Toshifumi Suzuki 1932— Biography - Lessons from abroad

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Toshifumi Suzuki 1932— Biography

Toshifumi Suzuki

1932–

Chairman and chief executive officer, Ito-Yokado Group and its
subsidiary, Seven-Eleven Japan Company

Nationality: Japanese.

Born: December 1, 1932, in Nagano prefecture, Japan.

Education: Chuo University, Tokyo, BA, 1956.

Career: Worked in a publishing sales company until 1963, when he joined
Ito-Yokado Co.; first president of its subsidiary, Seven-Eleven Japan, in
1973; has remained with Ito-Yokado group through 2004.

Awards: Voted the fifth most respected business leader in Japan,

Nikkei Industrial News

, January 2004.

Publications: Coauthor,

The Essence of Management: Spontaneous Managerial Decisions Based on
Conviction

[in Japanese], 2000;

The Starting Point of Business,

2003.

Address: Ito-Yokado Company, 8-8, Nibancho, Chiyoda-ku, Tokyo 102-8455,
Japan.

■ Toshifumi Suzuki, head of the giant Ito-Yokado Group of Japan,
helped revolutionize his country's retail sector, previously known
for its inefficient, hidebound practices. He introduced franchising to the
Japanese retail industry in 1974, as founder of Japan's
Seven-Eleven convenience stores, which eventually grew to a chain of over
10,000 units by 2003, many of them operating 24-hours a day. He pushed the
franchise concept in new, creative directions, and then turned around in
1991 to rescue the U.S. company that originated the brand. He has been a
pioneer in the gradual introduction of business-to-consumer e-commerce and
a forceful public spokesman for economic liberalization and reform.

Suzuki belied all the stereotypes of the consensus-based Japanese business
style and was never deterred by opposition within or outside his company
or by appeals to tradition. Using the leverage of his growing retail
empire, with over $28 billion in worldwide sales in 2003, he succeeded in
streamlining much of Japan's multilayered consumer-product
distribution

Toshifumi Suzuki. ©

AFP/Corbis

.

system and helped introduce a more consumer-driven orientation to product
development and manufacturing. Perhaps his most forward-looking
achievement was Seven-Eleven Japan's integrated data systems, whose
up-to-the-minute sales, customer, inventory, and supply-chain information
dramatically improved productivity, profitability, and responsiveness to
consumer needs. Suzuki devoted more than 40 years to finding creative ways
to wring ever-more value from his company's assets for stockholders
and customers alike.

LESSONS FROM ABROAD

Born in 1932 in the then-rural Nagano, 125 miles northwest of Tokyo,
Toshifumi Suzuki moved to the capital after finishing high school. He
received an economics and commerce degree from Chuo University in 1956,
where, by his
own later description, he was a student protestor; he also did a stint as
labor-union leader. Suzuki left a promising career in publishing sales
after a fateful 1963 meeting with the legendary retailer Masatoshi Ito,
who was then in the process of parlaying his family's modest
40-year-old clothing business into one of the first chains of superstores
under the company name Ito-Yokado. This new type of consumer emporium
combined separate food, clothing, and other stores into one unified
location. It proved to be a successful attempt to work around retail laws
that limited department stores. These laws, passed originally in the 1930s
and strengthened in the 1950s, were designed to protect the omnipresent
mom-and-pop neighborhood markets.

Suzuki became a director of the company in 1971. By then, the small
markets had succeeded in imposing legal limits to the superstores too, and
Ito-Yokado began shopping around for other growth options. In 1973 Suzuki
was instrumental in licensing the Denny's name for a chain of
restaurants. During his repeated visits to the United States to clinch
that deal, he became enamored with the country's thriving
convenience-store chains, especially the brand leader 7-Eleven of Dallas,
Texas. He immediately recognized the potential of convenience stores for
Japan.

Japanese consumers had long been in the habit of shopping several times a
day for small quantities of food. They placed a high value on freshness,
and their homes tended to be small, with tiny kitchens and little storage
space. Frequent shopping and crowded roads reinforced the need for small,
local food shops carrying a limited range of staples. The small shops
suffered, however, from antiquated management styles, poor capitalization,
and a weak position in the face of distributors and manufacturers. It had
become conventional wisdom, shared by most Ito-Yokado executives, that
only large stores could achieve productivity, through economies of scale
and professional management. Backed by economic consultants and industry
experts, Suzuki's colleagues saw no demand for any additional small
markets in the crowded Japanese retail scene.

Acting the part of visionary, Suzuki argued that Southland, the 7-Eleven
parent company, could supply the management expertise and systems that
might transform the Japanese mom-and-pop markets. Rather than continually
fight these politically well-connected entrepreneurs, a well-run chain
might tempt many of them into buying franchises, trading their valuable
locations and customer loyalty for security and higher revenues. Suzuki
managed to win over the company boss, Ito; the franchise ideal may have
appealed to a man who always preferred leasing his locations rather than
incurring the high bank debt typical of land-hungry Japanese retailers.

