philosophy-based corporate transformation: the case of kyocera … · 2020. 2. 1. · corporate...

AsiaPacificBusiness&EconomicsPerspectives,Summer2017,5(1).

22

Philosophy-basedcorporatetransformation:TheCaseofKyoceraMITACorporation

YuichiYodaRitsumeikanUniversityOsaka,[email protected]

ABSTRACT

This study focuses on the aspects of corporate transformation that are essential tobusiness growth. I infer thatmanagement practice based on the “Inamori managementphilosophy” is more effective and functions as a kind of driving force when tacklingcorporate transformations such as corporate revitalization and PMI (Post -MergerIntegration). Based on this awareness, this study applied a case study to the enterprisetransformation of Kyocera Mita Corporation with the aim of exploring the theoreticalimplicationsfromthepointofviewofbusinessadministration.Inthepreviousresearch,theeffectiveness of Kyocera Corporation's management was explained in the concept ofamoebamanagement,whichisamethodofsuperiormanagementaccounting(e.g.,AdlerandHiromoto2012,AmoebaManagementAcademicCommunity2010).However,thereisinadequate research beyond corporate boundaries regarding the effectiveness ofphilosophy-based management systems for corporate transformation. In theoreticalconclusion,theInamorimanagementphilosophyworkseffectivelytofacilitateresolutionofissues of confrontation and works dynamically while changing its form independentlyaccording to the businessmodel and the characteristics of the organizational culture forpromoting corporate transformation. Additionally, I would like to share the practicalimplicationsof the finding thatmanagementpracticebasedon the Inamorimanagementphilosophy is also effective as a management method from the perspective of companyreform. In summary, thephilosophy-basedmanagementpromotedsenseofunity, strongwillpowerandcostconsciousnesseffectivelyforrevitalization.Keywords:InamoriManagementPhilosophy,Philosophy-basedManagement,CorporateTransformation,ThreeManagementSpirits,Leadership,AmoebaManagement

INTRODUCTIONANDOBJECTIVESBackgroundandIssues

Inthispaper,Ifocusontheaspectsofcorporatetransformationthatareessentialtobusiness growth. Wiggins and Ruefli (2002) showed that in business administration,companiesdemonstratingsustainablegrowthcontinuouslyovercomenumeroustrialsandcrisesintheircorporateperformance.

SinceitsfoundinginApril1959,KyoceraGroup—thefocusforthisstudy—hasprovedto be one of those rare companies that has never experienced any loss, but has growncontinuously. It has turned around a number of companies that were experiencingmanagementcrisisandhasalsoexecutednumerousM&As.Howhasthecorporationbeenable to achieve sustainable growth despite undergoing repeated corporate revitalization


23

and Post Merger Integration, or PMI? In addition, corporation has been able to growdespite having several unrelated diversifications, which Rumelt (1974) stated would bedifficultinbusinessadministration.Thispointistheproblemconsciousnessthatliesatthebaseofthisstudy.

This paper looks at the InamoriManagement Philosophy or the Kyocera Philosophy(hereinafter,“thePhilosophy”) thatarebrought forwardbyKazuo Inamori—thefounderofKYOCERAasaformofmanagementphilosophyforKyoceraGroup.ThecorporationhasauniquemanagementRationale"Toprovideopportunitiesforthematerialandintellectualgrowthofallouremployees,andthroughourjointefforts,contributetotheadvancementofsocietyandhumankind."whichemphasizesemployees(which isaboutover69,000onMarch,2016) themost. The corporationwasestablished in 1959,which consolidatednetsaleswas1,479billionJPY(around13.3billionUSDollars)infiscal2016.ThePhilosophyisthegeneraltermgiventothebeliefsystemonmanagementthathasbeenaccumulatedbyKazuo Inamori. It pursues the appropriatedecisionbyusing the criteria of doingwhat isrightasahumanbeing,andaspirestomanagebasedonhumanspirit.Adrivingforceforcorporatetransformation, includingunrelateddiversificationcouldbeaddressedbysome“generalprinciples”inthePhilosophy.Objectives

In this paper, the theoretical and managerial objectives of this study in businessadministration are as follows: Theoretical (academic) aspects of business administrationare to explore some clues to the effectiveness andmechanism ofmanagement practicethrough business transformation based on the Philosophy, and indicate the importantconceptsandlogicbehindsuchpractice.Managerialaspectsofbusinessadministrationareto understand management wisdom and ingenuity from the perspective of businesstransformation(e.g.businessrevitalization,PMI)

LITERATUREREVIEWIt has been pointed out inmanagement studies that companieswhich demonstrate

sustainablegrowthhaveovercomenumeroustrialsandcrisesratherthansimplygrowinglinearly from the aspect of corporate performance to continue their rise. For example,Wiggins and Ruefli (2002) conclude that it is rare to see a company that achievesoutstandingcorporateperformanceonacontinuousbasis—afindingbasedontheir long-termsurvey spanning25years—from1972 to1997—comprising40 industriesand6,772companies.Theyhaveshowntheextremeunlikelinessinattainingsuchresults,andmadeapoint to state that a business entity would accomplish continual expansion by cyclingthrough the state of growth and recovery. Accordingly, corporate transformation andcorporaterevitalizationcanbecomeanimportantsubjectforanycompany.Oneaspectofcorporate transformation is the process of diversification: an additionof a newbusinessdomain. However, the difficulty in reaching a successful outcome has been indicated,especially for any unrelated diversifications with a weak link to the existing business(Rumelt,1974).

The threemanagement spirits put forwardby Kagono (2010),whichwill be cited asreferenceinthispaper,willbeanalyzed.Thespiritofmanagement(i.e.the“ManagementMindset”) is to establish corporate management in a capitalist society, the mindsetnecessary in order to judge andmove people based on the inner aspects of the peopleworking inacompany(Kagono,2010,p.46).Kagonoexaminesthefollowingthreespirits,


24

arguing that these threeplayacrucial role inmanagement: the first is thecitizen’s spiritdemonstratedthroughdiligenceinsocialnature,whichisespousedbyWeber(1920);thesecond is the entrepreneurial spirit that is promoted by Sombart (1911, 1913) andShumpeter (1926),pointing toa strongwill toaccomplishwhateveran individualhas setout to do; and the third is the commercial spirit advocated by Smith (1776) , which ischaracterizedbyarationalmindset.ThedescriptionofthethreemanagementspiritsandtheirkeywordsareshowninTable1.Table1.TheThreeManagementSpirits

Name(reference)

Explanation Keywords

Citizen’sspirit(MaxWeber)

Torespectsocialandworkplacerules,workdiligently,haveanobedientmindset,andbeabletocontroloneself

Diligence,loyalty,moderation,

overconfidence,altruism,steadfastness,honesty

Entrepreneurialspirit

(WernerSombart,Joseph

Shumpeter)

strongwillpowertoactualizedreamsbypursuingsomethingwithoutlimits,overcomingvariousobstaclesandraisingafightingspirit

Passion,creativedestruction,victory,

conquest,motive,ultimatepursuit,vocation,spiritwithoutriskandfear

Commercialspirit

(AdamSmith)

thespirittopursueabstractbenefitsandsatisfyone’sintereststhroughrationaljudgement

rationality,commitmenttonumbers,self-interest,real

intention

In addition,what is important for themindset ofmanagement is striking a balancebetweenthethreespirits.Inotherwords,Kagonostatesthenecessityofopposingspiritsintherealmofcorporatemanagement.Thekeytothemanagementspiritistobalancethesethreespirits.ThebalancemechanismforthesespiritsisshowninTable2below.Table2.Dynamismofthe“ThreeManagementSpirits”Classification ExplanationTemporalbalance

balancingtoemphasizeeachspiritaccordingtotime

SpatialbalanceNo.1

balancingtoemphasizeeachspiritaccordingtohierarchy(e.g.emphasizingtheentrepreneurialspirtforexecutives,thecitizen’sspiritforemployees,andthecommercialspiritformiddlemanagement)

Spatialbalance

No.2

balancingtoemphasizeeachspiritaccordingtoitsfunction(e.g.emphasizingthecitizen’sspiritandtheentrepreneurialspiritintheproductiondepartment;thecitizen’sspiritandthecommercialspiritinthesalesdepartment;andtheentrepreneurialspiritandthecitizen’sspiritintheR&Ddepartment)

However, Kagono (2010) stops at the conceptual overview of the three spirits.

Therefore, aspects that have not been empirically proven through specificmanagementpracticescanbebroughtforwardasissueitemsinthefuture.


25

Inaddition,thereisinadequateresearchbeyondcorporateboundariesregardingtheeffectiveness of philosophy-basedmanagement systems for corporate transformation inbusinessadministration.Asthecaseof Kyoceragroup'scorporatetransformation,someresearches have been accumulated in terms of the effectiveness of “AmoebaManagement” which has also been developed by Kazuo Inamori (e.g. Shio and Kirihata,2013; Tani and Kubota, 2012). However, there is little literature on the relationshipbetweencorporatetransformationandInamoriphilosophy.Therefore,furtherresearchisrequired.

