Get Rid of Big Data! The Life of a Small Company
An Ancient Business Resurrects Japanese Craftwork
by Nobi Oda
Even though Japanese craftwork is popular all around the world, the business has been left in the open as time changes, putting it in a dangerous downhill slump. However, in recent years, many people and companies have been finding ways to better incorporate Japanese craftwork through various methods. At the center of this movement is Nakagawa Masashichi Shoten, a shop that has been in business for 300 years. They have taken on the challenge to jump-start the flailing world of Japanese craftwork through brand marketing.
The 13th generation owner reinvigorates the world of crafts
Nara is one of Japan’s oldest cities and was originally the capital of Japan before it was moved to Kyoto. Nakagawa Masashichi Shoten was founded in the old capital in 1716, making it a company with a history of nearly 300 years.
Since its foundation, the company has dealt in high quality, handmade hemp fabrics (they use fabric techniques discovered in Nara and are known as “Narazarashi”). In 1898, they became a favorite of the Imperial Household Agency, and in 1925 were featured at the world exposition in France, cementing their place as highly respected products.
In recent years, they have expanded business into tea-making utensils and household goods made from hemp. Although that company is mainly a wholesale merchant, they also directly manage the store Yu Nakagawa, giving them some abilities as a maker. They were a small company with a healthy business, but nothing more than that.
The person that revolutionized the company is their current and 13th generation president, Jun Nakagawa. His new ideas led to the branding of their crafts, successfully creating the craftwork industry’s first SPA (specialty store retailer of private label apparel), as well as helping to reform fellow craftwork businesses through consulting. Nakagawa has opened up a brand new road for Japan’s previously stale craftwork industry to move forward into a new generation.
Increasing revenue through focused branding
Jun Nakagawa was born in 1974. He grew up in Nara and studied at Kyoto University’s school of law. After graduating, he joined Fujitsu, a major IT corporation.
“My job was to improve the server operational management service, which basically meant managing the IT crew, so I actually had nothing to do with writing code.”
At the same time, Nakagawa knew that in Japan it takes a long time to move up in a company, so he decided to change jobs.
“Although taking charge as a leader is one of my strengths, I felt it would be hard to keep working at a major corporation. That’s why I decided to change jobs to a smaller company. That was the first time I thought about the family business.”
Up until then, he didn’t have any particular interest in the family business. His father also rarely ever talked about his work at home. But Nakagawa was excited by the fact he could make a difference with his decisions. Joining the family business meant running the company in the future. This major responsibility is something he expected to take on.
“But in the beginning, my father rejected my decision. He basically told me that 2 years of job experience didn’t amount to anything, and the world wasn’t as easy as I thought it was. But I had already made up my mind so there was no turning back. I had to bow my head low, but eventually he let me in to the business.”
Nakagawa joined Nakagawa Masashichi Shoten in 2002. He was put in the household items division and was extremely surprised by the fact that the business methods were very ambiguous and he had no idea how anything worked. There was no budget for the catalog and no plans for production. Having just come out of a state-of-the-art IT corporation, he felt as if he had traveled through time and ended up in the 19th century.
He began working on reforming the company. His reforms included controlling manufacturing through IT, increasing the number of managed stores and products, starting up the new brand “kisara”, changing business practices, and training employees.
The biggest change he made was incorporating brand marketing, something that had never been done before in the Japanese craft industry. Many people in this industry thought that making a quality product was the same as branding it. Especially in Japan, the idea that quality products will sell regardless of brand is a mindset that is still widely shared.
Nakagawa explains, “The reason behind a product’s success is about 40% because of the product itself, and 60% because of the background and idea behind the product. If you want to successfully brand a product, that’s how far you have to go.”
In addition to having an appealing product, branding only becomes possible if you have a unified strategy that includes product planning, design, manufacturing, distribution, and a retailer to sell the product.
Nakagawa made a sharp distinction between what he had to change and what he couldn’t change. He put emphasis on training designer employees in order to maintain unified designs. For retailers, he would increase the number of directly managed stores, manage distribution, and understand how consumers reacted to the product. Through these various implementations, Nakagawa Masashichi Shoten became an SPA as it controlled everything about its products from manufacturing to retail. GAP is known as one of the pioneers of SPA, which has become a viable method for various industries, from apparel to foodstuffs, but had yet to be implemented in the craft industry. After seeing the reaction of their new business practices, Nakagawa Masashichi Shoten saw a major increase in sales. They were even able to open up a store for their “kisara” brand inside Omotesando Hills, one of Japan’s most sophisticated shopping areas(currently move into Shin-Marunouchi Building).