Suzuki still had to convince Southland executives, who had imbibed the
same conventional wisdom about Japanese retail, but again his dogged
determination won the day. In November 1973 Southland agreed to license
its name and supply expertise and systems, in exchange for a 0.6 percent
gross-profit royalty and a pledge to open 1,200 stores within eight years.

7-ELEVEN WITH A JAPANESE FACE

Aware that their new venture was unprecedented, Ito and Suzuki set up a
new subsidiary, Seven-Eleven Japan, with Suzuki as president and Ito as
chairman, and staffed it from outside the retail field. The new company
copied two of Southland's key policies: it would not try to match
the low prices of nearby supermarkets, and it would keep its accounting
system transparent to franchisees in order to maintain their trust.

Suzuki also brought over 7-Eleven's innovative computerized
point-of-sale registers, which Southland used primarily for inventory
control. In his hands, this technology acquired a far more important role.
Constantly upgraded with software developed by outside contractors
including Microsoft, rather than by a large in-house
information-technology department, using hardware codeveloped with
industry leaders such as NEC, these simple point-of-sale terminals and
their successors evolved into one of the most sophisticated integrated
systems of any company in the world.

Seven-Eleven Japan's system eventually came to link tens of
thousands of cash registers, hand-held computers, and other equipment
throughout the supply chain. Every employee was trained to use the
system's analytic tools, which exploited a wealth of customer,
sales, weather, and other relevant data, as a guide to daily ordering. The
integration of suppliers and distributors led to unprecedented response
times, as freshly made products ordered in the morning were delivered
before the evening rush. With such accurate data on sales trends, Suzuki
was able to forgo the standard Japanese practice of returning unsold
goods; in exchange, he gained full control of shelf space and a lower
wholesale price. The system also facilitated real-time two-way
communication.

By 1981, with over one thousand stores in operation, Seven-Eleven Japan
was listed on the First Section of the Tokyo Stock Exchange, which
includes only large, established companies. Several other
convenience-store chains had emerged by then but none could shake
Suzuki's market domination, especially in the Tokyo area. By the
late 1980s Seven-Eleven Japan (along with other Ito-Yokado initiatives
like the Mary Ann specialty stores for women, founded in 1978, and
Robinson's department stores in 1984) had grown so large and
profitable that it began to outshine its U.S. namesake.

When Southland ran into trouble later in the decade, Seven-Eleven Japan
helped out by taking over the chain's 58 Hawaii units in 1989. In
1991, in exchange for a $430 million investment, Ito-Yokado acquired 70
percent ownership in Southland, along with the right to retrofit
Suzuki's key innovations
in the U.S. network. With Suzuki as a very active president and chief
executive officer and Itoas chairman, Southland closed some 1,200 of its
6,700 stores; the firm's internal-distribution network was replaced
by a third-party wholesaler; product selection was improved and pricing
rationalized; and most important, an integrated information system modeled
on Japan's was installed across the chain. Despite sustained
opposition from many franchisees, who objected to losing their right to
choose manufacturers, products, and distributors, Suzuki plowed ahead. By
1994 the U.S. unit was again making money. Profits—and new
stores—continued to pile up throughout the decade and into the new
century, and the company's name was formally changed to 7-Eleven,
Inc.

MANAGEMENT STYLE

Suzuki was always known for being hard on staff, loudly demanding they
"adapt to change" and "listen to the
customer." He never missed an opportunity to proselytize on the
value of information technology among employees, franchisees, and
suppliers. During all the years of expansion Suzuki held firm to a
horizontal management structure, with only a handful of levels between
franchisee and top management. He enforced a similar streamlined
product-distribution system with regional depots and specialized trucks
delivering similar products just in time to all units in an area; this
network was organized by Seven-Eleven Japan, but the components (e.g.,
warehouses, trucks) were all third-party owned, in keeping with
Suzuki's goal of profitability rather than volume or assets.

Suzuki enforced his faith in communication through regular meetings with
managers at all levels. Some 160 "zone managers" were
summoned every Tuesday to the modest, rented Tokyo headquarters to share
experiences and opinions about even the smallest details of marketing, a
practice followed by no other Japanese firm. Several thousand other
employees and franchisees were brought in for weekly meetings and
twice-yearly conferences.

CHANGE AS A PERMANENT FIXTURE

In an interview reported in the book

Creating Modern Capitalism

(1997), Suzuki said, "I don't feel any sense of
achievement. The world changes too much. A marathon has an end, but the
world does not stop." Even in his late sixties and seventies he
remained actively involved in many Ito-Yokado Group initiatives. In 2001
he won rare approval from the cautious government financial authorities
for an innovative idea; he launched the independent IY Bank, offering
credit cards, loans, and ATMs, all at existing convenience stores. The
company's forays into Internet marketing began with a bookselling
partnership with Softbank and a book wholesaler in 1999; most books are
paid for and picked up at local Seven-Elevens. The next year he engineered
a $375 million partnership with NEC, Nomura Research, and Sony, called
7-dream.com, that promised to offer 100,000 products and services over the
Internet. The local stores were again expected to be the key—most
products would be picked up there and even ordered over public-access
terminals.

