BizNews: You founded Works Applications Co., Ltd. back in 1996. Since then, the company experienced an impressive growth track - it has realised revenue growth in 19 consecutive quarters. Today its customers include government agencies, major trading companies, manufacturers and other big companies from Japan and outside Japan. As of 2016, your company has more than 8,000 customers and has positioned itself as the clear no. 1 player in its field in Japan, holding more than 50% market share, and is used by more than one third of all Japanese listed enterprises. In light of this entrepreneurial success story, can you give the readers of DIE WELT an insight into Works Applications’ story; what would you say were the main drivers behind your company’s remarkable track record?

Masayuki Makino: Before we founded Works Applications, SAP from Germany and Oracle from the United States were the two leaders in the market. As a former IT consultant, I was very familiar with SAP and Oracle and their products, and thought they should be used and promoted in Japan too, mainly because ERP systems were barely used in Japan at that time. Each company had its own system – at very high costs. Companies invested a lot of money and time in developing their own solutions. Back office costs were therefore generally higher in Japan than elsewhere. I wanted to do something about this. I believed that using these standard products of SAP and Oracle would be the answer; and therefore, I started to promote them. After some time however, I realised that these products weren’t the right fit for Japan. With time, I understood that they didn’t reflect ‘a true global standard’ but more so were designed and fitted for what you can call ‘the German model’ for SAP and for ‘the American model’ in the case of Oracle - yet wouldn’t meet very well with the specific requirements of Japanese businesses.

Japanese characteristics in the workforce and office operations are different from the ones in Germany and in the USA. Japan has its strengths, just as Germany and the USA have their own. In Japan we have this particular habit of peace and harmony. This is also reflected in our work culture. In other markets I would say there are more segregated layers between educated and less educated workers; in Japan the workforce is overall rather homogenous. In Japan the average worker is highly educated and differences in terms of qualifications among Japanese workforce are less marked than in other economies. In Japan we value teamwork rather than a few cutting-edge leaders. Individualism is a lot less significant in Japan.

With this in mind I started making requests to SAP and Oracle and asked them to adapt their products to make them more fitted to our Japanese model. I explained to them that they should cater to Japanese companies and their requests – at least to the top 100 companies in the market. But they said no, they could not adapt in such a way. The requests were too different from their standards. My suggested Japanese approach to business was very different from the way in which SAP and Oracle believed it needed to be done. I knew though that this is how Japan functions; and that the strengths of how Japanese people work must be reflected in an ERP system. Of course SAP and Oracle wanted to expand their products globally, and Japan is an interesting market; but they realized that they needed to make huge changes to cater for our market. And they were not willed to make these changes because they thought it requires too much effort and maybe also that it will be too complicated. I realised though that there was no choice, we had to come up with a unique system for the Japanese way of doing business. And when I saw that nobody else wants to do it, I thought that I should do it. That is why I founded the company. My aim was to design a product for Japan; but at the same time also to come up with a product that can be adapted to other markets and cultures.

Yet as you can imagine, the beginning was very difficult. We were of course a very small company and didn’t have any brand recognition, and overall the market was very conservative. Big companies in Japan would never buy from an unknown vendor, even if the product was good. We needed to get recognition in the market. This was the biggest challenge in the beginning. But thanks to our great employees, our very good corporate partners and our strong vision, we were able to position ourselves and become the partner of choice for over one third of all Japanese companies. It’s not that something particular happened, there was no milestone, there was no cornerstone, it was just a step-by-step expansion.

I should bring one thing up at this point. Something that we are known for as a company is hiring and forming the right people. We dedicate a lot of effort into finding, hiring and training the best employees. That is very rare in this context – for a Japanese company we have a very high share of non-Japanese employees. 40% of our workforce is non-Japanese. But we don’t bring them to Japan. We go to them. In addition to our R&D facilities here in Japan, we have R&D centres in India, Singapore and Shanghai and will have one in the United States. What is important to note here is that we create these R&D networks before we even establish sales networks. We go to universities where we know there will be talented computer science students. Some of the best students for instance are found in Shanghai and Singapore. In Chennai, India, we established our R&D centre close to the India Institute of Technology. We are in these places to find the top students. And with our global remuneration system everybody is paid the same, no matter where you live. In India, consumer prices are low, so with a Japanese salary, you can do very well for yourself. We pay over the local market level.

BN: Your company is well-known for its unique, forward-looking HR policies. Works Applications has won numerous distinctions and prizes and has been awarded as the top place to work in Japan several times. In the light of these unique workplace incentives you have established in your company, what are your key values as the founder that are reflected here?

MM: For most companies, the most important things are money, customers, product and market. Most companies state “Our people are important”; however do they really treasure their employees as much as these other things mentioned? Do they prioritise talent as much as their customers? Would they be willing to lose their products to keep their talents? For me, high quality staff is the most important thing for my company. And that’s why we really care for our employees. Of course, leading companies such as Google also have a philosophy where they deeply treasure their employees. They can, of course, hire top-notch people given their unparalleled profits.

