A Japanese MBA Does Not Mean What You Think It Means

Education is very hard to disrupt.

That’s both good and bad. Education is so important to both individuals and society, it should not be changed on a whim, but over time it seems that our institutions of higher education have drifted away from meeting students real needs.

Yoshito Hori, founder and CEO of Globis, is making radical changes. He turned a small training school into Japan’s first independent and fully accredited business school with an MBA. Less than ten years later, Globis became Japan’s most popular MBA program.

We talk about the need for change in education and about the successful, real-world pilot program Globis is running to modernize Japanese higher education. Yoshito also shares insights on how to teach innovative thinking and explains why such a high percentage of Globis MBAs go on to found starts or join them.

It’s a fascinating discussion and I think you’ll really enjoy it.

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Show Notes

• Why most Japanese do not want to attend full-time MBA programs
• How to make an advanced degree both exclusive and inexpensive
• How to groom MBA students to start startups
• How Sumitomo missed out on a multi-billion dollar business
• Why Japanese higher education is so resistant to change
• This difference between SPOCs and MOOCs, and why it’s important
• How drinking in front of your computer might save higher education

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Transcript

Disrupting Japan. Straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero, and thanks for joining me.

You know, education is hard to disrupt. And as long-time fans know very well, that’s both a good thing and a bad thing. It’s good because education is so important and foundational not only to how well a given child will do later in life but also because in the large developed nations, the educational system forms the basis of society itself. It provides us all with a shared set of experiences.

So the fact that we don’t change the rules every few years is a good thing. On the other hand, this lack of disruption leads to educational systems that don’t really meet the needs of today’s students and today’s societies for that matter. So clearly, there must be a better way of doing things than what we’re doing now.

Well, today, I’d like to introduce you to someone who’s found a better way. Yoshito Hori founded Globis as a small business training school and grew it into Japan’s first independent and fully accredited business school offering MBAs. And then, Globis became Japan’s most popular MBA program.

Yoshito’s strategy for innovation is fascinating. Unlike similar schools in the US, Globis does not compete on cost. In fact, the Globis MBA is more expensive than similar degree programs at Todai or Hitotsubashi. No. Globis is doing something unique and something that is making a lot of people rethink how university and post graduate education is done in Japan.

But you know, Yoshito tells that story much better than I can, so let’s get right to the interview.

 Tim: So we’re sitting here today with Yoshi Hori of Globis. Thank you so much for sitting down with me.

Yoshi: Thank you very much as well.

Tim: Globis has about 7,000 students per year. It’s the most popular MBA in Japan. It always does well in the national business school rankings here. But what seems most unusual, it’s a truly international MBA program. You have students both from Japan and overseas now, right?

Yoshi: Yeah.

Tim: What sort of ratio?

Yoshi: Well, we have English MBA program and Japanese MBA program. Japanese MBA program is a part-time program. English MBA program, we have part-time, full-time, and online. We have roughly about over 100 English MBA program students. We have about 800 Japanese MBA programs.

Tim: That’s interesting. So you have more Japanese students but it sounds like there’s a lot more flexibility in the English language courses.

Yoshi: That’s right, yeah.

Tim: Why is that?

Yoshi: Well, our vision is to become number 1 business school in Asia. In order to become number 1 business school, we need to have full-time English MBA program. But in case of Japanese, we don’t need to have full-time in Japanese MBA program because not many people quit jobs to get MBA in Japan. Therefore, in Japanese side, we have Japanese MBA program in five locations with Mito and Shin-Yokohama at Yokohama station for hop campuses and also online.  Most of Japanese students participate and enroll into MBA program as a part-time MBA program. In case of English, we need to have full-time MBA program so that quite a few students come from overseas. There are roughly about more than 50 different nationalities within Globis MBA. More than 90% of Futa MBA program is non-Japanese. So it’s a very truly international MBA program.

Tim: Moving forward, do you think there will be more and more international students fueling the growth or more Japanese?

Yoshi: We feel that there will be more and more non-Japanese international MBA students coming in. The reason is that we have not been into English MBA programs until 2009. We have been around only for about 8 or 9 years and we just started full-time MBA program in 2012. We have a lot more room to grow.

