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[Business] EP30 - The book successfully predicted my company's chaos and helped us eventually increase 2921% net profit | 《Confession of Self-Made Millionaires》 by Masanori Kanda

• Meara He • Season 2 • Episode 30

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Last year, our company's year-over-year net profit increased by 2,921%. If there is one book that I believe contributed most to this transformation, it's the one I'm going to talk to you today. It's an easy-to-read business novel, but it unveils the hidden pitfalls all business owners annoyingly step into. This book reveals what these pitfalls are, how to prevent them, how to prepare for them, and how to address them when they arise. This book saved my company. Listen in and discover its secrets for yourself.





Show Note

Book Title in Traditional Chinese: 成功者的地雷
Book Title in Japanese: 成功者の告白： 5年間の起業ノウハウを3時間で学べる物語
Author: 神田昌典 Kanda, Masanori


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Composer / Writer / Author: KROTOV VLADYSLAV, IPI: 378003660, MoodMode.

Speaker 1:

Last year, our company's year-over-year net profit increased by 2,921%. If there is one book that I believe contributed most to this transformation, it's the one I'm going to talk to you today. It's an easy-to-read business novel, but it unveils the hidden pitfalls all business owners are knowingly step into. This book reveals what these pitfalls are, how to prevent them, how to prepare for them and how to address them when they arise. This book saved my company. Listen in and discover its secrets for yourself.

Speaker 2:

Welcome to A Book with Bubble Tea With your host, mira Hee. Here I share takeaways from East Asian books on parenting, startups and self-growth. Seeking insights beyond the typical English shelf, want to be a better parent and achieve more in life? You are in the right place. Grab your bubble tea and let's dive in.

Speaker 1:

Hi everyone. Welcome to the new episode of A Book with Bubble Tea. I'm your host, mira. How is everyone doing? It's been a while since we've talked about any business books, right? So in today's episode I'm excited to share a business book that I absolutely love.

Speaker 1:

The book is titled Confession of Self-Made Milleniares. In Japanese it's Seiko-Sha no Kokuhaku, go Nenka no Kigyo. Know how o Sanjikan de Manaberu Monogatari. And if we translate it directly from Japanese, that is the story of a successful entrepreneur for you to learn the five years experiences of doing a business in only three hours. And this book is written by Masanori Kanda. Masanori Kanda is one of Japan's most recognized marketing consultants and best-selling authors. His bugs have sold more than 3.5 million copies combined, and the book today is actually written in a novel form, so it's very easy to read. It reads like a novel, but the author said although the book is a fiction, the story is not fictional, and I'll tell you why.

Speaker 1:

The book narrates the story of Taku Aoshima, whom I'll refer to as Taku in this episode. Through Taku's journey, the author guides it through the process of starting and running a business, driving into the next level of success. But if you think that's it, this is just a typical book telling us how to start our business, then you are absolutely wrong, because the purpose and the value of this book is to highlight all the challenges every business owner will face, but without knowing them. These problems include, like the natural life cycle of products and the conflicts of leadership style at different stage of business, and how to handle your family tension, family crisis or even crisis at a personal level. So this book is more than just a guide to market success. It reveals hidden pitfalls that many business owners or entrepreneurs are unaware of, yet surprisingly, many fail due to these same issues. It seems like the more successful one person is at work or in business, the more likely that person will have some crisis, and these are not addressed in any business classes or not in any MBA, but it keeps on repeating themselves.

Speaker 1:

The author says he first experienced this firsthand. So one day he returned home from a long day of working feeling exhausted, and he found his wife left the letter of divorce in the mailbox, or his young son, who was only three years old back then, suddenly being diagnosed with some serious health condition. Or his employees fell ill, one after another, or even his consultant tragically committed suicide Committed suicide. The author first thought these experiences are all isolated, that he's just having bad luck, but later he noticed similar patterns happened to many of the people business owners that he helped to build successful businesses. He said he has seen this happen to thousands of business owners and he started to realize there is a pattern in it, because there are some underlying problems that all business owners experience, regardless of the size of their businesses or the industries they are in or the type of products or services that they sell to the market, or even like the family dynamics. Despite all these differences, the companies, the experiences that business owners go through are very similar, and this book is to help us address those hidden pitfalls that we aren't aware of so we can better prepare ourselves, even if those pitfalls or challenges are inevitable. The author believes that by empowering us we can better prepare ourselves and find the better solutions to handle them.