We focus intently on building our employees. We train them the best way we can. We do not force Japanese ways on them. Just because we are a Japanese company, it doesn’t mean that we have to have R&D only in Japan. We go to the talent – internationally. And this makes us an interesting company for Japanese and foreigners alike. ent that what Japan brought to it was “heart”, so “kizuna” was the bottom line of the Japanese presence at CeBIT.

BN: We saw that just recently you established a new research institute in Tokushima, the WAP Tokushima Laboratory of AI and NLP. What can you tell the readers of DIE WELT about this new R&D centre?

MM: Yes, this is a very interesting story. It links to what I was just saying. Tokushima is far from Tokyo and has a small population. And we went there to create a cutting-edge AI centre. Why there? Because there were leading AI engineers in Tokushima already – so we went to them. If they want to stay there, they can. We moved the R&D centre to them. Wherever top people are in the world, if we find a good number of resumes from a certain place – we will open a R&D centre there. If there are very talented engineers somewhere in the countryside of Germany, we will open a R&D centre in that rural town. This is our philosophy at Works Applications. We go to our talent.

BN: This is a very interesting, innovative approach. It leads me to my next question. Your company was also present at CeBIT 2017 and your products attracted a lot of interest. What can you share with the readers of DIE WELT about the technologies presented and the cutting-edge solutions you are currently working on?

MM: Indeed, we experienced a lot of interest in our products, particularly from the Germans. They asked a lot of questions about AI. How is it used? What is the reason for it? How can this help me as a business? We as a company can say that we are truly a frontrunner in the way we use AI. Of course, SAP and Oracle also do use AI in their products. The data in their systems is processed by AI, we do the same, this isn’t innovative, everybody does this already. Yet, with our products we go beyond that, and this makes them so unique and valuable for companies that use it. The biggest type of data, collected in ERP is manufacturing, sales and customer data. Everybody focuses on these, because you do get a lot of data from these. But differently from SAP and Oracle we are also focusing very strongly at something where you can get a tremendous amount of data, and that is operation data: the logs – logs from what employees did on computers. Our system logs the operation data from the employees: what keys they pressed, what key words they were looking for etc. We consider this data as highly relevant and as an integral part of the greater data base. The operation data is work data itself – it’s the footprint of every single thing done by employees. By processing this via AI, you can achieve abundant performance because, actually, AI can learn how to work through work done by employees. The AI in our products is going after the footprints of employees. It seeks to assist employees with certain tedious tasks, tasks that they wish the computer could perform on its own. This makes our products so interesting. Users feel the difference in their daily work; our AI actually allows them to make their computer work for them and not the other way round.

BN: That’s a very interesting value proposition you are offering. What potential do you see for your product in Germany?

MM: We do see a lot of potential in Germany. However, we do not have an office in Germany yet. We have offices all over Asia and US, but not yet in Germany. If we move to Germany, we will have to start as a rather unknown company in the market – just like we did in Japan. Of course, our value proposition is highly interesting for German businesses, and so we want to expand and tap into this potential as soon as possible.

We gathered some positive experiences in other new markets as well. When we visited a HR Technology fair in Chicago last year for instance, we experienced great interest for our solutions. I think our very clear focus - on producing solutions that truly help people to feel more comfortable working with their computers and making the computer work for them rather than the other way around - is very well-perceived in the market. Therefore, I see a lot of potential in Germany to become a new interesting market for us.

BN: You mentioned that you do not have much brand recognition in Germany yet. How do you plan to make Germans know about your products and the benefits they have?

MM: We realized at CeBIT that there is a large interest from German students in our company and the way we work. Just like in any other country we expanded in, the first priority for us at this stage is to visit and learn more about the different computer science universities and institutes in Germany in order to find out where would be the best place to open nearby R&D facilities. Once we have this infrastructure in place we can start tailoring our solutions particularly for Germany and then for other European countries - and then take it from there and expand our presence in the market gradually. I have several thoughts about various spots, such as Frankfurt for instance, however I still haven’t decided where we should set up our first operation. I used to think that London would be ideal for our first subsidiary in Europe, but now, after Brexit, Germany would probably be a better idea. I see Germany as the new centre of the EU and clearly as a hotspot for innovation and technology.

BN: What would be your final message to our readers in Germany, among them many businessmen and investors, but also many students?

MM: My experience is that Germans are somehow reluctant to work for a Japanese company, because of the cultural differences and because of the particular Japanese way, that is centred around harmony and team work and less about rewarding individual initiative. I sense that German innovators doubt that they will be able to thrive in such an environment. With that said, my message to your German readers would be that, yes, we are a Japanese company, but yes, you will be able to thrive and make a difference with us, because we have our Works Applications culture that is open to everyone and builds on the strengths of each and every employee from wherever they are. The fact that we go to our employees and build R&D centres in their area underlines this philosophy. My message to all German students and talented technology engineers is that they should consider us as a great opportunity. With us they can work in a dynamic and truly international environment, but they do not have to leave their country. The world is broad, and we want to work with all the talents, all over the world. I want young Germans to work with us – to feel the joy of working globally and make a real difference for companies who use our products.

BN: Thank you very much for your time. We really appreciate it.