Tim: MBA programs in the US tend to be quite expensive and Globis as about 4 million yen per year. How does that compare with MBA programs at Waseda or Keio?

Yoshi: Well, Waseda and Keio are almost about the same. But difficulties in Japan is that we have national universities like Hitotsubashi and Tokyo University which is roughly about one-quarter of tuition compared to Globis and they are highly reputed as well. So therefore, it’s difficult for us to raise our tuition simply because we are dragged down by those national good university in Japan as for tuitions.

Tim: Are their tuitions so low just because of the government subsidies towards those universities?

Yoshi: Yes. 70% of those revenue for those national universities are tax payers’ money. So it’s highly subsidized, mostly run by the tax payers’ money.

Tim: Okay. It does make it difficult to compete.

Yoshi: Well, you know, we cannot raise our tuition higher and we have to appeal to our potential students that our quality of education is three times or four times better than those who are run by tax payers’ money.

Tim: Before we get too deep into the program and the school and Japan, you’ve got a traditional MBA and you became an entrepreneur. What percentage of your MBA students go on to become entrepreneurs and what percentage would you say take the more traditional career path?

Yoshi: I would say roughly about 10% becoming entrepreneur and 20% more are joining entrepreneur companies. And then roughly about 20% will be changing jobs to consulting or other foreign affiliate companies. I think roughly about half remain in their companies.

Tim: Are those numbers pretty similar for both the Japanese students and the non-Japanese students?

Yoshi: In case of non-Japanese students, it’s difficult to compare because quite a few of them come from overseas to study here in Japan and most of Japanese students are living here in Japan, and therefore it’s difficult to compare. But in case of non-Japanese students who come to Japan, some start their own companies here, some change their jobs, and some go back to their home countries.

Tim: So that 30% of Japanese Globis MBAs are either starting a new company or joining a startup company?

Yoshi: Yeah.

Tim: That’s fantastic. That’s really high.

Yoshi: It’s quite high.

Tim: Excellent. Well, listen, before we talk more about Globis, let’s take a step back and talk about you.

Yoshi: Okay.

Tim: So you went to Harvard Business School. This was back in 1992, when you were graduating, and this was before the last internet bubble. What made you decide to start a new company rather than just join a consulting firm or going to a very high-paying job at a Japanese firm?

Yoshi: I was sponsored by Sumitomo Corporation to get my MBA. I feel thankful for my sponsor company, Sumitomo that I had never thought about changing my jobs. I was planning to come back and I did come back to Sumitomo but I really wanted to start up mu own companies and I want to become an entrepreneur. So I came up with 30-40 business ideas and I shortlisted it into 2, and I raised 2 business plans within Sumitomo Corporation for the new businesses to be done and executed by Sumitomo Corporation. But those two business plans were rejected by Sumitomo and therefore I had to do either of them by myself and I chose this Globis idea. I raised capital from my friends, small capital only about $8,000 and I started Globis from scratch.

Tim: But what changed your mind? There must have been some point. So you were on a great career track at Sumitomo, where they’d sent you to get your MBA. Was starting your own company you always wanted to do since you were a boy?

Yoshi: I never thought about becoming an entrepreneur in my life until I went to Harvard. My father was a nuclear scientist and my grandpa was a politician and the other one was also engineer-scientist. So I always thought about becoming a scientist or a politician but I decided to become more like a business person so I joined Sumitomo Corporation. But when I got into MBA, I was quite shocked about the split within MBA. Quite a few colleagues of mine wanted to become entrepreneurs and I start to think about what is entrepreneurship and how you can start a company, how you can make it grow. So I majored entrepreneurship in my second year. I took all the courses which have a name entrepreneurs attached like entrepreneurship finance, entrepreneurship management, entrepreneurship organization strategy and I was quite curious about entrepreneurship and I feel that I could do it. One speaker who came to campus, he said to us, “There is one thing different which will make life so much change. There is limit on what you can do but people tend to set their limit by themselves.” They say, “This is how much I can do. I can’t do more.” People tend to set the limit by him or herself. So important thing is to destroy the limit. There’s no limit in your potential.