While still a very active chairman, in the twenty-first century Suzuki
took on an elder-statesman role in Japan. He served as vice chairman of
the prestigious Keidanren business organization and sat on important
commissions on the environment, business ethics, and long-term economic
strategy. He also worked to expand Ito-Yokado's presence in China.

See also

entry on Ito-Yokado Co., Ltd. in

International Directory of Company Histories

.

sources for further information

Bernstein, Jeffrey R., "7-Eleven in America and Japan," in
Thomas K. McCraw, ed.,

Creating Modern Capitalism: How Entrepreneurs, Companies, and Countries
Triumphed in Three Industrial Revolutions

, Cambridge, Mass.: Harvard University Press, 1997, pp. 490–529.

Earl, M. J., and D. Feeny, "How To Be a CEO for the Information
Age,"

MIT Sloan Management Review

41, no. 2 (2000), pp. 11–23.

Sakamaki, Sachiko, "Ito-Yodako is Shaking Up Japan's Staid
Retailing World,"

Far Eastern Economic Review

, April 4, 1996, pp. 54–55.

"Seven-Eleven Japan: Blending E-commerce with Traditional
Retailing,"

Economist

, May 24, 2001.

"Suzuki Toshifumi on Consumer Preferences,"

Look Japan

, August 1998, pp. 24–25.

—Barry Youngerman

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Suzuki, Osamu 1930–

Svanberg, Carl-Henric 1952–

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Toshifumi Suzuki, born in 1932 in Nagano, Japan, pursued his education at Chuo University, where he later described himself as a student protestor and a labor-union leader. After an initial career in publishing sales, Suzuki encountered a pivotal opportunity in 1963 when he engaged with Masatoshi Ito, who was developing the Ito-Yokado system, which unified various retail segments into a single consumer emporium. Suzuki became a director of the company in 1971, a time when the existing small markets were also establishing legal limitations on superstores, prompting the Ito-Yokado group to seek new growth avenues.

Suzuki discovered the potential of the thriving convenience-store chains in the United States, particularly the 7-Eleven brand, and recognized their potential for the Japanese market. He observed that Japanese consumers habitually shopped frequently for small quantities of food, valued freshness, and often resided in smaller living spaces, reinforcing the need for small, local food shops. However, conventional wisdom within the retail industry, shared by many executives, suggested that only large stores could achieve necessary productivity through economies of scale.

Acting as a visionary, Suzuki argued that the parent company of 7-Eleven, Southland, possessed the necessary management expertise and systems to transform these traditional mom-and-pop markets. He sought to incentivize local entrepreneurs to adopt the franchise model, suggesting that a well-run chain could persuade local proprietors to trade valuable locations and customer loyalty for security and increased revenue. This persistence led to an agreement in November 1973 for Southland to license its name and systems in exchange for a royalty and a commitment to open numerous stores.

To establish Seven-Eleven Japan, Suzuki, as president, and Ito as chairman, deliberately distanced the new subsidiary from traditional retail practices by ensuring it would not compete solely on low prices and maintaining transparent accounting for franchisees. Suzuki also integrated 7-Eleven's innovative computerized point-of-sale registers, evolving them into an integrated system that utilized data from cash registers, inventory control, and supply chains. This system centralized customer, sales, and supply-chain information, enabling unprecedented response times and allowing the company to forgo the standard practice of returning unsold goods in exchange for control over shelf space and wholesale pricing.

By 1981, Seven-Eleven Japan had achieved significant market dominance, and its growth allowed it to surpass its U.S. namesake in profitability. When Southland faced difficulties later in the decade, Seven-Eleven Japan played a supportive role by taking over the Hawaii units. In 1991, Ito-Yokado acquired a majority stake in Southland, incorporating Suzuki's key innovations into the U.S. network, which involved streamlining distribution, rationalizing pricing, and installing an integrated information system modeled on the Japanese framework across the chain, despite opposition from some franchisees. This integration resulted in the formal renaming to 7-Eleven, Inc.

Suzuki’s management style was characterized by a demand for adaptability and a strong emphasis on information technology. He fostered a horizontal management structure and instituted streamlined product-distribution systems using third-party owned components, focusing on profitability over sheer volume. He championed communication through regular, intensive meetings with managers at all levels, a practice unique among Japanese firms. In his later career, Suzuki remained innovative, launching initiatives such as the independent IY Bank and pioneering e-commerce ventures, including partnerships that integrated local stores into online product fulfillment systems. In his final years, he transitioned into an elder-statesman role, serving on important commissions concerning business ethics and economic strategy, while also expanding Ito-Yokado's influence into China.