Omron, the innovation driver

Mr. Hajime Takebayashi, whose “official” nick name is “Shi”, has been releasing a lot of books relating business know-how and innovations, which he implemented over his career in Omron.

OMRON Corporation (English: OMRON Corporation) is a major electrical equipment manufacturer headquartered in Kyoto, Kyoto prefecture, Japan.

The founder is Kazuma Tateishi. In addition to industrial control equipment, systems, and electronic components centered on sensing and control technology, it has been the core company of the “Omron conglomerate”, which develops healthcare products. Listed on the First Section of the Tokyo Stock Exchange (Securities code: 6645) and listed on American Depositary Receipts (Securities code: OMRNY), Omron has been one of the stocks which consist of the Nikkei Stock Average.

I personally have valued Omron for many years. Mr. Inamori, the founder of Kyocera corporation, mentioned in his seminar, that there are a lot of innovative companies in Kyoto. Omron is one of them. Inamori continued those companies have been pioneers and remained leading companies of the industries where they founded themselves.

Shi, through his books, shared a lot of innovative strategies he has taken. The highlights are as follows.

1 re-identification of the business

When Shi managed a manufacture company as the CEO, he got an insight: what if we change our business category from manufacture to the service provider. Shi asked himself, “If we belong to the service industry, what kind of service we should provide? What types of company we should be?? Well, we are supposed to be a sort of Ryokan, which is the five star and traditional full-service hotel in Japan.”

Then he decided to be the number one Ryokan in Kyoshu regions, where the company is located. This strategy worked to change staffs’ mindset and the performance turned into positive, although the company had recorded negative results for many years.

2 Management call with Gong

Instead of scheduling meetings, or email communication for problem solving, Shi brought this idea: sounding a Chinese gong to convene the management team. The management meeting should be scheduled in advance, and each team leader saves their time for it. Shi had two objectives for this Gong call: 1) stop circulating mails to solve immediate issue, 2) get the problem-solving process transparent. When Shi was the top of the software development company, an issue occurs. People were getting used to circulating opinions via Emails and figuring out who is the one to be blamed. Shi found this process unproductive and invented this emergency call system. Leaders, when they hear the gong, must stop their tasks, come to downstairs, and start talking what to do. Other staffs can see and learn how to solve issues as this emergency call is open to all staff.

Those are examples of how Omron group has created innovations.

3 Investment value analysis

Looking at Omoron’s financial performance, they have delivered a constant net income for past decades. They have released the products by which they can remain a pioneer in the electronic industry. I assume not only their technology but also their innovative culture have created Omron as of today. Furthermore, I think the smart and innovative guy like Shi has worked for Omron. This is actually an intangible asset of Omoron.

For instance, as the comparison, I would like to mention a conglomerate company, ViveAmici (pseudonym). They have been famous for super conservative. They have never conducted something NEW. They have already created an empire and no management in ViveAmici wants to take any risks in starting something new. They have been prosperous for say past several decades however, looking at future, I strongly feel that there is no evidence that a company like ViveAmici could survive. The guy like Shi never wants to work for such a super conservative company. This means, no innovation they can experience not only in the past but also for future. They can’t change themselves to follow the trend of new era.

Looking at the stock performance, their stock price looks like those of blue-chip US listed companies. Now, we have seen a price adjustment of after COVID, the company like Omron could be the target for us to consider holding for long term.