RESEARCHMETHOD:CASESTUDYAdoptionoftheCaseStudy

Inthisstudy,the“casestudy”methodasaqualitativeresearchmethodwasadopted.AccordingtoYin(1994),thecasestudymethodallowstheresearchertoaskhowandwhyquestionswhentheresearcherhaslittlecontrolovereventsrelatingtothesubjectunderstudy,andiseffectiveforboththeexploratorypurposeandtheexplanatorypurpose,aswellasfordevelopingatheory.Furthermore,themethodiseffectiveforastudysubjectwithmanydatapoints,suchastime-seriesanalysis(Yin,1994).

Therewerethefollowingthreereasonsforadoptingthecasestudymethodinthisstudy.

• Thepurposeofthisstudywastheorydevelopment,andthestudymethodneededtobesuitableforthecreationoftheoreticalhypothesesandtheirexplanations.

• Thestudyaimedtoclarifyinachronologicalorderthemanagementapproach(whyandhow)employedinthecorporatetransformationphasethatlastedamediumtolongperiodoftime(spanningseveralyears),basedonthecorporatemanagementphilosophywithnocleardetailsdisclosed.

• Itwasnecessarytohandlehigh-contextcontentsthatcoverarelativelylongperiodoftimeinordertoclarifythechainofeffectsamanagementphilosophyhadoncorporatetransformation,anditsmechanisms(Numagami,2000).

MethodofHandlingCaseStudyData

Tohandlequalitativedataasascientificresearchapproach,casestudiesfollowthethreeprinciplesofdatacollectionproposedbyYin(1994)andensurereliabilityofqualitativedataincasestudiesbyspecificallyimplementingthefollowing.

• Useofmultiplesourcesofevidence• Use of face-to-face interviewswith themanagementwho experienced the case

beingstudied,emailsinterviewsasthebasis,whileusingpublishedmaterials,suchas literary works written by the then management, industry research papers,corporate history, and published magazine articles as the secondary data. Theprimary and the secondary data were cross-validated to better understand thecase.

• Maintenanceofachainofevidence• Informationondateandtimeofdatacollection,intervieweesandother

informationproviderswerearrangedinordersothatrelationshipsamongthecollecteddatacouldbemadeclear.

• Reviewbykeyinformants


26

The persons in the company who provided the relevant information reviewed thecompletedcasestudydocuments.

In academic study, qualitative data should be carefully handled. The secondarymaterialswere collected fromawide rangeofpublisheddocuments for this study. Theyincluded information posted on the corporate website (including securities reports),articlesinnewspapersandmagazines(includingarticlespostedonthewebsiteofmagazinepublishers),corporatehistory,patent information,researchreportsandpapers (includingworkswrittenbyresearchersandpersonnelbelongingtothecompanybeingstudied),andbooks (including research books). The primarymaterials included the relevantmaterialsprovidedbythecompanystudied,face-to-faceinterviews,andemailquestion-and-answercommunications. The face-to-face interview covered the case being studied and wasconducted several times with the person who dealt with the transformation of thecorporationunderstudyasamemberofthemanagementorasanadministrator.

Careers of the information providers were examined to better understand thebackgroundoftheinformationgivenorally.Internalmaterialsrelatedtotheareascoveredbytheinterviewwerealsogivenatthetimeoftheface-to-faceinterview.Theinterviewswere recordedonelectromagneticmedia tomaintain correct recordsof theexperiencesandtheviewsoftheworldofinternalpersonnelasthecollecteddata,andalsotranscribedaccuratelywordbywordinordertoutilizethemasresearchdata.ResearchQuestion

This case study focused on understanding the characteristics of the KyoceraPhilosophy as a management philosophy and finding its logic behind the efficacy incorporatemanagement.Extraattentionwaspaidtotheareasofcorporatetransformation,corporaterevitalizationandPostMergerIntegration(PMI),whichweresaidtobedifficulttoachieveintherealmofbusinessadministration.

Accordingly,thefollowingthreeresearchquestionswereposed:RQ1andRQ2ledtotheunderstandingofthecasestudy,andRQ3setupasthemaininquiryofthisstudy.

• RQ1:Whatwastheprocessofbusinessrevitalization?• RQ2:WhatwasthepracticaladvantageofutilizingKyoceraphilosophyduringthe

businessrevitalization?• RQ3: Did management based on Inamori Management Philosophy aid business

revitalization?Whywasthat?Whichmechanismsaidedbusinessrevitalization?

CASESTUDY:KYOCERAMITACORPORATIONFilingforbankruptcyin1998,MITAIndustrialCo.,Ltd.becamerevitalizedasKYOCERA

MITA Corporation (the namewas changed to Kyocera Document Solutions Inc. in 2012)through the assistance of KYOCERA Corporation. This paper examines the case study ofcorporatetransformationthathasbeencarriedout forKYOCERAMITA,whichwasbasedonthemanagementstyleunderpinnedbytheKyoceraPhilosophy.Iconductedsevenface-to-faceinterviewswiththemanagementwhoexperiencedthisbusinessrevitalization(seeAppendixA).HistoryofKYOCERAMITA’sTransformation

TheoverviewonthehistoryofitscorporatetransformationisshowninTable4.Thecompany fulfilled the termsof the 10-year reorganizationplan—basedon theCorporateReorganizationAct—sevenyearsaheadofschedule,andhavingintegratedwithKyocera’s


27

printer business, it successfully transformed itself as the core business of the KyoceraGroup.Table4.TheHistoryofKYOCERAMITA’sCorporateTransformationAug.1998 MITAIndustrialfiledpapersfortheCorporateReorganizationActtothe

OsakaDistrictCourt.Aug.1998 ChairmanEmeritusInamoriofKyoceradecidestosupportMITA’s

reorganization.Oct.1998 KyoceradispatchesKojiSeki(Kyocera’sExecutiveDirectorandProduction

Manager)asthebankruptcytrustee;beginsreorganizationprocedure.Jan.1999 Company-widepresentationofthenewmanagementpolicies;beginsto

incorporatetheKyoceraPhilosophyinearnest.Jan.2000 Reorganizationplanapproved;companynamechangestoKYOCERAMITA

Corporation(KojiSekiasthefirstpresident).March2002

Thereorganizationplantorepaythedebt,whichexceeded40billionJPY,(around307MillionUSDollars)in10yearswascompletedsevenyearsaheadofschedule.

April2002 KYOCERAMITAintegrateswithKyocera’sprinterbusiness.June2003 Infiscal2003,KYOCERAMITAachievednetsalesof200billionJPY(around1.7

billionUSDollars),andpre-taxprofitmarginofmorethan10%.April2012 CompanynamechangedtoKYOCERADocumentSolutions;becomesthecore

companyunderKyoceraGroupwithnetsalesexceeding240billionJPY.(around3.0billionUSDollars)

Source:Basedoninternaldocumentsaswellasinterviews.

TheBankruptcyofMITAIndustrialandAnnouncementofKyocera’sSupportFounded in 1948 as amanufacturer of copyingmachines in Osaka,MITA Industrial

filed to initiate the proceedings for the Corporation Reorganization Act at the OsakaDistrict Court on August 10th, 1998, and effectively went bankrupt. The total debtamountingto205.7billionJPYwasconsideredtobethe largestbankruptcyofany inthemanufacturingindustryinpost-WarJapan1.

President Yoshihiro Mita of MITA Industrial had requested for help from KazuoInamori, Chairman Emeritus of Kyocera in July 1998—onemonth before it went under.Kyocera itselfhad justbookeda loss in the fiscalyearendedMarch31,1998.Under theunfavorablemanagementclimate,hestilldecidedtoassistMITAIndustrialanddispatchedfive employees from Kyocera to investigate. In October 1998, Executive Director andProductionManager,KojiSekiofKyocerawassenttoMITAasthebankruptcytrustee.Atthetime,Sekistates,hepredictedthathewasgoingtobesentovertotheailingcompanybecause he has overseen the printing business at Kyocera and because there werestructuraldifferencesbetweenthebusinessesoftwocompanies—Kyocera’scorebusinesswas in ceramics components asopposed to the finishedproductof copyingmachinesofMITA’s2.

It has been noted in the interview that until December 1998, the reorganizationprocedure was being implemented under the auspices of the Osaka District Court

1(1998,August11).NihonKeizaiShimbun(Japanesenewspaper),morningedition,p.92BasedontheInterviewwithKoujiSekionOctober18th,2016.


28

(bankruptcy trustee was Makoto Miyazaki, an attorney) based on the CorporationReorganization Act, and rather than Kyocera taking the lead on its proceedings, it wasactually the court that was spearheading the affairs3. It was a particularly unforgivingrestructuringprocessthatincludedthefollowing:statusbriefingandcoordinationwiththecreditors;debtwaiverbythebanks,anda20%downsizinginworkforcethatcenteredonits management4. At the same time, Seki had visited MITA Industrial’s overseas anddomestic distributors, taking great pains to explain that businesswould continue due toKyocera’sbacking5.ThereorganizationplanwasformulatedthefollowingOctoberof1999,which was approved in January of 2000, andMITA was launched as the new KYOCERAMITAwiththefirstpresidentSekiatitshelm.BusinessOutcomesbyCorporateTransformation

Its performance under the transformation has been dramatic. Sales continued togrow, and in fiscal 2003, its net sales were almost twice—200 billion JPY (about 1.7 USdollars)—theamountcomparedtorightafteritsbankruptcyfiling.Infiscal2014,itbookedasalesfigureexceeding300billionJPY(about2.7USdollars),becomingthecorecompanyoftheKyoceraGroupclaimingmorethan20%ofnetsalesbysegment.

