Loading water, insurance and power onto the small-business sales channel (2014)

Seeing the sales channel, not the product, as the asset

The core of this diversification is that Hikari Tsushin grasped the object it sells not as a product but as the sales channel itself. Most companies build their business around a flagship product, and when demand for that product thins, so do their results. Hikari Tsushin did the reverse: it saw the network of direct visits and telemarketing that reaches small firms and individuals as an immovable asset, and swapped the goods loaded on top of it from copiers to water, insurance and power. What is more, it did not build each new line from scratch but took it in whole by tender offer, binding a maker’s capability and its own selling power together in a short span. Acquisition was a means of diversification and a means of buying time.

This pattern holds Hikari Tsushin’s strength and its danger together. The versatility of selling one product after another through the same sales network is a strength: when one market shrinks, another product can make up for it. On the other hand, the wider it spreads — water, power, insurance — the more each business demands its own expertise and regulatory handling, and the more territory there is that selling power alone cannot force through. Even so, Hikari Tsushin learned a structure that does not chain the life of the business to the life of the product, and it learned it from the reality of falling copier demand. What to regard as the immovable asset — the answer to that question is the consistent core of the company’s diversification.