In the 1990s, when Mongolia was just starting its transition to a market economy, a group of our friends used to study a great deal about stories and the history of Japan’s most famous companies, including Kyocera Corporation and its founder Kazuo Inamori. We read his book “Passion for Success” many times and one of us ended up starting a business in partnership with KDDI Corporation, which also belongs to Inamori.
When he was 27 years old, Kazuo Inamori established his well-known company, Kyocera (Kyoto Ceramic), which has 70,000 employees, a capital turnover of 14 billion USD, net revenue of one billion USD, and has made profits every single year for its entire history of 55 years.
Furthermore, KDDI Corporation, which was also founded by Kazuo Inamori about 23 years ago, currently has 15,000 employees and is the second biggest communications company in Japan today. Their net revenue was 3 billion USD last year.
I recently had an opportunity to have a chat with Inamori-san, Japan’s famous businessman, at the headquarters of Kyocera Corporation. He is internationally acknowledged for his management wisdom, unusual methods, and his efforts for society. Believing that it would be a timely and good read, I am presenting you the summary of my discussion with Inamori-san.
Although he is 83 years old today, Inamori-san works as an honorary adviser to his company and gives lectures on management skills to domestic and foreign audiences.
Inamori-san visited Mongolia in 2006, on the 800th anniversary of the Great Mongolian Empire. He told me that during the 2006 visit, he traveled in the countryside and stayed overnight in a herder’s home, learning about traditional nomadic culture. It turns out that he was advised by Taichi Sakaiya, who wrote a book about Chinggis Khan and published it in Nikkei newspaper over the course of a year, to travel to Mongolia.
BRINGING JAL OUT OF BANKRUPTCY
How did you manage to make Japan Airlines (JAL) profitable again within only one year, when the company was on the edge of total bankruptcy and ran deficits for many years?
At the time, a friend of mine, who was the minister in charge of transportation, asked me to revive JAL. I declined his offer immediately, as I had zero knowledge and experience in aviation and air transport.
However, he was persistent and kept telling me that I could revive the company because I founded Kyocera and KDDI.
If you look at a bankrupt company from the inside you can tell that the minds and resolve of its employees are also “bankrupt”. Such disaster starts in the head. It was the same case at JAL. After assuming my role there, I went to every corner of the company and met with many employees, including pilots, stewards, and other staff. They were just following rules and procedures. They were not doing their job from their heart. Some of them even seemed a bit snobby.
I believe that any company has to have an aligned understanding from the top to the bottom. All employees have to be aligned. It applies to any company in any industry.
After talking for days, we formulated the purpose of JAL’s management. The purpose was to ensure that every single employee was happy. We defined our goal as, “This is your company and its goal is to make all of you happy.” We did not say that our goal was to create value for shareholders or serve the executive management, as observed in Western companies.
This idea was absorbed at every level. As a result of everyone’s hard work, JAL made a profit of 184 billion JPY (almost 2 billion USD) only a year later.
This management system, invented by Inamori-san, is called “Amoeba Management”, named after the single-celled protozoan that lives in still water. It divides an organization into small groups, each of which has a leader, and calculates profits and working hours. Leaders of amoebas develop their own plans after consultation with senior management.
THREE MAIN PRINCIPLES OF SUCCESS
Inamori-san, Mongolians also enjoy reading your book about management. Your book named “Taking the Right Road in Life” has been recently published. About 1.5 million copies were sold in Japan and around 2 million copies in China. I have recently read your book “Amoeba Management” as well. All of your books present many important ideas and new solutions. Could you please tell us, Mongolians, the most important three principles required to achieve success?
Firstly, respect people. In today’s world, the gap between rich and poor keeps widening. Wealth is a consequence of human greed. Although greed allows for development, a part of society remains poor everywhere due to a fault in the system.
The world will not have peace if those who have accumulated wealth do not spend it on helping others. The solution is that business people care for and show love to each other.
Secondly, be modest. There is a risk that more wealth and power could make one unethical, arrogant, and patronizing. A company that has such leadership might enjoy a short period of success, but it will not last long. Its team members will gradually lose their passion and stop cooperating.
In Japan, there is a proverb that says, “one exists because of others.” We can only live in harmony when we consider ourselves a part of something bigger. Think of others first and learn to put yourself aside. Always look from both angles.
Thirdly, be brave. When you make a decision, look at it from many angles and think thoroughly. Always treat things with great sensitivity. If you think something must be done, be brave when you make that decision. Once decided, put all your efforts and see the end of it. If you do that, your team will be motivated and more efficient.
Having decided to join JAL, Inamori-san refused to receive a salary because he would work there only three days a week.
It is said that Inamori-san received a salary of only 100 JPY despite the fact that he was creating value worth millions of dollars. As he used to spend the whole day working and meeting people, all diners were closed when he finished work. So, he used to get noodles from convenience store and eat it with water.
When he gave one of his books to me, he inscribed the book with a message that read: “Respect the Divine and Love People” in Japanese characters. It is the philosophy of Kyocera.
Inamori-san says, “I thought that what is decided is decided.”
Mongolian brothers and sisters, let us respect the divine and love people as well!
2015.04.08