Find "Amazing Companies" that are Small in Size but "Giant" in Value! (Kanto/Chubu Edition)

The Small Giants Award is a project launched in 2018 by Forbes JAPAN and Dentsu Inc. to discover promising small and medium-sized enterprises (SMEs) across Japan. Now in its fourth year, this year's event will be held online for the first time. We present a contribution by Masaharu Fujiyoshi, Editor-in-Chief of Forbes JAPAN, highlighting the key points of the first regional competition block (Kanto/Chubu) on October 13.

Planning: Makoto Sasagawa (Dentsu Inc.)

---

It's said that "the pandemic changed the yardstick." Traditionally, the yardsticks for measuring a company's value were typically its organizational size, sales and profit figures, and brand recognition. However, as the pandemic has shown stark differences in outcomes even among companies in the same industry, size alone is no longer a reliable measure. Predicting the future is even more difficult.

Forbes JAPAN's "Small Giants" Award, now in its fourth year, has embraced the theme of "changing the yardstick." These are organizations that are "small" in size but "giants" in value and influence. What ingenuity made them "great companies"? Regional competitions, dividing the nation into four blocks, will be held online starting October 13.

Details on the "SMALL GIANTS AWARD 2021" can be found here

Before delving into the ingenious strategies these leaders have painstakingly developed, let's introduce the companies that passed the initial screening. These are the firms that advanced from over 100 companies recommended by our discerning Advisory Board.

The pioneer of autonomous organizations, leading the world, was in Tachikawa: Metrol Co., Ltd. (Tachikawa City, Tokyo)

The company develops, manufactures, and sells "high-precision industrial sensors" essential for factory automation. Its flagship product is the "precision positioning switch," which precisely determines the tip position of tools in robots and machine tools. Operating in approximately 70 countries, it boasts the world's top market share. However, this company leads the world not only in technology but also in its sales approach and work style.

Small and medium-sized enterprises (SMEs) frequently face "profitable bankruptcy." Their weaker bargaining position makes collecting receivables difficult, especially in overseas markets. To address this, the company began direct overseas sales via the internet around 1998. Payments are settled in yen upfront or through electronic payments like credit cards and PayPal, stabilizing cash flow.

Furthermore, it eliminated indirect departments like HR, general affairs, and accounting through digitalization, creating a structure where employees can focus on their core responsibilities. Moreover, all traditional job titles were eliminated. Everyone operates on equal footing, with project-specific leaders appointed for organizational management. While pyramid-shaped organizations remain the norm in Japan, egalitarian holacracy-style structures like Metrol's are still rare. The concept of "Teal Organizations," somewhat similar, only recently gained traction in Japan. Behind Metrol's high profitability, achieving a 20% operating profit margin, lies this unique approach to "how work is done."

The battleground is overseas. Small Giants in the Food & Beverage Industry: Chuo Wine (Koshu City, Yamanashi Prefecture)

While most Japanese wineries focus solely on the domestic market, the "GRACE" brand pioneered overseas expansion, competing globally.

In 2014, "Cuvée Misawa Akeno Koshu 2013" became the first Japanese wine to win a gold medal at the world's largest wine competition, the Decanter World Wine Awards. Since then, it has received some form of award every year for six consecutive years. Current president Shigeyoshi Misawa is known as a leading figure in Yamanashi's wine industry, while his daughter Ayana, who trained at French wineries, oversees cultivation and winemaking. The Misawa family authored a book titled "Creating Miracles with Japanese Wine," which, true to its title, chronicles their father-daughter struggle.

The company exports approximately 15,000 bottles annually to about 20 countries, expanding beyond Europe into Australia, Singapore, Hong Kong, and Taiwan in recent years. They believe a wine's value is determined not by awards but by its maker, pursuing meticulous winemaking with the perspective of "whether the landscape has become wine."

