Shintaro Yamada’s Secret Superpower: “Behavioral Design”

It is the duty of the Management Strategy Office to get involved with the upper management, support the CEO’s decision-making, and create business strategies as well as organizational operation mechanisms. The manager of the Management Strategy Office, Shuji Kawano (SVP of Strategy) is currently in charge of not only management/international strategies, but also the Security, Corporate Engineering (IT infrastructure), HR, R4D, and Sustainability (ESG & SDGs) teams.

He is also the author of today’s article. Because we felt his great passion in the way he bullet pointed his document, we decided to preserve the format. (Translator’s note: Shuji’s article is formatted in the classic kishotenketsu structure forming the skeleton of all Japanese narrative works. We also decided to preserve it as is because we felt… well, you guessed it, his great passion.)

*The following is (an English translation of) the original text from Kawano’s article.

Hello to everyone who was clickbaited by the title. This is Shuji.

This is my first Mercan post in two years. (I thought I did a good job last time, but I received the very constructive criticism that it was “confusing”.) With that in mind, this time I will take further advantage of the fact that Mercan is our company-owned media, and write closer from the heart to give you more of my unfiltered self. (And by “write”, I of course mean “type”.)

Ki/Introductions: Shintaro Yamada’s secret superpower: behavioral design

• People outside of the company who know Shin (Shintaro Yamada) often say that he is a “nice, normal person, and not at all like what you’d expect from a startup CEO.” He also calls himself an ordinary guy. Indeed he isn’t very emotional or hungry for the spotlight, a rare commodity amongst startup CEOs. He doesn’t show off his mansion in fashion magazines, pop up on variety shows, or tweet original poems that are thinly-veiled love letters to how high-and-mighty he towers above us mortals.
• His actions, altruistic. His words, never bombastic. A rare entrepreneur, bravely facing complicated social issues. (One of his personal projects is the Yamada Shintaro D&I Foundation, a scholarship program for young women in STEM, directly addressing structural issues standing in the way of D&I.)

• There is also another side to him not well known to others: his power of “behavioral design”. (I have taken the liberty to name it so myself, thinking of it as his superpower.)

• ”Behavioral design” may sound complicated, but in essence it is very similar to UX design, a term often heard in the IT industry.
• To create a good product, you must create good UX. We painstakingly fine-tune variables, and endlessly update the layout, color, text, and dimensions of every single element that is displayed on the screen, all to make sure our users take the ideal action on that screen, don’t we?
• Because Shin is originally a Product Manager, he approaches the organization as he would a product. (Or at least I think that he does.) He has his own infinite amount of variables that he has to mull over and fine-tune so as to create a workplace where everybody can excel at what they do. For example, he is particular about the structure of every document he requests to be created, down to each link included in it, and their destinations too. When it comes to the actual text, he insists on checking it down to every single preposition to make sure that they are safely attached to their nouns just where they belong.
• Anyone who hasn’t yet realized that this level of fixation on detail is what allows for the creation of a scalable organization could be very annoyed by this. Actually, so could everyone else. Hair-pulling, fingernail-chewing levels of annoyance.

• Good behavioral design has the power to bring people to action, regardless of how aware or receptive they may be. I bet that, like me, you also have a lot of experience preparing something a certain way with hopes that people will act how you want them to, only to see it crumble. That’s not a fault of your skills or abilities; it’s just a result of bad design.
• Allow me to explain with specific use cases, as I expect the leaders in Mercari to adopt the approach of behavioral design to bring about further innovations and reforms.

Sho/Developments: Behavioral design drives survival strategies

• Our industry is a fast one. Irreversible changes are happening to the environment surrounding all of our Group businesses (production structures, business models, working styles, etc.) blurring the lines between media, EC, payment, and SaaS that were relatively clear up to now.
• And more black swan events, like the pandemic, will happen in the future. As the essence of the fight between platforms is evolving, it is possible that the logic of how to make a profit will change along with it. There will be companies that quickly adapt to those changes, and we cannot afford to be left behind.

• The organizational skill that will carry us through these times can only be adaptability. (It’s a word you keep hearing over and over again, but there aren’t any textbooks that properly explain how to acquire it.)

• This is easy to overlook from inside the company, but Mercari has a transformational power that is beyond this world.
• We cleverly switch between top-down and bottom-up whenever the situation calls for it. Many elements of our business/organizational structure, many of the systems within, and even our management model are less than a year old. Even after the company has grown to this scale, we keep making major updates every year.

