Rakuten takes balanced approach

05 October 2011

TOKYO: Rakuten, Japan's biggest internet company, is balancing a global "corporate philosophy" with local requirements to drive growth across a highly diverse product and geographical portfolio.

Founded in 1997, the organisation's stable of websites now covers everything from ecommerce - its initial area of specialisation - to travel, financial services, advertising and entertainment.

While this diversity may pose coordination problems, Rakuten employs the dual ideas of "yoko-gushi", or spreading best practices internally, and "yokotenkai", or the actual "transplanting" of successful models into numerous business units.

"What we have been doing is sharing expertise across different businesses and countries," Hiroshi Mikitani, its CEO, told the Boston Consulting Group.

"Although we are in many different businesses, most of the components are the same: web technology, web marketing, and databases. There are so many things that we can share."

In the last year, Rakuten has acquired Buy.com, a US online retail platform, and Price Minister, the top-ranking equivalent site in France, as well as rolling out a Chinese ecommerce hub with Baidu, the search giant.

"We are trying to export our expertise to the US and Europe and to learn from our European business as well," said Mikitani.

Alongside establishing certain common standards, such as the requirement that all staff speak English by 2012, Rakuten allows its country teams a considerable degree of autonomy.

"We took the core components of our management-the corporate culture, our brand concepts, and our basic practices-and put them together into a corporate philosophy," said Mikitani.

"We tell managers to follow the basic framework … Beyond that, I am trying to give management as much freedom as possible. It is a little bit different from most American IT companies."

Looking ahead, Mikitani suggested the rapid pace of change, fuelled by the rising uptake of everything from social networks to tablets, will demand corporations in the IT industry make major choices.

"Consolidation is going to happen. You need to think about whether you want to be the acquired company or whether you want to acquire somebody," he said.

"You need to think about whether you will embrace various styles and cultures or whether you want to enforce your culture in other companies and countries."

Data sourced from Boston Consulting Group; additional content by Warc staff