Contrary to most public expectations, Donald Trump, who defeated Clinton in the election, is about to assume the presidency. In this first column of 2017, I would like to predict the future that the era of Donald Trump will bring.

■Prediction Approach: Considering Trump's Characteristics and Habits as a Businessman

First, there is a methodological issue of how to predict the future that Donald Trump will bring from Japan, where we are not particularly knowledgeable about America, let alone have sufficient information about Trump himself.

However, I believe that "prediction in specific areas is possible to some extent" if we take the appropriate approach. The specific area I refer to here is the realm of "economics." It is difficult to accurately understand and predict Trump's religious views, his ideological beliefs regarding race and gender equality, and his thoughts.

However, by carefully tracing his footsteps as a businessman, it is possible to understand the characteristics (habits) of his management style, winning patterns, mistakes he tends to make, and weaknesses, and I believe these will inevitably be reproduced in Trump's future administration. My understanding is that the more serious one becomes, the more a manager's true nature inevitably reveals itself.

Another axis that I believe will help me understand Trump is that the business he has been involved in is real estate. While I am not a real estate expert, I have experience from my early career training (doing menial work) in real estate investment business at a real estate fund management company. Additionally, through my subsequent involvement in M&A work, albeit on small deals, I believe I have a reasonably accurate understanding of the values, thought patterns, and business characteristics and habits of people in the category known as "deal junkies" who live in the so-called "deal world."

In this column, by analyzing the footsteps that Trump, a "deal junkie," has left in the real estate business, I want to explore hints about the world that Trump will bring by examining in which business areas he will demonstrate his deal-making abilities, or fail to demonstrate them, when he assumes the presidency—essentially becoming the CEO of the company called America.

What Kind of Business is Real Estate Business in the First Place?

Donald Trump is a businessman who inherited the real estate business founded by his father and devoted his life to its growth. Real estate business cannot succeed without the three elements of "location," "planning," and "management" coming together. This is the "most basic of basics" that I was repeatedly taught by a boss who was like an industry kingpin with decades of experience in the real estate industry during my early career.

"Location"

This is, needless to say, the location of the real estate. Naturally, prime land in Marunouchi and land in the mountains of Shinshu have completely different meanings.

"Planning"

This refers to what kind of building to construct on that land. No one would build a home improvement store on prime land in Ginza. This too is obvious.

"Management"

To maintain and enhance the value of real estate, mundane "management" tasks are essential, including "property management" such as "lawn mowing" and "window cleaning," as well as "rent collection management" and "delinquency collection." This is also an important factor that affects the value of real estate business.

While "location," "planning," and "management" may seem obvious, the combinations of these three are infinite, and finding the correct answer is very difficult work. Prime land in Ginza, Marunouchi, or Otemachi is easy to understand. However, what about "60,000 square meters of land in front of Toyosu New Market Station" or "a 30-year-old pencil building on 80 tsubo of land, 6 minutes' walk from Kamata Station"? If someone could immediately come up with appropriate "location," "planning," and "management" plans, they would be a considerable real estate expert.

Taking Toyosu as an example, in the early 2000s, the waterfront area was poorly regarded. The sentiment was like, "What's the point of building all these condominiums along the coast?" However, the condominium with the highest appreciation rate in Japan today is in Toyosu. Furthermore, with the Tokyo Olympics approaching, some view the waterfront's potential as continuing to rise.

On the other hand, there are naturally many people who particularly point out earthquake risks and soil contamination risks. Determining what kind of location a piece of land represents, what potential it has, and what kind of planning and management would be optimal is not such a simple judgment. Moreover, real estate business involves large scale and long-term business spanning several decades. Failure directly leads to major losses.

In such real estate business circles, as in all other businesses, work specialization is implemented. This includes division of labor for location-related work (land procurement, brokerage), planning-related work (design, architecture, construction), and management-related work (asset management, finance).

■In Which Area of Real Estate Business is Trump Skilled?

So, in which areas among "location," "planning," and "management" was Trump skilled as a businessman? Initially, I imagined he was a pure "deal junkie (transaction addict)" who found the greatest joy and fulfillment in "buying good land cheaply, extracting profit without much effort, and selling high."

My impression was that he was probably uninterested in and poor at "planning," which requires creativity and the ability to involve many people in realizing a vision, and "management" tasks, which require steady, diligent work.

However, reading his autobiographies, biographies, and above all, his objective achievements, I realize this is not necessarily the case. Trump has demonstrated various talents in all areas—location (procurement), planning, and management—and has accomplished numerous legendary deals.

■"Trump Tower" - Where All of Trump's Qualities are Condensed

The most characteristic example is surely Trump Tower. Roughly summarizing its history, it goes approximately as follows:

After college graduation, Trump was helping with his father's real estate company, but he thought he didn't want a life of simply inheriting his father's business and continuing to build cheap housing for middle-class families. He wanted to establish his own business.

