Activate Japan

We have more choices than ever before. More careers, more lifestyles, more products, more information, more entertainment. We can even have more money. But, with more decisions to make, we also have less time. So we use technology. Now we can go shopping without leaving the house, we can work at home and socialize at work. We lead multiple lives within a global online community. It might seem revolutionary but today's children will never know anything different. And if you want to get close to tomorrow's customers, you have to operate in their world. Activate is creating the next generation communications agency which marries direct marketing and consumer insights with interactive principles to help you get closer to your customers in this new world. We are driven by the mission to bring brands closer to consumers. By understanding them better. By communicating with them more personally, by creating a dialogue not a monologue. If you believe in this New World let's begin a dialogue.

Tokyo, Japan 26th March 2008 MasterCard’s sponsorship of Japan Fashion Week’s “3GTV Japan” has been the first to use the latest branded interactive mobile video service - Mobiactions. In a tie-up between Activate, KK, a Japan based advertising agency and McCann Erickson International, Sairis Group delivered an integrated Mobiactions campaign for Japan Fashion Week providing unique and compelling media access to live and archived video contents as well as a real-time videoblog for visitors. About the MasterCard Mobiactions IVVR promotion: Tim Smith (CTO of Urban Marketing) says, “MobiActions seamlessly integrates the mobile web experience with the 3G video experience providing advertising agencies a full featured, 360degree platform to present and manage integrated and interactive mobile media campaigns. Based on patented call-to-action-control, exclusive to Urban Marketing, the Mobiactions system guarantees that the viewers WILL experience not only the fun of a cool mobile interactive campaign, but also the BRAND messages which support it.” Mobiactions IVVR is also now available in Australia according to Sam Wilson - Urban Marketing’s Chief Operating Officer. “Now with the availability of interactive video and voice promotions & applications for Japanese and Australian brands, consumers can quickly interact with branded video and audio content via a 3G mobile phone. No longer do you have to wait for a WAP page to download, as the system uses video calling, which is available on 99% of 3G handsets.” “The ability to influence word of mouth communication is at the forefront of any communications strategy,” says Jerry Gentemann, Director of Activate Japan. “Once a big idea is identified, we look to leverage the digital media world and extend the creative concept online whether through digital media relations, 3G and mobile development, website development, or social networking. Activate and its technical partner Sairis have a crystal clear vision of what needs to be done to manage this evolution in the best interest of clients like MasterCard.” “We see this as initially very attractive to advertisers in the youth market, and as the acceptance of these interactive campaigns develops then industries such as music, automotive, real estate and health will demand this as an essential part of their mobile marketing mix,” says Wilson. Mobiactions enables brands to create an interactive mobile branding experience using branded video and audio media. Advertisers can run interactive mobile video and audio promotions for surveys, new product videos, movie trailers, music video voting and competitions as well as any business applications requiring video blogging from a mobile device. www.mobiactions.com

Press Release Activate K.K launches world premier of mobile phone technology at the Japan Fashion Week This spring's Japan Fashion Week from March 10th – 16th will see the latest use of mobile phone technology called 3gtv. The mobile site for the JFW will include a new split screen video call feature that allows viewers to review four different videos at once and select between them to see highlights of the previous days show. Also through the same video call, users can record a video message about their experience at the show and instantly post this video blog during the call to the JFW 3Gtv site. Access to the JFW official homepage and then to the Malibu 3G site, proudly sponsored by MasterCard can be reached here: http://www.jfw.jp/jp/index.html