Figure1.Changeinbusinessoutcomes”Sales”(billionJPY)6

Source:Basedoninternaldocuments

Atthetimeofitsinsolvency,MITAchafedunderitshugedebt,butinitspre-taxprofitmargin in fiscal 2001, it had turned a profit, and it achieved over 10% in fiscal 2003—industry’stop.

3BasedontheInterviewedwithYoshihiroTagawaonSeptember9th,2016.4BasedontheInterviewwithKoujiSekionOctober18th,2016.5BasedontheInterviewwithKoujiSekionOctober18th,2016.6Calculatedbyaround105JPYperadollar


29

Figure2.ChangeinBusinessOutcomes“pre-taxprofitmargin”

Source:BasedoninternaldocumentsEstablishingNewManagementPoliciesandIntroducingthePhilosophyunderCorporateTransformation

Generally speaking, many Japanese companies (e.g., Kyocera, Panasonic) have asysteminwhichthecorporatephilosophyisreadaloudtogethereverymorning.

Company-Wide Announcement of the New Management Policies and Ambitious GoalSetting7

In January 1999, Seki briefed all the employees of theMITA Industrial on the newmanagementpolicies.Untilthatmoment,ithadbeenunprecedentedforthemanagementclass,startingwiththepresident,todirectlydiscussitsbusinesspoliciesorbusinessgoalsbyfacingtheentireworkforce.

He explains that his actions were rooted in his desire to share with the wholecompanythattheyweregoingtorebuildthebusinesstogether.Atthetime,Canon,Ricoh,and Xerox were considered as MITA’s competitors, exposing a substantial lag in salesvolume,productioncapabilitiesandtechnologicalfeatsaswell.However,hestressedthatthe profit ratio only amounted to a difference of several percentage points, and set acompany-wide goal to exceed 10% in pre-tax profit margin—a feat that has not beenachieved throughout the industry. He states that he had the impression initially of notbeing taken seriously for having set an ambitious goal of 10% by a company, whichformerly filed forbankruptcyundermountingdebt.Buthehasequally set extraordinarygoals in his past work experiences (the revamping of Kyocera’s Tamaki Plant andFukushima Plant). At the core was his resolute commitment in one, “Toward being acompanythatwillnevergobankruptagain,”andsecond,“Believestronglyinwhatwecando.”ThesebeliefsweresimilartowhatInamoriusedtosayatmeetings:“Iamadreamerwho dreams.” This was in fact the application of one of the tenets of the Philosophy:“MaintainanArdentDesirethatPenetratesYourSubconscious.”

7BasedontheInterviewwithKoujiSekionOctober18th,2016.


30

IntroducingthePhilosophy8

Seki placed resolute will power at the core of the challenge, and designated thePhilosophyasthatwillpower’ssource.HeintroducedthePhilosophyfromtheinitialstagesofcorporaterecovery,whichwasinastateofcrisis,andshareditsvaluestoelevateeachand everyone’s mindset about their working style and to bring a sense of unity to theworkplace, as well as to, “Align Mental Vectors.” He mentioned, "pursuit of profit andaltruismisnotcontradictory"inparticular.

Table5.MainHistoricalTimelinesontheIntroductionofKyoceraPhilosophyNov.1998 BookofferofPhilosophyofInamoriKazuo,404applytopurchaseDec.1998 ExcerptsfromthePhilosophyarereadoutloudduringthemorning

meetingbroadcastMay1999 BookofferofEnhancingyourmind,growthebusiness,805applyto

purchaseJuly1999 KyoceraPhilosophyPocketbookdistributed;employeestaketurnstoread

attheworkplaceOct.1999 PresidentSekihashosted8Philosophystudyseminars;104department

andbusinessofficeheadshaveparticipatedJan.2000 1stphilosophyessaycontestwith2,573submissions(98.5%ofemployees)June2000 Philosophystudyseminarshavebeenhosted20times;409sectionchiefs

participateOct.2000 DistributionofAccountingPocketbook;employeestaketurnstoreadat

theworkplaceDec.2000 SubscriptionofferingofSeiwajyukuJournalbeginsJan.2001 The2ndphilosophyessaycontestwith2,535submissions(93.7%of

employees)Feb.2001 DistributionofLectureSeriesbyChairmanEmeritus;employeestaketurns

toreadatworkplace;ShimazuIrohasongofferingMarch2001 ThePhilosophystudyseminarshavebeenhosted9times;141domestic

salesmanagersparticipateJuly2001 DistributionofKyoceraPhilosophyHandbooktoallemployees;stafftake

turnsreadingitatworkplace.July2001 Accountingstudyseminarshavebeenhosted10times;426department

headsparticipateSource:Basedoninternaldocumentsaswellasinterview.

TheactualpersonwhooversawtheimplementationofthePhilosophywasYoshihiro

Tagawa,anemployeefromKyocerawhowastransferredtoMITA Industrial inDecember1998. He started reading aloud two pages from the Kyocera Philosophy pocketbook(undistributed)everymorningduringthemorningmeetingoverthein-housebroadcastingsystem that he himself set up. His intent was to provide an opportunity for theMITA’semployees to gain an understanding over what kind of a company Kyocera is and itsmanagement philosophy, and the recitation method had not even been adopted atKyocera.HewasneverimposingandwasverycautiousaboutadvancingthePhilosophical8BasedonInternaldocumentsaswellastheinterviewwithYoshihiroTagawaonSeptember9th,2016andtheInterviewwithKoujiSekionOctober18th,2016.


31

tenets.Hestatesthathefeltthedailyreadingswerestartingtomakeadifferencewhenhebecame aware of the growing responses from the employees saying, “The sayings areobviousbutIhavenotbeenabletoapplyit.”

At the time, the Kyocera Philosophy Pocketbook was prohibited to be distributedoutsideofKyocera.However,asarequestfromMITAIndustrial,whichwastobecomeoneoftheKyoceraGroupcompaniesinthefuture,adirectpermissionwassoughtandreceivedfromChairman Emeritus Inamori for its circulation outside of Kyocera in July 1999. As aresult,thePocketbookwasprovidedtoalltheemployeesofMITAIndustrial—thefirstevertobegivenoutsideofKyocera.Makingacircleattheworkplace,anemployeewouldtaketurnseverymorningbyreadingonephilosophicaltenetperparagraph.Thespecificformatwasthatthepersonwhoseturnitwastoreadwouldreciteonetenetandcommentonit,thenmanagerswouldaddtheirthoughts.

Subsequently,MITA Industrial implemented full-fledgedKyoceraPhilosophy trainingcoursesfromOctobertoDecember1999.First,Sekivisitedtheeightbusinesssitesaroundthecountryandspoketoandsharedwith104departmentandbusinessofficeheadsabouthisthoughtsonwhatitmeanstobealeader.Then,Tagawatookchargeoftheeducationalundertakingasheenvisionedtheidealformofanon-siteleaderbytakinginspirationfrom“To Become an Excellent Leader” that is found in the Philosophy Pocketbook.Consequently, the Philosophy Study Seminars for section heads took place from June toDecember 2000, followed by another for domestic sales managers fromMarch to May2001.StudySeminarswerealwaysfollowedbyaKOMPAorget-togethersatnight,wheremembersfromdifferentsectionswouldtalkabouttheirwork.Thesegatheringswerenon-existent during the days of MITA Industrial, and employees believed that they coulddeepen theirmutualunderstandingover theirhardships and thoughts.Coupledwith thedramatic improvement in business performance from 2001, working style based on thePhilosophyhadbeguntobemoreaccepted.

ThroughouttheprocesstosharethePhilosophicalstudyseries, thefollowingvalueswereinstilledintheemployeesofMITAIndustrial:“StrongDesire,”“AlignMentalVectors,”“ManagementbyAll,”“TransparentManagement,”“ExtendedFamilyPrinciple,”and“CostConsciousness.”CostConsciousnessReform9

Seki, who was originally dispatched as the bankruptcy trustee since October 1998,promptly took control overmatters of expenditures by implementing a structurewhereany outlays would have to go through him first. At MITA Industrial, none of thedepartmentswereprivytothenumerical figuresofmanagementaccounting,whichweredirectly connected to the financial results, and the investigative team from KyocerastronglyfeltthatMITAhadaweaksenseofcostconsciousness10.AfterSekiannouncedthenew management policies, he continued to utter the motto, “Pre-tax profit margin inexcess of 10%” and “Numbers are everything,” and tried to raise the company-wideawarenessforcostconsciousness.

StartinginJuly1999,MITAIndustrial launchedtheAmoebaManagementSystem—aproprietary system developed by Kyocera—as a method for management accounting.

9BasedontheInterviewedwithYoshihiroTagawaonSeptember9th,2016.10BasedontheInterviewedwithYoshihiroTagawaonSeptember9th,2016.Initially,theemployeeswerenottolduntil the financial statements were announced whether the company made a profit or loss. They were veryshockedoncetheycouldtracktheirprofitmarginonamonthlybasis.


