How Japanese build their business
The rise of Japan in the post-war period is an inspiring story. Here was a country devastated in the war & without any reserves of oil, iron or coal. Yet it rose from its ashes as it were & became an economic superpower in forty years. In the 1940s, the label "made in Japan" was taken to mean something cheap, sub-standard, easily breakable. Today, it is taken to mean something reliable, good quality, world class.
In the last fortnight, as your columnist moved among Japanese people in Osaka & met some of the captains of Japanese industry, he got an inkling of how Japan could achieve what it has achieved. Here is an interesting case study which provides valuable insights into the way Japanese businessmen build up their empire. It pertains to MK Corporation, which runs a huge network of taxi service in Kyoto.
Mr. Sadao Aoki started his taxi service in 1960 with ten cabs. Those were the days when jobs were hard to come by. For 24 driver openings, Mr. Aoki got 200 applicants. He hired the best among them & started operations, but something that defied common sense occurred.
Unexcused absences, tardiness & early-leaving became everyday occurrences. Taxis often remained idle. Accidents happened too often. Aoki was worried. He tried to reason with the drivers, requesting them at least to inform him beforehand so that he could plan a replacement driver. His persuasion bore no fruit. Drivers remained as careless & irresponsible as before.
A pragmatic friend advised him, "Aoki, stop that talk. It is common knowledge that taxi drivers take unexcused days off, are late & leave early. If U want to stop that, hire 30 people when U need 20. Give a cab to those who come to work first. U don't have to give a cab or pay wages to those who come late."
An Indian businessman would lap up this advice. Most of them, indeed, would not need it in the first place. But Aoki rejected it. Instead, he started visiting homes of his drivers to find out what was wrong. Most of the drivers, he found, lived in a small single room accommodation, with a shared kitchen, toilet & bathroom.
Those who worked night would not get good sleep in their rooms made noisy by children, machinery & traffic. When they overslept by an hour, they would be late for duty. If they overslept for 2-3 hours, they would take the day off. Some of them ventured out though feeling drowsy & would run into quarrels with passengers, traffic police & would feel "it's not worth it today, let me go home."
Aoki realised that he had first to improve the living conditions of his men. In 1961, he built company housing. In 1964, he borrowed pension money & built 2-bedroom mansion apartments complete with a bath, toilet & kitchen & supplied housing by granting loans to his employees.
He also devised ways to raise their wages to enable them to repay loans. He would go to the garage at 5.15a.m. He would meet drivers & in a man-to-man talk, discussed matters such as "how do we get 6-7km. per litre of gasoline instead of just 4 now? How could we reduce the cost of parts from 20,000 yen to 15,000 yen?
How could we increase the economic lives of vehicles from 2 years to 3 or 4 years? & how could we increase their entire life from 40,000km. to 60,000km?" As a result he could reduce expenses.
Many drivers spent more than an hour for commuting to their workstation. The next step, therefore, was to build taxi stands near their houses. However, Aoki's application for building garage for working vehicles was rejected by the Ministry of Transport.
He argued "it will be easier for drivers & they would be provide a better service to customers. Why is that a problem?" The approval was granted, but Aoki put this experience to good use.
He told his staff, "if U want to win against government objections, U must have support from the customers. & they will support U only if they get good service." He started a movement to return the cabs to the citizens. Taxis belong to the citizens, not the owners.
This meant that if a customer raised her hand, the cab would stop. It would pick up the customer. When the customer got into the cab, she would find that the interior was clean. She would be greeted politely by the driver & transported safely & comfortably. Morever, late at night, when a female customer got down the car, the driver would wait to verify that she reached the entrance of the house safely.
In those days, taxis would not stop for a physically challenged person, because picking such persons up was troublesome - the customers had to be lifted while entering & leaving the cab & the wheelchair would ride for free.
Aoki gathered all drivers in one spot, had a physically challenged person come to gathering & pledged that MK Taxi would give priority to picking up physically - challenged persons from that day on.