Even though passenger rail is supported by national governments in the rest of the world, the Bush administration proposed shutting down U.S. intercity passenger rail service by zeroing out funding for Amtrak in fiscal year 2006. The Bush budget proposal came during a fierce debate over how to reform the U.S. passenger-rail system. Some proponents of privatizing Amtrak have pointed to privatization efforts in other countries, including Japan, as proof that Amtrak could also be privatized. Are there lessons U.S. policymakers can learn from the Japanese experience with privatization? In the mid 1980s, Japan National Railways (JNR) was a monolithic national monopoly with an operating deficit, huge debt, declining ridership, high fares, poor service and political interference. In other words, JNR had many of the same problems that plague Amtrak today. In its place, the Japanese government created six separate private passenger-rail companies to serve different regions of the country. Three of the six companies that served rural areas would be eligible for a yearly operating-deficit subsidy from a revolving government fund. The other three companies, which largely served urban areas, were expected to cover their operating costs. Each private company would be responsible for both rail operations and infrastructure management. By most measures, privatization in Japan has been a success. Since privatization, yearly profits for the three main companies have increased to between $600 million and $2 billion, accidents have decreased by close to 50 percent, fares are stable, the number of rail employees has been reduced by 50,000 and ridership as measured by passenger-kilometers has risen by nearly 20 percent. However, any discussion of Japan’s privatization efforts must also note the Japanese government’s role in financing rail infrastructure projects and the operating deficits of rural railroads. While the Bush administration’s proposal would effectively destroy passenger rail in the United States, the Japanese government has launched an ambitious effort to expand high-speed rail service over the next 10 years. The cost, close to $30 billion, will be funded by the national government, local governments and revenues generated from existing high-speed lines. When construction is complete, the new lines will be owned by the government and leased to the rail companies. The same private rail company that manages operations will also manage maintenance for the new high-speed lines. Obviously, there are limitations in comparing the U.S. and Japan rail systems. Japan is especially well-suited for rail because of its high population density and short distances between major cities. Furthermore, in the current budgetary climate it is impractical to believe that the United States could build the type of dedicated high-speed rail network in its high-density corridors that Japan possesses. Yet the main difference between the Japan and U.S. rail systems is political. The United States has never had the political will to make the necessary infrastructure investments to create a competitive rail system. Instead, from the time Amtrak was created in 1971, Congress has given the struggling railroad barely enough to survive from year to year. As a result, Amtrak does not have enough money to fix its growing backlog of capital maintenance or promote a true high-speed rail system. In the Northeast Corridor alone, it is estimated that $28 billion is needed for rail infrastructure over the next 20 years, and billions more would be needed to implement higher speed rail. As U.S. highways and airspace become more and more congested, the lack of investment in rail infrastructure has made it difficult for passenger rail to compete successfully with these other transportation modes (all of which receive much more federal subsidy). By contrast, Japan has consistently poured billions of dollars into its rail infrastructure (even after privatization) and has created a competitive transportation alternative to plane and automobile travel. The lesson from Japan is obvious: Intercity rail systems, whether private or public, need stable sources of public investment to be successful. Unfortunately, this simple fact is often ignored by advocates of privatization in the United States. The administration’s legislation to privatize Amtrak does not guarantee any specific amount of federal funding for rail infrastructure. Without a specific dollar amount of stable, guaranteed funding, promises from the administration to rebuild the nation’s rail infrastructure ring hollow. An empty federal financial commitment in the name of “flexibility” for the states is a recipe for disaster. As Japan has shown, successful passenger rail systems need more government investment, not less.

Nissan is another company worth exploring with regard to Informal Structure. Although Nissan as a Japanese company has an extremely formal and hierarchal organizational structure Carlos Ghosn created a temporary informal structure to initiate change and reach his aggressive goals for the troubled automaker. “Ghosn's challenge was to act quickly, yet minimize the inevitable resistance that arises when an outsider tries to change traditional Japanese business practices. To resolve this dilemma, Ghosn formed nine cross-functional teams of 10 middle managers each and gave them the mandate to identify innovative proposals for a specific area (marketing, manufacturing, etc.) within three months. Each team could form sub-teams with additional people to analyze specific issues in more detail. More than 500 middle managers and other employees formed a new informal structure to implement the so-called Nissan Revival Plan. After a slow start—Nissan managers weren't accustomed to such authority or working with colleagues across functions or cultures—ideas began to flow as Ghosn stuck to his deadline, reminded team members of the automaker's desperate situation, and encouraged teams to break traditions. Three months later, the nine teams submitted a bold plan to close three assembly plants, eliminate thousands of jobs, cut the number of suppliers by half, reduce purchasing costs by 20 percent, return to profitability, cut the company's debt by half, and introduce 22 new models within the next two years. Although risky, Ghosn accepted all of the proposals. Moreover, when revealing the plan publicly on the eve of the annual Tokyo Motor Show, Ghosn added his own commitment to the plan: "If you ask people to go through a difficult period of time, they have to trust that you're sharing it with them," Ghosn explains. "So I said that if we did not fulfill our commitments, I would resign." Within 12 months, the automaker had increased sales and market share and posted its first profit in seven years. The company introduced innovative models and expanded operations. Ghosn, who received high praise throughout Japan and abroad, will likely become head of Renault. The change process that Carlos Ghosn launched at Nissan seems to be smoothly executed, but it was buffeted by uncertain consequences, organizational politics, and various forms of resistance from employees and suppliers.” (Kreitner, Kinicki, 2004)

