7: Profits come from the prosperous co-existence with customers (March 26, 2011)
Ohmi, which is currently Shiga Prefecture, was famous
for Ohmi shonin (Ohmi merchants) back in the Edo Period (1603-1867). Even today,
Ohmi merchants mean diligence and patience. They diligently expanded business
and increased presence in the market. Such famous companies as Takeda Pharmaceutical
and Takashimaya Department Store originate from Ohmi. Tonoyo
is also an Ohmi-born company. Founded in 1700, it currently enjoys an established
reputation as a trading company handling apparel products including Japanese kimono.
The family was originally a pack peddler selling
linen cloth and silken threads. At the beginning of the 19th century, it opened
a store in Kyoto and Osaka and grew to be one of the influential merchants in
the market. Many Daimyos (Clans) suffered from financial crisis toward the end
of Edo Period, and they borrowed money from affluent merchants. Lending money
to clans was truly dangerous because merchants were forced to write off their
loans in most cases. Most merchants, however, gave in to authority and reluctantly
lent money to clans for fear of sanctions. One brave merchant existed, and he
turned down the request from a clan for a loan twice.
was the fifth generation of this family. He said to the clam without hesitation
that he was mentally prepared for a sanction because he turned down the request
for a loan twice, but strongly and proudly alleged that if he had been asked to
discontinue business with the clan, all merchants would get fed up with business
with the clan and ultimately would ruin the clan. The austerity epitomized by
this story allows this company to prosper for more than 310 years.
family has the precept that profits come from the prosperous co-existence with
customers. That is, the business relations that ask one of the two parties to
accept compulsion of the other will not last long. The request from the clan was
exactly the one that the family had to turn down by any means. The two parties
are usually joined by social contribution that means the efforts to do what is
good for society. That is, the precept means that everything is fine if each of
the two parties and society are fine, and this was the knowledge widely shared
by Ohmi merchants.
The family was very innovative,
too. It created several rulebooks to govern the family, its collateral families,
and employees to prevent them from growing arrogant. In particular, it placed
higher importance on the merit system than the seniority system. It asked all
employees including managers to write a resignation every year to maintain an
uncompromising stance in the relations between the family and employees.
currently has plants in China and plans to build another one in China. As globalization
develops, Japanese companies have to establish solid and longstanding business
relations with foreign companies, and it is vital to locate reliable parties and
collaborate with them. For this purpose, the family seems to place the highest
importance on the precept that profits come from the prosperous co-existence with
6: Improve the environment surrounding your business, first (March 19, 2011)
Forestry needs constant efforts for
generations. You cannot expect short-term sales and profits, and you have to keep
thinking about innovation. Otherwise, competitors equipped with new technology
will surpass you, and it takes you much time to catch up with them. Hayami
Forest is the company that has never stopped making innovations in forestry
for the past more than 200 years. The concept that drives this company is "building
new mountains." That is, it places more importance on the environment that
surrounds its business than on pursuing for quick business return.
Hayami Forest was founded in 1790 when the
first generation started business in forestry and seafood. The Hayami family was
originally one of the high-ranking officials of the Tokugawa family in Kishu (currently
Mie Prefecture). The Tokugawa family that ruled Japan in the Edo period (1603-1867)
had three collateral families. They were located in Owari (currently Aichi Prefecture),
Mito (currently Ibaraki Prefecture), and Kishu (currently in Mie Prefecture).
The company was founded and is headquartered in Mie Prefecture next to Aichi Prefecture
famous for Toyota Motor.
The first generation made
a fortune in the seafood business and invested heavily in forestry. Because he
increased the number of mountains and forests, the Hayami family currently owns
a total of 1,070 hectares (about 2,650 acres), 80% of which are coniferous forests.
And 99% of the coniferous forests are Japanese cypress. The area where this company
owns forests has an annual precipitation of 4,200 mm as compared with Tokyo's
1,500 mm. Therefore, dense planting was traditionally dominant in this area because
of the pluvial climate; planting 10,000 trees per hectare - more than three times
as many trees as in other areas - was widespread. Dense planting, however, makes
it hard for the bottom weeds to grow, resulting in washouts of soil and nutrition
for trees in times of heavy rain.
The eighth generation
succeeded the seventh generation in 1943. He was a great reader, and he studied
forest management by himself. He was brave enough to discontinue dense planting
and adopt the concept of building beautiful mountains instead of pursuing only
for high return. The slogan this company invented was "Manage light to make
a forest grow rich by itself." Increased tree thinning enriched the soil
and increased the amount of plants. Each of Hayami's artificial forests has 243
kinds of plants, whereas a standard protected forest has 185 kinds of plants.