• How did we build this transformational power? It’s part of Shin’s expert design.
• Now I will explain case by case.
  • • • • First, designing the open management model.
• • • • • • • • • • • Please refer to my first Mercan article for a description of how we run executive meetings.
                    • All topics are raised by the day before the meeting, in a format that allows for easily sorting out the discussion points. Questions and comments are added before the meeting and answered on the document as well. And since all of this is done before the meeting begins, the discussions are short, multi-faceted, and deep. This is the source of the speed of our business. The process and contents of all discussions are then immediately shared within the company.
                    • The Roadmap (will explain below) that contains the company’s executive direction is created with the involvement of many parties, and is routinely updated. (Even at this business/organization scale, we do pivot often.)
                    • Many of our systems are implemented after heavy discussion involving the whole organization. For example, our new work style policy announced recently, Your Choice, came together after repeated discussion of its philosophy and specifics, built as a new normal working style designed to improve productivity and competitive power for hiring. As a result, we were able to withstand the powerful shakes brought about by an unforeseeable event.
• • • • • Designing a diverse and dynamic organization
• • • • • • • • • • • When addressing major issues that are difficult to resolve in just our natural state, the CEO himself takes the lead to drive the organization. (Pushed for global hiring activities soon after establishing the company. Established a cross-organizational D&I Council under the direct report line of the CEO so that D&I activities can take precedent in adapting to internal dynamic shifts. Observing the changes in the marketplace brought about by the pandemic, he established the Experts Committee, allowing for the creating of our Marketplace Principles.)
                    • Emphasizing equal opportunity, we will keep building our candidate pools without leaning towards any particular group, creating diversity naturally.
                    • Once a quarter, report lines are updated across multiple groups. Throughout the year, most of these groups undergo radical reorganization. Creating positions to select exceptional people for, while also revising the organization under the supervision of a strong leader. Rational progress side by side with intentional chaos.
                    • On the other hand, as management duties and work responsibilities tend to become vague with every organizational change, we always make sure to take them apart and make them clear.
• • • • • We will strengthen not just hiring talent, but growing it as well.
• • • • • • • • • • • They say 70% of growth happens on the job, while the rest is through feedback and studying. That is why is it a major challenge for us going forward to build the optimal assignment model, as well as programs for learning and feedback (coaching, mentoring, sponsoring, etc.).
                    • The mindset of managers, who are the builders of company culture, will be especially important as the era of a hybrid working style begins, so right now we are focusing on designing ways to improve management power.

• • Now let me introduce the design of maintaining discipline among changes.
    • • • • Redesigning the Board of Directors
  • • • • • • • • • • • We reorganized the board to have outside directors consist the majority, and now the possibility of the CEO himself getting fired is on the table at all times. This leads to a strong sense of discipline and clean execution of all top management duties.
                      • At board meetings, we narrow our focus on pre-selected topics, while also having a time slot for free discussion, allowing us to take the proper time to discuss important matters that will decide the future of the company. This gives our executives, whose minds are always busy with their daily work, new insights from various outside perspectives. As a result, the top management has the courage and support it needs to make the tough calls and take the right risks when they are necessary.
                      • Of course, the process and contents of board meetings are also shared within the organization. This makes it easier to reinforce or rewrite the hypotheses brought up in the meetings.
                      • These policies not only strengthen our governance, but they also improve our productivity.
  • • • • • Designing how to use a roadmap
  • • • • • • • • • • • We’ve created the roadmap for the path that eventually will take the whole Group the achievement of the mission. A clear description of our destination to help everyone have the same image in their minds. Next to it, the essential policies of our Group, and the keywords of the changes we will bring. This gives us the autonomy to decide the future path of our company by ourselves.
                      • Our three-year business plans and yearly budgets are just what you get when you add figures to the roadmap. This prevents any conflict or contradiction between the plans and strategies of the various Group businesses, and brings together the many little moving parts into an entirely functional whole.
                      • OKRs are stretch goals, set to help achieve roadmaps. By setting quantitative objectives for our OKRs, we don’t seek the comforting protection of the abstract. (What I’m trying to say is that we set our objectives in a way that makes it crystal clear whether we achieved them or not.)
                      • The design of this consistent and streamlined process for how we set objectives between the roadmaps, business plans, and quarterly OKRs prevents having multiple objectives clashing with each other and confusing everyone.
                      • Also, by reviewing past roadmaps, you can see that we’ve achieved most of the goals we’ve set over the past years, and let that sense of success wash over you.
  • • • • • Some other designs worth mentioning:
  • • • • • • • • • • • The design of building effective teams
                      • The design of not repeating failure
                      • The design of creating and coordinating diversity
                      • The design of winning at hiring
                      • The design of going Bold on the offense
                      • The design of switching to defense
  • • • • • …and so on and so forth. I can list maybe a thousand designs right off the top of my head. (And I actually would really like to dive deeper into it and share the designs I know with you all. Let’s set something up some time.
          • We will keep leveraging digitalization and keep building long-standing mechanisms that don’t rely on specific individuals.
          • Moreover, we will not stop improving and iterating every step of the way. PDCA for all.
  • • If you are a Mercari employee, there will be many times where you will have the experience of discovering the idea behind a certain mechanism, or maybe noticing a bump in it that deserves to be addressed. Through such experiences, you will be able to have the perspective to create your own designs that can reshape the organization and the business.
    • We want to be adaptable and disciplined, and change from “a company that went through rapid short-term growth” to “a company undergoing continuous long-term growth.” However, the strategies and management model to get us there are not yet in place, and building them comes with a lot of challenges. (So please contact and attract all the high-skilled people you know so that they join Mercari!)