Starbucks and Sazaby in Japan Starbucks, which began as a specialty coffee-bean purveyor in Seattle more than thirty years ago, gave Japan’s specialty coffee industry a real jolt when it established its first shop in Tokyo in late 1996. In just several years, the company has achieved a cult-like status, revitalized an entire industry, generated local competition, and inspired a new coffee culture that has extended the coffee drinking demographic significantly. Starbucks uses an energetic, hands-on style and straightforward corporate governance to manage its fast-paced growth, and has made employee satisfaction a key ingredient in its hugely successful blend. Other primary drivers of the “Starbucks experience” include offering customers high quality coffee, excellent customer service, a stream of innovative and appealing products, a savvy local partner with a similar business culture and values, and an inviting, nonsmoking environment. By combining the parent company’s sophisticated supply chain for coffee bean sourcing with its local partner’s understanding of the Japanese market, Starbucks Coffee Japan has become the clear market leader, poised to open its 700th store by the end of 2006. Howard Schultz, the parent company’s chairman and chief global strategist, had long been interested in the Japanese market, but a meeting with a blue-chip Japanese consulting firm in the early 1990s proved very discouraging. Japanese consumers would not accept a nonsmoking environment or drink from paper cups in the street, said the consultants, adding that Starbucks would have to keep stores no larger than 500 square feet to save on rent. Furthermore, the consultants believed that no Japanese person would walk down the street carrying a Starbucks beverage because it was considered impolite in Japanese culture. Schultz and Starbucks did not adopt any of the recommendations the consultants made, choosing instead to offer a Starbucks experience similar to what had worked in the United States. They met with several potential Japanese partners, but it was at a meeting with Yuji Tsunoda, a senior board member of Sazaby, that Starbucks Coffee Japan was born. Tsunoda had visited a Starbucks in 1992 and been impressed by the quality of the coffee and the excellent customer service. He identified immediately with the vision and values of Starbucks, and subsequently proposed forming a partnership, sensing that Starbucks could greatly increase Sazaby’s customer base. Meeting with Tsunoda convinced Schultz that Sazaby was the partner he had been searching for. The two companies had similar business cultures and a similar view of how to serve Japanese customers better. The board of Starbucks Japan has four members: two directors from Starbucks Coffee Japan, one from Starbucks Coffee International, and one from Sazaby. A managing directors committee consisting of the CEO, COO, and CFO who operates in concert with the board, making swift decision-making and rapid implementation possible. Tsunoda, who is CEO of Starbucks Coffee Japan, said: “In a typical board meeting at Sazaby, even people who had questions didn’t bother to ask. Our Starbucks Coffee Japan meetings are much more dynamic, the U.S–based members tend to focus on what the company has done and make concrete suggestions for improvement. The Japanese members talk knowledgeably about the realities we are facing in the market and the long term.” (Tsunoda, 2005) Tsunoda also notes that Sazaby learned a lot about disclosure practices from Starbucks because of U.S. (SEC) requirements and because Starbucks Coffee Japan had to make sure foreign board members received all materials beforehand so they could fully participate in discussions and decisions. “We shared a lot of information and ideas as questions would come from non-Starbucks Coffee Japan members,” he says. “This has made our meetings longer but significantly increased our effectiveness.” Starbucks overall theme is to provide a third place outside of work and home where people can relax and enjoy top-quality coffee and coffee-related products. Starbucks Coffee Japan trains employees to thoroughly understand what Starbucks represents, and believes its employees represent the firm’s most valuable asset. David Chichester, Starbucks Coffee Japan’s chief financial officer, says: “The culture is so important at Starbucks that all executives also go through an orientation during which they spend several days or more actually working at the store level to get the feel of the Starbucks experience and culture.” Starbucks culture is actually very similar to the old Japanese traditional business mentality where members of the company are part of a family. Since Sazaby operates in the same fashion, the creation of the 50/50 joint venture went very smoothly. Starbucks provided the complete supply chain of top-quality coffee, from purchasing to roasting to packaging, a feat that would be very costly for any other company to reproduce or copy. Sazaby, on the other hand, had insights into the Japanese consumer and the right connections and ability to pinpoint new store locations. Starbucks Coffee Japan successfully went public in October 2001 and now operates as a separate entity from Starbucks Coffee International. Starbucks Coffee International has sent over staff to help explain operating techniques, policies, and procedures. The basic services and goods have not been altered, although counter heights and merchandise packaging were changed a little to suit Japanese consumers. Early on Starbucks Japan fell into the red in fiscal 2002, posting a net loss of ¥454 million primarily because of too rapid growth opening new shops faster than its cash flow could handle. In less than a decade, Starbucks Coffee Japan has been able to basically reinvent the retail coffee market in Japan. The company did this by combining its own dynamic corporate style, brand name, global supply chain, and extensive expertise in producing quality coffee with partner Sazaby’s understanding of the Japanese consumer and insights into how to establish unique products and services. Despite a host of aggressive imitators and very tough economic environment, the company continues to grow the contemporary coffee house category.