32

Contrary to Kyocera, which manufactures components, the business model of MITAIndustrial rested on earning recurring profits through the rendition of services, first bybuildingafinishedproductcalledthecopyingmachineandthenhavingadistributor,whichisaseparatebusinessentity,installthematitscorporateclients.Therefore,MITAinitiallybrought inAmoebaManagementasa formofmanagementaccounting,which isdistinctfrom Kyocera’s formula where the broken-down amoebas conduct in-house sales andpurchases11. Itsobjectivewastoinitiatereformoftheirmindsetwithanemphasisonthepointof“ElevateCost-Consciousness”thatispointedoutinthePhilosophy.InSeptember1999, MITA started to create “hourly efficiency reports,” the essence of AmoebaManagement.After itsstaged implementations,dailymarginsbecamevisible for the firsttime and the added value of each department was now readily available. When themonthlyfinancialreportturnedaprofit,staffweremotivatedtoachievethesameforthehalf-year one, and gradually a cost consciousness developed in everyone’s mind wherethey became more averse to waste. Seki distinctly felt that by the latter part of 2000,Philosophicalphraseswereonpeople’slips12.IntegrationwithKyocera’sPrinterBusiness

SekistatesthatthebiggestchallengeinthephaseforKYOCERAMITA’scorporatetransformationwastheintegrationbetweenKyocera’sprinterbusinessandtheformerMITAIndustrial’scopyingmachinebusiness13.Inthesection,themergerwillbeexaminedfromtheaspectsofproductdevelopment,manufacturing,sales,workprocessandInformationSystem.HistoryofBusinessIntegration

EversinceKyoceraannounceditssupportin1998,KyoceraandKYOCERAMITAhavepursuedwaystodemonstratetheirsynergies.Asaresult,theystartedreviewingthespecificitiesoftheirfuturebusinessintegration.Forexample,therealignmentoftheformerMITAIndustrial’spersonnelsystemtoKyocera’shadtakenplacebeforetheactualmerger14.

Actually,KYOCERAMITAhadfulfilledthetermsforitsreorganizationplansevenyearsaheadofscheduleinMarch2002,andinAprilofthesameyear,Kyocera’sPrinterDivisionwasbroughtovertoKYOCERAMITA’ssidetofollowthroughontheirmerger.Consequently,employeesofbothcompaniesstartedtoundertakecopyingmachineandprinterbusinessasaunifiedteam.ProductDevelopmentReform15

EversincethestartofPrinterDivisionin198616,Kyocerahasbeenabletoaccumulateits strength in the following areas: proprietary device centering on “a-Si PhotoreceptorDrum”; long-life xerography process; controller technology; and software network

11BasedontheInterviewedwithYoshihiroTagawaonSeptember9th,2016.12BasedontheInterviewedwithYoshihiroTagawaonSeptember9th,2016.13BasedontheInterviewwithKoujiSekionOctober18th,2016.14BasedontheInterviewwithYoshihiroTagawaonSeptember9th,2016.15BasedonInternaldocumentsaswellastheinterviewwithKeijiItsukushimaonDecember13th,2016.16BasedonInternaldocumentsaswellastheinterviewwithKeiji ItsukushimaonDecember13th,2016.Kyocerahasapastofdevelopingacopier(analog)in1980,butiteffectivelyretreatedfromthebusinessin1984.Bytakingadvantageof its technical legacy, ithasahistoryofselling itsuniqueproductduringtheearlydaysof the laserprintermarket.


33

technology. The long-life xerography process was known as “Ecosys technology” in andoutsideofthecompany.Ontheotherhand,thestrengthsoftheoldMITAIndustrialliedinits possession of mechanism technology that could design a fairly complicated productcalledthecopyingmachine,anditsmechanicaldesigntechnologyofperipheralsystemsforpaperfeedandpostprocessingoperations.

After KYOCERA MITA was launched in January 2000, a mixed unit was formedtogetherwithKyocera’sPrinterDivisioninitsfirstshowingoftheirsynergy,andKYOCERAMITA’s first ever black and white digital Multi-Functional Product (MFP) KM2530/3530went on sales in August 2001. This product line adopted “Ecosys technology” that isembedded in Kyocera’s printers, which provides extended lifetime technology. In otherwords, from the standpoint of total cost and environmental friendliness, it was anenormous success. By combining the two companies’ specialties from theperspectiveofproduct development, KM2530/3530 became a symbolic product of the new KYOCERAMITA.Thesuccessrapidlybroughtbothcompaniestogether.ProductionReform17

Drawing his conclusion from his long years of manufacturing experience at plants,Seki,whowastheProductionManagerofKyocera’sprinterbusiness,believedthatoneofthemain reasons forMITA Industrial’s bankruptcy was due to the quality issues arisingfrom its defectiveproduction. Separately, hedirectedKyocera’s PrinterDivision andwasinvolvedinthemassproductionofprintersattheTamakiPlantinMiePrefecture18.Atthetime, the standard of MITA Industrial’s design capabilities and knowledge accumulationwas high enough for Kyocera’s Printer Division to outsource its designs to them, but hestates,therewerehugeissueswiththeirproductionquality.Thecruxoftheproblemwasbelievedtobetheinabilityonthepartofthedistributorstoconductaggressivesalesduetothelargevolumeofgrievancesthatwerereportedafterinstallingtheirfinishedproductsto the corporate clients. MITA Industrial was one of first in the industry to build aproduction site called theMITA Center in Hong Kong, but including its Hirakata Plant inOsaka,itsmanufacturingmethoddidnotmeettheacceptablelevel.

Seki’spettheorywasthepotentialtogenerateprofitsattheproductionline,andhesoughtforasitethathadthecapacityformassproductionatalow-costwhilehetriedtorecruitenoughfactoryworkers,whichledtohisdecision—bycoordinatingwithChairmanEmeritusInamori—ofconstructingaplantatShilonginChina.AndthroughajointventurewithaChinesefirm,theplantbecameoperationalfromDecember2001.TheShilongPlantadoptedtheproductionknow-howthatwasengenderedattheTamakiPlantforKyocera’sprinterbusiness,whilealigningittotheformulathatwasuniquetoChina’slocalsituation.For example, he sought to take advantage of the abundant and low-cost labor force byclassifying the work process with relatively short man-hours, and implementing amechanismwhereanyoneofthefactoryworkerscouldpressabuttontostoptheentire

17BasedonInternaldocumentsaswellastheinterviewwithKoujiSekionOctober18th,2016andtheinterviewwithKeijiItsukushimaonDecember13th,2016.18TamakiPlantwasaphysicallysmallplantwhichcouldonlyallot100to150membersfortheassemblyworkasamanufacturing unit. Therefore, it had adopted a system where through unit structuralization, each unitoutsourceditsspecialization.InthesurroundingareaoftheTamakiPlant,theoutsourcingmanufacturerswereinpositiontotakeontheirorder,andsimilartotheToyotaproductionsystem,componentsweredeliveredundertheJustInTimemethod.Inaddition,itwasthefirstcompanytoemploythemulti-skilled,cellproductionsystem,and therewas a 170% increase in productivity from the days of straight line assembly. Beginningwith ToyotaMotor,manycompaniescametoobserve—thatwashowcutting-edgetheirmechanismwas.


34

production line in order to prevent the creation of defective products: the structuralframeworkbasedonSeki’sphilosophyofpursuingexcellency inmanufacturinghadbeenimplemented. Similar to the Japanese counterparts, the management style towards theChineseworkersattheShilongPlantwasfoundedontheKyoceraPhilosophyof“ExtendedFamily”Principle19(editedbyItami2013,pp.199-235).

SalesReform20

The businessmodel for printers and copyingmachines is based on the practice ofgeneratingprofitsthroughtheprovisionoffollow-upservicesaftersales.TheissueforthePrinter Division of Kyocera since its launch has been its uneven sales performance thatvaried largelydependingon the region.Compared to itswell-knowncompetitors suchasCanon,whichwasahouseholdnameinJapan,andHewlett-PackardthatdominatedtheUSmarket,Kyocerahadbeenchafingunder itsnot-so-well-knownbrandnamefor20years.Europe, on the other hand, was not heavily brand oriented and had a high degree ofenvironmentalconsciousness.Itwasalsonecessarytocustomizethesoftwareforbusinessprintersthatwereembeddedinthelineofworkforeverycommercialentity.Asaresult,Kyocera’s business expansion in Europe was progressing fairly smoothly as it built anetworkofemergingdistributorsthatwerewellversedinIT.

ForMITAIndustrial,theirlargestsalesnetworkhadbeenintheUnitedStates,anditshold on business assetswas still strong at the time of their bankruptcy. Therefore,withKyocera’s relatively strong foothold in Europe coupled with MITA Industrial’s solidpresenceintheUS,theycouldfindsynergyinthesaleschannelaspect21.Furthermore,theaforementioned rise in sales has been due to its aggressive overseas expansion,with itssalesratioexceeding74.4%in2002,andreachingcloseto90%infiscal2016.BusinessProcessandInformationSystemReform22

AlthoughKyocera’sPrinterDivisionwasintegratedintoKYOCERAMITAinApril2002,thecombined twocompanies leftbehindahostofdiscrepancies in thebusinessprocessthat were cause for major inefficiencies: production items exceeding 50,000; about200,000components;fourproductionsitesathomeandabroad;andfoursalesgroupsinthe four regions around the world. Furthermore, two different information systems (IS)were atwork simultaneously: theoldMITA Industrial used anoffice computer basedonIBM’sAS400,andKyocera’soldPrinterDivisionutilizedahostcomputerasitsplatform.Forexample, the main IS for the old MITA Industrial was being internally developed, andaccountingnumberswerestartingtobecalculatedautomatically.ButfromtheviewpointofAmoebaManagement,allthenumbersthathadtobemanagedatmidpointwerebeingcalculated without the necessary checks and approval process. In addition, eachdepartment had its own Access database, but not a uniform design that was sharedcompany-wide.