Tochigi Seiko (Tochigi City, Tochigi Prefecture): The "Pipe" Handyman Elevating Both the World and the Local Community

One criterion for Small Giants selection is "contribution to the region." Tochigi Seiko operates with a focus not only on employment but also on collaborative development that provides local communities with technology.

Proclaiming itself the "Pipe Handyman," it offers stainless steel pipes for injection needles, precision pipes for office automation equipment, and precision pipes for analytical instruments. For its core medical device business, it handles tubular products like dental anesthetic needles, catheters, pump tubes, medical connectors, and endoscope components, as well as brush-related products featuring excellent operability and robust durability, contributing to medical settings worldwide. Approximately 40% of its sales come from overseas markets.

Nearly all product procurement is sourced from companies within the prefecture. Profit and loss figures for each department are shared with all employees, fostering a sense of ownership in management and enhancing organizational strength. This approach has driven ten consecutive years of growth. Simultaneously, the company provides technology to 200 local firms, elevating the entire sector through collaborative development. It has become a vital pillar supporting the region. Most recently, it is developing respiratory tubes, anticipating increased demand due to the novel coronavirus.

From the Human Body to Outer Space: "The Department Store of Filters": Fuji Filter Industries (Chuo-ku, Tokyo)

 

While Small Giants has featured examples of small and medium-sized enterprises penetrating global markets with their products and services, Fuji Filter Industry's remarkable achievement is its direct coverage of over 55 countries without relying on distributors or sales companies.

The company is a comprehensive filter engineering firm that handles the development, design, manufacturing, and sales of high-precision industrial filters and filter systems end-to-end. While filter companies often specialize in specific industries, Fuji Filter handles virtually every type of filter found in our daily lives. It is a rare entity, like a filter department store, serving sectors including general chemicals, food, pharmaceuticals, automotive, aerospace, home appliances, IT, and clean energy.

The evaluation committee highlighted two key points: despite being a small-to-medium-sized enterprise, it competes globally across such diverse fields; and the filter market itself is large with significant future growth potential. The third point emphasized was its corporate philosophy: "The Happiest Employees in the World." Companies that value their employees will become increasingly important in Japan's future society.

Persisting in research abandoned by major corporations, becoming the sole player in "optical single crystals": Oxide (Hokuto City, Yamanashi Prefecture)

 

A common trait among Small Giants companies is having hit rock bottom. While startups begin with "zero-to-one" ideas and development, small and medium-sized enterprises (SMEs) often carry burdens and achieve remarkable turnarounds from negative situations. Many such companies inherit legacy industries or debts from their parents' generation. However, Oxide, a technology venture founded in 2000, was evaluated at the review committee as "survival itself is commendable, but achieving further growth is worthy of praise."

Oxide is a group of researchers specializing in materials science. Beyond developing and manufacturing "optical single crystals" used as substrate materials in industries like optical communications, optical measurement/processing, and medical/bio fields, they also mass-produce devices, modules, and laser products utilizing these single crystals.

Comments at the review meeting included: "Generally, the materials field requires significant time and cost to commercialize research results, making it difficult for small companies." Moreover, while several major companies entered the optical single crystal market, most have since withdrawn. Oxide acquired businesses from these companies, absorbing experienced personnel and strengthening its technology.

Oxide is the world's only company capable of comprehensive crystal growth. For smartphones, Oxide's substrate materials are incorporated into most semiconductor inspection equipment. The company's business scale is growing at an average annual rate of 20%, performing well even during the pandemic. Increased demand is anticipated in areas like data centers, IoT, and healthcare, and currently, the company is struggling to keep up with demand for semiconductor inspection equipment. Further demand expansion is expected in next-generation communications, autonomous driving, and quantum computing.

Hear the passionate stories from the executives at the event starting October 13 at 3:30 PM! Which of Japan's "amazing companies" will emerge victorious? Witness the Grand Prix.

Details for the "SMALL GIANTS AWARD 2021" can be found here.