Dealing with the Bad Things First – Expedia Japan – Hidemaru Sato

Expedia had a hard road to travel when they decided to come into Japan. The Japanese market turned out to be nothing like they had ever experienced before. Not only were consumer attitudes and behaviors towards travel booking completely different than it was in their home market, but they were up against some very powerful and well entrenched companies, including both online giants Rakuten and Yahoo and traditional powerhouses like JTB. Today Hidemaru Sato, or “Maru" as his friends call him, will explain to us how Expedia managed to overcome the odds on a ridiculously tight deadline and how a few tweaks to the core product turned out to be key to their success. Maru also shares some great advice for both western companies looking to hire a Japan country manager and for people who are Japan country managers and want to do their jobs more effectively. It’s a great discussion, and I think you’ll enjoy it. [shareaholic app="share_buttons" id="7994466"] Leave a comment Friend Maru on Facebook Connect with him on LinkedIn Maru's advice on successful market entry Maru's advice on how to hire a country manager Partial Transcript Disrupting Japan, episode 64. Welcome to Disrupting Japan, straight talk from the CEOs breaking into Japan. I'm Tim Romero and thanks for listening. Travel giant Expedia has their work cut out for them coming into the Japanese market. Not only was the online travel game played very differently in Japan, but they were up against some very strong, very entrenched competition in Japan, both from the major online players like Rakuten Travel and Yahoo Travel, and from traditional players like JTB as well. Today we sit with down with Hidemaru Sato, or Maru, as his friends call him, and he explains how he had to change both Expedia’s marketing message and he product itself to make it attractive to Japanese consumers. In both cases, you’ll see why less is actually sometimes more. Maru also provides framework for both western companies looking to higher a Japanese country manager and for people who are Japanese country managers and want to do their jobs more effectively. Once you get to know Maru, you won’t be surprised to see that he has a very personality-driven approach on both counts. But you know, Maru can explain that much better than I can, so let’s hear from our sponsor and then get right to our interview. [pro_ad_display_adzone id="1411" info_text="Sponsored by" font_color="grey" ] [Interview] Tim: So, we’re sitting down with Maru Sato, and you’ve brought a number of companies into Japan, but today we’re going to talk about Expedia. It was a while ago but let’s go back to when Expedia was first thinking of coming into Japan. What did they see that was important about the Japanese market? Why did they want to be here? Maru: Okay, I think back to maybe the early 2000s, and basically it’s kind of the boom. It’s a lot of successful U.S. companies who enter the Japan market because Japan was still strong. Tim: Well, it still is. The Japan market is still pretty big. Maru: Then also, the Japanese market is something like new IT technology or internet-related business just starting. The first company I just helped come into Japan market is America Online, AOL. This is 1999, so this is when AOL was the world’s biggest internet service at that time. So they expand to Europe first, U.K., Germany, France, and also the Asia Pacific. Tim: In both AOL’s case and Expedia’s case, it was just part of the natural global expansion. Maru: And then U.S. companies, or global companies, they expect the Japanese market is big. So now it’s the same thing. Basically the Japanese market is big but usually they do not understand the cultural difference, and also business difference, and also user difference. So a lot of our conflict— Tim: I want to talk about that a lot. Before we get to that, though, how did Expedia pick you? How did you end up running this organization? Maru: My experience, AOL launching experience here, and also more than 10 years experience in Japanese companies and U.S. business. Tim: You had a track record here in Japan, and also you had had operational experience in America as well? Maru: Because a U.S. company, or a global company, tries to find a person who understands western style business and Japanese style business both. Tim: Actually, let’s talk about this because this is such an important point. What do you think makes a really good country manager or local Japan CEO? Because so many foreign companies fail here. Maru: From my experience, and also from my friends’ experience, the reason why it’s not easy to find a right person for GM or country manager. It’s not so easy to find the person who knows both cultures. Tim: Well, it makes sense. Almost everyone’s incoming from one culture or another and there has to be a bridge. Maru: It’s many, many