For the purpose of shortening the development period and reducing inventories,what Seki did the following year after the completion of the reorganization plan, was

19RetrievedApril9th,2017fromKyoceraDocumentSolutions’WebsiteabouttheShilongPlant“http://www.kyoceradocumentsolutions.co.jp/plant/sekiryu/outline.html”20BasedonInternaldocumentsaswellastheinterviewwithKeijiItsukushimaonDecember13th,2016.21BasedonInternaldocumentsaswellastheinterviewwithKeijiItsukushimaonDecember13th,2016.22BasedontheinterviewwithTetsuyaMorionOctober3rd,2016andtheinterviewwithMasahikoNishieonDecember27th,2016.


35

decidingonmakingalarge-scaleinvestmentthatwasmorethan10billionJPY.Specifically,thismeanttheintegrationofthebusinessprocessofthetwocompaniesandthecreationofthemainISandsystemintegrationwithSAP/R3asitsbase.ThiswascalledtheBusinessInnovation (BI) project, and several hundred development engineers were mobilized tocreate thenewmain IS. Theprojectwas launched inApril 2003 and thenew integratedsystem went live in April 2004. Fortunately, the system went operational without anydelays, and the goals for inventory reduction and shortened development period wereabridged. Even at the point of 2016, business operations are undertaken based on thismainIS.

Hebelieves that theefficacyof thePhilosophyhadbeendemonstratedduring theintegrationprocess.Forinstance,becauseofthetenetsofKyoceraPhilosophysuchasthelaw of “Always Double-Check,” it proved to be effective in gaining the understanding ofbusiness requirements by foreign employees and in overseas sites23. The creationof therequired approval process—at certain junctures—for the accounting values wasstreamlinedbasedon thePhilosophy.Also, “TransparentManagement”hadbecome thesystemrequirement,andMorifeelsthattherewerenoadditionalconditionsthatwereputonthemwhentheyhadtodealwiththeSarbanes-OxleyAct(SOX)later24.Inaddition,thecommunication between the employeeswho share the basic precepts of the Philosophyhad helped in creating a sense of unity in their awareness. Lastly, by overcoming thischallenging project, Nishie is convinced that the barrier between the staff of the oldKyoceraandoldMITAIndustrialhadinstantlybeentakenaway25.

Chart1.TheRelationshipoftheReformProcessandthePhilosophy

PuttingthePhilosophyintoPractice:TheCaseStudyofCorporatePhotoreceptorDivision26

ByfocusingonthecurrentCorporatePhotoreceptorDivisionofKYOCERADocumentSolutions, which has consistently been responsible for the business operations and thedevelopment,production,aswellasdistributionofthephotoreceptordrumfromthedays

23BasedontheinterviewwithTetsuyaMorionOctober3rd,2016.24BasedontheinterviewwithTetsuyaMorionOctober3rd,2016.25BasedontheinterviewwithMasahikoNishieonDecember27th,2016. 26BasedontheInterviewwithToruNakazawaonOctober3rd,2016.


36

ofMITA Industrialuntil today, this sectionwilldescribe thepracticeof thePhilosophy inmotion—theessenceofthispaper’sstudy.TheHistoryoftheCorporatePhotoreceptorDivision

In1998,asanorganizationwithabout100staffmembers,“TheSecondProcessCenter”,whichfounditsbeginninginthePhotoreceptorLaboratoryunderMITAIndustrial,wasresponsibleforresearchanddevelopment(R&D),productionanddistributionofphotoreceptordrumsaswellaslow-endprinters.Withapproximately80%ofitssalesconductedoutsideofMITA,itwasknowntorunabusinessthatwasfinanciallyindependentfromitsmaincompany:itssalesvolumewas2billionJPYwithagrossmarginrateof23%.

TheCorporatePhotoreceptorDivisionwaslaunchedasCorporatePhotoreceptorDivisionatthecuspofrevitalizationfromthefallof1998,andtheattempttounderstandaswellasimplementthePhilosophycommences.NakazawawholedtheDivision,statesthattherewasanabsenceofanykindofcoherentbeliefsysteminthecompanyuntilthen,andhedidnotknowwhatthejudgmentcriteriawas.AfterlisteningtoSeki’slectureonKyoceraPhilosophy—lastingforthreehours—hefelt,“ThisiswhatIhavebeenlookingfor.”Subsequently,heboughtallthebookspublishedbyInamoriwithhisownmoneyandstartedtointroduceaswellassharethemamonghiscoworkers.ImpactofthePhilosophyontheOrganizationReadingthePhilosophyinTurns26

In July 1999, the Philosophy Pocketbooks were distributed and employees startedreading the tenets in turns, marking the beginning of the penetration process of thePhilosophy.Atthetime,manysaid,“Thisisobvious,itiseasy,”buttherewerealsovoicesto the contrary, saying, “No one has been able to put these principles into practice.”AccordingtoNakazawaandOdo,therewasascenefromavideorecordingwhereInamoriwasclearlysaying,“Ihaven’tbeenableto followthroughontheseprinciplesmyself.ButI’m doing things with the intent to get better at it,” which gave us courage to keep ontrying27.Ontheotherhand,thosewhokeptcomplainingjustleftthecompany.KONPA28

KYOCERAMITAstartedthetraditionofKONPAorget-togethersinahastilypreparedtatami mat room. The so-called Kyocera KONPA, which Seki started by gathering theexecutivesatthetime,wasnot justaboutdrinkinganddining,but ratheranopportunityforthemtoshareaboutwhatwasgoingonwiththeirjobs.Amidtheuncertaintyafterthebankruptcy,therewasageneralfeelingamongsteveryonethatthecompanyneededtobereset, and understanding this sentiment; Nakazawa started KONPAs in his division. ThefactoryworkersfromOsaka’sHirakataPlant—themanufacturingbase—wouldcomeovertojointherestattheheadquartersinTamatsukuri,alsoinOsaka,andtheKONPAswouldtakeplaceasthewholedivisioncametogetherwithmonthlytargetsandsloganspastedon

27BasedontheInterviewwithToruNakazawaandTakahisaOdoonOctober3rd,2016.28Based on the Interview with Toru Nakazawa on October 3rd, 2016. I have been given the opportunity toparticipateintheKONPAoftheDivisiontwice(onOctober4th,2016andontheyear-endKONMPAonDecember27th,2016).IwasabletoexperiencetheessenceofthePhilosophysuchasthewarmthoftheExtendedFamilyPrincipleandasenseofunity.Iwanttotakethisopportunitytoexpressmygratitudeagain.


37

the wall. As of December 2016, KONPAs have been taking place for more than once amonthfor18years(theremaybemultipleKONPAsiftherearespecialevents).UtilizingthePhrasesasaMeanstoCommunicatethePhilosophy

Meetings are held by integrating the phrases from the Philosophy into discussions.Forexample, if discrepancieshavearisendue to schedulingproblems, someonemay saysomething like,“Idon’t thinkyou’rewrestling in thecenterof thering.”ThesemeasureshavehelpedthePhilosophytosetrootsinpeople’sminds.Thereareneveranytests,butthe degree of penetration can be sufficiently gleaned from the junior staff’s interactionduringmeetings; therefore, it ismore important to train them in accordancewith theirlevelofgraspoverthetenets.Furthermore,thedifficultyinstrikingabalancebetweentheprinciplesof“Customer-First,”and“Maximizerevenuesandminimizeexpenses”areamplydiscussed.PhilosophyEssay

Asseen inTable4, in2000,KYOCERADocumentSolutionsstarted incorporatingthepracticeof submittingphilosophyessays to thecontest thatKyoceraGrouphostsonceayear.Theessay isanopportunity for theemployees to take stockof theentireyearandreflect on it, aswell as set new goals. Nakazawawent through all the essays thatweresubmitted from the Division, provided feedback where it was deemed appropriate andutilizedthemomenttorealignthethinking.PrinciplesthatareuniquetotheDivisionsuchas“Impressthecustomers,”whichisanotherwaytosay“Customerfirst,”werefoundinabundanceintheessays,andhestatesthat“Thephilosophyisdeepandwide;thewordsoftheKyoceraPhilosophyPocketbookareverylimited.”HourlyEfficiencyReports

Implementing Amoeba Management’s hourly efficiency reporting has made itextremely easy to visualize business expenditures. In addition,Nakazawa admits that hewassurprisedtofindoutthesubstantiallyhighratioofthegeneraladministrativeexpensescomparedtotheestimateshehasmadeduringtheconventionalMITAIndustrialdays.Theefficiency reports are intended for monthly management, but this Division conducts acheckthreetimesamonth,adheringtometiculouscontrol,andproductivityhasincreasedtothepointwherethepre-taxprofitmarginchangedinthevicinityof40%.Furthermore,because of the intense intra-division price negotiations—another feature of AmoebaManagement—there isatendencyfortheDivisions inbecomingconcernedonlyfortheirownbottomline.However,throughthealignmentofvectorsasaresultofthe“ExtendedFamily” Principle, Nakazawa emphasizes that Amoeba Management has been able tofunction. Infact,Odosaid,“ChairmanEmeritus InamorisaidthatwithoutthePhilosophy,onecannotunderstandthebusinessprocessonlywithAmoebaManagement.29”

OtheractivitiestohelpthePhilosophypenetratefromtheperspectivesof“ExtendedFamily” Principle and “Sharpen Our Minds” that are based on the tenets are beingcontinuously undertaken: the hosting of the company-wide athletic day with almost a100%participant rate; summer festival in conjunctionwith the local region; and cleanupactivitiesbytheemployeeseverymorning.