Tim: So people are just setting their own expectations way too low.

Yoshi: Expectation and also they limit their own possibilities. From that moment, I decided to change my mindset that everything should be possible.

Tim: But even then, I mean, back in 1992, Japan had a very, very different opinion of startups and new companies than they do now. So even if you had a vision to create a new kind of university in Japan, you can’t just go out and do it. How big were your first classes? How did you get that first group of people together?

Yoshi: Well, when I started, I had only 20 students. That time, I used my apartment as office. Also, I used rented classroom for three hours for $200. That time, there was no internet so I sent out direct mails to my friends and then we had 20 students who are taking one simple course of marketing. I was only by myself and people thought that I was crazy because I went to Kyoto University, I got into Sumitomo Corporation, I got MBA from Harvard, and why are you starting up by yourself just giving out your papers and some leaflets to people? But I said to all my friends that I have a dream. I think I can do it. I believe in my potential.

Tim: Back in 2006, the school became an official Globis University. What’s the important difference between being a school and being a university in Japan?

Yoshi: Being a school was, from 1992 to 2006, we could not issue any credits. We could not issue any degrees. So we could not issue MBA. After 2006, we got license to issue MBA from the government of Japan. So we can say that we are Globis University and we can give out MBA. It’s a big difference. It has impact to our students.

Tim: Is Globis the first accredited university specifically for MBAs?

Yoshi: We are one of the few in Japan which had been started out as MBA-specific. There were a few others but we were one of the few. We were the only business school who has been started like entrepreneur. There are some tycoon who started out like school in Japan or Kensho Mae-san started out some business school. But in case of Globis, we are startup, from scratch, from apartment as office and rented classroom, and right now we are number 1 in Japan.

Tim: That had to be viewed as extremely disruptive by the existing universities, the existing educational systems. So how did the leading MBA schools at the time, Keio and Waseda, how did they react to Globis MBA?

Yoshi: Well, sense is that Keio and Waseda didn’t think of us as a major competitor from the beginning. We were just a startup and a business school. Imagine they had never thought that Globis would become their competitors because we don’t have any brand. We didn’t have any credibility. We didn’t have any government official license and we’re a totally different animal compared to Keio and Waseda, therefore, I don’t think they thought of us as a competitor. But in 2006, we became university but still, I believe, they didn’t think us as a competitor.

Tim: But that is almost the perfect description of the classic Clayton Christenson disruption.

Yoshi: Maybe, right.

Tim: Where the incumbent players simply ignore and dismiss the newcomer until it’s too big to change. It’s great and kind of amazing to see that happen but when we look at the Japanese education system overall, it seems very little has changed since the Meiji Restoration. There’s been reforms and women are now allowed into all universities but it’s still very much the same system as it has been for over 100 years. Why has education been so hard to not only disrupt but to change and improve?

Yoshi: Well, education requires strong brand, branding business. There’s a high entry barrier simply because you need to have some license to issue, some degrees. And until now, you need to have some land which will cost so much money. It will take time to build the brand because you need to have good alumni, and alumni will take 10 or 20 years to prove that their alumni are strong. Therefore, the entry barrier to education is high anywhere you go. In the US or UK or Europe, number 1 is Harvard and Stanford, it hasn’t changed. There is no business school like us in the US which will become number 1. Even in UK as well, so Oxford, Cambridge and maybe London Business School or London School of Economics. There is no new startup business school which will become number 1. So education is not Japan, education as a whole is a very difficult segment to get in and to become number 1 simply because there is a certain brand which had been established, in case of Harvard, more than 400 years. In case of Keio and Waseda, 150 years. There is so much alumni who are believing in their brand and carrying brand and therefore it’s not east to enter into education field.

Tim: So the business depends almost entirely on the brand and the reputation rather. Well, I guess there really aren’t any KPIs, there’s no real market they’re measured against.