He pledged to reinvigorate the Japanese craft industry
As branding continued, Nakagawa couldn’t stop thinking about his vision for the company.
“The company has been around for 300 years, but there were never any company policies or household practices. I never heard my father talk about any of this either.”
When there were few resources available, there probably wasn’t much need for a company vision. This is because a company’s only purpose was to create products that were needed by the public. But in today’s world, we have access to an overabundance of goods, so quality is a given and people buy objects not for their necessity, but for the excess ability and to connect with others. In this generation, company vision is essential to business.
As part of his vision, he started to work as a consultant for other companies.
“The craft industry has continually been in a business slump. If we lose our business partners, there will be no future for the company. However, there have been no success stories about companies that received support from government on creating products. Changes to distribution and business in general must be made, and that is something only our company can accomplish. That’s why I felt that I needed to start giving advice to other companies.”
Nakagawa experienced his company’s growth and saw where his company’s orders were placed. But he had no experience with consulting, so he decided to write a book and use that as an introduction to what he could do. When he discussed this with the editor of the design business magazine Nikkei Design, he was offered a job serializing his work.
He succeeded in rebuilding a Nagasaki-based ceramics maker
After reading Nakagawa’s book, the president of Nagasaki’s ceramics company Maruhiro contacted Nakagawa with a consulting job.
Maruhiro deals in hasami-yaki, which are ceramics made in Nagasaki’s Hasami city and were first made in the Edo period. But due to the heavy competition from cheaply made ceramics from other countries in Asia, the business was in a difficult position.
The next in line to run Maruhiro was Kyohei Baba, who came back to run the family business in his late 20's after working at companies in the apparel and interior design industries. After talking with him, Nakagawa heard what Baba really thought of the business.
“While we were kind of joking around, he said he wanted to make a movie theater in the town. His true passion wasn’t in ceramics. This was very important because it led us in the right direction. We then talked about how we could make a movie theater in Hasami city through the ceramics business.”
Nakagawa introduced Baba to Tochigi’s Mashiko city, a place that was successful in creating a community through ceramics, and eventually helped out in creating the “HASAMI” brand. “HASAMI” featured brand new products that were not typical hasami-yaki ceramic designs and became a huge hit, making Maruhiro a company that successfully overcame a difficult situation. Now, a lot of local companies are aiming to become the next “HASAMI”.
“The production area comprises of various specialty businesses and handles employee education and technology development. As for ceramics, individual specialty businesses are needed for the pottery itself, as well as the mold and clay. If you can’t maintain these businesses, the production area will cease to exist. Yet, it isn’t possible for me to take care of everyone, so through consultation I hope to create successful companies like Maruhiro that local businesses can follow through example.”
Make the company think about what they want to be
With the success of “HASAMI”, the demand for Nakagawa’s consultation service reached new heights. He primarily consults with owners of craft companies about their business practices.
“Up until recently, craft companies had artisans but no management. The majority of makers only created products retailers wanted, making their business completely dependent on the vendor. There were many companies that didn’t even have a set budget. Also, I think the way media only talked about the artisans’ techniques was a problem. The reason my consulting has seen so much success is because the majority of the companies didn’t have sound business practices before.”
But more importantly, as seen through Maruhiro, a company must know their identity and what kind of business they want to become.
“When it comes to branding, the key for small businesses is knowing what kind of business they want to become. They must choose their business path based on their goals and their strengths, and organize them to present to the consumers accurately. If they can do this, consumers will be able to connect with the product. There are still many companies that don’t know what they want to be and what their strengths are.”
Nakagawa’s way of doing things is almost the opposite of data analysis.
“If you ask consumers why they purchased a certain craft, they won’t have an answer. When communicating with the market, it’s necessary to understand that not everything has to do with sales numbers.”
It’s impossible to determine a company’s motivation only through data.
Even though Nakagawa is bringing a current business model into the craft industry, he doesn’t have any illusions about rationalism. This is part of his personality, but also because he’s in the craft industry. Even though Nakagawa Masashichi Shoten features many craft businesses in their exhibitions, they don’t constrict them with contracts. They also don’t think about making businesses they helped make successful part of their company. This comfortable network is working out fine. If you look at the big picture, it’s a sign of the future of capitalism, incorporating the positives of communal connections.
(translation: Nelson Babin-Coy)
Originally published at ignition.co.