29BasedontheInterviewwithTakahisaOdoonOctober3rd,2016.


38

TheImpactofthePhilosophyattheShilongPlant,China30

In 2003, the so-called drum plant, a generic mass-production line for thephotoreceptordrumofthePhotoreceptorDivision,becameoperationalinsidetheShilongPlantofChina.Currently,therearefourJapaneseandabout270Chinesestaffworking,inwhich Chinese holds the eight managerial positions. By utilizing the PhilosophyPocketbook, which has been translated into Chinese, tenets are read out loud in turnseverymorning,includingtheJapanesestaff.Onceitisreadout,themanagerwilladdtheircomment—similartotheJapanesestyle.Nakazawastatesthathegoestotheplanteverymonth without fail and by sharing management issues as well as thoughts on thePhilosophy,hefeelsthegradualpenetrationofthePhilosophyhastakenplace.ComraderyandExtendedFamilyPrinciplesarehighlyvalued,andithasbeenanormtocreateabondthatprovidesasenseofunitywiththeJapaneseDivision.Forexample,theDivisionawardsthe10-yearcommendationof continuousservice;gives thepoetrycardwith thewriting,“KeitenAijin:RespecttheDivineandLovePeople”on it;bestowsaball-pointedpenwiththestaff’snameonit;andprovidesgroupmessagesaswellasvideoletters.Thisplanthasan extremely low turnover rate of 3%, which is almost unheard of in themigrant laborcultureofChina.

DISCUSSIONThemainresearchquestionforthisstudywas:“Doescorporatemanagementbased

on thePhilosophyactuallyable to inducebusiness revitalization? If so,why?”Todeepentheunderstandingforthispoint,thecasestudywasorganizedbyestablishingthefollowingworkingresearchquestions:“Whatwastheprocessofbusinessrevitalization?Howwerethe implementation and utilization of the Philosophy practiced and devised during therevitalization phase?” In this section, using the research question as themain focuswillmakeananalysis.Philosophy-basedManagementforCorporateTransformation

For its transformation, KYOCERAMITAwas relaunched by establishing its principle:“Toprovideopportunities for thematerialand intellectualgrowthofallouremployees.”ThisbeliefiswhatliesattheheartofthePhilosophy,whichspeakstothesharedvalueofwhat itmeans toworkat anew joband its contribution for the creationofunity at theworkplace. This studyhasbeenable to confirm thatmanagement foundedon this tenethas indeed been practiced. For example, the Extended Family Principle—the creed thattreats employees as if they are part of the family—has been at play. Specifically, thepromptarrangementofstaffcafeteriaandtheKONPAroom,aswellasthesamesalaryandcompany benefits as KYOCERA—despite having been a revitalized company havedemonstratedthis.ThePhilosophyhasprovenitsefficacyduringthechallengingperiodoftheinitialphaseofKYOCERAMITA’srecovery:theformationofunityandtheintegrationofthecopyingmachinebusinesswiththeprinterbusiness.Infact,thestaffthatexperiencedMITAIndustrial’sbankruptcysaidthatthePhilosophyhadanenormousimpactonthem.

It isnoteworthytomentionaboutthevariousconceptsthatseemcontradictoryareeffectively utilized on an individual basis through the practice of the Philosophy, butsimultaneouslypursuedfortheirsynergisticeffects.Forexample,theexecutionof“severe

30BasedoninternalinformationatKONPA(onOctober4th,2016andontheyear-endKONMPAonDecember27th,2016)aswellastheInterviewwithToruNakazawaandTakahisaOdoonOctober3rd,2016.


39

price negotiations between divisions” (AmoebaManagement) is founded on the sharedcultureof“ExtendedFamily”Principle;andwhilethetenetof“PursueProfitFairly”isbeingsought, price setting based on “Maximize revenue” is being concluded, but only on theunderstanding that the “Customer-First” Principlehasbeen thoroughly exercised.Othersinclude, the concurrent search of “self-interest” and “altruism.” 31 These conflictingspirits—in practice—seem to be balanced through the following dynamism: temporalalignment; reciprocal functionality between divisions; and the hierarchical differencesbetweenmanagersandnon-managerialstaff.

AnotherinterestingdiscoverywasthefactthatexpressionsofPhilosophythemselvescouldchangeflexibly.Sometimes,staffwouldcommunicatetoeachotherbynottheexactwords found in the Philosophy Pocketbook. For instance, the “Customer-First” Principlecould be practiced by another expression, “Impress the Customers.” The basis of thisapproachisfoundedontheinterpretationsgleanedfromInamori’sexpressionsthatwerementioned during his lectures or the sayings found in the journal “Seiwajyuku,” or theunderstanding based on management philosophy or the Philosophy itself. It is aninteresting finding that Inamori management philosophy has worked dynamically andeffectively while changing its form independently according to the business model (e.g.manufacturing of finished products and service provision) and the characteristics of theorganizationalculture.ThePhilosophyandAmoebaManagement

Inamori(2010)andInamori(2013)werereferencedforAmoebaManagement.Inhislectures,hetalksaboutthebackgroundofthebirthofAmoebaManagement,itsobjectivesandthe importanceofmanagementphilosophy.Truetotheprecedingstudies,Kyocera’sAmoebaManagementisauniquemanagementaccountingmethodthathasbeencreatedtotrackthechangesinthemarketbyempoweringthemanufacturingdivisiontobooktheirown sales coordinate fair pricing through intra-company sales and purchasing process;elevate cost consciousness; and to have a grasp over the current numbers. For therevitalizationprocess, ithasbeenconfirmedthroughthiscasestudythatthetransparentmanagementsystemhashelpedtheunderstandingover theactualamountof theaddedvalueforeachunit;increasecostconsciousness;andstrengthenthesenseofparticipationbyall.

At the same time, values based on the Philosophy are embedded in AmoebaManagement.Forexample,itshouldbenotedagainthatthe“hourlyefficiencyreport”hasbeendesignedtoexcludepersonnelcost.AccordingtoInamori,theinventorofthissystem,whentheamountofsalaryofeveryemployeebecomestransparenttoo,especiallyforthecase of Amoeba Management with only a few members, it creates tension within thecompany. Therefore, to prevent this from taking place, it was decided to leave out theinformation.Also,itisnotsomecompensationsystembasedonaresult-orientedapproachthat corresponds to theaddedvalue amount that is espousedbyAmoebaManagement.Similarly,when intra-divisionsalesandpurchasing takesplace, Inamoridesires thatpricesetting should be founded on the integrity of the person, as well as fairness andcompassion—not based on profit or loss. He also seeks for an ethical operation that is

31Incaseslike,“BeBold,YetMeticulous,”“HaveaWell-BalancedNature,”andthe“FightingSpirittoAttempttheImpossible,”eachPhilosophicaltenetencompassesopposingconceptsyetencouragessimultaneousresolution.


40

absentofanykindofwindow-dressing,andexpectsthefrontlinetoinputthefigureswithasenseofjustice.

AshasbeenaccuratelystatedbyInamori,andsimilarly,asithasbeendemonstratedthrough this case study, is the emphasis put on the importance of Kyocera accountingsystemandAmoebaManagementwiththePhilosophyservingastheirplatform.Forsure,AmoebaManagementcanbesoughtasaneffectivetool torealizethecommercialspirit.However, what has been implied in this case study is the fact that the practice of thePhilosophy encompasses the exercising of Amoeba Management, and I would like toemphasize their indivisible relationship. I would like to make a point about theinseparablenessofthePhilosophyandAmoebaManagement.TheEntrepreneurialSpiritFoundinthePhilosophy

Inthiscasestudy’s interview,andbeginningwithSeki,the importanceof leadershipamongstonsitechiefshasbeenemphasized.Specifically,thePMIofthiscasestudy,whichisaccompaniedbycorporaterevitalization,seemedtobeaseriesofcontinuinghardships.Amid the challenging environment, they had set high goals; earnestly engaged in therebuilding process; made courageous decisions, and never gave up until they achievedsuccess—allbasedonthePhilosophy.Forexample,theintegrationofthecopyingmachineandtheprinterbusinessinashorttimeframe,aswellastheBigBangmethodwheretheentiresystemwasswitchedover tothenewoneallatonceduringtheunificationof theInformationSystem(IS)symbolizethesuccessbroughtbythePhilosophy.Theyareagroupof professionals burning with passion. The Philosophy contributes to the creation of astrongdesireorsenseoftenacityduringtheprocessofachievinghighgoalsorinthemidstoftheunforgivingrevitalizationphaseinrelationtocorporatereconstructionorPMI. It isbelievedthatInamori’sentrepreneurialspiritliesatthebottomofthis.

