Ernest advice on entrepreneuriship in Japan

Ernest Higa built and sold three Japanese companies. Domino’s Pizza, his last venture, was sold to Bain Capital in 2010. Now he’s on to the next challenge — reintroduction of the hamburger franchise, Wendy’s, into the Japanese market. Looking back over the course of his 33 year entrepreneurial career, Higa shared with Beacon Reports his thoughts and advice on entrepreneurship.

Higa: I started out being an entrepreneur in 1979 when I was 26. Back then, the word “entrepreneur” was not known or used. The closest thing was a “datsusara”, someone who couldn’t make it in a large company. Those were people who opened ramen or yakitori shops. When people asked, “Should I be an entrepreneur,” my standard answer was, “No, you should not. It’s tough getting money and tough getting recognition.” Entrepreneurship was not socially accepted. Even today, great entrepreneurs like Mikitani (the CEO of Rakuten), are considered as mavericks and not part of the establishment.

Now, I encourage people to be entrepreneurs because the environment is changing. Japan has been through ten years of the worst recession since the war, followed by another ten years of deflation. There’s nothing good about that, except I think it will enhance entrepreneurship in Japan. If you look at the United States, which is how I compare everything, the US was not very entrepreneurial in the 1950s. Everyone wanted to be a corporate man and work for IBM, Ford or GM. But when they broke the social contract around the 1960s or so, then you had great human capital on the streets who couldn’t find jobs. They had to make their own jobs as entrepreneurs.

In Japan, previously the best and brightest went to work for government and then into large companies. Now you don’t have the preferred option if you graduate from Todai or Keio University to do so. You have nowhere to go but to start your own business. So I think now is the age of entrepreneurship in Japan.

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I believe entrepreneurship is about taking on challenges and trying to achieve your own personal potential. Everyone’s potential is different. Potential is defined by your strengths, not your weaknesses. The most important thing is to identify your own personal strengths. You need to choose a business that leverages them. That enhances your probability of success by making sure you have a unique competitive advantage over other people.

When you are thinking about a new business, most people look for one in a growth area, or one that is very profitable — that’s the wrong approach. You really need to think about what your own personal strengths and weaknesses are rather than what’s out there. Even today, I wish I was in social media. But if that’s not my strength, I probably shouldn’t even try. It really boils down to what is your own personal competitive advantage. If you can leverage it in a growth industry, that of course is ideal. You have to define your personal niche as fine-tuned as possible when you’re an entrepreneur because your only asset is yourself.

We often don’t know what our own strengths are. Over many years doing various businesses I realized what I’m both good and not good at. In my case, it was obvious that I should do something that leveraged my bicultural expertise. It took a while to come to that conclusion…. I didn’t think about it right away.

When I started out, I worked 16 hours a day, seven days a week, and took off only two days a year. That was kind of focused. At some point you realize that is not the goal in life. The real goal in life is balance. But to be successful you have to be unbalanced in the beginning. You can’t start off balanced, because you will not be successful. I’ve been unbalanced most of my career, trying to be successful — what I think being “successful” is. Now you can keep on going in that direction, but I think you miss the point of life. At some point — and everyone’s different — you have to go for balance with your private life, your family, etc.

You don’t want to be completely retired either, then you’re out of the game. I’m still too young for that.

I get satisfaction starting new businesses and taking on new challenges. You can imagine Wendy’s is a huge challenge. The largest company in the restaurant business is McDonald’s Japan. They have 76% of the market in the hamburger business. They do $3.8 billion in sales and have 3,300 stores here. I’m going up against that and I’m putting my money into it in a deflationary environment. Now, that’s a challenge.

Ernest Higa is Chairman and CEO of Higa Industries Co. Ltd. In addition to being the operating partner of Wendy’s Japan, Higa Industries separately owns an ethnic food importing business that sells to major chains, supermarkets and convenience stores.



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