Happy New Year to you all. No doubt you greeted the New Year with all manner of thoughts swirling around in your head. But if we concentrate too much on uncertainty and instability we end up in a bad mood. So here I'd like to change the mood as we kick off 2010.

Several years ago a book called Blue Ocean Strategy (Japanese Edition) was published and sold quite well. In this book, markets where there are many rivals and where one spends all one's time competing on low price are called "red oceans," while markets where there is no competition - which is where one ought to be doing business - are called "blue oceans." This is all very straightforward. But what I thought was interesting was the idea that these blue oceans are not located in a great distance from red oceans but lying right beside them. This is a valuable hint. For small- and medium-sized enterprises in particular, investing large amounts of money on research and development is practically impossible. However, knowing that there is a beautiful blue ocean right next door makes one think that one can make a go of things as long as one is prepared to tax one's ingenuity.

Having built up a range of unique products and services, we here at Obun Printing are familiar with the exhilaration of swimming in a blue ocean, but even so, we still encounter situations where we have to swim in a red ocean. You could say that with one leg we're stirring a red ocean while with the other we're dabbling in a blue ocean. Or to put it in printing industry terms, if you mix red and blue you get purple. So, perhaps we're actually drifting around in a violet ocean.

However, there's no doubt that the proportion of blue is on the increase. At any rate, we're currently considering development proposals under 24 topics, with a considerable number of new products and services due to see the light of day in 2010. Maybe this year we can attach a flipper to the leg dabbling in the blue ocean to give us some extra propulsion.

Best wishes for the New Year.

Postscript: This is the 120th installment of the Thoughts on Management column, which has been going for ten years now. It is thanks to you, the reader, that it has continued for so long. I'd like to take this opportunity to express my gratitude once again. At present, around 700 individuals regularly read this column, and I hope it continues to attract a following. I humbly ask for your continued support.

Monthly senryu:
Turning purple into a bridge leading from red to blue

Since May 2008 I've been dispatching a "weekly message" to employees. The contents are organized by topic; including different perspectives on things like values, branding, and thoughts on management. I've also been sending messages featuring the following themes:

• Essence series that stresses the importance of capturing the essence of things
• Sharing the Fascination series that highlights the appeal of thinking and growing
• My personal thoughts on the questions in Peter Drucker's The Five Most Important Questions You Will Ever Ask About your Organization, and
• Corporate Culture series that stresses the importance of creating a good corporate culture

Given that I'd be held in contempt by my employees if they felt there was nothing unpredictable about the themes addressed or nothing fresh about the way I approached them, I'm always pretty tense when I write these weekly messages. In the Essence series I posed the question: what is the overwhelming difference between printed matter and other forms of media? Unfortunately, very few people came up with the kind of replies that I hoped for. In the case of non-print media, both contents and a means of reproducing them are required. Or to put it a different way, with printed matter the contents themselves form the medium.

It is with this sole desire of exchanging ideas with employees in an effort to encourage them to think, to consider the essence of things as a matter of course, and to open their eyes to the appeal of this approach and the value of knowing the essence of things that I continue to dispatch these weekly messages.

Monthly senryu:
The fascination of thinking is awakening to the essence of things

Last year I paid a lot of money to attend a certain seminar, although I ended up dropping out after just three days, having attended two of the six classes that make up the course. I'd like to summarize the things I became aware of as a result of this experience.

The theme of this seminar was "improving coaching skills." I confess I harbored a slight feeling of antipathy towards the use of the word "skills," but seeing as I hadn't done much in the way of real study for quite a while, I decided to go along and see what it was like. Halfway through the first day I started feeling something wasn't quite right after all. The reason for this was that, as I had expected, there was far too much emphasis on "skills."

Having said that, although "coaching" is something I've hardly studied at all, I routinely try to guide my employees towards solution strategies in the context of everyday conversation not by force but by encouraging them to think for themselves, so by attending the seminar I thought I might be able to brush up these skills. "Coaching" is a method of guidance whereby people are led in such a way that they themselves actually become aware of solutions. The aim is to make the subject aware. To put it bluntly, my approach is that as long as the goal is achieved, I'm not too fussy about the method. Although having said that, someone has come up with effective methodologies for this kind of thing as a result of years of research, so it probably pays to know about these.

