How a Banana Saved a Company

By Andy Raskin

You might think the moral of this story is that you can save your company simply by taking a risk on something silly. But that's not the moral of this story.

A few months ago, I read that a company was selling a dog-to-human translator. The manufacturer, Japan's No. 2 toymaker Takara, claimed that Bowlingual could decipher the barks of 50 breeds. CBS News even had its Tokyo correspondent "talk" to a cocker spaniel named Ruby.

Having studied in Japan, I knew that Takara mostly made dolls. But when I visited its website, I found that Dr. Dolittle devices were the leading edge of a somewhat wacky corporate shift. The company had just launched a subsidiary, CQ Motors, to make real, roadworthy cars--with a twist: They were modeled after Takara's cute and popular toy vehicles. The product line also included a collection of robot jellyfish, a talking tissue holder, and an alarm clock shaped like an angry old man who, when it's time to wake up, descends from the ceiling and screams at you.

Intrigued, I dug deeper. At San Francisco's Japan Center, I found a new book about Takara written by a Japanese journalist. The subhead read A Venerable Toy Maker's Road to Recovery. The book told of Takara's recent financial performance, which was phenomenal by any standard and downright unbelievable in zero-growth 21st-century Japan. Just four years ago, the company was almost bankrupt, but since then its sales nearly doubled, profits returned, and the share price more than tripled -- all while the Japanese stock market lost more than half its value.

Takara was not only thriving in a terrible economy -- it was having a blast doing it. It had been more than a decade since I'd heard of anything in corporate Japan worth emulating, but a stock price that tripled? I hadn't seen that in a while in any market.

So I decided to fly to Japan.

From the airport it was a short train ride to Takara's Tokyo headquarters, an aging concrete structure topped by a sign that said, "Play Is Culture." The first person I met was Yoko Watanabe, head of public relations, who was giddy with the news that Japan's prime minister was going to cite Bowlingual in a speech about innovation. She ushered me to a cubicle in the guest reception area, next to a table where men in suits were playing with robot dolls. I questioned her about Takara. How is it, I asked, that the company could go from barely surviving to being the nation's hottest business? What was the secret to its success?

She excused herself for a minute, and when she returned, she placed a plastic banana on the table in front of me.

"Don't worry," she said, smiling at my confusion. "None of us believed that something so ridiculous could change the fortunes of an entire company either."

*

"Takara" means "treasure," and it's also the name of the Tokyo neighborhood where founder Yasuta Satoh began manufacturing beach balls in 1955. Satoh was so good at delighting children with new products that people called him omocha no kamisama -- "god of toys." Among his most famous kid-pleasers were Licca, a wider-eyed, flatter-chested version of Barbie, which has sold 49 million units since 1967 and is still Japan's best-selling fashion doll, and the robots Microman and Diacron, which became a worldwide megahit in 1984 when Hasbro sold them in the United States as the Transformers.

Deep down, Satoh was a product man who, according to Takara executive vice president Nobuyuki Okude, "would set ridiculous goals, like making every child in the world happy." He embraced improvisation; in fact, some of his most inspired toys began life as failures. In 1970, for example, Takara licensed G.I. Joe from Hasbro, but Japanese kids weren't amused by a U.S. military hero. So Satoh backed a plan to create Henshin Cyborg, a clear-plastic doll pressed from the same injection mold. "We made up a crazy story about how he was an alien from the year 2025," Okude told me, "and he sold like hotcakes." A 1982 bid to market an early PC as a game console was thwarted by Nintendo; the experience, though, introduced Takara to software companies like Konami, which would later help Takara build radio-controlled cars and videogames.

In the early 1990s, as Satoh eased into retirement, Takara descended into what employees now call "the dark time." Two of Satoh's sons worked for him, but the eldest, Hirohisa, is the one he had groomed for succession. Armed with the Japanese equivalent of an MBA, Hirohisa became CEO in 1994 and set out to remake Takara in the image of a modern marketing machine. He instituted a five-stage review process to thoroughly analyze potential new products. He trained employees in market research and teamwork. And rather than go for broke with risky ideas, he aimed for more predictable middle-of-the-road releases.

It sounded reasonable, and Takara's results improved, at first. But managers faced such high hurdles in getting new products to market that few ideas ever made it. People ridiculed the training, especially the legendary Nari-ken, or Narita workshops, mandatory touchy-feely weekends at an airport hotel where participants explored questions ranging from "What is marketing?" to "Which is the Chinese character that best describes your personality?" Feeling unchallenged and bored, Takara's best people fled to competitors. Even Okude quit, to head a subsidiary at archrival Bandai. "It got to the point where we wouldn't invest in an idea until we were 100 percent certain it would be profitable," he recalls. "I was raised by this company to say, 'Here's a potential market, let's go for it,' but that way of thinking had disappeared."

With defections and a dearth of new products wiping out profits, Hirohisa resigned, and Takara's board brought back his father as CEO. This time, the founder called on his second son, Keita, who by his own account was something of a goof-off as a kid. ("When Dad imported the Game of Life from the U.S.," he told me, "my brother wanted to know the rules, and I wanted to play with all that fake American cash.") Indeed, in 1996, Keita himself quit along with the others and, with just one partner (another Takara refugee), built a small toy company of his own, which he called Dreams Come True. He was doing $14 million a year trafficking in Hello Kitty accessories and snowboards, but he agreed to help his father as a consultant. One of the first things he did was visit Takara's product development group and ask everybody this question: "What do you really -- really -- want to do?"

At least one worker rose to the challenge. Noting booming demand for cell-phone accessories, product manager Masahiko Kajita saw that no one was doing anything fun with external handsets. He prototyped ones shaped like a mackerel and a high-heeled shoe, but when he stood in a crowded intersection and pretended to take calls on each of them, he got more laughs with a banana.