In addition, the company started to improve the forest roads and strip roads in
1961. At present, the company has roads with a length of 45 km inside its forests,
which means a forest road of 45 m per one hectare. The roads that stretched in
a finely meshed pattern contributed to increasing productivity because the efficiency
of operation of vehicles and heavy machines was improved greatly.
wood imports depreciated the price of Japanese cypress considerably to a quarter
during the past 30-40 years. To cope with the increase of inexpensive import woods,
the company introduced state-of-the-art silviculture equipment to develop its
own nursery plants. The concept that this company has been cherishing for more
than 200 years gave this company the honor of the first Japanese company that
acquired the certification of the Forest Stewardship
Council (FSC) headquartered in Germany in 2000. It is noteworthy that this
company has focuses on the factors and environment that develop the business in
the long run and pursued the concept to make the mountains beautiful instead of
seeking for quick return from the sales of woods.
4: Find sources of business around you (December 10, 2010)
At the beginning of the Genroku period (1688-1703)
in the Edo era, production and distribution of products grew active and various
new types of merchants were born. Takatoshi Mitsui is most famous as the new type
of merchant of this period. He opened a kimono store under the name of Echigoya
that later developed to Mitsukoshi Department Store in Tokyo. He set up a policy
to sell kimonos in cash at the fixed prices instead of selling on credit. Most
kimono stores then sold kimonos on credit and set the prices higher to prepare
for uncollectible receivables. Takatoki's new business approach hit the heart
of shoppers, surpassed his competitors, and laid the foundation for future growth
birth of new types of merchants was observed in areas other than Edo (Tokyo).
Emon Motoya in Nagano Prefecture was one of such new types of merchants. He is
the founder of the Motokyu group
headquartered in Nagano Prefecture that has annual sales of over 30 billion yen
now. He opened a store in the temple town before the
Zenkoji temple in 1717 and started to sell salt, rice, and cotton. The temple
was a kind of trading post between Niigata Prefecture and Edo, and old and established
wholesalers were dominant there. Emon Motoya, however, was brave enough to compete
with the existing powers. What characterizes him from other merchants was that
he made business trips to production areas to purchase products that he identified
qualities and thought promising in the market. He later purchased and distributed
raw materials for foods as a wholesaler and made a fortune.
store opened by Emon Motoya was burnt to the ground by the epicentral earthquake
that attacked the Zenkoji temple and its surrounding area in 1874, but the business
in food materials helped the store reconstruct itself. Later, it added charcoal,
coal, and coke to its product line. The store was incorporated under the trade
name of Motokyu in 1948. Motokyu started
to distribute cement, and later handled ready mixed concrete in 1964. As the wholesale
business grew harder because of retailer's strong requests for price reduction,
Motokyu decided to start retailing in 1983 with an investment from a nationwide
household retailer chain. It subsequently expanded business by adding production
and designing of construction materials and road pavement materials. A holding
company was established to manage these diverse business operations in 2000.
The company grew even more energetic after 2000, and it branched out to the
restaurant business and hot-spring business, and added a leading hotel to the
list of the group companies. Look around you, and you can find numerous numbers
of sources of business however stagnant economy is and however hard the competition
is. You should not bind you with hoops. Possibilities are infinite.
strategy to diversify business radically is somewhat reckless from the viewpoint
of today's business theory. However, you have to learn that the Motokyu group
remains tough despite the diversification strategy inherently risky. As the company
teaches you, it is important to use your ingenuity to the maximum and find a way
how to survive and expand your business.
No. 3: Three policies to tide over hardships (November 26, 2010)
Kuroeya was founded
as the direct-managed store for lacquer products named Kuroenuri, a specialty
in Wakayama Prefecture, in Tokyo in 1689. It became an affiliated company of the
cotton wholesaler Kashiwaya (currently Kashiwabara
Paper Shoji) in 1774. Since then, the Kashiwabara
family, the family head of Kashiwaya, has been managing Kuroeya. Kashiwaya
opened the Tokyo store in the Edo period and became one of the ideal merchants
of those days, namely, a merchant who had the head office in Kyoto with an outlet
The Kashiwabara family achieved a rapid
growth in the 17th century through diversification. It did business in cotton,
lacquer, and paper in three trade names, and established an affinity with one
of the richest families in Kyoto. However, the business prosperity of the family
did not last long because of the Reform of Kansei (1787-1793) conducted under
the initiative of Sadanobu Matsudaira. Because of this reform that promoted the
deflationary policy, rich families were badly affected. In addition, they increased
bad debts because of the Tokugawa government's policy of debt waiver and reduction
or exemption of interest. In fact, the Kashiwabara family's net asset decreased
to one third.
Branching, Family law and store
law, and Frugality
The Kashiwabara family paved a way to reconstruction
through frugality and review of its assets. The three policies that save the family
were "branching", "family law and store law," and "frugality."
The branching was to appoint an employee who worked for the store for long periods
as director. Kashiwaya established the separation between capital and management.
