January 9, 2014 12:00 am JST

A lesson from the past: Speak your mind or fail

Masayoshi Son

After acquiring Sprint, I delivered a speech urging all employees and managers at the company to join forces with our Japanese unit and work as a single entity.

     I made the speech because I did not want to repeat the mistakes I had made running previously acquired companies in the U.S. When I took over the company that runs Comdex (Computer Dealer's Exhibition) and U.S. publisher Ziff Davis, I allowed American executives to run them at their discretion. This decision was based on my belief that Japanese owners should not interfere too much with the U.S. executives' business management. That belief was wrong.

     By leaving American executives to their own devices, I was acting as an investor and not as a business leader. This hands-off approach would never enable me to reform management of companies I acquire overseas. It doesn't matter how well a company is run, there is always room for improvement. A hands-on approach allows me to make profitable businesses more profitable.

     It is not that there were no benefits to acquiring the two previous U.S. companies. My experiences with those businesses allowed me to familiarize myself with the U.S. Internet industry. They also paved the way for me to take a stake in Yahoo. 

     But I was unable to create significant growth Comdex and Ziff Davis because I took a half-hearted approach to running those businesses. When I acquired the Japanese arm of Vodafone Group Plc and Japan Telecom, I realized that these companies would not post high growth without strong leadership. So I ran them with strong resolve. Without the correct leadership, even a company with capable managers and hard-working personnel will not be able to reach the top tier.

     This is why I sometimes yell at Sprint executives. At one recent meeting, I learned that our advertising at Sprint was not cost-effective. This made me quite angry. Sprint spends a large amount of money on advertising every year, but its effects have been almost negligible. I directed the Sprint executives to terminate all existing contracts with the company's advertising agencies. We will shortly start from scratch on advertising, with new agents also making proposals.

     Drastic change is sometimes necessary. When I took over the Japanese arm of Vodafone, it was like a sinking ship. I took the decision then to be more aggressive in my approach to management. I realized that I had to say what I wanted without reservation if I was to truly rebuild the company.

     You run the risk of forcing managers and employees to quit if you act like that. But there was little choice. About a third of the executives left the company within six months.

     I can be blunt with Westerners if necessary, probably because I lived in the U.S. when I was younger. I take my own approach to running my companies, and it is not very Japanese.

     Just like Vodafone in Japan, Sprint has gotten used to being a loser. It is perpetually stuck in third or fourth place in the U.S. telecommunications market. Some say the poor quality of its networks explains its position. This kind of excuse keeps Sprint from breaking the vicious cycle in which it is caught. There is a need for a change in mindset.

     Of course, Sprint is inferior to Verizon Wireless and AT&T in some respects. But we can learn a lot from our flaws. Japanese companies provide better telecom network infrastructure and greater customer satisfaction at retail stores. U.S. companies are ahead in Web-based services. Business people in both countries should learn from each other.

     A Japanese SoftBank executive recently made a presentation in English in Silicon Valley. His spoken English was terrible, but who cares? He was able to make himself understood. In the past, I would probably have told Japanese executives at SoftBank to focus on Japanese operations if their English was not at a high level. Not anymore.

Masayoshi Son, chairman & CEO of SoftBank, spoke to The Nikkei in Silicon Valley. Son founded software wholesaler Softbank Japan (currently SoftBank) in 1981. He has played a pioneering role in Japan's IT sector.

Japanese version is available on The Nikkei Online Edition