My Leadership Journey

ACCJ-Kansai CEO Series: GE's Eriko Asai shares how to stay resilient during uncertain times

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Since 2015, the American Chamber of Commerce in Japan (ACCJ) Kansai chapter has hosted the CEO Series, an annual collection of speaker events featuring top executives from leading companies. The sessions are very popular due to their intimate and insightful nature, and the glimpses they offer into the lives of successful leaders. Attendees leave inspired and with actionable advice to help them improve their work lives, while the candid discussion is especially valuable for young professionals starting to build their careers.

On May 19, Eriko Asai, president of GE Japan and ACCJ chair, spoke at an event co-hosted by the ACCJ-Kansai Business Programs Committee and Diversity & Inclusion Committee. She revealed what she had learned on her way to becoming GE Japan’s first female president.

“Today, I’m going to share with you my leadership journey and some of the challenges I’ve experienced over the years that helped me develop my leadership skills and keep myself resilient during uncertain times,” she said.

The landscape has changed significantly since Asai took the helm of GE Japan in January 2018, and the company currently is undergoing its biggest business transformation of the past 128 years. “One of the most important jobs, as a leader, is to drive the cultural transformation and make a difference,” she noted.

Milestones

Asai opened her presentation with a slide labeled “Leadership Journey” on which she charted the major events in her life and career, beginning with her birth in the UK.

More than just a visual representation of education and job changes, the chart tells a story that Asai believes has great value. “I highly recommend that you write your journey like this, because it helps you reflect on who you are, your strengths and weaknesses, why you think about something a certain way, what you care about, what has been consistent in your career journey, and where you want to be in the future,” she explained.

One thing that this writing exercise brings to the forefront is self-awareness which, Asai said, is such an important part of the leadership journey. Noting that her rise to company president was a zigzag, not linear, she outlined her career progression and the skills she learned along the way—a particularly valuable way of looking at professional development and staying the course.

“It’s very important to be intentional about your journey, according to your life stage,” she explained, breaking down the phases of career progression by age:

• Twenties: challenge yourself
• Thirties: work–life balance and expertise
• Forties: leadership
• Fifties: investing in the next generation

When she moved to Japan at age three, to Australia at age nine, and then returned to Japan two years later—all due to her father’s work with a trading company—Asai learned three key skills that would help her become a leader:

• Survival
• Listening
• Adapting to change

Two more skills were added when she chose to study at a UK university, before going to work for Sony Europe in Germany—despite speaking no German:

• Being the minority
• Communication

When she began a series of transitions in her thirties—shifting first to government affairs with Microsoft Corporation, then to healthcare with GE Healthcare, during which time she also served as director of the American Medical Devices and Diagnostics Manufacturers’ Association, later expanding her role to energy and finally becoming president of GE Japan in her late forties—she added two more key traits:

• Self-confidence
• Resilience

Now that she is president, she has taken on roles that help her invest in the next generation. This includes serving as chair of the ACCJ. And, while she leverages her experience to help others grow, she finds herself also refining skills such as:

• Developing people
• Building teams
• Crisis management

“I have lived in many places, in five countries, and have always been a minority in those societies—so I know how it feels when your voice is not heard, how painful it is to be left out with no means to respond,” she said. “Although I didn’t know the word ‘inclusive’ when I was very young, I came to understand what inclusive leadership looks like through my experiences in the early part of life. I’m sure many of you have had similar experiences. It’s very good to reflect on those and think about how you can apply what you learned earlier in life to your workplace today.”

As she noted, her path has zigzagged, so it is important to remember that you can learn at any time. “Leadership is all about acquiring skills at any point in your life. If you didn’t have a particular experience—for example, a chance to live abroad—earlier in your life, you can always do something different in your current life and practice adapting to the change.”

Pandemic Leadership

Next, Asai talked about the current situation and the need for leaders and teams to work together when dealing with a crisis such as the coronavirus pandemic.

“This is a moment when leadership really matters,” she said. “We need to prepare for the worst-case scenario and make sure that people understand the guidelines we have put in place. This takes self-awareness and imagination.”

She said that, in such situations, it is important to follow up with employees who may be feeling left out, or who find it difficult to talk with a manager. “We need to be creative about supporting them in making the work-from-home experience comfortable.”

