More profitable company even under the recession

For the past 60 yrs of history, Kyocera has never recorded a loss.

Keys are as follows

Let me explain one by one.

1 Everyone is sales force

“Under the recession, we had reduced orders from our clients and I pushed our people, regardless of the department, to market our products. Thus, the production, operation, or even R&D guys went to their potential clients to sell our products. This strategy actually worked well as our staff were able to understand each other how challenging the sales are. Usually, the production complains about the sales as they are not serious about selling such a good product. On the other hand, the sales people complain that the quality of our product has not satisfied our customers’ needs. However, recession forced them to do a sort of role play and people understand each other and spontaneously have gratitudes towards others. This allowed us to create harmony in one company.

→ In a company, teamwork is very important. What encourages us to successfully work as a team is such a role play. Put ourselves in other’s shoes and understand that is not an easy task. By doing this, people feel others and can be more cooperative.

2 Sales is the fundamental of business

“In the management board or top leaders in a company, there are well educated guys who come from a famous business school. They don’t know how to remain humble to get the sales order/ new businesses from the potential clients. In the recession, I asked everyone to be the sales force, so they thoroughly understand that sales is the fundamental process of the business.

No matter how brilliant business school you come from, unless your company can get sufficient orders from your clients, your business would never be successful. We should remain humble and ask our clients to give us businesses. Your pride or academic career never works for your company to get new business.”

→ From my experience, so -called smart and brilliant guy tend to be arrogant to our potential clients or business partners. They are qualified professionals but they always seem to look down upon our clients or other partner companies. For my company, such third party vendors can never work with us. In our real estate field as well as family business advisory services, we have eliminated those guys, who can’t respect our clients.

3 Release new product

“Under the recession, Kyocera invented a “guide-ring”, This “guide-ring” was made of ceramic, providing a strong resilience. The CEO of that fishing rod production company tried this with ceramic and won the fishing championship. The new fishing rods with ceramic guide rings have been one of Kyocera’s cash cows, as their market itself is not so large. “

→ This is understanding ourselves: strengths, weaknesses, and at the same time, what the strengths and weaknesses of our customers are. We should be sensitive to their internal voices. I have been concentrating on what has made them comfortable and what made them nervous.

Japanese people have sometimes said that we are always good at such sensitive works. Our clients are mainly non-Japanese and I feel that we should be more sensitive and catch their exact demand.

4 Push cost reduction

“The recession is the best timing for you to radically check the production cost. You may want to look for much cheaper materials, much better workflow, the production system itself. Despite your common sense, market standard, or even best practice in the market, you may have to think of another dimension of the cost reduction. ”

→ One of our principal businesses is valuation. Now I have a good opportunity to reconsider the valuation production. Valuation takes time, requires skills and knowledge, thus, it would not be easy to reduce the production cost. On the other hand, during my duties at court, I have had many cases where valuation definitely helps the parties in litigation. It is funny that they can’t pay several hundred thousand valuation costs even though they discuss over millions or tens of million JPY assets. I feel we may be able to find opportunities here to help our potential clients. Technologies and digital platforms may help to develop a sort of system.

5 Keep high productivity

“When the production order had reduced one third of the pre-recession level, I reduced the workforce to be involved in production to one third. The two thirds of workforce were allocated to the machine maintenance, and facility management of all our production facilities. The operation maintained the same productivity as they had before the recession. At the same time, I started a workshop for our staff to learn the Kyocera business philosophy. So I used the recession to develop our working environment as well as unite staffs’ mindset towards our ultimate goals.”

→ I feel what Inamori did was a sort of managing “moods” among staff. If we have our idol times, we may be occupied with anxieties and bad moods. On the other hand, if we are filled with a good mood, that would drive further positive outcomes in our businesses. This is what Inamori wanted to deliver to Kyocera.

So, the following points are tips to be more profitable even under the recession.

All of the above, as the prerequisites, Kyocera must be a high profit company. They should have sufficient retained earnings for them to conduct the above strategies. At the very early stage of Kyocra, Inamori worked hard to pay-back his supporters. That was the initial point when he realized the company should have a high profitability in its business background.

Under the Western environment, this may impact ROE, so the CEO doesn’t want to accumulate retained earnings. However, Kyocera was different. As long as Kyocera exists to fulfill their staff, the company should accumulate the retained earnings to back up the operation under the unexpected recession.

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

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