph & Telephone (NTT) early in his career to found what is today called KDDI, Japan’s 2nd largest telecom company.

JAPAN is not known for its entrepreneurs. Bold small-business leaders are scarce; corporate decisions are usually made by consensus.

This was the prevailing mentality when Sachio Semmoto took an engineering job in 1966 at Nippon Telegraph and Telephone (NTT), then a state-owned monopoly. To become a cog in such a mighty machine was considered one of life’s highest callings.

His talent was spotted and in the 1970s he was sent to America to get a doctorate. But the education he ended up receiving was of a different sort.

In America, having a job at one of Japan’s most important companies counted for little. Some even sneered at the idea of working for a bloated monopoly. “That gave me culture shock,” Mr Semmoto says. “I couldn’t understand that—I was proud of working for a government organisation.”

But it dawned on him that there was an alternative to the industrial giants that he had always known. A decade later in 1983, at the age of 41, he stunned his colleagues by announcing that he was leaving to start a rival company, just as market liberalisation was starting.

Such things were not done. Leaving a job was considered foolhardy; starting a competitor was regarded as deep betrayal.

“No one stood up to compete. But I perceived that if no one stood up, then Japan would not change. So I stood up,” Mr Semmoto says. The Japanese establishment did not share his enthusiasm. Some businessmen and politicians said they would use their power to ensure that his venture failed.

But competition had its effect: outrageously high call charges fell and services improved; telecoms became more accessible to more people. Mr Semmoto’s venture, today called KDDI, is the second-largest telecoms operator in Japan, with revenues of around $35 billion.

… his efforts to shake up corporate Japan continue. He has made corporate governance a priority at his recent ventures, appointing truly independent directors, many of them non-Japanese—a rarity in Japan.

He is also campaigning to encourage Japanese to study abroad. Thirty years ago the world’s best universities teemed with Japanese students; today their seats are filled by Chinese and Koreans, he says.

“If we do not go to the outside world, we cannot survive,” he says. In his own career he has repeatedly looked beyond the constraints of the usual Japanese ways. And because of that, he remains an outsider.

Read the article in The Economist.

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