At the start of the pandemic, Asai set up the national crisis management team for GE Japan, to help it cope with Covid-19 and the potential disruptions to business operations. By working together, helping everyone understand the risks and importance of establishing and following safety guidelines, and listening to employee concerns so that they might feel comfortable and adapt, GE Japan was able to continue being productive and secure.

Once everyone had become accustomed to the new procedures and workstyle, she handed over related responsibilities to the business leaders, who then managed their units and teams on their own.

Strategy and Policy

Expanding on GE’s business transformation, Asai highlighted the importance of focus.

“GE has a 128-year history, but we have really changed our portfolio over the past couple of years,” she explained. “We used to have businesses such as capital, plastics, and even media. But we have divested ourselves of most of the non-core businesses and now are focusing on infrastructure.” The three areas of the strategy are:

• Energy transition
• Precision health
• Future of flight

In terms of policy, GE is working with governments around the world to implement rules and regulations that harness innovation while ensuring a sustainable future. Three key policy areas are:

• Decarbonization
• Decoupling
• Digital transformation

Highlighting the last of these, she reminded attendees that “the ACCJ just released the Japan Digital Agenda 2030 report, which provides comprehensive guidance as to how Japan should leap from here, given that the government is focusing on establishing a digital ministry and there are a lot of changes to come. It’s an important time for the ACCJ to be putting forth a position on this, and we are also doing so at GE.”

Building a Culture of Success

“To make this business transformation, one of the most important jobs as a leader is to drive the cultural change,” Asai said, explaining that, at GE, 50 percent of a team member’s review score is based on performance and 50 percent on leadership behaviors, of which the company has three:

• Act with humility
• Lead with transparency
• Deliver with focus

“When we talk about acting with humility, it sounds obvious. But it’s also surprising that we are talking about it at this point in GE’s long history,” she said. “We are very proud of our technology, but because we are so proud, we have become a little bit arrogant. So, the questions are: How can we become more humble? How do we behave with humility? What does humility look like? We need to discuss and debate this as a team.”

She added that humility is a very important starting point for leadership behavior. “If you think something is wrong, you should say so. We have to be open to this. It has to be a culture of welcoming feedback and acknowledging mistakes.”

Transparency, she explained, goes hand in hand with humility, because without transparency, people will not raise issues and you cannot solve problems. The worst-case scenario for a company is not having the bad things reported up to management level.

“Trust is the base of this transparency,” she said. “And this also goes for leaders sharing bad news with the team in a timely fashion, because, without leaders exercising transparency, the team will not have the courage to share bad news themselves. It goes both ways.”

Delivering with focus relates to our ability to manage the demands of modern life, where it is easy to become distracted or be drawn into doing a task that is not the highest priority.

“In a world where we have so much work to do, we really need focus and speed. And being able to focus on the most important thing is a continuous challenge,” she said. “It is about ruthless prioritization and practice, and I am continually struggling to do that myself. Priorities are so important.”

Takeaways

In closing, Asai recapped five points that she believes can lead to a successful and rewarding career—one in which you might also zigzag your way to the top:

• Leadership is about continuous learning
• Focus on building trust
• Embrace awareness and imagination
• Be mindful of how you use time
• Take control of your life and have fun!

“We live in an uncertain world, so constant change is the norm,” she said. “We are never going to be perfect, so we need to be humble and learn from others. The good news is that you don’t have to be perfect, and you don’t have to know everything, because there’s no way to know everything.”

Building trust, Asai noted, takes time. But “speed of trust,” as she calls it, is very important because when there is trust you can get work done faster.

Being mindful of how you use time also is critical, she said. “In my case, I need to spend about 20 percent of my time reflecting and really thinking deeply, without meetings, and 10 percent or more on people development, talking to people—especially young talent who have points of view to share—and spending time with them outside my work.

“And, obviously, sleep and exercise—all the things that keep you healthy—must be tended to, so it’s very important to carve out time in your schedule for that,” she added in closing. “Making sure you are healthy is, in the end, bringing a healthy spirit to work every day.”

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Are Minpaku a New Asset Class?

