Thursday, June 9, 2011

Earthquake Survivors And Lawson: More Than A Marriage Of Convenience

Lawson's vans mobilize to reach those in need. Via.

When Takeshi Niinami, CEO of Lawson convenience stores, first agreed to talk at Japan Society he expected to speak about Lawson’s expansion overseas. The company is opening stores in China, India, Indonesia and perhaps Vietnam. That changed on 3/11.

Those earth-shattering events brought new meaning to the important role convenience stores play in Japan's economy. To the surprise of many, when relief first came to some of the devastated areas, it was with a Lawson’s delivery truck, not a self-defense forces vehicle.

Stepping in after the tsunami where the government failed, Lawson's found itself in a highly unusual role of feeding and supplying hundreds of thousands of affected Japanese. “The public sector was of no help at all in the first ten days,” the CEO of Japan’s second largest convenience store chain told an audience at Japan Society recently. “We supplied aid more smoothly and systematically.”

Lawson’s nimble reaction is a telling indicator of Japan's rapidly evolving private sector economy.

Lawson took immediate action despite facing major disruption to its own business. While 20 Lawson Stores, many factories and distribution centers in north eastern Japan were destroyed or damaged by the earthquake and tsunami, the company’s supply chain in other parts of Japan remained in tact. Lawson's decentralized structure made it nimble enough to allow the company to move supplies quickly to the affected area.

Niinami's intense focus on the disaster required him to make unorthodox decisions with a speed unusual in Japan. “I took the executive decision to send supplies from Tokyo to Tohoku; this action brought a shortage of inventory to Tokyo causing complaints from customers there. I still believe that decision was correct though we lost some sales in the Tokyo area.”

And while Niinami was making key and quick decisions in Tokyo, he wasn’t trying to run the show from the capital. From the first day, he delegated authority to the regional head office in Tohoku where the general manager had more first hand knowledge of what was needed.

The devolution of authority led to some surprise requests including 20 motorbikes. “The Tohoku general manager needed the motorbikes because the roads were destroyed and there were no express ways,” said Niinami. Motorbikes were the most efficient way to get around and helped the company gather information on the ground. “I think the information we got was more correct than the information the public sector was collecting.”

Lawson was able to do this because the company has a well-established management culture where local managers exercise a great deal of autonomy. After the earthquake this proved invaluable. “In irregular times they had to make decisions,” Niinami said. “ They did a good job.”

In the first days of the crisis, a priority was to restore fuel supplies to the affected area. According to Niinami, most fuel supplies were being controlled by the government, which commandeered some commercial fuel tankers. Resupply was slow.

Niinami urged Lawson franchisees to not wait, but to drive their own fuel tanks to the area with or without government approval. Business partners also lent vehicles and shared their limited stocks of fuel. “Do not talk to the government,” Niinami said they told him. “So we sneaked in to some hidden places anyway.”

When Niinami heard that some truck drivers supplying Lawson stores were reluctant to go to areas with high levels of radiation, he took matters into his own hands and contacted some of them directly. “I will go with you, I told them,” he said. “Then one of the drivers said, “Okay I will go, I understood your guts, we don’t need you to come.”

Lawson’s rapid response to the disaster is proving to be much more than a marriage of convenience. Survivors were grateful that Lawson was quick to arrive on the scene, as other aid was slow to materialize.

The halo effect of its response is having surprising results in Japan and, Niinami hopes, soon overseas. The company has seen changes in consumer behavior following 3/11, some of which may influence the kind of stores it runs in the future.

After the quake, more people are shopping at local stores because they have no gas to drive to larger supermarkets. Housewives and senior citizens, who are not typical convenience store customers, are now seen much more often. As a result, Lawson is offering more fresh produce in small portions to meet their needs. Niinami hopes these groups will now become regular customers.

Overseas, Niinami feels that other countries will not only benefit from stores themselves but also from learning from Lawson’s record as a good corporate citizen as demonstrated by its response to 3/11.

Niimani's bold actions come as no surprise to those who know him. The Keio University and Harvard Business School graduate has earned a reputation for being a straight talking man of action, firing people when he arrived as CEO at Lawson and changing vendors.

Niinami has been President and chief executive officer of Lawson since 2002, after a career that started at Mitsubishi Corporation’s sweetener products division. Under his leadership, Lawson has increased operating profits for eight straight years. He is also vice chairman of Keizai Doyukai (Japan Association of Corporate Executives).

Reflecting on his recent experience, he understood the importance of not taking for granted what seems so normal and routine - operating a 'conveeni'. “We transported essential things, prepared foods, baked goods, water and blankets from as far way as Western Japan. I am proud we could provide some comfort and relief to the survivors.”

--Juliet Hindell 

Hindell was BBC Tokyo bureau chief and Daily Telegraph Tokyo correspondent and is now based in New York. Read her article about the Japan Society panel Why Japan May Surprise the World: Rebirth after the Tohoku Quake.

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