Yoshi: It’s difficult. Even if you become number 1 in terms of skill, you’re not really number 1. You have to have a strong reputation. You have to be chosen by employers that their alumni are quite capable. So those reputation is hard to build. If you are to become number 1 in e-commerce, it’s easy. KPI is revenue.

Tim: Right.

Yoshi: If you become number 1 in search engine, it’s quite easy. It’s the biggest usage. However, in case of education, it’s not easy to measure number 1. Let’s say for the strategy to get in has to be a little bit different from actual businesses that you’re in.

Tim: That makes a lot of sense. Next year, you’re going to be moving ahead even further. You’ve announced that you’re having a fully accredited online MBA program. So it’s all live. It’s not like pre-recorded videos. And in a blog you wrote, you mentioned that you really thought this was the future of education. Why?

Yoshi: I’ve been always thinking about what education will be looking like in 2030 or 2040. Education up until now has not been changed since the era of Socrates. You meet and you discuss and use some kind of a textbook. That’s education. However, with technology, education will be changed. When I realized that was when we started online MBA program using SPOC method. SPOC stands for Small Private Online Courses, MOOCs stand for Massive Open Online Courses. MOOCs was just the library of video data, SPOCs is interactive, real-time discussion-based with only about 30 or 40 students, which is just like a case method discussion. We do a classroom with 30 or 40 students in a classroom. SPOC basis, everybody is online and anybody can be in the US, somebody can be in Italy, somebody can be in Japan or China, and then you hook into internet on the same time. We did that for one case which is the same case as we did in the real class. The responses were quite amazing. Most of the students thought that the experiences of learning is almost identical to real classes. I was a professor teaching that course and I feel the same way. Wow, this is going to be future going to be looking like. So therefore, we started online Japanese MBA, online English MBA program, and now we have quite a few students enrolling into online MBA program from US and also from Europe and from Asia, and that’s just the beginning. We abolish all the paper. All the cases, everything are online now. All the communications being done online. And then in the future, we feel that everything will be done online. Let’s say like in case of music, they used to be LP then it became CD and was download. Nobody downloads CD any longer, it’s mostly streaming. Nobody buy. So in case education, same as education, I think education will become more like streaming.

Tim: I want to push back on that a little bit because I think it’s true. We certainly can provide maybe even a superior educational experience, a superior teaching experience online rather than classroom-base. But even thinking back to your time at Harvard, how much of the value you got out of the school was information being poured into your brain and how much of the value was the informal interactions and the friendships and bouncing things around? Are you worried that we’ll be missing that when we move online?

Yoshi: Well, it’s more education is going to be disconstructed like some part of education can be done online, some part of it will not be done online. That’s like going out for drinks cannot be done online, some kind of chatting in a classroom cannot be done online. However, more and more things are being done online. Let’s say after the class of online courses, it’s amazing that people go out for drinking in front of the display.

Tim: Really?

Yoshi: They do a chat after class. This class was doing this. What do you think? There was actual drinking going on online, actual chatting is going on online. And then sometimes they get together offline and then their friendship becomes much deeper because they’ve been knowing each other for a long time online and once they become offline, they meet each other, the friendship becomes better. You know, there quite a few people are getting married, meeting up online. The experiences of online are becoming more and more taking over the experiences of real classes.

Tim: That’s true. It might be a generational thing as well. so younger people are more used to interacting and more comfortable interacting meaningfully online but I can’t help but wonder that if Sumitomo had sent you to an online MBA, if you would have not have chatted as much and drank as much and talked as much with your fellow students and decided to become an entrepreneur.

Yoshi: Well, it’s difficult to say. It’s difficult to say that more and more online students will be getting more experiences as well. If I were taking online, being sponsored by Sumitomo, I must have different experiences and that experiences will not be judged worse or better. It’s totally different experiences and new experiences will emerge out of the online education which could not be experienced in real classes.

Tim: If you look at sort of the range, what kind of things do you think are really well-suited to be taught online and what kinds of things do you think are harder to teach online?