Incidentally, this particular "seminar" adheres to such procedures or methodologies to an unnecessary, even extraordinary, degree. The thing I found most dissatisfying was that the overly inflexible approach meant that there was no attention at all given to "thinking," which is something I've always regarded as more important than anything else.

Inspired by this experience, I began to think even more about this subject. Why is it that I was so critical of this seminar? Looking back on it now, I think perhaps it was an overreaction to the fact that the lecturer not only had an affected manner of speaking, but also spoke in a quiet voice, and that I generally didn't fancy the conceited way he talked.

As a result, I came to a kind of conclusion that thinking is the most important thing after all, that the method adopted, or in other words the skill element, is the last thing to be considered, and that it's fine if the method differs slightly from person to person.

The fact was, however, that I had to inform the lecturer that I was dropping out before the end of the seminar, and so, mindful of the need to give a convincing reason, I gave the matter even deeper and broader thought. And the thing that came to mind as I thought about this was the approach of Kyocera founder Kazuo Inamori: "Maximize sales and minimize expenses" (I've diverged from the original topic slightly but bear with me for a moment).

Nothing could be truer than this. This is a real "theory," I thought. However, unless one knows how to maximize sales and how to minimize expenses, it's about as useful as the proverbial "rice cake in a picture." After thinking about it some more, I realized that answering these questions required "know-how." It's not enough to simply carve out new territory in an existing field. One way to maximize sales is to develop a new product and enter a new field. And this is a good example of "know-how."

Furthermore, with regard to the minimization of expenses, "know-how" includes more than simply encouraging in-house production and negotiating reductions in outsourcing and material costs; it also includes things like knowing how to lift productivity and reduce the amount of raw materials used. And once one has considered all the options and worked out what needs to be done, one then needs to decide how to implement this knowledge in order to gain the maximum benefits, which is where "skill" is required. Even if one knows what to do, this knowledge is meaningless unless one can actually do it. In other words, knowing something in general doesn't necessarily equate to being able to do it. Unless one has the "skill" to implement it, even if one has developed some amazing "know-how" it will all be in vain. This is why "skill" is so important.

So, the first thing is to "think," and then to be "aware" of things. After this one should be able to "think deeply and broadly" and "systematize." You could say that this is what is actually meant by discovering "theory." However, this is simply a principle, and so in order to decide how to act, one needs to discover "know-how." Thinking repeatedly about what kind of thing "know-how" is leads to the discovery of actual "know-how." And after honing the "skills" required to ensure this "know-how" leads to results, implementing these "skills" should gradually bring huge benefits. At least this is how I see it.

I've gone on far too long, but the main point is "to discover theory and know-how, but also to acquire the skills to implement these later on." Rather than seminars to teach people skills, what we really need are seminars to teach people "how to think," but these seminars don't exist. Maybe the people in the seminar business should give this some thought.

Monthly senryu:
Thinking leads to the discovery of theory and know-how
Know-how only produces results when one has the right skills

As I did at this time last year, I am posting the text of my remarks to employees at a morning meeting at the start of 2010 (January 12).

Happy New Year. In my speech at this time last year I said that 2008 would be a year that would go down in history. The reason was the Lehman Shock. There is no doubt that the global economy suddenly worsened, and while initially it was said that the impact on Japan was slight, we ended up with a situation in which even Toyota, which prided itself on being number one in Japan in terms of both sales and profits, plunged into the red after posting record sales and profits the previous year. This trend continued into 2009, with the whole world affected by the economic slump. In Japan, while great hopes were placed on the Hatoyama administration after the historic defeat of the Liberal Democratic Party of Japan, problems including the breaking of election pledges as laid out in its manifesto, dubious political contributions from private individuals, and the relocation of the US military base at Futenma have seen the approval rating for the Hatoyama administration worsen from around last month, fuelling a sense of distrust and unease.

So what can we expect in 2010? Unfortunately, I cannot see either the economy, society, or the global environment improving. In light of this, I can state categorically that if Obun Printing simply relies on the market at the macro level or on existing customers at the micro level, we cannot expect greater than average results.

