Kazuo Inamori: Lessons from one enlightened entrepreneur

 

Kana Inakaki

Teachings of Kyocera and KDDI founder were surprisingly simple and still resonate today

As a messy succession crisis unfolded at Apple supplier Nidec, Shigenobu Nagamori, its 78-year-old founder, had one big regret. 

Over the past decade, he had poached a number of high-profile executives from carmaker Nissan and electronics maker Sharp as potential heirs. But none of his outside picks met his towering expectations. Instead, they left the company, leaving an exasperated Nagamori to last week tap one of Nidec’s founding members as a temporary president.

“When Mr Kazuo Inamori was alive, he told me that a company insider is best as president. His warning turned out to be true,” Nagamori said, acknowledging with guilt that he had finally realised how talented his employees were.

Inamori, the renowned founder of ceramics company Kyocera and telecoms group KDDI, died at the age of 90 in Kyoto last month. Known in Japan as the “God of management”, he was one of the country’s great industrialists. Along with Sony’s Akio Morita and Soichiro Honda, the founder of the eponymous carmaker, Inamori helped drive the country’s economic miracle in the postwar period. He also helped rebuild Japan Airlines from the ashes of bankruptcy in 2010 without receiving a dime for his role as chair.

Long before stakeholder capitalism and the need to serve employees along with investors became vogue in the west, Inamori’s management philosophy had centred on his belief that companies should focus on the livelihood and wellbeing of employees instead of simply pursuing profits. 

In his first interview with the Financial Times in 1978, Inamori explained that what tied his company and workers was not simply a financial contract, but “a human relationship” based on trust and partnership. 

His motivation, he claimed, had nothing to do with accumulating personal wealth. “We have a saying: money has legs and if you try to catch it, it will run away from you,” he said. At the same time, he was a ruthless cost-cutter, who had forced the proud employees of JAL to save expenses on everything from lunch boxes to corporate pamphlets.

The teachings of Inamori were surprisingly simple: don’t be greedy or selfish, be honest and most importantly, do what is right as a human being. His principles resonated beyond Japan to China, and attracted 15,000 students to his leadership schools worldwide, including SoftBank founder Masayoshi Son.

How do these teachings resonate today? In his book A Compass to Fulfilment, Inamori himself questioned and then quickly rejected the idea that his philosophy was too outdated for the complex modern world. He argued that a sincere attitude and a focus on the universal good as opposed to national interests were the approach needed to settle international trade and history disputes.

In an era where nationalism is on the rise following the supply chain disruptions of Covid-19 and the energy crisis sparked by Russia’s invasion of Ukraine, there are practical lessons to take away.

One is the need for entrepreneurial spirit at a time when the start-up scene in Japan is so dormant that the government has promised heavy state investment. Like the Honda founder, Inamori was a warrior and a rebel, who resisted meddling from the government and banks as he transformed Kyocera and KDDI into global technology participants.

By setting up KDDI, Japan’s second-largest carrier, he brought competition to a market that was controlled by formerly state-owned NTT. When Japanese manufacturers proved too conservative to try out what is now Kyocera’s technology, Inamori ventured into the US, eventually clinching a contract with Texas Instruments to supply electrical resister rods for the Apollo space programme.

Inamori’s best-known concept of “amoeba management”, which involves dividing up large organisations into small units that draw up their own goals and strategic plans, is also pertinent. Companies will need independent thinkers to come up with innovative ways to navigate an environment where governments will feel compelled to intervene in the name of ensuring economic security.

His bottom-up management style and his investment in training employees have allowed Kyocera and KDDI to avoid the succession challenge plaguing corporate Japan. Inamori, who decided to retire at the age of 65 to study Buddhism, never clung to his leadership position: “It did not have to be me who founded Kyocera or KDDI. By chance, heaven provided me with that role and I was merely acting it.”