What Is the Ultimate Real Estate Analysis? — Philosophy: “Listening to the Speaking Voice of the Product”

This time, Inamori* spoke about the above motto in Kyocera philosophy.

What Inamori said is quoted with “”.

 

“We had been conducting research up to the very limit, and just when we were at the stage of needing one or two more decisive pushes, I decided to completely replace the researchers whose attention had become scattered. It was, by all accounts, a reckless decision. If replacing the entire team had led to failure, the three years of research up to that point would have been wasted—a truly catastrophic outcome. However, I chose instead to bring in new researchers with sharp, unclouded eyes, so that they could examine the work with a fresh and uncontaminated perspective. It was a gamble—whether we would succeed or fail. Remarkably, that gamble paid off, the experiment succeeded, and today our Eco-Sys printer exists because of it.

The technology was so challenging that even Xerox, Ricoh, Canon, and no other company in the world could manufacture that drum. As a result, they purchase it from us.”

 

This episode shows us how critical attentiveness and keen insight can be. Today, under the theme of “Listening to the Voice of the Product,” Mr. Inamori reminds us of just how indispensable those qualities are.

Our own business is devoted to real estate analysis and valuation. To uncover the true value of real estate, the below three perspectives Mr. Inamori highlights are equally essential:

 

 

 

Let me now explore each of these in greater depth.

 

1) Macro-level: analyzing the region where the property is located

Words of Kazuo Inamori

“At one point, I wanted to see exactly how the ceramic products warped, curling up like dried squid. So I made a small hole in the back of the kiln, allowing me to peer inside. I then observed carefully: at what temperature would the pieces begin to warp, and how would they change in the process? Sure enough, they began to warp in line with the temperature curve. No matter how many times we repeated the experiment, they would bend as if they were living creatures. At times, I felt like sticking my hand through that hole and pressing down on them, shouting ‘Stop!’ to keep them from warping. It may sound like a joke, but it was a very real impulse. Day after day, despite endless experiments, the warping would not stop, and I found myself tempted to hold them down with my own hand.”

 

My Commentary

→I believe Mr. Inamori is emphasizing the importance of analyzing the environment in which each individual product is formed.

Real estate, too, does not exist in isolation, suspended in midair.

Each property exists within a broader context: a country, a prefecture, a town, and a neighborhood.

It is crucial to consider the surrounding environment:

What kind of natural environment is it? How was that environment shaped?

What history has emerged from it?

How did that history give rise to towns and settlements?

And ultimately, what kinds of traits and characters are cultivated in the people born and raised there?

This year marks my 37th year as a real estate appraiser.

In the past, I did not always conduct such deep environmental analysis.

But over time, I have come to realize how essential it is for truly understanding the value of real estate.

That is why, more than ever before, I feel the need to devote greater time and energy to analyzing the environment.

 

2) Micro-level: carefully observing the property itself

Words of Kazuo Inamori

“In order to improve the yield, you must look at your products with all your might—observe them with intensity. When you do so, it is as if the product itself tells you where it hurts, where it has been injured. Through such observation, the cause becomes clear. Just now, I used the metaphor of ‘the product speaking,’ but in truth, when you look at your own product with that level of seriousness, it genuinely feels that way. That kind of wholehearted observation is absolutely essential.”

 

My Commentary

→Last year, I traveled to Noto, which had suffered devastating earthquake damage, to assist in the recovery efforts.

I went from house to house, stepping inside each one, carefully examining every single pillar, every sliding door, every shoji screen.

Although I have worked in real estate appraisal for more than 30 years, it felt as if I was being taught anew how to truly see and observe each individual property.

As I worked, I constantly asked myself how I could carry out “property damage assessments” in a way that might ease the suffering of the victims, even if only a little.

Toward the end of the relief activities, I found myself imagining the people who had built those houses—their intentions, their hopes, their state of mind at the time of construction.

Such close and detailed observation, I came to realize, is vital for bringing any endeavor to completion.

 

3) Mind-level: listening closely to the voices of people

Words of Kazuo Inamori

“’Even though a desk is square, if you place something on it that is not aligned parallel to one of its sides, does it make you feel uncomfortable? The balance is off, so of course it makes you uncomfortable. On a square desk, objects should be placed squarely.’

That is what I used to say. For example, if a pencil case was sitting at an angle, I would straighten it so that it was parallel with the edge of the desk. This habit of mine became so well-known that whenever I walked onto the work floor, people would immediately straighten the papers on their desks before I even arrived.

This is what I mean by harmony. I often write the words Love, Sincerity, and Harmony on calligraphy paper. But if objects on a square desk are turned this way and that, and you don’t feel any discomfort at the lack of order, then you will not be able to truly see good products, nor will you be able to create them.

When objects on your desk are out of balance, you feel irritated and unsettled. When they are neatly aligned, you feel calm; when they are not, you feel restless. Because of this sense of harmony, when I looked at products on the production line, I could immediately tell when something was ‘off.’ If you observe products without this sensitivity to harmony, you will never be able to detect defects or abnormalities.

That is why I constantly stressed the importance of organization and orderliness—to keep one’s own senses balanced and in harmony.”

 

My Commentary

→In judging the value of real estate, we always gather the opinions of the people who use the property, who live in the neighborhood, or who know the area well.

When listening to people, it is crucial to distinguish between subjective opinions and objective facts, and to listen carefully with that distinction in mind.

By making this distinction—sometimes empathizing, sometimes analyzing the local perspectives—we begin to cultivate within ourselves the same sense of harmony that Mr. Inamori describes.

With that sense of harmony, we can detect elements that are not immediately visible, yet ought to be reflected in the valuation of a property.

 

For example:

A property which has a parking space with some inconvenience in parking.

A property located in the school district of a prestigious public junior high school, attracting many families eager to live there.

A property in a reclaimed area, where nearby houses experienced soil liquefaction during an earthquake.

Through detailed interviews with residents and stakeholders, we gather this kind of information. Whenever possible, we make sure to include these findings in our reports. This enables us to achieve a higher level of precision in real estate analysis.

 

 

 

* Mr. Kazuo Inamori, the founder of Kyocera, KDDI (one of the top tele communication companies in Japan) and the top of revitalization project of JAL. As a well-known Japanese entrepreneur, he has been sharing his experiences and management know-how with managements of small to middle companies in Japan.

 

Further queries or doubts, please email to ytomizuka@abrilsjp.com

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