The only way Obun Printing can distinguish itself from the competition is its own efforts. This means making the effort to add healthy companies to our client list, which means focusing on displaying to these clients our overwhelming appeal. It also means being able to offer exceptional products and services at attractive prices.

Fortunately, in the areas of both emotional value printing and online publishing, this year we can look forward to even more new technologies, materials, products, and services being developed and seeing the light of day than last year. The number of customers using our online business card service is steadily rising. Product lineups and sales volumes for other products and services are also increasing (such as evidenced by the development of color variations and value-added products for our rewritable paper lineup, the expansion of our range of book cover designs and sales channels, and the increase in demand for novelty products).

The varnish printing seminars held at the end of last year were also extremely popular, so much so that there have been requests for more. In short, one could probably say that 2009 laid the foundations for rapid progress in 2010. In addition, new services and technologies will be added, putting us in an even stronger position.

In light of this, I think you will understand the potential for growth through our own efforts. However, the size of the economic pie is still shrinking and prices are still dropping due to deflation. The extent to which we can minimize the impact of these factors is another important theme. The value of our work to date will decrease in the midst of price competition. Accordingly, we must strive for even further cost reductions. This may be unspectacular and even, to be honest, unenjoyable. But unless we go about it properly, although we may still have our own products and services, we will not survive.

Looking ahead, in the coming year the focus will be on striving to reduce costs with regard to existing work and taxing our ingenuity in an effort to be more proactive with regard to new work. I look forward to your continued understanding and cooperation.

Monthly senryu:
Originality is something all our employees create together

The following are the contents told to the employees at the morning gathering in March, this year.

Generally it is said that economy is good, because consumption is expanded. Since consumption increases, you have to expand production. Productivity is then very important. A lot of things have to be made at low prices. It is not necessary to say that the products offered should be increased simultaneously or the design nature should be enhanced.

However, when business has cooled down, how is it? Because money or income does not increase, or unfortunately they decrease, cheap things are good. It will be said that it is better to be cheap and to be able to buy a lot.

Here we think in the position of the customers who places orders for printed matter. At first it is better to be cheap, but think that it is good if it is possible to make things different from other printed matter with the same price because they are outstanding. Differentiation is possible; in other words the value becomes high. By the way, anyone understands the reason that things unlike other printed matter are good, but the printing companies having the answer, how to make different things actually, are rare.

Let's consider the foundations of craftsmanship here. At first it is to say that make good quality things at a low price. Quality stability and productivity are asked for. Next, it is to make the things, which show the performance, which the other companies do not have. However, "development power" is asked for before making the things. The printing industries placed themselves as "order industry" or "device industry" for many years. However, now, market size has been reduced. Because demand has decreased even if we have good machines of the productivity no matter how much, there is no need to have machines, which can make a large quantity of things in a short time. Therefore, the printing company, which has a web offset press, suffers.

On the other hand, Obun Printing is in the situation completely different from other printing companies. About the business of on-line publishing, Obun has begun dealing with it since 2000. Annual production of "web card" has risen to 60,000 boxes in seven years since the service started, and, the "blog bookbinding service" came to occupy 80 to 90 percent of the share of the market in a total of three years.

Also about Obun's emotional value printing, development has been done solemnly five years ago. As a result, it came to develop "urushi lacquered printing" and "rewritable paper." 10% of sales were occupied in connection with emotional value printing, and the sales quantity of "rewritable paper" attained 10,000 sets at the end of February, this year. Moreover, because we talked about such development relations frequently, other divisions in the company were provoked and interesting things are likely to be made soon in those divisions, which were unrelated to development.

Thus, the word "development" is heard now here and there, in Obun Printing. Moreover, even if it develops the component technology and material, it is useless treasure if there is no product development to make use of it. By saying this, "Cansay" book covers and rewritable paper with magnets were also made through the commercialization project meeting.

Thus, it is certain that Obun Printing's employees changed their views and it has become a company of development type, beyond belonging to a traditional "just accepting orders" industry and a device industry. There is no doubt that Obun Printing is changing qualitatively. I clearly realize that our many employees have been changing certainly through an encounter with the CEO (Shacho-Juku), a smile luncheon meeting, or a triple-one suggestion plan. Let's have confidence and continue to go this change—the quantitative expansion is waiting at the point.