people who speaks much better English than be, but how long does a person understand society over in the United States? Business and school, and life, everything. For me, I just spent 2 years at university and also 10 years in business in California. Also I talked to a lot of U.S. based companies for Japanese based companies. During 10 years, I just learned how to debate them, how to fight with them. Tim: I think that right there—fighting is one of the most important aspects. It seems like so many companies will choose someone who’s in late 20’s, early 30’s, went to school in the U.S., speaks English very well, gets along with headquarters, but had never had to fight for resources inside an American company. Maru: Fighting is, my years of fighting is how to understand each other. That is sometimes fighting, and sometimes discussing, how to pursue them based on trust and also based on respect. So when I was in my first 10 years of business experience in the United States, it was as the country manager of a Japanese company in the United States. That was a citizen watch company. We have a lot of mechanical engineering and also precise engineering technology, but how to get the business for Japanese headquarters—that means I need to talk to Hewlett Packard, I need to talk to Motorola, their computers, these people. The lucky thing for me is, “Hey, Maru, you understand it both ways.” It’s much better than a person who does not understand U.S. culture, who has come from Tokyo, to talk to Hewlett Packard, or Dell computers, or HP,” so that is totally different. Also, 2 years in Stanford makes me know how to collaborate with people in the United States and also the international. So that two years of experience in grad school at Stanford is very, very important for me. Tim: But operating in English in a university setting is very different from managing staff or trying to make sales. Maru: Yeah, yeah, because the business is based on communications anyway. All my friends, general managers, country managers here in Tokyo—very successful people—listen very carefully and also try to understand each other type person. The most difficult person is moving, or talking, or acting under the order from top management. Tim: Yeah. I’ve seen this happen. It seems to me that the Japan head is really the representative of the Japan office at headquarters, it’s not the other way around. So the Japan head is not there to explain to the Japan to the Japan team what headquarters wants—the job is to explain to headquarters what the Japan team needs. I think a lot of people don’t do it that way. Maru: They try but it needs the training and practice. Business school never teaches how to do that. I did many, many mistakes and I did many, many faults, but all mistakes and all faults are better after, to the next stage. Tim: Right. You learn. Maru: Yeah. I learn. Also, I always talk to U.S. headquarters, to my boss. Usually my boss is sometimes head APAC or head of intelligent business in the United States. I just talk to them. Anyway, come to Tokyo for 2 weeks. It’s just a blink to a prospect but on the other hand, I just try to bring them to a Japanese bar or Japanese drinking place, trying to introduce my other friends. Tim: Right, to build relationships with headquarters and to get the CEO or the APAC head thinking about Japan. Maru: And also I usually just teach my boss how to give your business card to them. It’s always, I just teach them, “No, no, 30 degrees.” But this makes business fun. And also, it’s a lot of each meetings and each meeting is sometimes, the law of headquarters is different. So I always make clear, “Okay, this week, I have the meeting, two meetings tomorrow, and two meetings the day after tomorrow, so this one is your law is like this, this, this, this.” Tim: You know, it sounds like what you’re doing, you’re just making a very strong emotional connection for the visitor. Maru: It’s very important. Tim: I mean, they’re doing business, of course, but you’re making it much more emotional and engaging than a normal business meeting. Maru: And also, sometimes, the family tries to make a relation. You know, when he comes, I just introduce my wife, and maybe some dinner or something, and try. My wife is always shy but I sometimes try. Tim: To build those personal and emotional connections? That makes sense. Maru: And also, my management style is always bad things first, good things later. Tim: Get the bad news out of the way early. Maru: The business is always dynamic here. The general manager, the country manager here, we have a big backbone in the United States, but Japan it’s only two, three people at start up time. The important point is business is dynamic, always, ongoing. And a lot of the problems, first 2 or 3 years, many, many problems, and then some problems are solvable if they understand earlier, understand how to solve it—