WhenthePhilosophywasclassifiedinaccordancewiththethreemanagementspiritsforthesakeofit,Ibecameawarethatthereweremoresentencesinrelativetermspertainingtotheentrepreneurialspiritthanthecitizen’sspiritsuchasdiligenceorcostconsciousnessthatisassociatedwiththecommercialspirit(seeAppendixB).ThedegreeofpreferenceshouldneverbejudgedbasedonthenumberofsentencesthatappearinthePhilosophy,butthefactthatthebeliefsystemwithregardstoentrepreneurshiphasbeenblendedinthePhilosophyandpasseddowntotheorganizationhasbeenwellestablished.

Inaddition,itisemphasizedthatthedemonstrationofon-siteleadershipbasedonthePhilosophy.AswhatthecasewithSeki'sleadereducation,theKyocerapocketbookclearlystates"ALeader’sCharacter"and"ImportantAttitudesforLeaders",andtheleadershipofthefieldincludingtheexecutiveispolished.Indeed,inKyocera'spersonnelevaluationsystem,howmuchleadersarepracticingphilosophiesisrequested.Philosophy-basedleadershipseemstobethedrivingforceofthecorporatetransformationphase.

CONCLUSIONTheoreticalImplication

Regarding the case of KYOCERAMITA, themain findings related to the theoreticalaspect of business administration are as follows. In specific moments during corporatetransformation, I see the efficacy of the Philosophy in skillfully promoting the variousconflicting views for the execution of business—believed to be necessary in businessmanagement. In turn, this leads to a resolution between these opposing conceptswhile


41

valuing both perspectives demonstrated by the spirit ofmanagement. It seems feasiblethat themanagementbasedon InamoriManagementPhilosophycansuccessfully induceand bring about a solution to the meaningful but contending concepts represented byKagono’s(2010)commercialspiritversustheentrepreneurialspirit,orcitizen’sspiritversuscommercialspirit(seeChart2).

ItisaninterestingfindingthatthePhilosophyhasworkeddynamicallyandeffectivelywhile changing its form independently according to the business model and thecharacteristicsoftheorganizationalculture.

RegardingAmoebamanagement,IrevisittherelationshipwiththePhilosophy.Iinferthat Amoeba management can be positioned as an effective means to realize the"commercialspirits"mainly.This isto inferthatwhencomparedtotheprecedingstudiesthat I already touched upon, the degree of interpretations—on the question ofindivisibility— differs depending on the researcher or the objective of study. But here, Iwould like to make a point about the inseparableness of the Philosophy and AmoebaManagementduringthecorporatetransformation.

Chart2.ConceptualFrameworkofthePhilosophy-basedCorporateTransformation

DescribedwithreferencetotheconsiderationofthiscasestudybasedonKagono(2010)ManagerialImplication

It is inferredthatKYOCERAMITA'scorporate transformationcase itself suggests theeffectivenessofmanagementbasedonInamoriManagementPhilosophy.

First,thePhilosophycontributestothesharingofvalueswithregardtoworkmethodsin a new workplace and helps foster a sense of unity as a spiritual stronghold duringcorporate revitalization. It seems that this comes from the spirit of the extended familyprinciplebasedonthePhilosophyof"pursuitofthematerialandintellectualgrowthofallemployees".Second,thePhilosophycontributestostrongwillpower,whichisnecessaryinthe process of corporate revitalization and PMI’s severe rebuilding. Inamori's


42

entrepreneurial spirit seems tobe the source. Third, in corporate revitalizationandPMI,thespiritofpursuitforprofitandcostconsciousnessasshowninthepracticeofAmoebamanagement provided guidelines to raise organization's member’s awareness of theprofitability by rational decisions. The principle of Transparent Management enhancedindividualawareness.Agendaforfurtherresearch

As I have already mentioned in the paragraph on abduction with regards to thestudy’smethodology, I aim todiscoverandproduceahypothesisbycomparingdifferentcasestudieswhileadheringtohistoricalmethodologicaltheories.Forthat, it isnecessaryto seekcertainnumbersof casestudieswitha track recordof corporate transformation,whichhasincorporatedandutilizedthePhilosophy.Furthermore,theongoingissueisthecontinualrefinementofthehypotheticaltheorythroughadditionalcasestudiesbasedonthe researchmethod of comparative case study and abduction. In addition, it is equallyimportanttotakeuponthosecaseswheretheresultswere insufficienteventhoughthebusiness entity had implemented and executed the Philosophy. Also, it is crucial tocarefully analyze the prerequisiteswith regards to the corporatemanagement based onthePhilosophyforcorporatetransformation.

ACKNOWLEDGEMENTSInthisresearch, Ireceivedagreatdealofsupportfrommanypeople32. Isincerely

express our gratitude for their help. I am grateful to Dr. Tadao Kagono33who offeredvaluablesuggestionsandsomeopportunitiestopresentattheKagonoResearchMeeting,aswellasindividualguidance.

Iwould like toexpressmysinceregratitude to thepeopleofKYOCERADocumentSolutions Inc. (formerly KYOCERAMITA Corporation) and KYOCERA Corporation for theirgenerous support to undertake this study. I am sincerely grateful to Mr. Koji Seki, Mr.Yoshihiro Tagawa, Mr. Keiji Itsukushima, Dr. Toru Nakazawa, Mr. Masahiko Nishie, Mr.TetsuyaMoriandMr.TakahisaOdofortheirassistanceintheformofextendedinterviews,detailedinternal informationanddocumentreview.Fromtheinitialstagesofthestudy, IreceivedinformationandinsightontheKyoceraPhilosophyfromMr.ShigeyukiKitaniandMs.YumiSoedaofManagementResearchDepartmentofKYOCERACorporation.

REFERENCESAdler,W.R.andHiromoto,T.(2012).“AmoebaManagement:LessonsFromJapan’s

Kyocera,”MITSloanManagementReview,fall,pp.83-89AmoebaManagementAcademicCommunity(Ed.)(2010).AmoebaManagement:Theory

andPractice(AmoebaKeieigaku),KCCSManagementConsulting,Inc.Glaser,B.andStrauss,A.L.(1967).TheDiscoveryofGroundedTheory:Strategiesfor

QualitativeResearch,NewYork:Aldine.

32Ialsowouldliketothankthestudents(NatsukaKiyama,SyounTsukino,ShuntarouShimizu,SonokoMasaki,KeiMatsuda,RinoYasuda)ofYoda‘sseminarofRitsumeikanUniversityasresearchassistants.33SpecialvisitingprofessorofKonanUniversityandprofessoremeritusofKobeUniversity


43

Hoshiro,H.(2015).Methodtocreateatheoryfromhistory:Integratingsocialscienceandhistory,Keisoshobou(inJapanese)

Inamori,K.(1997).FORPEOPLEANDFORPROFIT:ABusinessPhilosophyforthe21stCentury,KodansyaInternationalLtd.

Inamori,K.(2009).Howtowork,Mikasa-Shobou(inJapanese)Inamori,K.(2010).ACOMPASSTOFULFILLMENT:PassionandSpiritualityinLifeand

Business,SunmarkPublishing,Inc.Inamori,K.(2013).AMOEBAMANAGEMENT:TheDynamicManagementSystemforRapid

MarketResponse,CRCPress.Inamori,K.(2014).KYOCERAPhilosophy,Sanmarkusyuppan(inJapanese)Itami,H.(Ed.)(2013).DevelopmentofJapaneseBusinessModelinChina,Yuuhikaku(in

Japanese)KYOCERACorp.(2010).Thechallengetoanendlessfuture:ThehistoryoftheKyoceraGroup

for50years,KYOCERACORPORATION(inJapanese)Hiromoto,T.(2006).“AmoebamanagementofKYOCERA:itsmeaningandformation

process,”Keizaironsou,178(4), pp.357-384(inJapanese)Kagono,T.(2010).ManagementMindset,Seisansei-Shuppan(inJapanese)Numagami,T.(2000).KouinoKeieigaku.HakutoShobo(inJapanese)Schumpeter,A.J.(1926).TheoriederWirtschaftlichenEntwicklung.2.Aufl.(Japanese

Translation)Shio,KandKirihata,T.(2013).BusinessrevitalizationthroughintroductionofAmoeba

management:Focusingontheacceptanceprocessinintroducedcompanies.Meruko-Kanrikaikeikenkyu,Vol.6,No.1+2,51-62(inJapanese)

Smith,A.(1950).AnInquiryIntotheNatureandCausesoftheWealthofNations.EdwinCanna,M.A.,LL.D.,London,2vols.(JapaneseTranslation)

Smith,A.(1776).AnInquiryIntotheNatureandCausesoftheWealthofNations.Thefifthedition,LL.D.andF.R.S.ofLondonandEdinburgh(JapaneseTranslation)

Sombart,W.(1911).DieJudenunddasWirtschaftsleben.LeipzipVerlagvonDuncker&Humblot(JapaneseTranslation)

Sombart,W.(1913).DerBourgeois,ZurGeistesgeschichtedesmodernenWirtschaftsmenschen.Duncker&HumblotGmbH,MünchenundLeipzig(JapaneseTranslation)