Monthly senryu:
A quality change leads to quantity increase without realizing

For some reason we "think" every day. I love it so that I may say that it is a hobby to "think". I noticed that "a flow of thoughts" changes with themes considered at a certain time. For example, when solving a mathematical problem, we think logically as much as possible. When writing a plan, the point is making it an attractive proposal, and we make our brain work in a totally different way. I compose Senryu, and look for interesting perspectives from which to select any theme, and express it in 17 characters so that it may be felt "Indeed." This is also a unique brain teaser. Though all of these examples belong to thinking activities, we can see how the line of reasoning is different with the type of thinking.

Moreover, there were things like this. I tried to solve a certain problem together with two or more subordinates and asked their answers. Then, my answer was different from theirs. The reason is that my thinking was deeper and wider than the depth and range of the thinking of the subordinates.

When this difference became clear, I always taught how to think, but I noticed that there is not much sense in repeating the same lesson of thinking with many subordinates. At this point, I came to the idea of "systematization of thinking." Though I had no idea about how many kinds of thinking would be there, I thought at first roughly classifying them and considering one by one would be useful.

Through this work, my brain functioned in a way I had never experienced before, because I found out how one's brain moves. As a result, ways of thinking were divided roughly into ten kinds, and how to use the mind for every theme was summarized.

I felt very uncomfortable about making "usage" (how-to) at the beginning. Yet, systematizing ways of thinking and arranging how to think is also a useful know-how. So, I think it is of value that we were able to make such know-how originally by ourselves.

Monthly senryu:
Summarized thinking patterns - that's know-how

I spent considerable time on "systematization of thinking," about which I told last month, but I got tired when 80% was completed. There I noticed incidentally, not only me, but my subordinates should also think, then it would be good practice for thinking.

It was just before year-end holiday, so letting them think would be good as the homework of the winter vacation. What a splendid idea! I admired even if I do say so myself. 12 members of the management meeting were the candidates and I told them my aim for the homework; as the springboard for discussion had been made, what to do now was "retouch correction," and make it even more impeccable.

After the vacation, long-awaited homework was submitted, and four people's proposals were adopted, though I had expected to have adoptable proposals by more people. The wisdom of Obun Printing, "systematization of thinking" was completed through this process. Although general classification was still divided into 10 categories, the contents about how to use our brains was substantially polished.

Since it is wasteful to leave this laborious work as untouched, I wrote it in the management plan document in the current fiscal year, and told that I wanted all employees to make use of it when thinking. Furthermore, because this collective intelligence is really a great thing, if other views are thought of by any of our employees, I will have them proposed. In this way, I want to bring up this wisdom continuously.

Monthly senryu:
Our culture is about to flourish in the style of collective intelligence

By the spread of iPods, it has become natural to download music from the Internet and to hear it. Likewise, with the appearance of Kindle and iPads, information-centric paper media such as newspaper and magazines are going to turn into electronic delivery.

In this change, I think that the publication of information-centric printed matter, to which speed is vital, will decrease substantially. However, it does not mean the other printed matter will also be a thing of the past. With this background, what should we printing persons do? In my opinion, we should produce printed matter which the Internet and other web-based products including electronic readers can never beat.

For one thing, it is possible to develop a completely new effect, for example, giving printed matter smooth depth like a 3-D movie. This has been realized by a printing company with advanced technologies, with which we keep on friendly terms. Moreover, it is also possible to make printed matter embedded with voice data, and we have already released this kind of printing products.

Furthermore, effects appealing to vision and hearing are also thinkable. Printed matter associated with the sense of touch, smell or taste is the tricks that are never possible with the Internet or electronic readers. But the work of developing these futuristic machines should not be left to printing press makers. Because once these kinds of machines are successfully developed, what awaits us is again a never-ending price war, as any company having machines with new functions can make all these printing products.

