Hiroshi Mikitani is one of the biggest success stories you have never heard off. He is the founder of Rakuten and is the third richest person in Japan. Rakuten is a behemoth of Japanese business. It is so big that is it estimated that 90% of Japanese business users have an account with Rakuten.
To think about the Rakuten is to think about a combination of a Japanese Amazon and eBay in one place that also sells services on top of products. When you think about it from that perspective, it does make a lot more sense about how he has gone from start-up founder to third richest man in Japan.
Makitani also went against strong cultural and societal norms when he founded his own company. He did this after leaving a high-paying and well-respected job with Industrial Bank of Japan as what is known in Japan as a salary-man. Within Japanese society generally, once you become a salaryman with a company like Toyota or Mitsubishi, Sony or Tepco you usually never leave.
So at the age of 31 going off and starting a business is really unheard of. So from the 1990’s to the present day, Rakuten has grown from a one-person operation to a 10,000 person operation with market penetration and dominance that even Amazon would be jealous of.
So learning about Makitani, there is a lot that can be learned about business from this somewhat obscure (on western standards) entrepreneur who has been so very successful. The primary and most important area that I am going to focus on is his ideas around business growth, 3, 10 and business systems.
Rules 3 and 10: Business and growth and systems
The provisions of 3 and 10 are focused on how the business is growing, milestones for growth, the impact that this growth has on operations within the industry. As a company produces, it will need a wide range of change in the way that it is run, the systems that are implemented and the operations that are used.
The milestone for the change are every time the business triples in size (based on the number of employees) and every time business his a 10, e.g. 10, 100, 1000 etc. So to put this into an example as a company starts with one person the systems for the business are kept in the head of one person when it grows to three people a new range of systems will have to start being put into place.
After this when the business hit 10 employees a new look at the systems that govern the company will need to be put into place. After this point, the industry would then have to triple in size before it then needs to relook at systems (30 employees). After this, the step is 100 employees and so on.
The 3 & 10 pattern: 1,3,10,20,100,300, 1,000, 3,000, 10,000 etc.
The aim of all entrepreneurs then is to build into the business the systems for growth that allow the company to reach the next milestone on the growth pattern before reviewing and changing the way the business systems are governed.
This is actually a straightforward and unique way of thinking because many firms, once they cross a certain size, can start to get captured by process of constant managerial and leadership tinkering that distracts from the core day job. This leads to employees wasting effort and time on systems that are already fully functioning.
What does this mean for my business
When I learned about Mikitani, I realised that actually, I had been engaged in change for change’s sake and that I was playing with many of process to either whittle away time or to make me feel like I was president business.
Whether it has been changing CRM systems or engaging in changes to the way I run social media, there was definitely busy work being made. When realising this, I made a few critical decisions. Firstly, I am going to stick with my website’s provider, my CRM, accounts system, and other systems.
They all work, they all do their job, and they all are staying until I reach my next milestone.
Secondly, the way that I am running my social media was not conducive to growth. The time that is invested in social media each week is not conducive to the growth of the business. This did lead to a change in the supplier to a system that focuses on social media automation rather than me managing the posting schedule.
Although this has meant a small price increase in the cost of the way I do social media, it has meant that I am at least 2 hours a week freer which will although me to focus on other more critical tasks.
Thirdly, it has made me realise that I need to build far more systems into my business at the process level of my company that supports growth.
How can you use this idea in your business?
The most important way is to use the rule to save time and effort. Build and test systems for growth, once they work do not review them until a milestone has been hit. The below examples are ideas that other recruiters can use when
- Review your CRM and ATS only when you hit the milestones. Most of the systems produce marginal change when you move between systems, so it is best to change rarely.
- Only ever change the commission and equity structure so that it supports the growth from each milestone. For example, during the early phases, more significant focus on individual billings but as the business grows to develop it in
- Use each sign as a chance to review all your suppliers and renegotiate contracts based on the new size and growth path.
I am sure after reading this article you will have come up with many ideas of your own to improve the way that your business work or how you run your own desk on a daily basis.
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