We were talking about the reasons why the business diversification fails.
The points to be noticed are as follows.
1 Thinking about management’s energy allocation
2 Increasing your energy efficiency
3 Developing internal resources as division heads
4 Transferring your energy& mindset to those team leaders
5 To assess the performance, looking at figures as final output of the energy transfer
We will explain the reasons from 3 to 5 in this blog.
Case
The main business of the company A is the housing construction. At the time of the second generation, the recycling department and the kitchen design and sales department were spined off as subsidized companies under A company group.
Bob, the son of the second generation, became the third generation leader and was handed over the business, but the sales decreased significantly.
Mr. Inamori shared the tips of diversification. In the following, Mr. Inamori’s words are quoted as “”.
3 Developing internal resources as division heads
“If you want to diversify and grow your company but in case you can’t do it on your own, you have a department head who is as responsible as you are, works hard, and protects the company as you have done. It is important for the company to grow.”
4 Transferring your energy to those team leaders
“However, in a small business with only 10 or 20 people, it is not easy to develop people who really had a hard time with you and have the same level of ability and responsibility as you do. However, in order for a company to grow, we must train and develop such important human resources, the business leaders.”
→ Regarding the qualities of a leader, Mr. Inamori quoted a Chinese classic as follows.
“Thoughtfulness and prudence” is a first-class qualification.
“Boldness and tolerance” is a second-class qualification.
“Smartness and cleverness” is a third-class qualification.
── Shingo Lu “Ginging”
So we may have to choose those person who understand and conduct “altruism”, on behalf of all the staffs.
5 To assess the performance, looking at figures as final output of the energy transfer
“You should proceed with the construction work by carefully analyzing the cost estimation. You should consider using cheaper materials than you estimated. Of course, the quality should not be compromised. Profit margins should increase if you come up with idea to buy good materials at low prices. Management is ultimately a set of “figures and numbers”. We use various items including materials, but we have to look at all of them numerically. Unless you can replace all the business processes with numbers and read those figures, you won’t be able to run a business. In other words, the business processes appearing in numbers must be managed by using the income statement. However, in the case of the management of small and medium-sized enterprises, that is not always conducted. Most of top managements haven’t seen the numbers. Even if they follow numbers, they only see them superficially. You must understand and analyze the figures thoroughly as if the numbers speak to you and demonstrates you their status and history.
To sum up, the below is the process as well as important items for a company to diversify its business.
1 Thinking about management’s energy allocation
2 Increasing your energy efficiency
3 Developing internal resources as division heads
4 Transferring your energy to those team leaders
5 To assess the performance, looking at figures as final output of energy transformation
The most important thing is to train managers and people who have the same ideas and abilities as does the business leader.
I heard that Mr. Ito, the successor to Mr. Inamori, was a Kyocera starting up member when the company was founded. He is a graduate of a local technical high school.,Without any brilliant academic background, he became the top of the Kyocera Group worldwide. He contributed to the growth of Kyocera by overcoming the sudden appreciation of the yen and the subsequent recession. I thought that Mr. Inamori brought up with all his heart and soul to train such a great leader as Ito, as if he raises a child.
Further queries or doubts, please email to ytomizuka@abrilsjp.com
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