Speaker 1:

So, as we're going to talk about the book now, I will first give the background of the story, then I will break down the book into four parts, and these four parts will be based on the life cycle of a business. They are the start-up phase, then entering the growth phase, then transformation phase and last the stabilizing phase. This cycle of business is very, very important and crucial to the author because he believes that any development of a company essentially follows this path of growth, and how well you will do after reaching the stabilizing phase like whether you will have another growth curve leading to the next level of success or you will decline it will depend on how well you handle this initial growth period and then during each part. I will also share the reminders from the book on things to look out for at each stage so that we can all prepare ourselves, and, at last, I will share about our company's experiences, what I learned from the book and how it helped me to turn my business around. Okay, then let's start it.

Speaker 1:

The story of Taku. Taku was on the brink of being demoted by his company. Puzzled and frustrated, he encountered his ex-manager, kanzaki, who had previously worked at the same company but eventually left to establish his own accounting firm. According to some news report, kanzaki has been extremely successful at what he does. He signed up over 100 clients in just one year, earning an annual salary exceeding 100 million Japanese yen. Inspired by Kanzaki's encouragement, taku decided this is what he's going to do. He resigned and started his own business Stage 1, startup phase After Taku quit his job.

Speaker 1:

Kanzaki explained to Taku that to have a successful business at the startup phase, timing is the most critical factor that Taku has to consider, akin to the importance of location when buying a property. This timing refers to the product lifecycle, because the product usually goes through this phase of introduction, growth, maturity and decline phase. So entering into a market during the product's growth phase can be easier than launching an entirely new product in its introduction phase. It will require a lot more resources, a lot more capital, a lot more effort to introduce something new to the general public. Many startups actually fail because their concepts are just too new. So before they eventually stabilize themselves financially, they go bankrupt. So Kanzaki told Taku, before he does anything to the business, he needs to think about what is the right product and what is the right timing. But Kanzaki said there is always opportunities because even in saturated market where red seas, creating a niche can lead to the next growth opportunity. Taku was first very frustrated because he thought well, everything has mature right, so where is this timing of growth that Taku can enter? However, kanzaki encouraged him and let him know that even in saturated markets where red seas market creating a niche can lead to new growth opportunities. Kanzaki also advised Taku on the importance of choosing a product with sufficient profit margins and shared tips on quickly acquiring early adopter clients. With Kanzaki's advice, taku launched a business specializing in website translation from Japanese to English.

Speaker 1:

Bear in mind this book was written 20 years ago, so back then it was still at the growth period, but I think now it's all replaced by AI. But never mind. The concept is still valid and eventually the company was poised to enter its growth faith. Usually, business books stop here. However, what the author really wants us to know is the real challenges are about to come. Once the company are at the stage of growth, many hidden challenges will begin to service. But before we enter into the stage 2 of entering the growth faith, let's just recap. So for the startup faith, if you want to start any new businesses, the most important thing is the timing. Whichever products you want to introduce to the market, make sure that product is at the growth phase, so not completely new to everyone, unless you believe you have a lot of capitals that you can burn, a lot of resources that you can devote into. Otherwise, if you want to gain quicker market success, make sure that product's lifecycle is at the growth phase. It will really help you a lot to stabilize yourself at the initial stage. Okay, stage 2, entering the growth faith.

Speaker 1:

As Taku's business progressed positively, he became more and more optimistic about the future, but strangely, his wife actually grew increasingly negative. It seems like the more positive Taku is, the more negative the wife becomes, and the success also leads to less time together, cooling their relationship. Both Taku and his wife noticed the growing rift but mistakenly believed that it will overcome itself eventually. The author said he observed many marriages fail at this period, during this growth phase, and many kids actually experienced some health or behavioral issues during this period as well. It's common for one partner's success to breed jealousy or insecurity in the other. As partners evolve at different rates, their path may diverge too, and relationship strains often intensify during this phase, potentially leading to extramarital affairs Like it's very easy to get attempted by someone else outside of the marriage and develop an affair outside of the marriage. However, the greater concern is the impact on children. Kids are very sensitive to family dynamics. They often adopt one-to-two strategies if they see their parents are not getting along well. They're either excelling in everything they do to avoid being a source of conflict for their parents, or acting out to draw their parents' attention away from their own issues, like not doing something that they know is wrong, or just completely being a rebellious kid. Some children even develop stress-related illness during this time.

