DoCoMo

DoCoMo

JAPAN’S WIRELESS TSUNAMI

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DoCoMo

JAPAN’S WIRELESS TSUNAMI

How One Mobile Telecom Created a

New Market and Became a Global Force

JOHN BECK

AND

MITCHELL WADE

American Management Association

New York • Atlanta • Brussels • Buenos Aires • Chicago • London • Mexico City

San Francisco • Shanghai • Tokyo • Toronto • Washington, D. C.

This publication is designed to provide accurate and authoritative information in

regard to the subject matter covered. It is sold with the understanding that the pub￾lisher is not engaged in rendering legal, accounting, or other professional service. If

legal advice or other expert assistance is required, the services of a competent profes￾sional person should be sought.

Library of Congress Cataloging-in-Publication Data

Beck, John C.

DoCoMo : Japan’s wireless tsunami / John C. Beck and Mitchell E. Wade.

p. cm.

Includes bibliographical references and index.

ISBN 0-8144-0753-6

1. DoCoMo—History. 2. Cellular telephone services

industry—Japan—History. I. Wade, Mitchell E. II. Title.

HE9715.J3 B435 2002

384.3’06’552—dc21 2002008312

© 2003 John Beck and Mitchell Wade

All rights reserved.

Printed in the United States of America.

This publication may not be reproduced,

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or transmitted in whole or in part,

in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise,

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Printing number

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Special discounts on bulk quantities of AMACOM books are available to cor￾porations, professional associations, and other organizations. For details, con￾tact Special Sales Department, AMACOM, a division of American Manage￾ment Association, 1601 Broadway, New York, NY 10019.

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For Roger

—JB

For my parents

—MW

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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Chapter One: Love . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter Two: Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Chapter Three: Impatience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Chapter Four: Luck . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

Chapter Five: Fun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Chapter Six: Strength . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

Afterword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213

Appendix A: Intimacy and M-Commerce . . . . . . . . . . . . . . . . . . 219

Appendix B: Interview with Kouji Ohboshi . . . . . . . . . . . . . . . . 225

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233

vii

CONTENTS

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We have a confession to make: This isn’t the book we thought we were

going to write. And if you’re looking for a safe, detailed history of an

exceptional company, this isn’t it.

Let us explain. NTT DoCoMo is a truly exceptional company.

Largely unknown outside Japan, it has created more wealth in recent

years than almost any other company in the world. (The Stern Stewart

Wealth Added Index [WAI] compares share-price increases and divi￾dends to the cost of equity for 5069 firms worldwide, from June 1996

to June 2001. DoCoMo is the only Asian firm in the WAI top ten, and

one of only three from outside the United States.)

Originally spun off from a hidebound bureaucracy, DoCoMo was

the kind of startup that might simply have faded away. Instead, it has

become a true global superpower. It has over 30 million paying Inter￾net customers—as many as America Online—but got there five times

faster. Its technology is a full generation ahead of anything in the

United States or Europe. And it is rapidly acquiring stakes in every

major global market. Insiders believe this Japanese powerhouse could

dominate the new economy, just as Sony and Toyota have dominated

the old one.

So the elements are there for the book you might expect: a classic

(if conventional) high-tech success story. What’s more, this is clearly a

success story that matters, truly, to the entire industrialized world. For

some time now, just about every telecom you can think of has been

investing and positioning and preparing for the Big Mobile Commerce

Boom. And many other businesses have been watching closely, because

ix

INTRODUCTION

mobile data is one of the very few things that seem capable of bringing

the good times back. It’s the economic grail, or at least one of them: a

disruptive information technology that begins once more to drive

growth in stock prices, employment, wages, and housing—just about

all the markets that matter. But the Boom hasn’t really happened

yet…except in Japan. When you look a little closer, what that really

means is that it has only happened, so far, for one company: DoCoMo.

So anyone who cares about recapturing boom times—anyone who

wants to see the tech sector come roaring back—needs to know

DoCoMo’s story. Certainly, all the players who are now investing for

this wireless future (as well as the skeptics not investing) need to know.

