Mercari CEO Office: 1 Year of Reforming Business

Many people imagine that a CEO Office has a secretarial role, mainly carrying out tasks related to assisting the CEO. However, this is not the case with Mercari’s CEO Office. They support the CEO’s decision making by stepping into managerial tasks, from setting strategies, to creating structures to manage the organization.

It has been exactly one year since the CEO Office was created. Today we would like to share a blog entry, written by none other than Shuji Kawano, our Head of CEO Office. The original text is written in a very unique way, so we thought that preserving its original form would be the best way to give you an idea of what the CEO Office is like.

*The following is the original text from Kawano’s blog.

Introduction

• – What does scalable management need? The answer to this question in today’s business environment is often abstract. Is it values? Trust in people? Charisma?
• – The instincts of an organization constantly trying to expand while rejecting new things, and the instincts of capital seeking profit, trying to win a struggle for survival. The role of Mercari’s CEO Office is to work together with the CEO to face the dilemma of a company that needs people to make profits, but loses profits when using people.
• – Topics like management that the CEO Office handles are abstract, but strategic thinking, extensive practical knowledge, experience, and leadership are necessary when it comes to planning and execution.
• – Foreseeing any issues that might hinder scaling, and taking anticipatory action. Getting to the bottom of the problem, tackling issues that appear to be bigger and more complex, and then organizing them one after the other, addressing them in a simple but impactful way.
• – So far, at the CEO Office we have taken many initiatives, both big and small; creating the Group’s Roadmap, promoting a manager talent development program, (as M&A’s control tower) making Michael our wholly-owned subsidiary, and pulling out of the UK and Souzoh projects, are symbolic examples of these actions. We are currently working on a major update to our fundamental OS to allow the organization to withstand a scale of tens of thousands of people.
• – We want to do this not in emergencies, but in normal times. This is because we should be calm and act while we are healthy, instead of rushing to have surgery once we get sick. People tend to get scared when I talk about this, though.
• – As the name suggests, the CEO Office is the team directly below Shin (Shintaro Yamada), Mercari’s representative chairman. It was created in July 2018, exactly one year ago. I’d like to talk to you about the team’s past year and its present.
• – Since I don’t usually make public appearances, some people might think that I’m Shin’s secret agent, or that I’m some kind of hologram. Well, here I am.

Development: The Pandemonium of Rapid Management Growth

• – The main battle in Mercari is against serial and irreversible decision making.
• – Senior management runs around every day helping build the organization, as well as regulating the speed of business development, based on its limitations. So we make the focus of our business more clear, simplifying the battle and maintaining growth.
• – We concentrate on things that add substantial value, without recklessly trying to expand through M&A, so when implementing new businesses, we take into account the balance between innovation and the company’s overall productivity.
• – It does have a cold side, but that is because management is an economic activity. At Mercari, all members are expected to care about our finances.
• – Additionally, the management skills required to handle tens of people, hundreds of people, and thousands of people are all different. We try to maintain the same dynamism and sense of crisis that we had as a startup, but in reality, our scale is that of a major corporation. The truth is that we have the soul of a venture capital and the governance of a large organization. Because of this, people managing this transition period require the skills to provide a scalable structure, and also to find consensus with stakeholders to move forward.
• – If you can’t get the stakeholders’ approval, you will naturally have to stop halfway through, and the team members that were working on that will be weary. If this goes on, a feeling of defeat takes root within the organization, and that can lead to the organization weakening. I believe that our management style needs to be refined.