Speaker 1:

The pressures of a growing company constrain family relationships, with frustrations cascading from partners to children and beyond and contributing to a broader society anger. Eventually, many successful business people divorce at this stage. But you know, the thing is like the media often focus solely on their commercial achievements without addressing the fundamental questions of at what cost? At what cost did they manage to achieve these commercial successes? So these successful business people's marriage failures just become a gossip, without linking them to the commercial success that they have, without acknowledging the pride that the business person's family are also putting up with. The society either does not set that business success is the cost to dysfunctional families, or the society is just too used to seeing it and think well, it's just normal for successful people to divorce. This portrayal can lead to a very, very distorted view of success and as more people aspire to achieve the same success, we're likely to actually create more dysfunctional families. Many couples end up breaking up at this stage.

Speaker 1:

But the author believes that divorce is not the solution here. It's not like he's against divorce, but he just believes that it often overlooks the underlying problems. What causes the divorce in the first place? And without addressing these core issues, the cycle of dysfunction is likely to repeat in future relationships as well. The author advocates for giving ample attention to family members, bearing in mind of the importance of work-life balance, and recognize the contribution of other family members bringing to the family and ultimately to your company's success. The author believes only by addressing the real underlying issue the business owner, business managers or the entrepreneurs can overcome this challenge in their own marriage, in their own family.

Speaker 1:

So the reminder here is during this phase, especially when you are about to enter the growth period, pay attention to your family, because a lot of the challenges will start to service at your family or at your personal level. And do not think these things are isolated on its own. They are all interconnected because when you are pursuing your company's success, a lot of time you're sacrificing at your family or at your personal level. In order to resolve it properly, you need to give enough attention to other family members as well, because by divorcing, by breaking up it's not the way to solve the problem. You are likely to see the same thing happen again and again. It doesn't matter whether you are being with this person or a new person, because they are not the root cause to the problem. The root cause is an imbalanced work-life balance.

Speaker 1:

Okay, now let's move on to stage three, the transformation phase. Although Taku's relationship with his wife had not improved, his business actually seems to be thriving, perhaps too much so. Every find the company now a team of 20, was incredibly busy, with no time for calls or emails. Despite apparent success, taku faced unexpected cash flow problems and staff illness and a flood of customer complaints. What went wrong?

Speaker 1:

The author explains that companies typically hit a transformation stage in their fourth year, regardless of their growth speed. This stage often brings chaos, manifesting in various issues like frequent staff absence, high turnover, product delivery problems, financial discrepancy, low quality, ethical lapses and growing dissatisfaction with management. These signs actually indicates that business owners can no longer control the business as they once did when the company was still small. A small, manageable company can operate with a flat structure, but as it grows, this model becomes unsustainable, leading to oversight and disorganization. The transformation requires actually shifting from a business centered around the owner to a corporate style structure with proper systems and a professional management team. If managed successfully, the company will continue to grow. If not, it will lead to further complications for the business, its owners and the staff.

Speaker 1:

However, even when business owners recognize these problems, they often fail to address the fundamental issues. They often think that, well, you know, I just need to implement stricter rules or I just need to automate more systems so that, no, the company can become more efficient. But, as in the book, kanzaki told Taku, don't do so, because this is still not yet the right timing. You need to first address something even more fundamental than that before you can start implementing more rules or automating things. What is this, kanzaki told Taku? The thing you need to do now is to actually show love, support and affirmation to the team.

Speaker 1:

You can imagine Taku was like what Am I listening to? A parenting book or a business book? But that's right, because building a company or managing a company is very much like raising kids. You don't start disciplining your kids when they were just born right? Instead, you first shower them with love, you care for them, you help them grow, then you deal with their discipline issue later, once they become older. It's the same with building a company. If you focus on only discipline without first building this love, trust and the support within the company, it will greatly hinder the team's cooperation and long-term success.

