CEO Column

Creating a market



Creating a market

I don’t have as much time to spend reading books, newspapers, and magazines as I once did. I used to have a reading addiction and insatiable hunger for information. Even when I didn’t dedicate my time to reading, I made sure to expose myself to print whenever the opportunity arose. I’m finding, though, that my capability for such spontaneity has waned, so I make a point of consciously setting time aside to read. Amid this decline, I would like to share with you a book I recently encountered. Reading it filled me with confidence concerning the direction in which I should take my business.

The author of Management Studies is the late Masao Ogura, son of Yamato Transport Co., Ltd. founder Yasuomi Ogura. Masao was the creator of Yamato’s Kuroneko (black cat) TA-Q-BIN courier service and is also regarded as having rejuvenated a dynasty. The book was penned quite some time ago—the first edition was published in 1999.

I’d read the book before. The first time was a casual read, and the second time it was chosen as the subject of a study group I was participating in. This was my third pass at the book—I’d happened to overhear an employee mention it. “Oh yes, I remember that,” I thought, then located it on the shelf and started reading it again.

Masao Ogura’s father founded the company, which at the time was a garden-variety logistics company that handled the transport of large-volume commercial cargo. Though it was Japan’s largest trucking company before the war, it did not move fast enough in making inroads into the long-distance hauling business, where demand grew rapidly in line with postwar economic expansion. When Masao was young, the company had fallen on hard times. Attempts to diversify the business in response were not entirely successful, and business remained sluggish. Add that to the deterioration of their large-lot commercial cargo transport business, and the company found itself confronted with a crisis.

These were the conditions facing Masao Ogura as he assumed the position of president. For some time, he had contemplated a transition from commercial to personal delivery transport, and he decided the company’s way out was to implement this shift. Let’s take a look at the differences between commercial freight and personal delivery transport:

Commercial Cargo Transport Private Courier Transport
Daily, monthly (regular, repetitive) Uncertain as to when or from which household orders would come (incidental)
Transportation route is fixed (regular) No fixed destination (irregular)
Large lot (large quantity) Small lot (small quantity)

There is no way of telling where to pick it up or where to deliver it, and it could be just for one package. At the time, few people believed that this type of private home delivery service could succeed, and as such Masao Ogura was working with very little support to attempt to enter this new business. What Ogura saw, however, was the increasing affluence of the Japanese people, which in his mind represented great potential demand for personal delivery services. Admittedly, at first glance, private courier transport seems to be riddled with disadvantages. A second look, though, reveals a number of positive aspects.

Commercial Cargo Transport Private Courier Transport
Demand is stable, but there is a lot of competition with low fares and poor payment terms  Even if you try hard, you won’t make money Demand is unstable, but fares are not discounted, and people pay in cash → If you do well, you will make money
At the beck and call of shippers Customers express gratitude
Always competitive, easy to enter the market Very difficult to enter an established network or brand

A closer look shows that the private courier business, regarded by the industry overall as having poor profit prospects and vehemently opposed by Yamato executives, has both advantages and disadvantages. Ogura believed that if his company could bring it to success, it could grab a larger share of the considerable demand and create high barriers for entry.

Yamato Transport’s entry into the personal delivery business—which most believed would not be profitable—resulted in the company’s creation of a foundation that no one could rival. Today, Yamato Transport is the undisputed leader in logistics, and its Kuroneko Yamato TA-Q-BIN the top brand.

While Ogura titled his book, Management Studies, the theme is clearly “creating a market.” My impression is that, behind the story of Yamato’s development and growth—which saw the emergence of tremendous latent demand, the establishment of a business, and the building of an extremely successful brand—Ogura was attempting to stress the significance of creating a new market.

My encounter with this book proved to be a tremendous inspiration for me. Kamakura Shinsho is also attempting to cultivate a market in end-of-life activities, for which there is significant latent demand. No one, however, is moving to capitalize on this. While the road ahead will likely be rough, if successful, we could potentially achieve a corporate scale and brand power rivaling that of Yamato Transport. Above all else, I relish the opportunity to create a new market while most companies are busy trying to tap into markets that someone else has built.

Hirotaka Shimizu
Chairman and CEO
Kamakura Shinsho, Ltd.