How short-term rentals can bring personal, financial, and cultural rewards

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Although inbound tourism has been put on hold as the world grapples with Covid-19, Japan was a top destination prior to the pandemic and no doubt will be again. While there long have been plenty of places for visitors to stay—Yamanashi Prefecture is home to the world’s oldest operational hotel, Nishiyama Onsen Keiunkan, which was founded in 705 ad—a new market has been emerging in recent years. Driven by the Japanese government’s focus on tourism as part of its recovery efforts following the global financial crisis of 2008, minpaku (short-term rentals) have become a big opportunity for investors and real estate owners.

On July 1, the American Chamber of Commerce in Japan Alternative Investment Committee welcomed Tracey Northcott, chief executive officer of Tokyo Family Stays G.K. and Tracey Northcott Consulting, to talk about her experience as one of Tokyo’s most successful minpaku hosts and how she grew Tokyo Family Stays into a seven-figure business. She also discussed the ecosystem of services and operating models that provide business opportunities, as well as how hosts can make themselves a valued part of the community by collaborating with neighbors and local business.

Starting Point

While there are plenty of midrange business hotels in Japan, these are not ideal for many leisure travelers as they are neither family nor tourist friendly. They can also be difficult to book if you do not speak Japanese. Minpaku, in contrast, are family friendly, budget friendly, and can easily be booked online in English.

Northcott, an Australia native who has lived in Japan for 21 years, began her minpaku journey in 2011 with a single unit. Four years later, she had 25. She was able to take advantage of a surge in visitors to Japan that followed the easing of visa restrictions in 2013—a development to which major hotels were slow to respond, because of the planning and construction required for such large-scale facilities and the need to maximize their return on investment (ROI).

“The tourists were going to places where the cost of land is very high, such as Tokyo and Osaka,” she said. “When a hotel is built, the company really wants to maximize their ROI, which means they want to put a five-star hotel on the land. So, you didn’t really see a lot of the smaller chains then that you might see now.”

As an example, she noted how companies such as Best Western operate a range of brands and hotel types, from luxury to economy, thus serving the needs not only of executives traveling on business, but also families on vacation. This is common in the United States, but not in Japan.

“There was a massive hole in the infrastructure. But for minpaku hosts, because they use existing buildings, there is a very low barrier to entry, and there was an absolute boom in minpaku growth from 2013 onwards,” she explained.

During her presentation, Northcott highlighted three points that helped that quick growth:

• Lack of regulations
• Plenty of available real estate
• Decades of flat rental prices

“It was a no-brainer for people to do exactly what I was doing—to set up a second or third apartment for rental and then list them on the [online lodging] platforms,” she added.

Backlash and Legal Turns

As more people seized this seemingly easy way to make money, the popularity of Airbnb in Japan took off. In fact, the country became the platform’s second-largest and fastest-growing market after the United States. But as Airbnb grew—particularly between 2015 and 2018—there was a backlash from local communities and businesses. Northcott highlighted six reasons for this:

• Big increase in tourism, but with little improvement to infrastructure
• Popular tourist locations becoming saturated by non-Japanese
• Disruptions to neighborhoods and residents’ usual lifestyles
• Some Airbnb hosts and their guests acting poorly or unprofessionally
• Press reports and TV shows doing gotcha pieces
• Airbnb’s failure to educate the domestic market

These and other concerns led to a poor image of the minpaku industry among the general public and resulted in a push for regulation.

“It was hard when you were a professional host, and you really were proud of what you were doing, but there were some people out there who were giving us all a bad name,” she recalled.

Perhaps in a majority of cases, minpaku listings were in violation of local statutes. But this doesn’t mean they were illegal, as rules for this form of lodging had not been defined. There were a lot of gray areas. Public sentiment against hosts, however, was definitely building.

Initially, minpaku fell under the rules and regulations of the Inns and Hotel Business Act, which was enacted in 1948 to govern the operation of hotels and three other forms of lodging: minshuku (Japanese-style bed and breakfasts), ryokan (traditional Japanese inns), and youth hostels. Minpaku, Northcott explained, is a modern evolution of the minshuku tradition. Changes were needed to keep up with the evolving market, and in March 2016 the Diet passed the minpaku law, formally known as the Private Lodging Business Act.

