CEO test -wagon sales -, the pricing is the management 2

Inamori spent a lot of time speaking about how important the pricing is. He used to refer to this wagon sales example to Kyocera managements as well as to Seiwajuku members. What Inamori mentioned is quoted with “”

“When I appointed officers at Kyocera, I had been wondering whether I should choose a so-called elite candidate with a good educational background or not. I was skeptical that he was good enough to manage the team or the company. After all, I found out I should choose an employee who really understands what the business is. I proposed this ‘Noodle wagon champion’ as the leader test. The points are as follows. Each candidate with an initial start-up fund of say 500 USD needs to set up a noodle wagon and commences his own business. Location, menu, targets, promotion, everything is up to the guy, wagon owner/manager. During this test, they don’t have to come to the company and over the several months, the winner is the one who has the most profit in his hand.”

I would like to simulate how I could deal with this test. The points are the following.

1 Where does the demand come from?

2 The sales driver and differentiation

3 Innovative cost reduction

4 Keep simulating until you get clearest visions

Let me elaborate one by one.

1 Where does the demand come from?

First, demand is the fundamental factor to make the business profitable. What kind of customers are coming to the wagons that are already selling, when is the busiest and what are they eating? Are they willing to eat the food even by queuing? What is the best sold menu and how much are they spending? What motivates their customers to come there? Will they become repeaters? I would like to think about these questions all the time and thoroughly investigate those factors relating to demand.

2 The sales driver and differentiation

We should incorporate into our own wagons the tips which we perceived from other top sales wagons. However, we don’t have to compete with them by creating a sort of copy. We may have to bring something that differentiates ourselves from others. I would like to sincerely and humbly create products that can be selected from the customer’s point of view.

3 Innovative cost reduction

Inamori mentioned that we should charge the highest price at which the customer is willing to buy your product. Once we’ve set up that price, we must generate the profit by scientifically and innovatively controlling and managing the cost structure.

4 Keep simulating until you get clearest visions

In another part of Kyocera’s philosophy, Mr. Inamori says that we must think until we get the clearest images in color. After having a realistic image of noodles to be served at the wagon, realistically simulating how to serve customers, we may come up with various issues and problems. We must get prepared for those potential issues with various solutions.

I think the point of this Noodle wagon championship is the pricing. We must carefully point out the highest price that customers are willing to buy. If we carefully and sincerely reconduct the above processes with our utmost souls and spirit, we will be able to see that one point.