Yoshi: I’m in the camp that most of things will be taught online. Almost all the classes that we provide, real classes of English and Japanese MBA are being taught online. We always judge by the feedback from students as to whether it was quality or not on a 1-5 scale. So far, we didn’t find any issues teaching online. What is going on? We are investing more on to AI as well. We call it Globis AI Learning. We call it GAIL. In the future, AI will be the one to be teaching students as well. And then using online, automatically, all the data being collected, who spoke and the airtime and whether or not which was judged by professors, what score, and all the data being collected online, that is going to be able to create totally different experiences.

Tim: I was about to say that things like chemistry lab or physics lab would have to be done in person but technically, you could use VR to simulate certainly undergraduate physics in chemistry labs. So with lifetime employment, a thing of the past unless you’re working for the government, do you think this is going to force education to change? Do you think that we’re going to see more mid-career Japanese start taking courses and getting engaged and furthering their education?

Yoshi: One thing we are changing the way MBA is being taught, I mentioned about delivery which is online. The second thing is that we are changing the contents of what should be taught in MBA. Technology is changing the way we do businesses. Amazon came in, Facebook came in, Google, and all of them were not existent about 2o years ago. Google did not happen and Airbnb. Technology is enabling new businesses at the same time threatening the incumbent therefore all the businesses are being affected by technology. That means that business leaders have to change and they have to be equipped with new skills. We call it technovate. Technology and innovate. We use it in the same way. What we are teaching right now is AI and also social media communication. We are teaching leaders program coding and algorithms and system architecture. Also, we’re teaching leaders to have design as well. So what is going on is that the changes of the technology is so rapid that mid Korea have to learn again and even senior leaders have to learn again. Therefore, I think the educational contents are going to be changed drastically at the same time lifelong learning is going to be things that have to be always studying to keep up.

Tim: Yeah. The online education is only going to become more and more important as we move forward.

Yoshi: Online education as well as the needs of education are going to be more and more important.

Tim: I’ve got two more quick questions to ask you. So I’d like to ask you a little bit about Japan in general. You’ve been outspoken and positive about startups and innovation in Japan for a very long time. You’ve invested in dozens of companies. You’re a successful entrepreneur yourself. Looking back over the last 20 years, what are the most important changes that you’ve seen in Japan?

Yoshi: When I started, I was the first MBA holder who became entrepreneur and then Mikitani of Rakuten started, DeNA of Tomoko Namba started. And then quite a few jumped in and we created the ecosystem. There is no single point that has contributed to this ecosystem. It’s more and more best and brightest are coming in to entrepreneur field and they are becoming as role model and they’re buying professional basketball teams, professional baseball teams and they ate becoming visible in societies and they are being respected. And they are educating new leaders within their organization and then the spirit of entrepreneurship. That has created this ecosystem.

Tim: I guess it goes back to what you were saying before, how people set their own limitations, they believe their own limitations are too small. But they can see all these role models, they realize that those limitations are false and they can do it too and they try.

Yoshi: That’s right.

Tim: So it’s been mainly role models?

Yoshi: Role model and also first penguins. Those people are core of ecosystem and there are quite a few of them.

Tim: Okay. Listen, before we wrap up, I want to ask you what I call my magic wand question, that is, if I gave you a magic wand and I told you that you could change one thing about Japan, anything at all, the way people think about risk, the legal system, the educational system, anything at all to make it better for startups and innovation in Japan, what would you change?

Yoshi: I think most of the regulation has been changed and I give a good credit to Prime Minister Abe for fostering entrepreneurial ecosystem and spirit as well. Prime Minster Abe has started a Venture Award, the Prime Minister giving award to successful entrepreneurs. We have more capital coming in, more venture capital, more entrepreneurs, and more NGOs coming up. If you are to narrow it down to entrepreneur, I think most of the things had been done already.

Tim: Okay. Well, let’s broaden it then. To improve Japan, it doesn’t have to necessarily be startups and innovation but just to make things better, what would you change?

Yoshi: I think the biggest issue of Japan is declining birthrate, because declining birthrate mean declining population. And declining population right now has created this situation that we have of laborer. Lack of laborer is becoming the biggest bottleneck of Japanese economy. So one thing I would change is every policy possible to facilitate more birth to happen in Japan. One example would be that the biggest difference is if you compare France and Japan, the birthrate of those who are married are not so much different. It’s almost the same. But the biggest difference come from those who are not married. Here in Japan, not many people have become single mothers, single fathers.

