Blame it on the boss of NOVA

The NOVA chain of conversation schools — whose slogan is “ekimae ryugaku” (study abroad in front of the train station) — operates roughly half the English conversation schools in Japan. Earlier this year, in response to a stream of bitter customer complaints, the Ministry of Trade, Economy and Industry and the Tokyo Metropolitan Government investigated the company and confirmed that some of NOVA’s 800 schools had indeed engaged in a number of dubious practices, such as refusing to refund tuition fees to students canceling lessons.

As a result, on June 13 the chain was ordered to partially suspend business for six months — a draconian penalty by Japanese standards, and one that threatens the company’s very existence.

Writing in Sapio (7/25), a biweekly self-described “international intelligence magazine,” business pundit Ken’ichi Ohmae asks why these problems occurred. And more to the point, he ponders, with so many Japanese enrolled in conversation schools, why does the nation’s level of spoken English remain so poor?

For a time NOVA grew, and founder and CEO Nozomu Saruhashi was praised as a dynamic and charismatic businessman. But like so many success stories these days, Ohmae notes, it was an illusion, analogous to the tale of the emperor’s new clothes. NOVA began running out of steam and has finished in the red for the last two fiscal years.

How did this mess come about? The first problem, Ohmae points out, is inherent in the English-teaching trade itself. For the past decade, while demand for English has been booming in other countries, from South Korea and China to Germany and France, the Japanese have been spinning their wheels. Japan’s average TOEIC (Test of English for International Communication) score results are the lowest among all advanced economies, around the level of North Korea.

This situation, Ohmae writes, has fostered a “loser mentality,” where learners feel that there is no benefit to continuing their studies. Of course the conversation schools are not entirely to blame: It’s students’ lack of persistence, which leads to their piecemeal, on-again, off-again approach, that stands in the way of language mastery.

A second problem relates to NOVA’s management. In recent years, the media has loved to lavish attention on flamboyant, high-profile entrepreneurs. These so-called “shogun-sama” businessmen typically set unreasonably high objectives for their companies, and while achieving initial rapid growth, they often begin to overlook the key source of their success — which, in the case of English schools, are the students who constitute the source of revenues.

NOVA’s high growth trajectory was achieved on the basis of aggressive marketing, such as its management’s boast that it would “open 1,000 schools,” — when what it should really have been doing was vowing to raise the level of its students’ English ability.

Of course, Ohmae points out, problems are by no means confined to conversation schools, but are rampant throughout the Japanese business world.

A common factor in recent scandals involving the Goodwill Group (C0MSN nursing homes), Katoyoshi (frozen foods), Reins International (food retailing) and others, says Ohmae, is the presence of charismatic and energetic founders who, at some point in their companies’ meteoric growth lost sight of their customer base and forged ahead with their eyes focused only on the bottom line. Because of the personalized, do-it-alone style of top-down management, such companies typically fail to benefit from frank advice offered by directors or advisors from outside the organization. And if the regular directors fail to speak out at policy meetings, then no devil’s advocate is in a position to restrain the cocky leader’s impulses.

Ultimately, the main cause of NOVA’s problems can be attributed to slumping demand at English conversation schools. To some degree, the media has reported that English-related business has become saturated and that schools have become overly aggressive in soliciting students, but this doesn’t reflect the actual situation. The prolonged decline of conversation schools can be laid at the door of their failure to show concrete results: I.e. the ability of their students to speak the language hasn’t improved.

Despite the expanding status of English as the de facto standard for international business communications — as evidenced by the learning boom it enjoys in many other countries at present — it strikes Ohmae as exceedingly strange for demand to be on the decline only in Japan.

“I get the impression that over the past 10 years or so, Japanese have become resigned that their English won’t get any better, and that their desire to master the language is presently on the decline. If that’s the case, then it’s natural that a company like NOVA, which is going against the prevailing trends by attempting to expand, would become so bent out of shape.

“That said,” Ohmae concludes in Sapio, “The apparent decline in the desire for self improvement may spell even bigger problems for Japanese.”