Speaker 1:

And even well-behaved individuals may grow resentful and rebellious because they don't believe that we have the best interests for each other. They don't believe that their colleagues have the best interests of them and they don't think the management have their best interests at home. They don't believe that we have their best interests at heart. And when there is this distrust, how can the team work and cooperate together? Well, before restructuring the company, the authors suggest fostering a positive team environment first. And how to do that?

Speaker 1:

One recommendation the author proposed in the book is to actually play a very simple game called Good and New. The team will play the game with the team's journalist, peter Klenn, and according to the author, how to play this Good and New is every day in the morning, the team members will share something positive or something new happen to them in the last 24 hours and the team will pass this ball around to each other. And whoever gets this ball will share about something either good or new happened to them in the past 24 hours. Such a simple game, but it's amazing. It really foster a sense of community and appreciation. And plus, because every time when the team share about something good or new that happened to them, you kind of refresh their mentality as well, so they can think more positively. It's kind of like a reset button in their mind. The author says just by playing this game, in three days you will start to feel the atmosphere among the team members will change.

Speaker 1:

And the other thing that the author suggests, through the mouths of Kanzaki, is to play this validation game. How does it work? So, whenever there is any big event happen to the company, like someone gets promoted or someone having a birthday, just say something positive about that person. Give that person the words of affirmation to validate them, make them feel how important they are to the company. And just by being genuine and sincere you will naturally build and foster a positive and loving, supportive environment amongst your team. And once you feel this foundation of love, support and trust is ready, then you can move on to the next step, which is about building more rules, more system and more discipline.

Speaker 1:

And how to do that? The author suggests, try out a method used by Ritz-Coulton hotels. So for Ritz-Coulton hotels, they have this 20 credals of how they would like their staff to serve their customers. One of the credals is we are gentlemen and ladies serving gentlemen and ladies. So these 20 credals are very important to the quality of service that Ritz-Coulton delivers to their customers. And every morning they will form a small group and in each small group they will pick one credal out of the 20s to discuss. This approach personalizes each credal and reinforces them over time, because only 20 credals right. So 20 days later you encounter the same credal again. So it kind of gives you the opportunity to continuously reinforce it in your staff's mind.

Speaker 1:

However, kanzaki also warns Taku Implementing such changes can reveal hidden organizational problems and may even provoke oppositions from employees. Taku experiences firsthand when his sales manager Ryo, who he greatly relied upon, leaves the company under contentious circumstances, taking the entire sales team with him, plunging the company into crisis. So before we begin talking about the next stage, I would just like to quickly summarize here. So during the transformation phase, you will see chaos happen, but fear not, as soon as you follow what the author said. First, make sure that your company has a loving, supportive, trusting atmosphere amongst a team member. It's very important. The team member needs to take a get. The team member needs to feel loved. They need to feel like their opinions are heard. They need to feel like they are important to the company. Then, once that is built, then move on to the next step of building rules, implementing systems in the company. But make sure you only do so after you build the loving, supportive environment. Otherwise, harsher the rules are, the more likely your staff will just do something behind your back, which might lead to even worse outcome. Okay, stage four stabilizing phase and preparing for the next growth. Confused by Liu's action, taku seeks Kanzaki's advice, who then explains to him that such challenges are inevitable. Why is that?

Speaker 1:

The author outlines four crucial roles for any company to grow. They are the entrepreneur, the executor, the manager and the facilitator. Each plays a vital role at different stages of the company's life cycle. So initially it's the entrepreneur, because the entrepreneur drives the company right. It drives the company to grow from zero to one, and later the entrepreneur is likely to be joined by an executor and entrepreneur and executors will continue to foster growth of the company and the company will enter this growth period. But as the company matures, it requires stability through structured rules and systems. So it becomes necessary to shift the leadership dynamics from the entrepreneur and the executor to the executor and the manager.