Tim: It’s very hard to be a single mother in Japan.

Yoshi: That’s right. And so we have to change the mindset of Japanese people that even though he or she may not be married, she’d be able to give birth and become father/mother. And if that happens, if we have more single mothers and single fathers, I think birthrates will come up and then would be happy mother, happy father even though he or she may not find a good partner to marry. That kind of diverse lifestyle, I think, is important.

Tim: Yeah. That’s a part of a trend that being accepting of more diverse lifestyles is good in so many ways but I hadn’t really thought of that but that’s a really important one, just having society as a whole accept the fact that it’s okay for someone to a single mother or a single father.

Yoshi: I think it’s good. If that will be able to make the society to be more wealthy in psychological way.

Tim: Do you see that changing?

Yoshi: I think it’s changing.

Tim: Yeah. I think so as well. Thinking back of over the last 15 years or so, I think it’s starting to change. There’s further to go.

Yoshi: Like a famous ice skating athlete who gave birth being a single mother. That kind of more and more news is coming will change.

Tim: Role models. It’s all about role models.

Yoshi: Yeah. So important. And we have to pay respect. We have to appreciate those people who do it and we have to support them. That kind of society, I think, we need to build to make the birthrate become higher.

Tim: That’s fantastic. Well, Yoshi, thank you so much for sitting down with me.

Yoshi: Thank you very much.

Tim: I really appreciate it.

And we’re back.

A lot of ed tech startups talk about disrupting education using a combination of standardized curriculum and online tools. Globis is one of the few that’s actually doing it and doing it at scale. The university system in Japan needs fixing. And with the exception of tenured faculty, not too many people disagree with that.

Globis offering part-time and weekend degree programs is something most Japanese universities would never even consider. But Globis and their graduates are doing quite well with them. Their move to fully accredited online courses will be an even bigger departure from Japanese norms and one that I’m a bit skeptical of. It just seems to me that so much of effective instruction involves real face-to-face interaction with professors and more importantly, with other students.

But you know, maybe it’s a generational thing. Globis’ early pilots resulted in students having after class drinking sessions in front of their monitors. So yeah, maybe generation Z simply is more comfortable living their lives online and is completely cool with this. We’ll have to wait and let the results speak for themselves.

But you know what I found most impressive and the most inspiring fact of this interview, at least for me? The fact that 30% of the Japanese Globis MBA graduates go on to either start a startup or join a startup. I couldn’t find these numbers for other Japanese MBA programs. But even the startup education programs I run don’t usually end up with 30% of the students starting or joining startups. So I imagine the numbers from the business schools are significantly lower.

Okay. So that’s great for the startup community and that makes me happy. But this is also great for Globis because of Yoshito’s entrepreneurial background and the shift towards startups going on in Japan today, Globis has a real chance to become known as the best university in which to learn how to run a startup.

The education system as a whole is very hard to disrupt but Globis is well on its way to disrupting how MBAs are earned and more importantly, how they’re used.

If you’ve got an experience with MBAs or online education, Yoshito and I would love to hear from you. So come by disruptingjapan.com/show119 and tell us about it. When you get to the site, you’ll see all the links and notes that Yoshito and I talked about and much, much more in the resources section of the post.

And hey, you might have heard, Disrupting Japan is looking for a social media intern. The fact is that between making this podcast, working with Tepco, writing for Forbes, and teaching at NYU here in Japan, I am stretched pretty thin and I need some help taking things to the next level. So you’ll help us make a greater impact in Japan and with Japanese startups and you’ll get to connect with some of the most amazing people in Japan and help build the skills you’ll need to grow your own startup one day. Native or near-native Japanese fluency is a must here. So if that sounds like a challenge you’d be up for, send me an email at [email protected] and we’ll talk about it.

And most of all, thanks for listening and thank you for letting people interested in Japanese startups know about the show.

I’m Tim Romero and thanks for listening to Disrupting Japan.