The head family in Kyoto controlled the capital, whereas the cadet family in Tokyo
took care of management. And the cadet family in Tokyo had the function to keep
close eyes on and sometimes dissuaded the head family in Kyoto whenever necessary.
As a matter of fact, the cadet family greatly affected the rise and fall of the
The three business operations were reorganized
into paper business and lacquer business after the Edo period. The Great Kanto
Earthquake burnt down the head office and warehouse of the paper business, but
the paper business recovered thanks to the support from Mitsubishi
Paper Mills. Although the paper business was seriously damaged, the lacquer
business grew dramatically after the earthquake thanks to the great demand for
lacquer products. That is, the strength of the diversification worked rather well
to the Kashiwabara family's business. Ironically enough, the relatively highly-profit
paper business covers the relatively low-profit lacquer business at present.
this case shows, it is not too much to say that the three policies of branching,
family law and store law, and frugality saved the Kashiwabara family in the past
hardships. The three policies can be said to be today's important factors of running
business: well-organized promotion system, well-established company law, and well-managed
No. 2. Renew the
consciouness of the strength (November 22, 2010)
oldest company is unquestionably Kongo Gumi
(Congo Construction) in Osaka that was established in 578 (not in 1578). The
company specializes in the construction of shrines and temples, and it was
involved in the construction of Horyuji
Temple in Nara built by Prince
Shotoku in 607. It lost independence and became a group company of a larger
construction company in 2005 because of the inability to tide over the worldwide
financial crisis. Many major construction companies, which specialize in real-estate
development and condominium construction, entered into the shrine and temple market
one after another to get orders.
president of this company thought seriously about the strength of his company
and found that his company has a group of shrine carpenters and the excellent
ability to process wood. He formed a team made up of young engineers and put it
under his direct control to improve the company's brand. He collected the team
members from five divisions: construction, design, purchase, quantity survey,
and sales. Master carpenters delivered lectures on the company's history of some
1,400 years and expertise of shrine construction. For example, hand-finished wooden
buildings have a completely flat surface that can repel water without paint application.
The machine-finished wooden building last 100 years, but hand-finished wooden
building can last as long as 300-600 years.
with this kind of expertise and confidence of its technology, salespeople are
developing the market nationwide focusing on big shrines and temples that the
company has traditionally been hesitate to develop. Actually, it was totally satisfied
with orders from the shrine and temples in the neighboring prefecture. Salespeople
are now courageous enough to take orders from head shrines and temples across
the country. As the marketing area expands, they are accumulating information
and knowledge with the help of information technology and successfully increasing
presence in the market.
maintains current-account surplus. It achieved current profit of 150 million yen
against sales of about 50 billion yen for the fiscal year ended March 2010. The
number of employees increased from 90 to 130 in the four years. Under the initiative
of the president, employees are renewing the consciousness of the strength of
their company quite rapidly. As the case of Kongo Gumi shows, reforming employees'
consciousness of what strength they have works well. In addition, the collaboration
of the five divisions gives momentum to the company growth.
1. Don't be hung up on the tradition and goodwill (November 17, 2010)
Yakuhin, a Nagoya-based drug wholesaler, was established in 1726. When the
company was doing business with the shop name "Izutsuya" in the Edo
era, a broke out at the bathroom of this shop in 1855, and the fire immediately
grew to be a big fire and burnt neighboring houses. In 1966, it rebuilt the shop
and made the roof lower than roofs of neighboring houses on purpose to show the
apologies for having caused the big fire. With the advent of the Meiji ear that
began in 1968, the company started to handle western-style medicine. Aggressive
and energetic, the 7th family head visited the U.S. to see the rationalization
of operation using computer in 1968 and 1969 and expanded the distribution network.
Much affected by this father, the 8th family head integrated manufacturing and
built a distribution center beside the manufacturing plant.
8th family head did not succeed his father's name contrary to the tradition, saying
"If I am hung up the tradition, no drastic reform can be achieved."
He took the initiative in constructing the state-of-the-art distribution center
and introducing the information system to increase the efficiency of operation.
In fact, no drug wholesalers introduced such advanced information system as Nakakita
Yakuhin. His initiative helped the company strengthen the sales force. In addition,
he set up the sales force specially dedicated to dispensing pharmacies despite
the opposition of other directors who dislike increasing cost, knowing well the
current system found it hard to take care of medical practitioners and dispensing
The manufacturing division
is expanding business under the theme of erasing, and disinfectants are growing
to be one of the mainstays of this company. The 8th family head is planning to
increase the outsourcee business of large pharmaceutical companies and spin off
the manufacturing division into a separate company to give outsourcers sense of
security about confidentiality obligation. As shown the above, he is working out
new innovations from one after another. The courage to overcome the tradition
is one of the secrets to keep a long-established company prosper.