The Journal The Authority on Global Business in Japan

ACCJ EVENT | ROUNDTABLE

MARCH 2015

Appetite for Risk

Industry leader on sustainably building a business

By Brandi Goode

According to Jim Thompson, a person is wise to judge the value of his life not based on his net worth, but on the good he sees he has done for others and the world. Coming from a man whose personal net worth has been estimated above $1 billion by Forbes, this may sound odd.

But Thompson has learned a great deal about life and business in the ascent from his 1963 “survival” job in Japan, earning $250 a month, to his current role as chairman of Crown Worldwide, a global business with 265 locations in 60 countries.

Speaking at an American Chamber of Commerce in Japan roundtable discussion on February 5, Thompson was described as a “model entrepreneur.”

Like many start-ups, Crown—first branded Transport Services International—got off the ground with no employees save Thompson, no equipment, and a one-room office in Yokohama. He had come to Japan with an aeronautical engineering degree—which he admits to never having used—and a fascination with the country.

As business grew, Thompson sustained a healthy appetite for expansion, keeping up a steady pace of acquisitions worldwide. Five years after launching, the company moved headquarters to Hong Kong, where Thompson and his family have lived ever since. Within 10 years they had expanded into other Asian countries, the United States, and even the Middle East.

In Thompson’s eyes, however, it wasn’t until 1989, with the acquisition of a UK company, that the organization became truly global. He recalled the challenges of merging Crown with the new business due to strong cultural differences.

The blending process took five years, and eventually they had to change the people, he said, as it became clear the new associates weren’t going to change their mindsets to adapt to Crown’s culture.

Thompson recognizes there is no perfect model for deciding whether two businesses’ cultures can be blended, or whether there is a need to “clean house,” citing another example when Crown took over New Zealand’s Scotpac International.

Such experiences have also reinforced Thompson’s belief in a common brand name. The team in New Zealand was wedded to the Scotpac trademark, insisting it carried such inherent value in the market that business would suffer under any change.

In fact, once the company was unified under the Crown name, profitability improved. Thompson advocates having one strong brand name worldwide—and a memorable symbol, such as the company’s fire-red moving trucks.

Quality assurance is paramount in this model, he said, but ultimately a common name simplifies and improves operations, for both internal and external customers. Crown performs monthly evaluations based on customer and employee feedback, assessing a variety of factors.

“That has kept us on our toes, so we can immediately identify problems and repair. You have to do this in service sectors,” he said.

When it comes to management, Thompson learned early on the value of delegation.

“I remember one of our first negotiations for some Isuzu trucks here. My Japanese was not up to par, so I delegated the discussion to two associates, having a good price in mind. They came back with a far better price, and I realized that you can delegate a task and people often do better than even you would. This lesson has stayed with me all my life.

“You can never build a personal services business without good people around you. You have to hire well, which is the hardest thing. Hire the right people and motivate and incentivize them on an ongoing basis, and you will have an unbeatable team.”

In a lengthy discussion following his talk, Thompson openly shared his opinion on what entrepreneurs today find to be some of the biggest issues, many of which are the same challenges he has confronted in his own journey. Here are some of his key messages.

Controlled risk: Entrepreneurs need to take smart risks without fear to grow a business, but they should do so at a manageable pace. People sometimes get carried away with their initial success, he said, and lose all they have built. Crown’s controlled growth principle means that when it acquires a new business, it ensures the larger company can survive that acquisition’s potential failure.

Due diligence before and after: Careful, thorough investigation of a target acquisition is essential to avoid taking on any unwanted liabilities. Crown tries to buy company assets rather than entire corporations to circumvent any “sleeping problems.” If after buying a business, you realize there is little chance of a sustainable, profitable future, do not be afraid to close up shop and move on.

CrownP

Thompson recently presented Mayor of Yokohama Fumiko Hayashi with a specially designed happi coat to commemorate the company’s founding there 50 years ago.

Don’t give away too much too early: Thompson admits to having considered taking Crown public many times, but has always concluded it would not be the right choice. He highlighted how shareholders demand consistently rising returns from public companies, and his vision has always been to be in the game for the long term, even if that has meant growing at a slower pace. Now, he said, while Crown could probably be bigger, it has incredible stability heading into the next generation.

“Hang onto equity,” he added. “It will be worth more going forward, based on your own hard work. Better retained internally than in venture capitalists’ pockets.”

Crown is currently working on a book celebrating its anniversary, to be released in the second half of 2015, entitled Crown — the First 50 Years.

Brandi

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Brandi Goode

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Thompson advocates having one strong brand name worldwide–and a memorable symbol.