So, he rented a small cheap apartment in Manhattan, moved there alone, and made it his base from which to walk around New York City every day. In Japanese terms, this would be like the second-generation heir of a moderately successful local mid-sized real estate company doing apartment management in Nerima declaring, "I won't end up in Nerima! I'll build the finest luxury tower mansion in Azabu someday!" and living in an old studio apartment in Azabu-Juban while walking around the neighborhood thoroughly. Trump was 25 years old at the time.

There, Trump set his sights on an 11-story building standing on prime Fifth Avenue land and thought, "If I build the world's best mixed-use apartment and commercial facility complex here, it will definitely be the greatest thing ever!"

From then on, he wrote dozens of letters to the existing building's owner, continuously proposing the purchase of the land. However, those letters never once received a response. But he continued this persistently.

However, those letters unexpectedly led to a sale opportunity three years later, and in 1983, at the young age of 37, he succeeded in completing the 63-story Trump Tower in Manhattan's prime location.

In this process, he negotiated to purchase air rights from neighboring Tiffany to maximize floor area ratio, persistently negotiated with the government to get the construction plan approved, and gave detailed management guidance such as polishing the handrails of Trump Tower's entrance stairs twice a month—throwing his entire being into Trump Tower.

So, what characteristics and qualities do managers and leaders who demonstrate high capabilities across all these different business areas—location (procurement), planning, and management—possess?

■High Learning Ability

Accomplishing a project like Trump Tower construction requires extremely diverse knowledge spanning not only real estate but also law, finance, design, administrative law, and much more. To understand, consider, and utilize all this while running at the young age of his twenties requires an extremely sharp mind and learning ability (or simply put, an attitude that doesn't shy away from studying). Trump was probably a very diligent manager, at least in his younger days.

If this learning ability continues today, it will likely be fully demonstrated after his presidential inauguration. While there are clearly misstatements based on insufficient study, and concerns about his being a complete amateur in diplomacy and economic policy, it's not hard to imagine that he will catch up and become proficient with support from his advisors. The fact that he currently doesn't know something is assumed to pose no essential damage to his administration.

■Sharp Ability to Grasp Essence (= Intuition)
While Manhattan was already the world's most valuable area at that time, being able to create something completely transcending previous concepts like Trump Tower and being confident it would definitely sell demonstrates sharp intuition for grasping the essence of things.

This sharp intuition will likely be greatly utilized in performing the diverse duties of the presidency. Even when flooded with information from advisors and related government agencies, he will utilize that information while ultimately making decisions based on his own convictions and intuition.

■Ability to Act Based on Long-term Vision (Not Ad Hoc Ideas)

Twelve years from when Trump was an unknown 25-year-old second-generation manager until he completed Trump Tower at 37. Continuing to work persistently is something that cannot be done by managers with only quick reflexes. Trump can be said to be a manager capable of accomplishing big jobs based on long-term vision. (Conversely, this shows his obsession with "success" and "victory" is that strong.)

I often hear criticism of Trump as acting on spur-of-the-moment thoughts or being haphazard, but I don't necessarily feel that's the case. I imagine his ability to fight long-term battles (and ultimately achieve the victory he aims for) is extremely high—when he follows his instincts and determines "this can be done," he will definitely accomplish it no matter how many years it takes.

■Ability to Use Bluffing as a Means Most Effectively

On the other hand, for an unknown 25-year-old young entrepreneur to succeed in such a massive project without track record or funds required considerable "bluffing" and what could be called charm—the ability to win over people.

Such bluffing would be mere delusions of grandeur if not realized, but when someone like him actually realizes it, it can no longer be called bluffing. This is an ability similar to Steve Jobs' "reality distortion field"—the ability unique to one-man owner-managers to involve others and realize that world through complete belief. Especially in diplomacy, Trump's negotiation techniques using this bluffing effectively to draw concessions from opponents will likely be fully demonstrated.

■Has Relentless Obsession with Victory, but Doesn't Seem to be a "Winner-Takes-All" Vulture

The larger a project like Trump Tower development becomes, the more stakeholders there are, and the fruits of success (= profits) need to be distributed in allocations that satisfy everyone reasonably. Someone who takes all the credit alone cannot do big jobs involving many people. This suggests he is a manager who can distribute (share) results to a degree where everyone is reasonably satisfied, not just ruthlessly self-interested and maximizing only his own profits. (Of course, it's clear he's not simply a "nice person" who gives away his own share to others.)

For example, there are signs he's trying to use relations with Taiwan as material to draw favorable conditions in trade with China—Trump's bluff diplomacy has precarious aspects like walking on thin ice. However, if he intuitively understands that deals where only he wins and monopolizes results don't last, he will ultimately aim to reach compromise points where both sides can shake hands in diplomacy.

■Where are Trump's Precariousness, Limitations, and Risks?

So conversely, what precariousness, risks, and limitations can be deductively inferred from his business life?

Weakness Hypothesis 1: Because he views the world too much through "zero-sum" elements, he may be insensitive to the concept that new value is created through "growth and innovation"

While it's true that real estate business cannot succeed without the three elements of location, planning, and management, it's also true that real estate business cannot begin without land itself. And land, in principle, doesn't increase. (The world's land area is basically constant.) Therefore, compared to other businesses, the zero-sum element of "if others gain, I lose" inevitably becomes stronger.

