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Kumon COO Departure Exposes Management Rifts

Kumon Learning Center signage
A Kumon sign with its puzzled face that seeks to understand, photo/jsparks

TEANECK, NJ — Chief Operating Officer Savio Rebelo resigned last week from the North American subsidiary of Japan's Kumon Institute of Education. His resignation shows a parting of the ways with a chain that is going off in a different direction. Akira Hamanaka, president of Kumon North America, will add the chief operations role to his own duties until a replacement can be found.

"The departure of Savio Rebelo from Kumon North America was a mutual agreement," states Joe Nativo, Chief Financial Officer of KNA (Kumon North America), which franchises learning centers. Kumon North America appointed Rebelo as chief operating officer at the end of November 2011. He was also a member of its board of directors. "Mr. Rebelo was with the company for 10 years," said Nativo. He adds, "Kumon North America appreciates his service to the company and wishes him well in his future endeavors."

Executives in Japan, which in some companies still have lifetime employment, can have a difficult time firing underlings. One of the perks of being stationed in the United States is the relative ease and quickness of hiring, firing and shaping an organization.

"There are no plans for upcoming personnel changes," assures CFO Nativo about the stability of Kumon North America's senior management.

A firm searching for system-wide consensus in a diverse land

Akira Hamanaka, who was announced as North America's new president a little earlier in the same month in which Rebelo became COO, November of 2011, explained in an email to franchise owners that there was a difference in strategy between the two. "Due to substantive differences of opinion regarding the operation and direction of KNA, it was mutually agreed that it would be in the best interests of all concerned if Savio left the company."

Kumon is pushing to have its franchise owners standardize and upgrade their learning centers, which it calls the Center Transformation Initiative.

Data: World Franchising, Kumon Fact Sheet 2012. *Aug 2012 figure.

"We, the management, are engaged in having constructive debates aimed at reaching conclusions with a unanimous accord," Hamanaka assures the learning center owners. He aims to build consensus within his company and also with the franchise network.

For the network's business owners, how corporate wants to build harmony is at the heart of the problem.

Former COO Rebelo had refused to recognize and work with the system's International Association of Kumon Franchisees, an independent trade group that represents the interests of Kumon franchisees. That management style was in contrast to that of the franchising firm's former head, Hideki Kusuzawa, who spoke often with the trade association and its leaders. Kusuzawa has since been promoted to the board of directors at the company's world head office in Japan, where he helps oversee strategy for some 26,000 Kumon learning centers worldwide.

"We had very open communication with Hamanaka's predecessor Hideki Kusuzawa," declares Nicole Smith, president of the International Association of Kumon Franchisees. The Canadian owns a Kumon formatted prep-school business in Hamilton, Ontario.

New KNA president Hamanaka has been pulling away from the more independently minded association of late. Rather than have the already developed group serve as its advisory council, the franchisor rebuilt its own advisory council from a defunct one a year and a half ago. Rebelo and others had made it clear that they did not want to touch the independent trade group with a ten-foot pole.

Yet independent franchisee associations are known for bringing innovative ideas into franchise systems. Franchise chains tend to focus on duplication and if not careful, can easily fill its halls with yes-men. That environment can incubate group think that reacts to a world of its own creation. It can also stifle creativity and innovation. Although it's a different industry, CEO Andy Puzder of CKE Restaurants, which services 3,219 Carl's Jr and Hardee's quick service restaurants, told Blue MauMau that using an engaged independent franchisee association was one of the first steps his firm took when it stepped in to turn its brand around. "It doesn't matter to our management team or me where ideas come from. It only matters that we succeed," declared Puzder. The independent Hardee's association runs the advisory councils.

What do Kumon's franchised business owners want?

The owners want a say in the direction of their future and the brand in North America. For one thing, they see the departure of chief operating officer Rebelo as an opportunity. They'd like to choose who will be the next chief operating officer. "We have our eyes on someone who looks like they would be very good," says franchisee Smith. She thinks that the number of franchise owners should grow much more rapidly with a COO who works closely with franchisees and the independent association leaders.

Franchisees also object to the decision of Kumon to use their ad funds to hire Japanese advertising and public relations giant Dentsu for branding initiatives in the United States and Canadian markets. If it were up to them, the independent-minded franchisees would hire and direct a top-notch North American marketing firm.

Finally, the independent association would like to have a seat at the table in shaping the operating manual and deciding how the learning centers should be upgraded.

"I thought it would be a good thing, now that we are thirteen years into the 21st century, to use an independent association," says IAKF president Smith.

Such independent cries from American business owners may be disheartening to hear for a franchisor leader who wants harmony, not division. At the moment the system's franchisees are not particularly happy with the direction in which the chain is headed. Hamanaka's challenge is to build consensus out of a vibrant network that can learn and innovate rather than have staffers issue top-down orders originating from afar. As he struggles with his more independent-minded franchisees, the president in the New Jersey corporate office is no doubt mindful of the Japanese proverb "Fall seven times, get up eight."

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