Aoki would constantly keep in touch with his men. He would be in the garage early in the morning. He would speak personally to each driver reporting for duty & returning after night duty.
He had an exclusive radio service to communicate with drivers & customers. Every month there would be a study group meeting at his sales offices. Once a year, there would be a study group meeting in Kyoto International Conference hall or five-star hotels, for Aoki wanted his drivers to be proud of their profession.
Aoki's message to his drivers at all such meetings was simple: wash your car, dress properly & greet your customer. & he would always be looking for ways to raise their image & income. Their uniforms are designed by a reputed designer & cost 70,000 yen, for "drivers are products". A few of them are sent to England to learn English. The taxis are also "moving departmental stores."
Drivers would ask customer if they wanted to buy or sell anything, would get his business card & the company's information department would follow up with dealers. If the deal went through, the company would earn commission, 60 per cent of which would go to the drivers. MK Taxis always have a 10000-item shopping list & the company has annual revenue of over 200 million yen.
Aoki visits homes of his drivers every December with a year-end gift & has set up MK Wives Association. Once a year, he gathers drivers' wives & explains through a slide show how valuable their husbands are to the company.
The Association has wives survey customers who get out of MK Taxis. The wives take those surveys home & discuss it with their husbands. The company, labour union & the MK Wives Association, all become one & go in the same direction. MK Corporation now has over 850 vehicles. Its intangible achievements are even more impressive. Aoki's rivals have been forced to emulate his ways.
In the old days, it was common knowledge, or perhaps some moral code, that taxi drivers offered no greetings & provided no service. Customers, taxi company managers, Ministry of transport and, of course, the drivers themselves took that for granted. Even when Aoki greeted them in the morning, they would just wave their feather-duster brush used to clean their taxis & total their receipts in silence. Now they stop their hand totalling receipts, look at him & say "Good Morning."
There was a time when children would not mention taxi driver as their father's occupation while enrolling for school. Today, they mention it with pride & there have been compositions from children about wanting to be a MK taxi driver. How did Aoki achieve all this? In his own words, "I am not doing anything in particular. I have just continued to use common sense for a long time."
In the last fortnight, as your columnist moved among Japanese people in Osaka & met some of the captains of Japanese industry, he got an inkling of how Japan could achieve what it has achieved. Here is an interesting case study which provides valuable insights into the way Japanese businessmen build up their empire. It pertains to MK Corporation, which runs a huge network of taxi service in Kyoto.
Mr. Sadao Aoki started his taxi service in 1960 with ten cabs. Those were the days when jobs were hard to come by. For 24 driver openings, Mr. Aoki got 200 applicants. He hired the best among them & started operations, but something that defied common sense occurred.
Unexcused absences, tardiness & early-leaving became everyday occurrences. Taxis often remained idle. Accidents happened too often. Aoki was worried. He tried to reason with the drivers, requesting them at least to inform him beforehand so that he could plan a replacement driver. His persuasion bore no fruit. Drivers remained as careless & irresponsible as before.
A pragmatic friend advised him, "Aoki, stop that talk. It is common knowledge that taxi drivers take unexcused days off, are late & leave early. If U want to stop that, hire 30 people when U need 20. Give a cab to those who come to work first. U don't have to give a cab or pay wages to those who come late."
An Indian businessman would lap up this advice. Most of them, indeed, would not need it in the first place. But Aoki rejected it. Instead, he started visiting homes of his drivers to find out what was wrong. Most of the drivers, he found, lived in a small single room accommodation, with a shared kitchen, toilet & bathroom.
Those who worked night would not get good sleep in their rooms made noisy by children, machinery & traffic. When they overslept by an hour, they would be late for duty. If they overslept for 2-3 hours, they would take the day off. Some of them ventured out though feeling drowsy & would run into quarrels with passengers, traffic police & would feel "it's not worth it today, let me go home."
