The story of how Akira Morikawa adopted an unconventional management style to build the popular LINE mobile messaging service is both instructive as it is enlightening. The former CEO of Line Corporation switched to a ‘guerilla style’ of management after traditional Japanese methods failed to work.
Morikawa rose to become CEO in 2007 just 4 years after joining Line (then called Hangame Japan) when the firm, a subsidiary of Korean based Naver Corporation, had little in sales and few employees. Speaking frankly about his first attempt to manage the company, Morikawa says, “I started managing the Japanese way, but I failed.” Then, he could not convince his managers to back new product ideas which were proposed by foreign staff. He sorely needed that buy-in to grow the company.
In a world awash with product in which people already own most of life’s conveniences like TVs, cars and clothes, Morikawa believes there are not many products which people need to buy. To convince them to do so, a product needs to be much better than anything else available. His ideas are similar to those of PayPal founder Peter Thiel who suggested in his book ‘Zero to One’ that a product must be at least 10 times better than its closest substitute. “Anything less than an order of magnitude better, will probably be perceived as a marginal improvement and will be hard to sell, especially in an already crowded market,” Thiel wrote.
The problem, Morikawa argues, is that today’s managers cannot think creatively or innovatively. “Japanese managers love operations,” he says. They are the product of manufacturing firms that built hugely successful export-led companies after World War II by fine-tuning processes, operations and logistics. Within these behemoths, innovation and creatively gets hindered. Too much consensus and paperwork is needed to get anything new started and there are too many senior managers with vested interests who block change.
Talking philosophically Morikawa says, “Japanese people like to move in a straight path, but it’s a dream. Every day the global market changes quickly, like water. The market is like a savanna. In this environment managers need to embrace change in order to survive.” He adds, “Being clever is not so important. The ability to change is.”
To kick-start change, Morikawa jettisoned traditional Japanese management methods in favor of a ‘guerilla style’. First, he reset all employee wages. Rather than remunerate staff based on seniority, he announced a deadline by which all pay would be meritocracy based. He stopped making plans after those previously announced met with resistance when altered. He also abolished daily company meetings, de rigueur at many Japanese firms, as he thought them useless. To foster a culture of innovation, he moved the operational side of the business to China in 2008, leaving core creative staff in Tokyo under his direct supervision. Not surprisingly many employees who could not accept change left.
The firm prospered under Morikawa’s leadership. It expanded from online games into online search, buying Livedoor Co., Ltd in 2010. LINE messaging was introduced in 2011 after the 3/11 earthquake when Morikawa was looking to develop the Smartphone market. Then, people who had previously only connected to virtual friends wanted to connect to actual friends and family. LINE messaging allowed them to do so. Last year 181 million active users communicated through LINE messaging. The firm had ¥86.3 billion ($717 million) in sales and employed 650 staff.
Morikawa achieved that success in part because Line’s management structure is flat. Only four senior managers, one each in technical, marketing, design and the CEO, act as gatekeepers. They manage a pool of 400 creative staff based in Tokyo, choosing which project ideas to back from those generated within the pool. Teams come together and disperse as the gatekeepers decide, using their intuition to guide them. Teams are flexible; some overlap. A countless number of projects are in the works at any given moment, but only those which result in a product with a good design and a good marketing story are released. “If it cannot grow to become number one, we stop,” says Morikawa.
He believes the venture ecosystem works because designers are free to follow their passions. He likens traditional management ecosystems to zoos where the well-fed become lazy. In the savanna of Line’s ecosystem, however, employees learn to feed themselves. “People need to build their own road,” he says.
Recently the new age entrepreneur left Line to follow his own passion. As a child singer he appeared on TV and in films. Later as an adult he worked at Nippon TV’s Channel 4 where he brought broadcast analogue services into the digital age. After leaving Line this April, Morikawa launched digital media startup C Channel. His new venture streams content produced by independent video bloggers to young women interested in following the latest trends, fashions and lifestyle ideas.
Click here to learn more about his new venture.
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