Yet the one company that has really pulled this off has remained almost

an unknown. Those who do care about wireless know something about

its success. But most of them write it off with explanations that, stripped

of their camouflage, boil down to “Oh, those wacky Japanese!”

To us, that seems like a mistake, and that’s why we began the

book. John had lived in Japan, consulted all over the world, and

taught international business for twenty years.* He knew that Japan

was on a different continent, not on a different planet. Mitch, who had

spent the same twenty years looking at how people actually use infor￾mation, knew that driving the adoption of a complex new technology

was getting harder just as the real-world impact of those technologies

(or at least their potential impact) was growing much larger. And both

of us were conducting wireless-commerce research at Accenture’s Insti￾tute for Strategic Change, a think tank focused on ideas that lead to

immediate management action.

From this perspective, it seemed obvious that DoCoMo’s success

really matters. We felt strongly that no company that had succeeded so

thoroughly—especially in a field with so much intense and skillful

competition—could be ignored. After all, DoCoMo had accumulated

that AOL-size user base, in a market where paying users were scarce.

It was reaching milestones, such as a market cap that, for a time, made

it the second largest company in the world. Only a few years old, it

x Introduction

*Throughout this book, the two authors will be referring to each other by their

first names, John and Mitch.

was big enough to start buying significant stakes in companies like

AT&T Wireless. Given all that, the lessons from its core success, no

matter how Japan-specific, would surely be of use to other competi￾tors. Who knows? They might even hold the key to starting up that

Big Mobile Commerce Boom.

So with the generous support, unflagging enthusiasm, and match￾less industry knowledge of Masakatsu Mori and Chikatomo Hoda at

Accenture, we began to study the case of DoCoMo. Colleagues there,

led by Meiko Ueyama and Junko Ohhira, provided Japanese-language

documents, detailed analytic material, and company expertise that

simply can’t be found anywhere else. Then Yuiichiro “Pat” Kuwahata,

DoCoMo’s head of International Public Relations, with the blessing of

CEO Keiji Tachikawa, managed to line up interviews for us with all of

the top executives in the firm. These in-depth discussions provided us

with unprecedented access; we knew we had a chance to crack the

code—to really understand why DoCoMo’s i-mode service had swept

its entire national market by storm at exactly the moment when wire￾less data offerings worldwide were being met with a resounding yawn.

We began our research looking for strategies, tactics, technologies,

details of execution and leadership—all the ingredients that case stud￾ies traditionally focus on. And that’s what we found, at first. But once

we got behind the DoCoMo curtain, and began to hear directly and at

length from the people who had actually made this success happen, we

discovered a surprise:

In the end, this huge techno-success story is all about feelings.

The triumph of DoCoMo is not mainly about engineering, or the

right legacy infrastructure, or backing the winning technical standard.

It’s not mainly about pricing the service wisely, or guaranteeing distri￾bution, or staying close to customers. Even though DoCoMo is a very

Japanese company, its triumph is not really about dedication and effi￾ciency. All those are part of the story, of course. But many competing

companies have done quite well on all those dimensions. In the end,

what sets DoCoMo apart is passion.

Introduction xi

That’s a surprise to many, who know only a little about Japan. But

those who have experienced Japan more deeply realize that feelings are

central—as central, in fact, as in our seemingly “warmer” Western cul￾ture. In one of the first American books written about Japanese busi￾ness, Japan’s Managerial System, Harvard Business School professor

Michael Yoshino explained that the basic building block of Japanese

social structure was giri (obligation or duty). But a society based only

on duty would be too hard to endure, so a complementary concept

emerged: ninjo. The term can be defined literally as “sympathy” or

“kindness,” but in a culture where good and evil are determined

almost completely by social context, ninjo takes a much more impor￾tant place. It has come to mean “human feeling,” and it is the glue that

holds Japan together.

We would argue that Japan is not alone in needing this glue;

almost every society, almost every business, almost every person trying

to make things happen in the real world, could profit from a little

more ninjo. Looking closely at DoCoMo’s performance, we suspect

that the smart, dedicated, hardworking business culture here in the

United States would actually become even more productive with a lit￾tle less attention to the obvious aspects of creating value, and a little

more attention to passion.