Kajita's something of a celebrity in Japan, in part for his invention of the beloved banana phone and in part for his dyed blond hair -- the salaryman equivalent of going to work with your tongue pierced. When I met him, in a hotel near the Imperial Palace, he was touting Bowlingual's upcoming launch in Korea and doing an impersonation of a schnauzer for Japanese reporters. He seemed carefree, but he told me that dying his hair was a deliberate move to keep himself under pressure. "If I stand out, I have to deliver," he said. Then he fielded questions about whether Japanese dogs and Korean dogs speak the same language.

It takes sales of 100,000 units for a toy to achieve hit status in Japan. The banana phone, together with some offshoots, sold 150,000. With the product's success, prodigal son Keita sent the message that he would bet on ideas he liked, even if all he had to go on were giggles at a busy street corner. The toy company also got a taste of what could happen if it challenged its long-held belief that it couldn't sell to anyone much past the age of puberty.

*

In 2000, Takara named Keita CEO and bought his company. He persuaded Okude to return and established a "life culture" division to market to adults. At the heart of the division, which already accounts for 20 percent of Takara's projected ¥81.5 billion ($679 million) in revenue for fiscal year 2003, is the Nanchatte series, a product line that, Kajita says, is "20 percent practical, 80 percent entertainment." It is, in other words, perfect banana thinking.

Nanchatte hits include a security camera that follows intruder movement but isn't connected to anything; a motorized home beer tap called Let's Beer Great; and Gorgeous Bath, a lion's-head bathtub fountain whose opulent image Takara promoted with two sisters famous for their implausibly large breasts. (Watanabe, the PR director, asked me how to translate "nanchatte," in case Takara ever sells these products overseas. "Just goofin' on ya" was the closest phrase I could think of.)

Kajita had to excuse himself -- the Japanese edition of Playboy was waiting to interview him -- so I rode the subway to Okasan Securities, where I met Masashi Morita, an analyst who follows Japan's toy industry. He told me he enjoys covering Takara so much that on research visits he proposes Nanchatte line extensions. "That banana really got me thinking," he said, and then boasted that the only reason Takara rejected his idea for a cell-phone-shaped PC keyboard was that it would have been too expensive to make.

I told Morita that I would be meeting Keita Satoh in a few days. He pulled out financial charts on Takara competitors Bandai and Tomi, and showed me how their sales and profits had recently leveled off. By comparison, Takara's profits were growing 25 percent a year. "The difference," he said, "is that Takara is willing to take risks, and that's because of Keita." He gave as an example Beyblade, a line of gyro-tops that kids pit against each other in a sumolike ring. In 2000, Beyblade was on the market but languishing. But when Keita went to the boys division and asked which product they liked best, Beyblade was consistently the answer.

So he invested nearly ¥300 million ($2.5 million) to make a Beyblade TV cartoon. In Japan, a product-oriented cartoon typically triples sales; Beyblade's sales jumped by a factor of 10. To date, more than 64 million Beyblades have been sold worldwide, generating revenue of ¥13 billion ($108 million) in the last year alone. If you haven't heard of them, just wait until Christmas.

*

The second son of the god of toys met me at CQ Motors, the subsidiary he founded because "I always dreamed of riding in cars like the ones I played with as a child -- and I thought maybe others did too." He was slightly heavier than the average 45-year-old Japanese man, but his face was boyish. He seemed shy and unassuming for someone who has inspired so much success and creativity.

After chatting awhile, Keita let me test-drive the Qi electric car. The sporty one-seater, which costs ¥1.29 million ($10,750), sold out its first run of 99 vehicles; 300 of them are on back order. The car is so cute that a bunch of second-graders mobbed me at a stop sign and hopped in. We took pictures, and we all gave the peace sign.

Back at the showroom, Keita told me he had just received a call from Mizuho Bank -- one of his main lenders -- expressing concern about his management style. "They're bankers, so they're afraid of the risks I'm taking," he said. "And frankly, it would have been easier not to spend ¥100 million [$800,000] to develop Bowlingual, because if it fails it will be a very visible failure. But when my people are at the plate, I don't want them to swing for base hits. I don't even want them going for regular home runs. I want us to hit it out of the stadium and splash it in the water like that guy what's-his-name."

When I pointed out that Barry Bonds-style marketing is a lot different from what Hirohisa had espoused, he said that it had always been that way. "My brother will go to his grave thinking he did everything he was supposed to," he told me, "which for him is the most important thing."

Keita said his own dream is to build a "life entertainment" company that makes toys for people of all ages. He told me he had just purchased a home-appliance manufacturer and that he plans to bring Takara's fun sensibility to refrigerators, microwave ovens, and toasters. When he asked if I thought there would be a market for that in the United States, I said I had recently been shopping at Bed Bath & Beyond, and that, come to think of it, the microwaves didn't do much for me.

"Bed Bath and what?" Keita asked, motioning for a colleague to write down the name. I translated the last word into Japanese, and he said, "Yes, 'beyond.' That's exactly where we'd like to be."

It was tempting, of course, to believe that Takara was on its way there because it was willing to wager on wacky stuff. And sure enough, Keita agreed that all of Takara's success flowed from the banana. But as I said before, I think that's missing the point. After all, Takara still does market research and it still trains its people, though these days they're more likely to be lectured by an industry veteran. What's changed is the starting point. Because if you think about it, Keita's bets are riding not on fruit or jellyfish or cars, but on the answer to a very simple question -- one that his brother never bothered to ask himself or his employees.

What do you really -- really -- want to do?

Andy Raskin is a senior editor at Business 2.0.