Tani,T.andKubota,Y.(2012).TheRoleofChangeAgentsintheOrganizationalTransformationofAcquiredCompanies:IntroductionofAmoebamanagementandpenetrationofmanagementphilosophy.OsakaFuritsudaigakukeizaikenkyu,57(4),35-47(inJapanese)

Weber,M.(1920).DieprotestantischeEthinkundder’Gest’desKapitalismusGesammelteAufsäutzezurReligionssoziologie.Bd.1,SS.17-206

Wiggins,R.R.andRuefli,T.W.(2002).SustainedCompetitiveAdvantage:TemporalDynamicsandtheIncidenceandPersistenceofSuperiorEconomicPerformance.OrganizationScience,Vol.13,Issue1,82-105

Yin,R.K.(1994).CaseStudyResearch2/e.SagePublications,Inc.Yoda,Y.(2013).InformationSystemManagementthroughCorporateTransformation:IS

FlexibilityandStrategicExtensibility.Sekigakusha(inJapanese)YonemoriY.(2007).Abduction:Logicofhypothesisanddiscovery.Keisoshobou(in

Japanese)


44

AppendixA:ThelistofIntervieweesName

(thetimeframeoftheinterview)

Primaryaffiliation

Formercareer

KojiSeki

(3.5hours)

ProductionManagerandExecutiveDirectorofKYOCERACorp.ReorganizationTrusteeofMitaInd.(transferredfromKYOCERA

Corp.)FirstPresidentandAdviserofKYOCERAMITACorp.

CybernetElectronicsCorp./KYOCE

RACorporation

YoshihiroTagawa

(2hours)

ManagerinHumanResourcesDepartmentofKYOCERACorp.TransferredtoMITAInd.fromKYOCERACorp.

FirstSeniorGeneralManagerofCorporateGeneralAffairsDivision,KYOCERAMITACorp.

DirectorandSeniorManagingExecutiveOfficer,KYOCERAMitaCorp.

KYOCERA

Corporation

Dr.ToruNakazawa

(2hours)

ChiefofPhotoreceptorlaboratory,MITAInd.ManagerofCorporatePhotoreceptorDivision,KYOCERAMITA.SeniorGeneralManagerofCorporatePhotoreceptorDivision,

KYOCERADocumentSolutionsInc.AdviserofCorporatePhotoreceptorDivision,KYOCERA

DocumentSolutionsInc.

MITA

IndustrialCo.,Ltd.

KeijiItsukushima

(2hours)

ManagerofPrinterBusinessDivision,KYOCERACorp.GeneralManagerofR&DDivision-3,CorporateR&DDivision,

KYOCERAMitaCorp.DirectorandManagingExecutiveOfficer,andSeniorGeneral

ManagerofCorporateR&DDivision,KYOCERAMitaCorp.DirectorandSeniorManagingOfficer,andSeniorGeneral

ManagerofCorporateQualityAssuranceDivision,KYOCERADocumentSolutionsInc.

ManagingExecutiveOfficer,GeneralManagerofCorporateCommunicationEquipmentGroup,KYOCERACorp.

KYOCERACorporation

TetsuyaMori

(1.5hours)

Informationsystemsdepartment,MITAInd.MIS(ManagementInformationSystems)Department,KYOCERA

MitaAmerica,Inc.GeneralManagerofCorporateITDivisionofBPRDivision,

KYOCERADocumentSolutionsInc.

MITA

IndustrialCo.,Ltd.

MasahikoNishie

(1.5hours)

TechnicalServiceEngineer,OkayamaServiceCenter,MitaInd.SeniorManager,BI(BusinessInnovation)ProjectDivision,

KYOCERAMitaCorp.GeneralManager,CorporateBusinessSupportDivision,

KYOCERADocumentSolutionsEuropeB.V.GeneralManagerofCorporateAuditDivision,KYOCERA

DocumentSolutionsInc.

MITA

IndustrialCo.,Ltd.

TakahisaOdo(1hour)

SeniorGeneralManageroftheCorporateGeneralAffairsDivisionofKYOCERADocumentSolutionsInc.

KYOCERACorporation


45

AppendixB:ThelistofKyoceraPhilosophyThe left column is Kyocera Philosophy based on Inamori (2014). The right columncorrespondstotheauthor’s (Yoda)researchbasedon“ThreeManagementSpirits” fromKagono(2014)(notKyocera'sofficialopinion).

ToLeadaWonderfulLife CategorizedbyAuthor

(Yoda)basedon“ThreeManagementSpirits”fromKagono(2010)

ElevateOurMinds HeartsinHarmonywiththeWilloftheUniverse Citizen’sspiritBaseYourLifeonaLoving,SincereandHarmoniousHeart Citizen’sspirit

DrawaVisionwithaPureMind Citizen’sspiritLiveSincerely Citizen’sspiritAlwaysBeHumble Citizen’sspiritBeThankful Citizen’sspiritStriveforBetterWorkHardfortheSakeofOurColleague Citizen’sspiritEstablishMutualTrust Citizen’sspiritCommittoPerfection EntrepreneurialspiritDedicateYourselfEarnestlytoYourWork EntrepreneurialspiritAccumulateTediousEfforts EntrepreneurialspiritFireYourselfUp EntrepreneurialspiritLoveYourWork EntrepreneurialspiritSeektheEssenceofMatters EntrepreneurialspiritBetheCenteroftheVortex EntrepreneurialspiritLeadbyExample EntrepreneurialspiritCornerYourself EntrepreneurialspiritWrestleintheCenteroftheRing EntrepreneurialspiritDiscussFrankly Citizen’sspiritMakeUnselfishDecisions Citizen’sspiritHaveaWell-BalancedNature Citizen’sspiritExperienceRatherThanKnowledge EntrepreneurialspiritAlwaysBeCreativeinYourWork EntrepreneurialspiritMakeCorrectDecisionsMakeDecisionswithanAltruisticMind Citizen’sspiritBeBold,YetMeticulous Citizen’sspiritVoluntaryAttentionSharpensJudgment Citizen’sspiritInsistonPlayingFair Citizen’sspiritSeparatePersonalMattersfromBusiness Citizen’sspiritAccomplishaNewFeatMaintainanArdentDesirethatPenetratesYourSubconscious

Entrepreneurialspirit

PursueUnlimitedHumanPotential EntrepreneurialspiritHaveaSpiritthatAcceptsChallenges EntrepreneurialspiritBeaPioneer Entrepreneurialspirit


46

WhenYouThinkIt’sTimetoGiveUp,theRealWorkBegins EntrepreneurialspiritChangetheWayofThinkingaboutQuality EntrepreneurialspiritFightingSpirittoAttempttheImpossible EntrepreneurialspiritConquerObstaclesPossessTrueCourage EntrepreneurialspiritRaiseOurFightingSpirit EntrepreneurialspiritCarveOurOwnWay EntrepreneurialspiritSayItandDoIt EntrepreneurialspiritThinkThroughtoVisualizetheResults EntrepreneurialspiritNeverGiveUpUntilWeSucceed Entrepreneurialspirit

ReflectiononLifeTheResultofLifeorWork=AttitudeXEffortXAbility Citizen’sspirit,

EntrepreneurialspiritLiveEachDayEarnestly Citizen’sspiritYourLifeIsanExpressionofYourMind EntrepreneurialspiritHaveAmbitiousDreams EntrepreneurialspiritIsMyMotiveVirtuousorSelfish? Citizen’sspiritLeadOurLivesWithapureMind Citizen’sspiritASmallGoodIsLikeaGreatEvil Citizen’sspiritReflectonOurBehaviorDaily Citizen’sspiritTheHeartofManagementManagementBasedontheBondsofHumanMinds Citizen’sspiritPursueProfitFairly CommercialspiritFollowTruthandPrinciples CommercialspiritPracticethe“Customer-First”Principle Citizen’sspiritManagementBasedonthe“ExtendedFamily”Principle Citizen’sspiritFollowtheMeritSystem EntrepreneurialspiritEmphasizePartnership Citizen’sspiritManagementbyALL EntrepreneurialspiritAlignMentalVectors EntrepreneurialspiritValueCreativity EntrepreneurialspiritTransparentManagement CommercialspiritAimHigh EntrepreneurialspiritAtKyocera,EveryoneisaManagerPricingIsManagement CommercialspiritMaximizeRevenueandMinimizeExpenses(MeasureYourInflowandControlYourOutflow)

Commercialspirit

ProduceaP&LReportDaily CommercialspiritHoldSoundAssetsOnly CommercialspiritProjectOurAbilitiesintotheFuture EntrepreneurialspiritMakeTargetsWell-KnownandUnderstood EntrepreneurialspiritPerformingDailyWorkElevateCost-Consciousness CommercialspiritBeFrugal CommercialspiritBuyOnlyWhatWeNeed,WhenWeNeedIt Commercialspirit“On-site”Management Entrepreneurialspirit


47

ValueKnowledgeGainedThroughExperience EntrepreneurialspiritMake“Sharp”Products EntrepreneurialspiritListentoWhattheproductSays EntrepreneurialspiritCommittothePrincipleof“One-toOne”Correspondence CommercialspiritAlwaysDouble-Check CommercialspiritGraspMattersSimply Entrepreneurialspirit

philosophy-based corporate transformation: the case of kyocera … · 2020. 2. 1. · corporate...

Documents