A big drop in the number of listings accompanied the implementation of the law on June 15, 2018, with Airbnb removing about 80 percent of listings on June 4. In the blink of an eye, the number of available options dropped from 62,000 to 13,800. But this purge, and the clearer rules introduced by the government, led to an increase in the quality of hospitality and allowed the market to mature. Professional hosts and property managers were better able to take advantage of opportunities to build their businesses.

“The people who were just trying to make a buck decided they were going to move on to something a little bit easier,” Northcott said. “That allowed the market to mature, and for professional hosts to really dig into their hospitality style, and to do some market segmentation and outside marketing—all the things that go into a professional business.”

With the Wild West days of minpaku gone, owners must now get a license to rent out a property for short-term stays. The terms and conditions for approvals are strict, while additional fire and safety certification is required. Information about guests must also be reported to the local hokenjo (public health center) every two months. This includes nationalities, dates and length of stay, and the tracking of guests’ movement around the city or country. This health requirement is not specifically tied to Covid-19. It was already in place for hotels as part of the 1948 law.

While the Private Lodging Business Act provides a framework for the operation of short-term rentals, the regulations vary by location. Bookings are limited to stays of 28 days or less—for a total of 180 days per year per facility—but what days are allowed depends on the city or neighborhood. In Tokyo’s Minato Ward, for example, you can only rent on weekends or school holidays. Toshima Ward, in contrast, is rather flexible. And areas that have strong hotel lobbies mostly have been able to keep minpaku out.

Building Success

Once you have your license, what comes next? How do you create a successful business? Some people worry that they might be seen as a pariah in the community. A lot of animosity was shown toward hosts in the years leading up to the minpaku law, and the memory is still fresh for many. But by creating alliances with neighbors and local small businesses, minpaku operators can become valued partners in the community.

The key, Northcott said, is to be transparent in what you are doing from Day 1. Especially in rural areas, if you get to know the officials and explain what you are doing, they are generally ready to help, as they see the benefits to the area. They understand that minpaku can inject significant revenue into the community.

This is related to a minpaku myth that Northcott dispelled during her presentation.

“People, when they start up their business, seem to think that the nightly rate is the only opportunity they have to make money, and discounting is the only marketing strategy they’ve got,” she explained. “But discounting is a bit of a blunt instrument. People who are new to the industry try to use it as a marketing tool, but that’s a race to the bottom. You’re going to get bad guests and you’re not going to have a successful business.”

The better choice is identifying the pain points of your ideal guest to create additional revenue streams. Northcott said she can earn 20–30 percent more over her nightly rate by addressing the needs of guests during their stay. This personal touch includes arranging packages for events such as micro-weddings, anniversaries, honeymoons, and birthdays. Helping create a memorable and special stay is a great way to increase revenue while maintaining a high-quality experience for guests.

And affiliate agreements with third-party service providers, such as restaurants and cafés, private chefs, cultural classes, tour companies, and ticket vendors are another great way to boost your profits while also providing benefit to the local business community.

This approach also allows you to provide guests with an authentic local experience. Many people who book minpaku accommodations want to know what it is like to live in another country. This is an area in which the more personal nature of minpaku excels compared with hotel offerings.

“A hotel is really an accommodation product; it’s a bed, it’s where you stay, and then all your experience is outside the house,” Northcott said. “A minpaku is really a hospitality and experience product. I don’t offer cheap accommodation—that’s not my product. I’m very clear about this in all my marketing. I offer inbound tourists a local experience, and with that they get a whole bunch of information about what it’s like to live in another country, and all the community responsibilities that come along with it.”

Of course, this all takes time and hard work. Northcott noted that minpaku is a full-service hospitality business, so if you’re looking for passive income, it may not be for you. Success requires:

• Having great communication systems and logistics
• Educating guests on community responsibility
• Handholding throughout the guest experience
• Having a 24/7 response system, with redundancies

Beyond the Pandemic

While no one can predict when we will emerge of the ongoing states of emergency, and when Japan will reopen its borders to inbound travelers, Northcott is bullish on a strong recovery.

