The Sharp-Edged Fool

In the business world, whether something is "rational" or "irrational" is sometimes decided by whether or not there is a precedent. If there is a precedent and you know it produces desirable results, it becomes "rational."

Take Amazon, for example.

While we now know that Amazon is a titan of information technology and that its strength lies in technology, back in the late 90s and early 2000s, at the time of its founding,

"I invested because I thought it was light on its feet since it was e-commerce, but all Jeff Bezos does is build massive warehouses.
It costs 50 million dollars to build one logistics center, and the same amount to operate it... is he crazy?"

This was the honest, unfiltered opinion of Wall Street.

However, as time passed, it became clear that Bezos's strategy was hitting the mark.

Around the same time, the major bookstore Barnes & Noble started online sales, but it was useless.

They operated with the mindset of "just putting the books in our own warehouse online," but they didn't even know if the inventory in their own warehouse actually existed or not. As a result, orders wouldn't arrive. Once it gets to this point, it's the world of old-fashioned "inventory quality," and if you neglect that and move to the internet, there's no way it will go well.

When I lived in New York, I had trouble with things not arriving several times. Even when I asked via email, I wouldn't get an answer. Well, of course not. Because they "didn't know" (laughs).

I often see the term "Amazon Effect" (being kicked by Amazon) used for Barnes & Noble's slump, but if you ask me, it's their own fault.

Now then;

This diagram is a version of one by Ken Kusunoki, whom I respect (Partial Rationality and Overall Rationality, Figure 5.2 from "Competitive Strategy as a Story"), arranged in the Sakamoto style.

The horizontal axis is the whole, and the vertical axis is the part.

For example, GO, which says "you can call a taxi with your smartphone," is so eager to increase the number of taxis that it has drifted away from the "comfortable travel space" that users truly want. Elderly drivers fumble during payment, and young drivers don't know the roads; in terms of parts, it is extremely irrational.

However, as a management company, GO appeals to rationality by saying, "You can easily call a taxi with your smartphone. You can also complete payment inside the car." In other words, it is a partially "irrational" but overall "rational" entity, which can be called a "rational fool" in the bottom right. I should clarify that "fool" is an expression of affection; try having a girl from Osaka say "Aho ya naa..." (You're such a fool...) to you once. You'll melt (laughs).

Irrationality means "there is no precedent" or "we don't know." Just because there is "no precedent" or "we don't know" doesn't mean it's bad; that is where the fun of business lies.

For example, at JOYWOW, where "it's all about being known," the website is just this one page.

It really is making a fool of people, but when you have "intense movement" like JOYWOW, a static website doesn't fit. Posting on social media is the most natural fit. So, that's why I do it this way.

This is what a "sharp-edged fool" is. The parts are rational, but when viewed as a whole, it is "irrational."

The one with the greatest potential is the "sharp-edged fool" in the top left.

The reason why large companies stop producing interesting products is that they try to make both the "parts" and the "whole" "rational." As a result, an "honor student" is born, but it is easily copied. And then, similar products end up lined up on the shelves. In the first place, honor students are boring.

The businesses around me that have broken through are all "sharp-edged fools" that are "irrational when viewed as a whole."

Take Neco Republic, for example.

Individual measures are rational and easy to understand. It's about saving cats, right... but when viewed as a whole, as a business model, it's not clear "where the money comes from and how it circulates" (laughs). It's irrational. But that becomes its edge, and it gathers everyone's support.

Neco Republic is overflowing with love for cats, starting with its founder Asaka (Asaka Kawase) and including all the staff. Their ability to push past 'irrationality' and turn it into a 'sharp edge' is their greatest strength.

Let's aim to be sharp fools!