Aoki realised that he had first to improve the living conditions of his men. In 1961, he built company housing. In 1964, he borrowed pension money & built 2-bedroom mansion apartments complete with a bath, toilet & kitchen & supplied housing by granting loans to his employees.
He also devised ways to raise their wages to enable them to repay loans. He would go to the garage at 5.15a.m. He would meet drivers & in a man-to-man talk, discussed matters such as "how do we get 6-7km. per litre of gasoline instead of just 4 now? How could we reduce the cost of parts from 20,000 yen to 15,000 yen?
How could we increase the economic lives of vehicles from 2 years to 3 or 4 years? & how could we increase their entire life from 40,000km. to 60,000km?" As a result he could reduce expenses.
Many drivers spent more than an hour for commuting to their workstation. The next step, therefore, was to build taxi stands near their houses. However, Aoki's application for building garage for working vehicles was rejected by the Ministry of Transport.
He argued "it will be easier for drivers & they would be provide a better service to customers. Why is that a problem?" The approval was granted, but Aoki put this experience to good use.
He told his staff, "if U want to win against government objections, U must have support from the customers. & they will support U only if they get good service." He started a movement to return the cabs to the citizens. Taxis belong to the citizens, not the owners.
This meant that if a customer raised her hand, the cab would stop. It would pick up the customer. When the customer got into the cab, she would find that the interior was clean. She would be greeted politely by the driver & transported safely & comfortably. Morever, late at night, when a female customer got down the car, the driver would wait to verify that she reached the entrance of the house safely.
In those days, taxis would not stop for a physically challenged person, because picking such persons up was troublesome - the customers had to be lifted while entering & leaving the cab & the wheelchair would ride for free.
Aoki gathered all drivers in one spot, had a physically challenged person come to gathering & pledged that MK Taxi would give priority to picking up physically - challenged persons from that day on.
Aoki would constantly keep in touch with his men. He would be in the garage early in the morning. He would speak personally to each driver reporting for duty & returning after night duty.
He had an exclusive radio service to communicate with drivers & customers. Every month there would be a study group meeting at his sales offices. Once a year, there would be a study group meeting in Kyoto International Conference hall or five-star hotels, for Aoki wanted his drivers to be proud of their profession.
Aoki's message to his drivers at all such meetings was simple: wash your car, dress properly & greet your customer. & he would always be looking for ways to raise their image & income. Their uniforms are designed by a reputed designer & cost 70,000 yen, for "drivers are products". A few of them are sent to England to learn English. The taxis are also "moving departmental stores."
Drivers would ask customer if they wanted to buy or sell anything, would get his business card & the company's information department would follow up with dealers. If the deal went through, the company would earn commission, 60 per cent of which would go to the drivers. MK Taxis always have a 10000-item shopping list & the company has annual revenue of over 200 million yen.
Aoki visits homes of his drivers every December with a year-end gift & has set up MK Wives Association. Once a year, he gathers drivers' wives & explains through a slide show how valuable their husbands are to the company.
The Association has wives survey customers who get out of MK Taxis. The wives take those surveys home & discuss it with their husbands. The company, labour union & the MK Wives Association, all become one & go in the same direction. MK Corporation now has over 850 vehicles. Its intangible achievements are even more impressive. Aoki's rivals have been forced to emulate his ways.
In the old days, it was common knowledge, or perhaps some moral code, that taxi drivers offered no greetings & provided no service. Customers, taxi company managers, Ministry of transport and, of course, the drivers themselves took that for granted. Even when Aoki greeted them in the morning, they would just wave their feather-duster brush used to clean their taxis & total their receipts in silence. Now they stop their hand totalling receipts, look at him & say "Good Morning."
There was a time when children would not mention taxi driver as their father's occupation while enrolling for school. Today, they mention it with pride & there have been compositions from children about wanting to be a MK taxi driver. How did Aoki achieve all this? In his own words, "I am not doing anything in particular. I have just continued to use common sense for a long time."
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