“Beyond 2021, revenge travel is going to be a thing, there’s going to be an exceptional amount of pent-up demand,” she said. “I know a lot of people in other countries who’ve got their credit card in hand and their fingers hovering over the keyboard. As soon as they can book a flight and the borders are open, they are coming. I don’t think demand is going to be a problem. The tourist marketing machine has already started.”

If you’ve got an entrepreneurial spirit and are looking to invest in something that can be both financially and culturally rewarding, the road ahead looks bright for minpaku.

“It’s a modern evolution of the minshuku tradition,” Northcott reiterated in conclusion. “If you do it right, you have complete control over your profitability and the sustainability of your business.”

While Airbnb may be a name that most people recognize in connection with short-term rentals, Northcott sees them merely as one possible marketing channel, not the only one—and certainly not your identity. You get to build your own brand and you set the course.

“Minpaku allows you to create a unique local experience that lets you have a business of your own that can bring in additional monetization options.”

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Learn more about Northcott’s businesses:
tracey-northcott.com

Learn more about Tokyo Family Stays:
tokyofamilystays.com

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Finding Success through Diversity

Outside directors can play a key role in your business and personal lives

It’s annual general meeting (AGM) season in Japan. I will participate in a few for the boards on which I serve as an independent director and anticipate that this year will be quite exciting, because the calls for greater independence of corporate boards are more insistent than ever. Indeed, some activist investors are setting the table stakes at 30-percent independent outside directors—in line with proposed changes to Japan’s Corporate Governance Code regarding Prime Market companies—before they will even consider voting in favor of a company-sponsored resolution.

Independent outside directors help to broaden the perspective of the board and hedge against the risk of insiders simply following the company position out of self-interest, loyalty, or groupthink. Studies have shown that companies with boards that include independent members tend to outperform those with boards comprising only insiders. As we seek reform in important areas—such as environmental, social, and corporate governance, as well as diversity and inclusion—it is believed that boards with greater independence will push for more rapid change.

The American Chamber of Commerce in Japan (ACCJ) has been advocating for Japan to improve corporate governance, so we are pleased to see, in the proposed changes to the Corporate Governance Code, a greater focus on sustainability, a recommended increase in the number of independent directors, and a call for companies to present a policy and targets for diversity in senior management.

Many Voices

At the ACCJ, we’re fortunate to have a diverse board that could be viewed as being made up entirely of independent directors. While all ACCJ board members are members of the chamber, our positions are voluntary and not paid, and—except in rare cases—we have no other business relationships with the chamber. As such, we could fall within the meaning of outside—or independent—directors.

As an organization, the ACCJ benefits from this tremendous diversity of backgrounds, experiences, and expertise, and the quality and range of the ACCJ’s white papers, statements, and events are a direct result of the diversity and depth of our membership. Having been involved in many ACCJ committees, and in the development of our papers and positions, I can tell you that divergent voices are the engine that drives our ability to effectively advocate on behalf of all members.

These experiences and imperatives got me thinking about the role that diversity, inclusion, and independent voices can play in our own lives and careers. When we look at our personal networks of peers, colleagues, mentors, family, and friends, how often do we see a mirror of our own experience and how often are we benefiting from a truly outside perspective?

Broaden Your Network

In the corporate world, consultants and coaches are paid to deliver their independent viewpoints and advice. But beyond these formal arrangements, there’s much we can do as individuals to broaden our perspectives. It’s comforting to be in the company of like-minded individuals, but staying inside your established circle can sometimes lead to an echo-chamber effect—and that’s not fertile ground for the type of innovation and constructive change we need to feed our energy as business leaders.

This month we’ve launched a revamped ACCJ Membership Directory and we’re piloting Wai Gaya—a new platform designed to facilitate informal conversations among members. Both initiatives offer opportunities for discovery and connection to broaden your network within the chamber.

I hope you’ll take this opportunity to get in the spirit of AGM season by not only expanding your ACCJ network, but by actively seeking out those with different views. Instead of simply connecting with people across your professional or industry sector, make a point of reaching out to people whose resumes and experiences look nothing like your own. Bring a few outside directors into your life. If the model holds true, you might just realize the same kind of performance benefits in your own career that we hope to achieve by pushing for more independence in corporate Japan.

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