Hiroshi Mikitani: The Answer Is in English

This blog post is part of a series entitled Is Japan in Decline?, in which leading experts analyze Japan’s economy, politics, and society and give their assessment of Japan’s future.

“Soon, our company meetings will be conducted in English.” I first started telling my staff this in early 2010, when my idea to make English the official language of Rakuten began to take shape. The initial reaction to my idea was not warm. “There goes Mikitani with some nonsense again.” Many were skeptical. A few even commented that I would forget about the idea in time.

But I didn’t. I remain fully committed to the process I’ve come to call Englishnization—making English the language in which we do business. I do this because I am convinced it is the best thing I can do both for Rakuten and for Japan.

The move to declare English our official corporate language has its roots in the shifting global economy. I was at a retreat once in which I saw a presentation outlining GDP predictions for nations around the world. In 2006, the report showed, Japan held a 12 percent share of global GDP. The report predicted this share would fall to 8 percent by 2020, 5 percent by 2035 and a mere 3 percent by 2050. Sitting in the audience, I tried to imagine what a Japan with only 3 percent of global GDP would be like. Our presence on the global stage would be akin to the Sakoku era of the Edo period—when we were closed off to the world by legal decree.

From the very beginning, I have always believed that empowering Japan and restoring it to its former glory are two of Rakuten’s most important missions. If Rakuten is to fulfill these missions, we must foster the vitality needed to accelerate the global expansion of Japanese businesses and revitalize Japan. As I listened to this report on GDP, I understood once again the need for Rakuten to work toward accelerating globalization.

How to do that? The answer, I believe, is Englishnization.

Language barriers, I realized, were creating inefficiencies in our operations. I began to knock them down, one by one: I began to conduct the asakai, our weekly company-wide meeting, in English; I began to have presentation materials put into English; and I started to give speeches in English.

And then, the move that got everyone’s attention for good: I announced that English language test scores would be tied to the conditions for promotion. I told everyone that if they did not clear the minimum TOEIC scores set for their job type within two years, it would not matter if they were an experienced development engineer or a talented salesperson—they would not be promoted, and they might even face a demotion.

Around our headquarters in Tokyo, English language schools began to fill up with Rakuten employees. Rakuten staffers who had left other firms to join us heard from their old jobs: If that crazy Englishnization thing gets to be too much, you can always come back here. When Rakuten employees went out for drinks after work, they could count on someone from another company asking about Englishnization. It was a hot topic, not only in our industry circle, but around Japan and in the global media. CNN even covered our story.

Our results: Since we started looking at TOEIC scores, the company-wide average has moved from 526.2 points in October 2010 to 697.7 points in June 2012. In about one and a half years, the average employee has improved his or her TOEIC score by 171.5 points. Some have improved their scores by over 400 points. Beyond the scores, all board, senior management, and weekly company-wide meetings are now conducted in English.

It has not always been easy. Our first board meeting conducted in English took four hours—double the usual time. Many meetings were awkward and difficult when speakers were restricted to English. We have had to accept that the English we may initially hear in the halls is less traditional English and more “Globish.” And that’s fine. I also had to understand myself the impact of my plan. When Harvard Business School came in to research a case study on our project, the results showed me clearly the level of stress my press for Englishnization created among employees. With that information, we were able to make changes in the timetable and cost structure of the program, to ensure employees were best positioned to be successful.

Has there ever been a company in the history of Japan that has progressed so rapidly and on such a large scale toward regular English usage? I doubt it. Will this be the driving force that guides Rakuten and other Japanese companies to success? I believe so. Rakuten strives to be the world’s number one internet service company. This has been our goal since day one, and it has always been apparent that there is only one way we can achieve this. We must start to do business abroad. We must become a truly global company. There is no other way forward. Whether we work toward expansion globally or not is no longer something we can decide. It is our destiny. Globalization is something that we must make real.

Put simply, global companies speak English. I do not believe a Japanese company can survive unless it can become a global company. More than just surviving, I am certain that if Japanese companies can transform themselves into truly global companies, we will see the return of prosperity to Japan.

Hiroshi Mikitani is chairman and chief executive officer of Rakuten, Inc.