Holden Case Study Challenge #3 - Does it pay to shoot straight?

Holden Case Study Challenge:
Does it pay to shoot straight?

by Jihad Kiwan
Managing Director, MAScIR Microelectronics
Sala al Jadida, Morocco

I’m Jihad Kiwan. It’s 1997, and I’ve just taken over as SVP/Managing Director of Worldwide Semiconductor Services (all names have been changed to protect the innocent). We’re #4 in market share among the world’s third-party suppliers of semiconductors. Based in America with a branch in South Korea, we lag well behind the Asian-based #1 and #2 entrants in the category.

MEET OUR CUSTOMER
The customer is Tanabishi, one of Japan Inc’s best-known giants in consumer electronics. Like their main competitors, they’ve traditionally been vertically integrated from start to finish: they manufacture their own semiconductors, build their own PC boards, do their own final assembly, product manufacturing, sales and brand marketing.

OUR SALES OBJECTIVE
Our objective is to do what our company has failed to do: Crack one of the big Japanese electronics firms like Tanabishi and become a major fabrication supplier to them.

OUR CUSTOMER’S CRITICAL BUSINESS ISSUES
The semiconductor industry is going through a fundamental business strategy shift. Worldwide demand for semiconductor-based components is starting to exceed supply, and the big electronics companies are looking to lock in a future supply stream before prices rise some more.
In order to better optimize their wafer fabrication investment and better manage manufacturing capacity, these companies are still keeping all the high intellectual-property chip manufacturing to themselves, but they’re starting to outsource the manufacturing of the more basic digital integrated circuits to third-party foundries. There is business to be won, but we haven’t been winning it.

OUR SUPPORT BASE MAP?

We don’t have a support base map, because we don’t have any supporters. Our competitors are Asian-based, so they have firm relationships in place with the Japanese electronics giants. We don’t. To make matters worse, when I inherited Japanese sales responsibilities from my predecessor, I learned that Tanabishi’s procurement department has been sitting on our contract offer for two years. No reply, no action, nothing. Our people are so frustrated with Tanabishi, they’re willing to give up on them entirely.

THE COLD CALL
Working through Procurement was getting us nowhere. Figuring I had nothing to lose, I sent an email straight to the CEO of Tanabishi. I told him I’d be in Tokyo two weeks later — why not meet with me? All my colleagues told me I had no chance, zero, of getting an answer. Less than 24 hours later, there’s a reply in my inbox. The CEO says, Sure, why not? So, I make my way to the elaborate Tanabishi corporate complex. In the usual Japanese fashion, you work your way up through the ranks during the meeting. First I meet for 20 minute with Procurement. Then I meet for 15 minutes with the managing director. Finally the CEO, Mr. Miyamota, enters. He spent a lot of time in the U.S., and his English is excellent. After he greets me, he simply asks, “So, what can we do for you?” I answer just as simply: “You can sign my contract.” I explain the long logjam to him. He just says, “O-kayyyy...” He doesn’t say no. Then he wishes me safe travels, and he leaves. As I’m gathering up my things and leaving the room, I’m thinking to myself, “Well, at least I did the best I could.” As I’m leaving the complex, though, a Procurement official chases me down from behind. Breathlessly he asks, what am I doing next weekend? (It’s now Wednesday.) I reply, nothing that would keep me from being available. He says, very well then, the CEO wants to play golf with you. He’ll send a driver around to pick you up at 6:30 AM Sunday. Now, who am I to play golf with the CEO of Tanabishi? Nobody. But it’s a huge opportunity, so I’m there.

THE 6:30 AM MEETING
We get to the golf course. There’s the CEO, the Procurement official and me. This golf course doesn’t have a driving range, so we have to warm up right at the first tee. He takes a few swings, I take a few. To be honest, his swing is not very good, and I realize mine is a little better. The CEO asks me, “Jihad, what is your handicap?” I tell him it’s 18. “And Miyamota-san, what is your handicap?” It’s 24. I say “I’ll tell you what. I’ll give you six strokes, and you take them on the holes that are the most difficult.” He agrees. Now, there’s millions of dollars on the line here. The one big chance we’d waited years to get. I don’t like to play “customer golf” — I play to win. But the CEO has summoned me to his own private golf game for reasons unknown. Which way do I go here? Do I play ruthlessly to win, or do I ease off a little?

THE MOMENT OF DECISION: TAKE YOUR BEST SHOT?
Or not? Decide what you’d do to win the deal, and post it below. Next week, I’ll tell you what I did — and how it worked out.

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Case Study Outcome:

How I Won 

by Jihad Kiwan

I stood on the first tee with the CEO of Tanabishi. I said, “Miyamota-san, I don’t play ‘customer golf.’ I will fight every single shot. If you beat me, you’re a better player than I am. If I win, then I’m surely a better player than you.” Then we played golf. I beat him by something like 20 strokes.

Afterwards, we went inside and showered, then we went to the bar to have some snack. He hugged me and said, “Jihad, it is good to do business with you. You are very honest.” I was surprised to get that compliment from him. Once we were in the bar having the drinks, he gave a phone call to his driver. The driver had two copies of the contract in his car, and he brought them to the clubhouse. And he signed them in front of me, and gave me both copies to be signed by my management in the U.S. and send him back one copy.

This whole golf outing had been one big character test. If I had played “customer golf” and not beaten him properly, I can guarantee there would have never been a contract signed. Instead, I had just closed the sale for several million dollars worth of chipmaking over the next 12 months. Later on, Worldwide and Tanabishi became strategic partners with a joint interest in a factory acquisition.

The two-year delay? I found out later that my predecessor was just a little bit too arrogant on his visits to Tokyo, and there had been some bad blood between him and the managing director at Tanabishi.

As for Mr. Miyamota, we remained in touch. He’s retired now, but we’re still good friends — and we still play golf to this day.