Lessons from Long-Lasting Japanese Companies
There are 5,000 companies in the world that are more than 200 years old. More than 3,000 are in Japan. Because these companies have provided a long secure base of jobs for the Japanese economy, the Bank of Korea undertook a study of them – to learn lessons for Korea, as there are only three firms in that country older than 100. These are the lessons and facts from this study:
- These companies are devoted to earning the trust of their customers, their employees, their communities.They are “anthropocentric” – realizing that talented people are the most resilient force.
- They also believe that honesty with customers will provide loyal customers, even in a crisis.
- The companies deliberately stay small. Average size is 115 employees. Only 6 percent are larger than 300 employees.
- They are conservative.
- They control growth. They are internally financed.
- They avoid speculation.
- They invest in the skills and loyalty of their people.
- They believe in craftsmanship; they believe in adoptive craftsmanship.
- They are dominant in small markets. Sixty percent are the leader in market share; 30 percent are the market share leader in the country; only 13 percent export.
- The study illustrates the advantages to small and nimble for survival through a metaphor:
- There are now only two species of elephants in the world, whereas 75 percent of all living things are insects.
- These companies have been fortunate to have been in protected environments – no wars for most of history.Interestingly, they have not fully embraced primogeniture.
- They are very comfortable “adopting a son” to be the better success.
- In fact, 25 percent of successions are to non-family, adoptive successors. Only 75 percent follow family lineage. For the most part, they forbid the employment of in-laws.
- To quote the research paper, “their ultimate purpose of the company is not the profit, but its continuation.”
In our own studies, we have found these observations to be true the world over. “Family Capitalism” is a very different species.
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