Business Process Improvement Company, Gemba Research, Goes to the "Mecca of Efficiency"

April 2007 - Gemba Research helps companies in a number of industries improve their business processes by implementing elements of the Toyota Production System.  We interviewed Bradley Anthony Schmidt, managing partner for Gemba Research, who took a look back on establishing his company in the country he calls the "Mecca of Efficiency."

Company Description
Schmidt describes the services Gemba Research has for making companies more efficient.

Could you describe your company's business?
We improve business processes.  We train companies to take the waste out of their processes by implementing the Toyota Production System in their own business.  Any process they have, we consult with them to improve them and make it more efficient.

The other part of the business is the benchmarking study missions.  We take American companies to see Japanese companies that have processes related to theirs and are excellent examples of places that are doing Kaizen, or Continuous Improvement.  Because every company is different, we have to have lots of good companies to visit.  Being in the US, we didn't have that.  But now being in Japan, we have over 50 companies we can take them to.  Any company that calls us, we can pretty much give them exactly what they need.

Opportunities in Japan
Gemba Research already had industrial study mission business in Japan but felt the need to establish an office there.

When did you feel your company was ready to expand to Japan?
We registered our Kabushiki Kaisha [KK] in July 2006.  We were doing a lot of these study missions in Japan, and it was just a real pain to organize from the US.  In order for us to fulfill the requests properly and deliver our product at a much higher quality, we thought we had to be in Japan.

What opportunities attracted your company to Japan?
On the consulting side, we had a few companies we knew would work with us if we were in Japan; they wouldn't work with us from the US.  There was business there, but we had to be in the local market to get it.  We have other overseas offices, but I'm happy to say that Japan is one of the most profitable.

Another thing was if we could actually prove to our customers that we were consulting in Japan, which is the Mecca of efficiency, it would give us instant credibility.  None of our competition has consulting businesses in Japan, so this is a huge opportunity.

Market Entry
Schmidt describes the initial steps he took in establishing the office as well as what he wishes he would have known before starting the process.

What were the first steps you took in taking your business to Japan?  Describe the thought process.
I first moved here, visited the JETRO office, got some basic accounting information, hired a rental agent to find some office space, hired an assistant and got him to get the legal issues sorted out, found an accountant, found the insurance, etc.

Looking back, what do you wish you would have known before entering the Japanese market?
What organizations I should be a part of, any recommendation for business associations, or even how to open a bank account, some proper accounting advice on how to set up a company, like tax minimization.

One thing we stumbled on, luckily, was that there are certain areas in Japan, and in Tokyo especially, where it's prestigious to have an office than in other areas.  We happened to have just found a place, but that would have been good to know.  That is a big deal here, where your office is located, even if they're right next door to each other or just across the street, it carries a whole different weight.

Establishing the Office
Here, Schmidt shares nuggets of wisdom from his experience in establishing his company's office in Japan, information valuable to any company regardless of its industry.

Was starting your business in Japan different from your initial perceptions?
Yeah, all the governmental stuff.  When we first started, we had a limited budget, so we did all the governmental paperwork ourselves instead of hiring a lawyer to get it done.  It was complicated, but it probably would be just as complicated to do it in the US.

Also, the fact that Japan is on an accrual basis with their accounting as opposed to a cash basis was interesting.  Even for small companies, it's accrual.

Was anything more difficult than you thought it would be?
Not really.  By coming to Japan, we discovered what was really unique about us.  Before, we didn't know that.  In Japan, the consulting style is more top-down, in-your-face, whereas with us, we were more like, "Let's talk with the shop floor people. Let's pull the improvement ideas through them."

Once we discovered the difference, it's made it a lot easier for us to identify our niche and to carve that out for us.  Once we did that, it wasn't a struggle.

What was easier than you thought it would be?
We really lucked out with finding good people to work with. 

How did you find them?
We were talking with another JETRO office in Nagoya.  The person I met introduced us to his friend.  Having a senior Japanese guy on our team who knows the business culture and the lingo has been really useful.

What advice do you have for companies who wish to expand their business to Japan?
For us, the best thing was to get a retired Japanese guy just to be the wise man in the room to give you advice on everything.  That was really useful for us on everything from letter writing to where to use company seals.  In Japan the company seal makes documents official.

Also, if I could have found a network of foreign companies in Japan, that would've been a huge help.  The fact that they're here in Japan, they had to open a bank account, they had to figure out the taxes for expats [expatriates]--all the things we couldn't figure out just by talking with Japanese accountants, it would've been a huge help to talk to people who have actually done it before.

Results and Outlook
Since registering in Japan in July 2006, Gemba Research KK has had a number of accomplishments and sees a promising future.

What has your company accomplished in Japan so far?
We've got a whole bunch of consulting work, so that's been good--another revenue stream for our Japan office.  And as far as the study missions go, we've increased the number of sites we can visit by 50%. 

But the most important part is that the quality increased due to us being here.  We know that whatever people throw at us, we now can handle, whereas before, it was much harder to organize these study missions from the US.

We've also developed another shorter type of study mission, as well as some that are more catered to specific topics such as healthcare, logistics and maintenance.  There would have been no way we would have been able to do that if we weren't here. 

All the relationships with these companies we've had in the past are much deeper now that we're actually here.  A lot of the Japanese companies we've visited on study missions in the past are really happy that we're now located in Japan. 

And we know that if another company wanted to start doing these study missions we have a huge advantage over them because we're here and they're not.  In fact, a large global consulting company has now outsourced there study mission business to us because our new structure allows us to cater to their clients needs better than they can.

What do you see for the future of the company in Japan? 
We definitely want to keep adding people.  Japan is definitely is a growth market for us.  Basically, there is huge credibility for being here, and having a thriving office in Japan is a big encouragement for our guys in the US.  We'll be profitable by June of this year.