Conventionally, people in the printing industry think, "Let's do our best to supply what clients want NOW." In other words, what we should do is dealing with evident needs, and it is something anybody can manage. But, we, the people of Obun Printing, are not interested in something anyone can see through. Instead, we are always looking for potential needs and trying to find a way to address them in s short period of time. If this whole process is successfully done, probably it means that a new formula for the growth of a company has been obtained.

We have learned such a formula and got one of the answers. So far, we only picked up only one answer, however, there must be more right answers to find, and we will continue to dig out one after another.

Monthly senryu:
Having fun in realizing something other people are not able to do

I once heard that the Sony Walkman was developed after one of the company's founders, Akio Morita, was out enjoying a walk one day when he thought how wonderful it would be to be able to listen to great music while walking in such surroundings. According to this story, he then asked the company's engineers to develop a device that met the following requirements: it had to be lightweight so that people could listen to it while walking; but it also had to provide sound of the highest quality.

The point I want to make with this anecdote is that the Walkman was not a result of "listening to the voices of customers" as stated in the title. If users actually came up with ideas and told manufacturers they wanted this or that, then we would definitely have to "listen to the voices of customers." But if we want to provide customers with the kinds of products or services they themselves haven't thought of but we think they might want, then no matter how hard we strain our ears we will never be able to hear the voices of customers. Because the customers haven't thought of these products yet.

Those seeking to produce things that hitherto haven't existed must imagine the sentiments of customers. As manufacturers, attuning ourselves to acutely sensitive consumers and improving our developmental capabilities give us a proverbial second string to our bow, which is something we can always do with.

Monthly senryu:
The maker thinks from the perspective of the buyer

People's abilities are wide-ranging, and it is often the case that abilities that are visible now and abilities that are likely to come to the surface in the future are different. It is not unusual, as I'm sure all of us have experienced at some stage, to realize once we give it a try that we are in fact suited to something we thought we were not suited to. In this case it is an aptitude discovered by chance, but from the point of view of management, we mustn't rely on chance but instead be able to see what others cannot.

Marketing that predicts the market needs of the future, product development based on technology trends—it seems large enterprises in particular are attentive to such things, but when it comes to "expanding the potential of employees as people" they don't appear to be doing much at all. For example, not everyone involved in development is able to become a developer at the level expected by the company. It may be they are more suited to fostering budding developers. However, because their schooling and postings were all development-related, the company jumps to the conclusion that they must have them achieve great things in this field, leading to results that are unsatisfactory for both the company and the individual concerned.

Often the individual themselves is unaware of what it is they are suited/unsuited to. It is also possible that their natural abilities will be demonstrated in a completely different environment. Accordingly, if the dictum "the right person for the right job" is applied with regard to the present only, there is a danger of committing a major error. Discovering abilities/aptitudes that may have been overlooked could well be the key to achieving a win-win for the individual and the company.

Monthly senryu:
Discovering aptitudes is precisely what management is about

Several years ago it seemed everywhere I went I encountered the debate over "who a company belongs to," and, reflecting the American way of thinking, the consensus seemed to be that "a company belongs to its shareholders." To be honest, I had serious doubts about this, and later on people started to argue that raising employee satisfaction was important, with all sorts of opinions ranging from "shareholder-orientation" to the more established "customer-orientation" and "employee-orientation" being thrown into the mix.

At one lecture meeting I went to, the speaker said the important thing was the order in which these things were placed. First came the employees, he said, then cooperating companies, then the customers, then the company, and lastly, although one wasn't really conscious of them because if the first four were taken care of properly the company should naturally be able to keep its head above water and pay a dividend, came the shareholders.

Under the management philosophy I devised some 14 years ago, the order was employees, customers, the company, and then society. Later, however, I reversed the order of the first two items, placing customers above employees. Naturally I explained to my employees in writing and at morning meetings the reasons why the order was changing, and no one really argued that it was odd. Later still, after thinking again about the relationship between the various stakeholders in light of the topic raised at the lecture meeting mentioned above, I realized that the relationship between the respective stakeholders differs depending on the company's circumstances. It led me to consider this matter carefully and summarize my own views on the debate over the order of the stakeholders.