This differs somewhat from the essence of innovation = the essence of growth, where things that never existed before newly create value (like the internet being born in a world without internet, or iPhone being born in the era of flip phones). The glimpses of thinking in Trump's behavior that "others (other countries) gaining means I (my country) am losing" seems to be considerably due to his business background.

Growth is originally about increasing the total pie that participants can obtain. Therefore, a world where growth is realized is not necessarily zero-sum, but for him who seems to view the world as zero-sum, the idea that growth is realized through innovation seems intuitively difficult to understand.

Therefore, areas like technology venture growth and development are unlikely to receive overwhelming support from him. Rather, the type of innovation called game-changers that fundamentally destroys existing industry practices and revenue models may be viewed as enemies by him, who stands on the old economy side in the economic zero-sum game, and could potentially become subject to regulation.

Weakness Hypothesis 2: Has never served under any "boss or ruler" and is poor at "explanation"

Looking at Trump's business life from above, one notices that he basically has no period of "serving under a boss (being employed)." Trump's business life began by helping his father's work, and his father could be said to be his only boss, strictly speaking. However, for Trump, who became independent in business at 25, it's hard to imagine he felt his father was his boss.

Rather, his father was a good mentor and the respected head of the family. Even afterward, Trump himself reflects on being influenced by numerous mentors, including a lawyer (Roy Cohn) who influenced his management stance and philosophy, but these were all mentors, not bosses.

Also, as a second-generation president with some accumulated capital from the beginning (though apparently not very much), he didn't need to bow his head to relatives, parents, or friends to request investment, nor did he need to save money by doing subcontracting work. In modern terms, he didn't need to explain business plans to angel investors or venture capitalists to request funding.

Furthermore, even after Trump Organization became massive, he never took his company public. Therefore, Trump can be said to have conducted business with almost no need for (or avoiding) the act of "being governed by others, performing duties with delegated authority, and explaining results to bosses or governors (shareholders, etc.)"—in other words, "fulfilling accountability as a trustee through exhaustive explanation."

From this, when stakeholders (like media or voters opposed to him) seek "accurate explanation" or "true intentions," Trump tends to adopt an attitude of "If you're opposed, do as you please. Don't get involved in this deal. Goodbye." It seems he has a business sense of "If opposed, we part ways and that's the end. No need for explanation."

For such one-man owner-type managers, virtually the only situation where accountability arises is with "family." The reason Trump values family above all and seems to listen carefully to family advice is because family is the only and greatest stakeholder for Trump, the only party to whom he feels accountability.

The Trump administration's family influence will undoubtedly be significant. Unless a wise family member seriously advises about the necessity of accountability to voters, Trump's "insufficient explanation" will likely remain a constant destabilizing factor for his administration.

Weakness Hypothesis 3: Doesn't know foreign exchange (or so it seems)

Looking at Trump's business background, I don't see extensive experience in overseas business. It appears he only had plans to build Trump Tower in Moscow, Russia, and was involved in casino construction in Dubai and other Middle Eastern locations. Therefore, I feel he doesn't have personal, visceral understanding of how decisively important foreign exchange is in global business.

Particularly, as the US appears to be entering a phase of interest rate increases, it's completely unclear whether Trump views the accompanying dollar strength as national interest, or conversely, views dollar weakness as national interest because it supports the old economy and leads to domestic industry development.

Personally, I believe currency wars are the ultimate form of zero-sum games that Trump excels at. (Both currencies cannot weaken simultaneously.) When Trump understands this, what kind of deals he will propose to the world is what I consider the greatest uncertainty factor for the global economy. Logically, Trump, who protects domestic industry, should be a dollar-weakening advocate. While economic intellectuals around him seem to be persuading him that no, that's not right, according to economics textbooks... he seems to understand the position that a strong dollar is national interest for now.

However, whether his unique learning ability and genius-level intuition, surpassing economic textbook theories (which he probably considers useless), will still lead him to accept a strong dollar based on his own intuition—this will ultimately be the biggest point of the Trump administration's economic policy.

■Summary

To describe Trump in one phrase, he is "the god of yankee tigers." Rising as a second-generation manager, valuing family and trustworthy companions, and crushing anyone who opposes them with full force. However, he thoroughly protects his companions and family. Now that he has become president, family and companions mean the United States of America, and to protect these companions, he will thoroughly attack those he considers enemies and ultimately win. This will be his basic stance.

Also, through "deal negotiation ability," while actively pursuing negotiations to maximize American national interests, since he won't exploit other countries to the extent of "America takes all," geopolitical risks to the world economy under President Trump may relatively decrease and stabilize.

Economically, the US economy seems likely to stabilize around the old economy and continuously achieve steady growth. However, essential innovation-driven growth won't be accelerated by the administration, and "disruptive innovation" that destroys existing industry structures might even face strengthened regulation. Nevertheless, America's innovation capacity won't be lost.

And if the Trump administration judges that dollar strength is contrary to US national interests, Japan may again face considerable yen appreciation risk. How the Trump administration will build the post-Obama era remains a focus of attention.