• Industry: Food, Drink & Consumer Goods
  • Type: Business and industry issue
  • Date: 6/12/2013

Lessons from other industries: Hanging on his every word 

Lessons from other industries
The world is listening to the Zen Buddhist priest who turned around Japan Airlines – but what can the consumer industry learn from Kazuo Inamori?

Corporate gurus often reflect the country that made them great. In the US, Steve Jobs brought rock-star charisma to Apple’s boardroom. Australia’s tech entrepreneur Matt Barrie brashly tells his staff at “You either perform at A+ grade, or you don’t cut it.” And one of the stars of Japanese business is an 81-year-old ordained Zen Buddhist priest whose managerial philosophy is based on the amoeba, the microscopic single-cell organism that can move around and take on any shape.

In 2010, Kazuo Inamori was given a task most thought impossible – fixing Japan Airlines (JAL). He had twice turned the job down on the grounds that he had “no clue about airlines”. When he took over, JAL had posted a net loss of US$2bn in the past three quarters.

Despite the strong local flavor of his management style, Inamori has rebuked his Japanese peers for lacking “assertiveness, vigor, energy and resolve”. Japan has a consensus-based corporate culture, where maintaining the status quo is the norm.

Inamori is not like that at all – partly because he is at heart an entrepreneur. In 1959 he founded Kyocera, a highly successful ceramics conglomerate that makes non-metal kitchen knives. Then in 1984 he founded DDI, which merged with two other companies to become KDDI – Japan’s second-biggest telecoms carrier. Inamori’s business philosophy is based on doing the right thing as a human being and developing the leadership potential of every employee. With a simple yet precise system of micro-divisional management and accounting, he distributes leadership and management responsibility all the way down to small self-supporting units. He calls it the amoeba management system. Every amoeba group gets targets and real-time numbers that reveal how their part of the business is performing. They are encouraged to work as if they are independent within the company. “All employees have the same mindset as executives, and we run the company together,” says Inamori.

One of his first moves at JAL was to issue a small book of his philosophy, featuring such soundbites as: “The ability to see your way into the future is a result of applying effort and living today and every day to the fullest”. This may sound like a fluffy cliché, but don’t be taken in. Inamori once said that to run a business you need to be mentally as tough as a karate champion – but he’s more of a master of t’ai-chi, the fighting form developed by Daoist monks. In karate, force meets force. T’ai-chi succeeds by knowing when to yield and when to strike.

Lessons from Kazuo Inamori

  1. Do the right thing as a human being

    In a tough spot, going back to basics and doing what you know is right is the way to succeed.

  2. Break it down to a single-cell culture

    Amoeba management creates the smallest units possible, feeds them real-time data, sets targets, fosters their leadership potential, and gives them responsibility.

  3. Always look on the bright side of life

    Remaining cheerful, thankful and humble – and working hard at all times – will ensure success.

JAL fired a third of the workforce, retirees took a 30 per cent cut in their pensions payouts, and the remaining employees had their benefits halved. But Inamori was famed for buying a six-pack and drinking with people working late. “After a beer or two, people opened up and told me their honest opinions,” he says. His handbook on business contains the line: “Be frugal.” The JAL amoebas have certainly been saving every possible yen. Crew members iron their own white shirts, and at one airport, mechanics reuse their lunch bags to carry small aircraft parts, saving a dime a time. Such frugality starts at the top, where the amoeba management system is run by Inamori and 80 executives out of a large hall with a wooden floor and spartan desks and chairs.

JAL’s operating profit margin has surged to 17% – better than some low-cost rivals – and the airline is, once again, one of the industry’s most profitable carriers. Since the global economic crisis, business leaders have faced relentless public scrutiny over their ethics, remuneration and lifestyle. Reputational issues are proving especially critical in the consumer sector where many organizations are discovering, the hard way, that, as Inamori famously observed: “No company can generate long-term profit unless it makes every stakeholder happy”.


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