• Foundation phase - Without investors one cannot start a company. This reminds me of the words by the founder of Kyocera Corporation, Kazuo Inamori. He said that the investors were the ones who created the company. He was only able to found it thanks to this investment from third parties. In other words, without the company one cannot hire employees and there won't be any customers, so at this stage the most important people are the shareholders who finance the company.
• Growth phase - Work starts to come in. The number of customers increases and as a result the company grows and the workforce also expands. Naturally, the number of cooperating companies also increases. At this stage, the presence of customers and the efforts of the employees are what support the company.
• Fund-raising phase - Once one reaches the stage of rapid growth, the need for greater investment arises to take account of things like the expansion of office space, increased investment in plant and equipment, and the opening of new stores. At this stage, the demand for funds is met by borrowing in the case of indirect financing or a capital increase in the case of direct financing, leading to either an increase in the number of shareholders or an increase in investment from existing shareholders, so the spotlight shifts back to the shareholders.
• Listing phase - During this stage, the spotlight is well and truly on the shareholders.
• Post-listing phase - The company is supported mainly by customers, employees, and cooperating companies.

As you can see, the degree of importance of each of the stakeholders varies depending on the circumstances in which the company finds itself. Accordingly, I don't think the shareholders should always come first in every set of circumstances. Rather, I think we could probably say that once the company has taken shape, the customers and employees are more important.

Incidentally, there is also debate over whether the employees or the customers are more important. As noted above, at our company we initially placed the employees above the customers, but later reversed this order. The reason comes down to the fact that the development of the company depends on whether or not customers value it. If it is not valued, its performance will naturally remain flat or decline. This is why we must try to do everything in our power to ensure we are valued by customers. It is essential that we think about our customers before anything else, which is why we ranked the customers as most important.

With regard to this, one could argue that, no, because it's the employees who influence the customers, these employees have to be highly motivated, and so in order to motivate them we must consider the employees above everyone else. In fact this argument is also perfectly reasonable and cannot be rejected.

At this point it might help to think again about the basis of corporate activities. By this I mean that without employees the company wouldn't exist, and without customers there would also be no revenue. In other words, both are essential. So perhaps we could sum up by saying that employees need to think about customers at all times and provide products and services that please customers, and that the company must continually strive to ensure employees remain highly motivated. That is to say, I think this ordering is all a bit pointless.

Monthly senryu:
Becoming a company where support takes precedence over order

Previously in this column I've mentioned I've had three mentors. The first is Mr. Kazuo Inamori, the founder of Kyocera Corporation; the second is Mr. Jack Welch, former chairman and CEO of General Electric Corporation; and the third is Mr. Jim Knapp, an American who's also the former CEO of a printing company. In a sense, the management styles of Mr. Inamori and Mr. Welch are poles apart, but they are not different in every respect. Both stress the importance of making the most of the people around one, for example. The difference is in their methodology, which is something one can learn from.

I came to respect Mr. Inamori and Mr. Welch as mentors through their writings. Of my three mentors, Mr. Knapp is the only one I've been able to correspond with directly via email. Actually, my father met him first and found Mr. Knapp's company interesting. So he encouraged me to go and meet him and I developed an interest in his unique management style. Since then I've continued to visit Mr. Knapp around once every two years, and over that time I've come to recognize him as someone who values spirituality, mainly on the basis of his introducing me to one particular book that preaches the importance of ideas and values.

I mentioned Mr. Knapp in my Thoughts on Management column in December 2007 ("Training Trip"). This time I've written about him from a different perspective.

I email Mr. Knapp as often as opportunity allows, and because I look up to him as a "mentor," depending on the content of these emails I usually refer to him unreservedly as "my mentor." Once, after I'd told him that he was one of my three mentors as outlined above, I received a reply in which Mr. Knapp wrote, "I'm thankful that you regard me as a mentor. However, I've only ever given you one piece of advice, which is, 'I want you to always stay the same as you are now.'" When I read this reply I couldn't help shedding a few tears. What a wonderful "mentor," to be so encouraging towards a disciple.

To have been lucky enough to encounter such a person, "my precious mentor," is truly one of the joys of my life. I'd like to take this opportunity to once again thank Mr. Jim Knapp from the bottom of my heart.

Monthly senryu:
A gracious message from a mentor: continue living the way you are now