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Business

Son's consistent strategy is yielding a new kind of business group

BANGKOK For years, even after SoftBank went public on the Tokyo stock market in 1994, many in the Japanese business establishment treated the company as an ugly duckling, as it did not seem to fit into any conventional category.

Its main business at that time was software wholesaling. It soon invested in the Comdex computer trade show and Yahoo of the U.S., and founded Yahoo Japan as a joint venture with Yahoo. But industry watchers were still confused. Was it a wholesaler? Was it a dot-com company? Was it an investment company like Berkshire Hathaway? It didn't seem to fit into any of these categories.

SoftBank got involved in a takeover attempt together with Rupert Murdoch of TV Asahi, a major Japanese broadcaster, and partnered with Nasdaq to found Nasdaq Japan.

It was only after it acquired the Japanese operations of Vodafone in 2006 that SoftBank started falling into a conventional business category -- telecommunications -- in terms of its consolidated revenue composition by segment.

Son insists SoftBank is "a group to bring the benefits of the information technology revolution to people and make them happy." Investing in the stock exchange for startups, therefore, made sense, because capital market infrastructure was crucial in facilitating an IT revolution.

Also, he has repeatedly said that he has always pursued a consistent business management strategy -- fight as a group, and keep the group diverse and dynamic.

300-YEAR TIMELINE "You may think I'm crazy, but I am serious about building a group that will prosper for 300 years. Flexibility and dynamism are necessary to realize that," he told The Nikkei.

"Focusing on one business field may be effective to maximize short-term profits, but it makes a company vulnerable to paradigm shifts," he said. "Paradigms are bound to shift over 300 years. Only a group comprising diverse businesses with various expertise and changing member composition will survive."

He envisions a non-hierarchical network of companies linked by minor shareholdings and other relationships. It is more like a federation than an empire. "For a herd to be dynamic, the members should be loosely tied, with space for free movement," he said.

So all those companies in which SoftBank has a minority share -- from big ones like Alibaba Group Holding to numerous small startups around the globe -- are all "group members" for Son.

Taking a full or majority share in a company means he wants to directly put his hands on that business. The mobile phone operations and Yahoo Japan are the biggest examples of this.

ARM Holdings is a major new member that could change the technology focus of the entire group, and that is why Son decided to take full ownership. Son said he will invest as much as 45% of his time in ARM's business.

However, unlike Vodafone Japan or Sprint of the U.S., which SoftBank acquired in 2013, ARM has a well-established and competent management. The question, then, is whether Son's direct and deep involvement in ARM's management is good for ARM. Is it not against Son's own strategy of keeping a sufficient distance between group members?

Besides, the business of chip architecture and design is far more technological and global -- and has stronger global competitors -- than the mobile phone carrier business. It is going to be yet another fresh, challenging chapter for Son's management methodology -- a tough enough challenge to re-energize a man who turned 59 in August and has given up the idea of retiring at the age of 60.

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