Ten/Twists: The flare for reacceleration, shot mid-pandemic

• • • So we finally launched our new online store service “Mercari Shops”, mostly intended for creators, producers, and small business owners. Its advantages are that it is easy to use, and easier to sell items on. It is our fourth pillar, which we intend to invest in for a long time, so that we can become an essential service for as many business owners as possible.
    • And we have also established Mercoin, which plans and develops services related to cryptoassets and blockchain technologies. There, we intend to develop services for our users’ asset management and technologies to guarantee the authenticity of physical and digital goods, and continue to expand our platform to keep delivering the experience of having safe, secure, and simple transactions.
    • We will speed up our investments into offline expansion too, so that we can have more brick-and-mortar touchpoints and strengthen our relationship with our users, which had been confined to smartphones until recently.
    • And a little bit about global expansion. We had to put our plans on hold during the pandemic, but now the preparations for entering a third country are moving along again. It’s not like we have to ask anyone to make bold challenges, everyone is always in the mood for it anyway. And maybe this isn’t the most appropriate place to say this, but all this action is bringing plenty of chaos into the organization .
  • • As you can tell from all this, Mercari is a company of gigantic “try”s happening one after the other. With a healthy dose of ambition, and no limits defined for the business, or the organization, or the individuals, each and every member is valiantly taking on bold risks. Seeing and feeling that vibrancy in the air makes me think that despite our total scale reaching 1700 employees… this is no “corporation”. This is a mere “company”, with that venturous startup spirit still burning red, hot, and dazzlingly bright. On the other hand, considering just how colossal the total body of our stakeholders, starting with our users of course, and every other party involved with the company and its services, has grown to be, I can perhaps even say that Mercari is in a way a romantic company, taking on social issues with great hope and sentiment. (Allow me to take this moment to come clear and apologize as I am definitely plagiarizing this part from this video right here. )
  • • For most of the previous year, we limited our business operations by implementing a “safe mode” in response to the impact of the COVID-19 pandemic. But even then, our members, ever so vigilant, were sowing the seeds that would later grow and bear fruit for the future of the company. And at the end of 2020 we proudly announced the end of safe mode. The CEO himself called for “aggressive growth”, effectively shooting up a flare, for the entire company to see, signaling the time for reacceleration.

Ketsu/Conclusions: Our future mission

• • • In order to lead a circular economy, Mercari has to expand into a vast, vast market. That means we also need a highly sophisticated organization that can make it possible.
    • With everything I’ve said up to this point, you might think we are already there as a company, but we are still a novice startup not yet making it to global standards. I want us to achieve those standards ASAP, and then become the benchmark for defining best practices for the whole world.
  • • There are an unlimited number of pegs that you need to turn so we can keep this endlessly expanding guitar somewhat in tune. We will keep redesigning any part of the whole that doesn’t function. However, the process is bound to cause friction and contradiction. There will be times that require making a call on matters that are not quite black-and-white, and uniting people, who don’t necessarily see things the same way, on a common cause. Each of you will have to be a leader capable of leading people towards innovation and transformation.
    • Our job is to face any vague matter head-on, reason our way to finding the “Mercari answer” to the problem, put it in motion, and produce results. And of course, enjoy the process while you’re at it.
    • It is you who will choose the future of Mercari. Let’s make Mercari an even more special company by this time next year through behavioral design that can bring about change, and contribute to the society of the future!