Turn: Order and Chaos in the Executive Meeting

• – I once had the chance to attend one of the executive meetings that I would be participating in after joining Mercari. What I witnessed there was chaos. I remember that my first impression was, “Are these executives fighting?! This company is outrageous.” However, once the meeting ended, everyone got along just fine at dinner. They were like young friends going at each other by the riverside, and then walking home together as if nothing happened.
• – At the meeting, each of the executive members would discuss their agendas in a very frank and open way. Executive meetings at most companies tend to have a kind of “non-aggression pact,” where one doesn’t encroach upon someone else’s area of control, but that didn’t exist here.
• – There were also very strict rules and order when contending at the meeting. Before the meeting, everyone is supposed to look over the documents that were prepared in advance, so all questions, and even their answers, had already been noted down. And this was before starting the meeting. Any items on the agenda that didn’t have a clear argument, a proposal from the people involved, or an action date would be rejected one after the other.
• – Shin always says that the executive meeting is a place to bring everyone’s wisdom together, but Fumi (Fumiaki Koizumi, Chief Operating Officer), Hama (Yuki Hamada, Chief Product Officer), John (John Lagerling, Chief Business Officer/US CEO), Naoki (Naoki Aoyagi, Merpay CEO), and Tamo (Hirohisa Tamonoki, Mercari Japan CEO) are all having a real fight of thoughts.
• – For the most part, whether a business venture is a hit or not depends on luck, but assuming that the business is a hit, it is the management that defines whether it grows a little or a lot. This is something I was reminded of in that moment.
• – Also, our goal as CEO Office members is to not let the CEO make decisions.
• – This is a concept that can be misunderstood at first glance, so let me explain.
• – Making decisions is difficult when there isn’t enough information, or when there is, but the information is not organized. Even if the problem is simple, if these conditions are not met, you end up depending on intuition to decide.
• – And even if the problem is difficult, if a fact-based analysis of the situation is properly made, the issue is organized, and the people involved have expressed their intentions, then it’s easy to make a decision. Because the choice then becomes so obvious that making a decision is not really necessary.
• – I want the CEO to only have to make decisions once or twice a year. Those would be big bets, like taking a leap in the dark, with little information that cannot be analyzed.
• – I myself haven’t been able to make big bets in life, and I’m still sitting in the dark.

Conclusion: An Update of My Current Initiatives (Scalability, Not Manpower)

• – Mercari’s strategy so far has been to improve the organization’s execution power in order to improve its management. In short, we concentrated on hiring talented people. This allowed dependent senior management’s decision making to also improve, and we have achieved a striking growth as a result.
• – However, problems that we were able to solve so far through skilled manpower now need to be solved by many people across the organization, as the volume of issues to address increases throughout our organization and our business. So what is needed are scalable structures that allow for everyone’s skills to blossom.
• – It sounds difficult, but tackling this is a fundamental part of any business operations.
• – We establish our vision (roadmap) based on our mission, and invert that to think of what we need to do now. Establish the necessary human resources; secure, place, and train them; quantify our business activities (visualization); increase productivity while reducing risks; and increase our scale. Simply, we are faced with these basic rules.
• – It is said that Mercari’s workplace is “chaos” because we don’t make rules. But we need to start organizing that chaos, not just embracing it. After doing that, I want to take on new chaos with a higher degree of difficulty.
• – Again, right now what we need to be aware of is creating scalable structures. To improve their effectiveness, we should include them in our everyday activities. People who can do this will become an important part of management.
• – We want to things like strategy or finance to be something not just for senior management, but for each and every member.
• – As a result, we will be able to make hard decisions faster. To do this, we will take a high-level approach and redesign everything, from the way the board of directors should be, to our organizational structure.
• – The main purpose of restructuring these business processes is often to improve productivity, but it is actually directly related to improving governance.
• – Let’s all bring our wisdom together to create Mercari’s next stage!

Shuji Kawano

Head of CEO Office. After working in a joint investment fund between Livedoor’s investment bank division, Goldman Sachs Securities, and SBI Holdings, he joined Industrial Growth Platform, Inc. (IGPI), a strategy consulting company. After that, he started his own business. He was also head of Gunosy’s Management Strategy Office when the company listed. He joined Mercari in July 2018. The drawing in the photo is his Slack icon.