01 Sep 2013
The New Rules of E-Commerceby Sean SilverthorneTopics:
One day in 2010 the CEO of Japanese e-commerce giant Rakuten announced that thousands of employees would soon conduct business in a tongue most of them knew nothing about: English. Within days all the signs at the Tokyo headquarters were in the new language.
Founding chairman and CEO Hiroshi Mikitani (MBA 1993) is not shy about pursuing the big idea, in this case a belief that English is the lingua franca of business and learning it would give his organization a competitive edge. Rakuten, founded in 1997, operates an online mall and related services used by merchants to access some 80 million customers. The third largest e-commerce marketplace in the world, behind Amazon.com and eBay, Rakuten businesses also include financial services, e-books, travel, and a professional baseball team.
As Mikitani details in his recent book, Marketplace 3.0: Rewriting the Rules of Borderless Business (Palgrave Macmillan), he has succeeded with a contrarian view about e-commerce. While other online markets focus on the end customer, Rakuten's mission is to support the vendors who sell to those customers.
His rewrite of the rules of online business ideas include:
Price is not the most important thing. Shoppers want value but also a stimulating experience, or "discovery shopping." Rakuten helps its vendors, many of them small-shop owners, use social media to offer unique content, such as the fashion shop that chronicles its buyers' global adventures, or the grocer who films entertaining updates proving the freshness of his eggs.
Empower partners over products. Rakuten allows its merchants great leeway in crafting their online portals. Site designs encourage customers to linger and explore rather than purchase and leave, and Rakuten provides its retailers with easy-to-use tools for quick site refreshes.
Embrace innovative thinking. Rakuten discovered that its Indonesian customers were hesitant to key in credit-card information due to security concerns. The solution: Mikitani heeded the advice of a local partner to create delivery teams on mopeds to collect payments at customers' homes.
He thanks Harvard Business School for teaching him how the individual entrepreneur can better the lives of many. "What I learned is that it didn't matter how big your company is; what mattered was how much value you create yourself. This concept was powerfully new to me."
Another crucial HBS lesson, he writes, is the need for speed. Lack of speed (velocity and agility) is a problem Mikitani traces back to the CEO. "If you believe that speed is not your job, then it won't happen. A large organization simply lumbers along at the slowest common pace."
Mikitani even suggests that too much thinking before acting slows the process dangerously. It's better to think to act. "There is no course on speed at Harvard, yet it is a constant theme across many of the topics taught there."
Judging by Rakuten's 2012 market cap of $13 billion and 10,000 employees, Mikitani has certainly learned his lessons.
Class of MBA 1993, Section A