In our research at DoCoMo, the role of human feelings was obvi￾ous. Once the key figures began sharing their experience with it, there

was no denying the point: Passions are vital. This very young company

faced the huge challenge of creating a mass market for wireless data

(and, before that, the substantial challenge of creating a national mar￾ket for cell phones at a time when Japanese customers just weren’t

interested). They succeeded beyond anyone’s expectations because the

right people in the company had the right mix of powerful, human

emotions—and proved extremely skillful at managing them. DoCoMo

used passions to lead its own creative and competitive efforts, to lead

the market, and, ultimately, to lead a global industry.

These findings force us to propose a radical, almost embarrassing

idea: In managing your business, human passions matter. A lot. More

than any of us admit, and certainly more than we act on. (And we are

xii Introduction

deliberately excluding the obvious place for feelings—the only place

many managers think about them—which is marketing and advertis￾ing.) Feelings are worth paying attention to, in your daily manage￾ment, in choosing what company or group or project to work on, and

in selecting technologies to back or companies to invest in. Want to

get a great job, avoid a layoff, stay in the good graces of your board,

keep a key customer, or get a good deal from a supplier? Skill, talent,

profitability, quality, responsiveness, and a slew of other business

issues are vital. But lots of individuals and companies can do compa￾rably well in these areas.

Usually the decisions that most affect your career and the success

of your company come down to questions like this: Does my boss like

me? Does the board trust me? Will customers call me, before calling a

competitor, because they just prefer talking to me? Would my supplier

be willing to shave a percentage point off the product price just to con￾tinue our working relationship?

Reflecting on the research presented here, we believe that a com￾pany that understands the power of human passions, and manages

those passions in its customers, its employees, and its leaders, will cre￾ate value faster than its competitors.

DoCoMo is a fantastic example. Here’s a company that went from

essentially zero to over $30 billion in revenues, without major acquisi￾tions, in only a few years—mainly because in several key areas it tapped

into the power of feelings. In a floundering national economy, in a sec￾tor where billions have been invested for disappointing returns, in a

product category that most customers don’t yet understand, DoCoMo

launched what is surely the most successful new product in history. By

the time i-mode was barely two years old, it was carried by a third of

the adults in its home market. Although there are extremely capable

wireless competitors in Europe and the United States, to say nothing of

Asia, none has matched this feat. So far, none has even come close.

We believe that the only way to really understand that success—

and find ways to emulate it in your own business—is to explore the

passions that DoCoMo has used to lead. These include the very per￾sonal feelings of the company’s:

Introduction xiii

■ Customers—their love for one another, their passion for free￾dom, and their excitement at being in on a shared social phenomenon.

■ Senior Leaders—whose passion defined their management

style, and who used those passions to inspire the company they led.

■ Key Creative Employees—the unlikely people who basically

invented i-mode. DoCoMo couldn’t have done it without them. And

they couldn’t have done it without some very particular emotions—

enabled by those above them—that don’t usually show up in corporate

annual reports.

■ Managers and Staff at Every Level—the human beings who

together make up so much of any company’s corporate culture. To

DoCoMo, these people brought exactly the passion it takes to create a

phenomenal run of good luck.

■ Next Generation of Leaders—supplying DoCoMo with the

one passion that can help the company surmount its two greatest chal￾lenges. This feeling, already commented on by business partners in the

West, is crucial in determining how much farther DoCoMo’s success

can extend.

As you can see, this book is very much about people and passions.

But we assure you, it is not “touchy-feely.” After all, it is real data—

including the thoughtful comments of very serious, successful, and

businesslike people—that brought us (with great surprise) to these

conclusions. And we accepted them ourselves only after extensive

reading and analysis. So while we will tell you DoCoMo’s inside

story—revealing these passions—we will also share the intellectual

underpinnings. Every chapter includes analytic information, based on

both well-founded theory and practical experience, to help understand

why passion, and specifically these particular passions, should be so

important, not just for DoCoMo, but for other firms in other indus￾tries. And we never lose sight of the “so what?” question. Each chap￾ter ends with concrete actions you can take to convert the lessons of

DoCoMo into extraordinary performance for your own firm.

xiv Introduction