Speaker 1:

Entrepreneurs must sometimes take a backseat to managers and executors and let them take care of things, because those people are better equipped to stabilize the company. But if the entrepreneurs fail to recognize this, the entrepreneurs can actually create more chaos to the company. The author said it's like the executors and the manager are trying to build a car, but the entrepreneur kept on pressing the accelerator. So when the cars are not properly built and you want to press the accelerator, the cars will eventually break apart. So if the entrepreneurs don't understand right now that they need to take a backseat row, they can lead to destruction of the company and oftentimes the executors or the managers you know they will not want to see that happen. So by presenting that, sometimes they even ousted the entrepreneur in order to save the company. However, the downside of that is, yes, you save the company, you stabilize the company, but then you also throw the engine for the next growth away from the company. So the company eventually declines due to lacking innovation or the power of growth. When I was reading this, it just kept on reminding me of what happened between Apple and Steve Jobs in 1985, when Steve Jobs was ousted by Apple because of the clash between him and the Dan CEO. But then what happened is like, yes, apple became stabilized, but then, without Steve Jobs, it also lost the engine of growth and Apple eventually asked Steve Jobs to rejoin Apple 11 years later and eventually became the company that we see now.

Speaker 1:

Lastly, it's the role of the facilitator. The facilitator role is actually very important, but the facilitator, instead of being in the leadership position, like driving the company to either grow or to stabilize the facilitator is actually trying to create a good environment that everyone can work together and to collaborate and to function well within the team. So the facilitator is like bridging gaps between team members and nurturing a supportive environment. During the growth phase, the facilitator focus on team building, like building the loving relationship, like what we talked about earlier. But in the stabilizing phases, the facilitator will focus more on helping to implement rules and procedures. This facilitator's role can be taken by the manager of the company, or the owner of the company, or the entrepreneurs or the business manager, but this role is very important as well to being the glue to gap between different teams and make sure things go smoothly amongst the team members. Okay, so at this stage of stabilizing phase and preparing for the next growth, the important thing is to understand where your company is currently at and what kind of leadership style that it's required in order to either grow or to stabilize, to implement rules. If this dynamic is wrong, like if the right person is not in charge, and if you don't know whether you should step back or you should step up, then the company is not likely to do very well Because you don't give what it needs at the time it needs it right. So it's very important to understand the dynamics and the skillset of the entrepreneurs, the executors, the managers and the facilitators and who are needed the most at which stage of your company's growth curve.

Speaker 1:

Finally, I'm going to share with you things I've learned from this book and what happened to my company. This book, confession of Self-Made Milleniares, was published about 20 years ago, but I still find it incredibly relevant and help me so much to this day. What I really love about this book is that it shows me where my business is and what I need to do next, and prepares me for what's coming. Aside from the family breakdown part, which was mitigated, actually, by my husband's insistence like almost like forcing me to balance business with family duties this book's descriptions match exactly my experience precisely with my company's development, especially after implementing methods to foster a loving and supportive environment and to implement rules and systems afterwards.

Speaker 1:

I started my business in 2016 as a solopreneur, so I was doing everything by myself. However, four years in, I had a team of 12 people and I found myself constantly firefighting. The situation didn't improve after I moved to Riyadh. In fact, it got worse. Tenants and landlords complained so much, business partners were dissatisfied and I remember once I even have to rush back to Abu Dhabi to just address some tenants' complaints. I was constantly worried, burned out and I was short tempered with my families as well. As you can imagine, due to stress from clients and tenants, I felt I worked so hard, yet everything seemed to fall apart like the business was in shit. I was exhausted. Daily In my attempt to solve problems were met with criticism from my husband for not addressing the real issues, so you can imagine the tension in my marriage was also high.

Speaker 1:

I was burned out at work and feeling like I wasn't being a good mother and then I wasn't being a good business owner. I was failing at everything. First of all, we weren't even making money. Like after all this, we were not even making money. After accounting for staff gratuity, our net profit was nearly zero in 2022. My husband and I argued frequently about the business, but I was stubborn in my approach. I believe what I was doing was right and he had no idea what he's talking about, because I started this business. I know how to be a good property manager. He does not know what to do, he does not have a say, and this is my business. So I was that stubborn and this thing eventually changed in 2023, when I re-read this book again and I would say that was a true turning point for me, because this book made me believe that and it showed me how wrong was I and eventually let me to make three crucial decisions. First, I implemented this good and new game, so we played this every single morning, but because most of the staff worked remotely, it wasn't possible to throw the ball around or pass the ball around, so we did like an online spending will thing. So whoever got spun will have to share something good or new but exactly like how the book has predicted.

Speaker 1:

I faced some resistance from the team and the team feel like we're just being like are we a kindergarten, like? Why are we playing this stupid game? But I kept on persisting in Though eventually we still have to make some adjustment due to the requirements from the team and the dynamic is different. But it was our first step to really building this positive team dynamic. I remember like before we started this good and new game, even staff like sitting next to each other in the same team. They would not directly communicate in words, rather, they will send chat messages, and I was like you guys sit next to each other. Why wouldn't you talk it out? Why wouldn't you find a solution quickly just by conversing with each other? Nope, they prefer to use WhatsApp messages to WhatsApp each other. I don't know what were they thinking. I think now, looking back, maybe they want to have some proven writing Like yes, this is what they have discussed about. So when they were challenged or asked by the management, they have something to defend themselves. But you see, this attitude of they need to defend themselves because they don't trust that their colleagues or the management will back them up is the fundamental issue. So I'm really glad that I did this good and new to the company. Even if we adjusted later to something that's different, it's fine. It was the first step and everything was just exactly like how the book predicted.

Speaker 1:

I faced some opposition and, yeah, in 2023, what happened is one third of our staff resigned due to various reasons. But still like, suddenly, we have a very high term rate of the company and that was one of the crisis I experienced in 2023. But because this book, I knew I was actually on the right track. So, yes, it was tough. I wasn't worried because I knew this is just part of the necessary process to go through this transformation phase if we want to have the next level of growth.

Speaker 1:

Second, I stepped down and handed over the business to my husband. This was a tough decision as I had always resisted stepping down from my own business, but this book made me realize that I was not the right person in charge at this stage. My husband is a better manager than me. His managerial skills were what the company actually needed and stepping down allowed him to implement necessary systems and structural changes. I wouldn't deny it pained me so much and frustrated me so much whenever he vetoed my idea on new things I wanted to do with the company and he would always say we are not ready for it yet. I would always be like what do you mean? We are not ready for it? Look at what other companies are doing. We are losing out. But he ignored me, he wouldn't care. And now, looking back, I'm glad that he didn't care and I'm glad that I bit my tongue nevertheless and continue letting him take the lead until we are ready for the next growth. And I also see that I became more of a facilitator to the company, like gapping between departments, and really continue to foster this positive environment within the company.

Speaker 1:

Third thing forming a management team. So we hired someone from the outside to be the deputy director and sales manager and we promoted our most senior property manager to be the operation manager. This completed our management team and then I became more like a facilitator, now gluing the team together and continue to give them guidance, like when they need me. But then I wouldn't say I'm actively involved to manage the company. I trust the management team that we have and I trust my husband's implementations on other systems or rules to allow us to better manage the company with these three major changes. Despite significant staff term rate, I think six staff out of 15 left the company.

Speaker 1:

In 2023 alone, our year over year net profit increased by 2,921%. I mean nearly 3,000%. It's a huge relief for me to finally feeling that we're on the right track, and I truly credit so much of the success to the insights I gained from this book. I believe we are not yet completed with our transformation, so we're still in the process, and I do hope that our 2024 will be much, much better than 2023. And you know, I am also very sure we're going to encounter more challenges in the future and more pitfalls. But more than ever before, I know we're on the right path. I know what we are doing. I know what we need to do now, and this book is the one that gave me such a great confidence and that's what I wanted to share with you today.

Speaker 1:

If you can read Chinese or Japanese, definitely pick it up. Don't look down on him just because it's written 20 years ago. It's so relevant, even till this day. All right, so that's Confession of Self-Made Millionaires. We will put the Japanese name and the show note, so definitely make sure you check it out. I hope you find it as enlightening as I did. If you enjoyed the show, please follow or subscribe us here in the podcast. We're on YouTube channel. Yes, we have a YouTube channel now. Search a book with bubble tea with Mira M E A R A, and I'm sure you will learn more insights from many, many great East Asian books that you might not find on your usual English bookshelves. So do follow us. That's it for today. Let's enjoy our bubble tea and grow together Until next week. Bye.