Introduction
In July 2001 I had the opportunity to speak about "My Management Policy" at a seminar held on South Korea's Jeju Island. This was ten years after I inherited the role of President, and I was just reaching the point where I was solidifying my own personal views about management. So I was very grateful for the opportunity to speak.
But now we are seven years further down the road, and I have lived through some difficult and dramatic events that have driven me to change some of my thinking. So I am taking the liberty of writing a revised version of my views, which I am calling "Version 2.0."
Today, I think the original title of my paper—"My Management Policy—was somewhat pretentious. So this time around I'm changing the name to "How I Manage." Those who have read the first version may feel somewhat confused about it all. But what follows are my current thoughts, honestly told. Some of my views have changed because of shifts in my environment, while other has evolved as a result of continued thinking. In any case, I am writing as honestly as I can, and I hope that those who have read the previous version will accept that this new one now represents my current views.
Idealistic Practical Management
Most people probably think that managing a company is all about making a profit. But in my case, the goals are different. Of course I know we need to make a profit in order to stay in business. By what I really want is to do something meaningful and significant, to bring passion to the work, to do interesting things, to provide a worksite where employees can enjoy and look forward to their work, and to provide work that allows and encourages employees to grow fully as human beings. So these are my real goals.
These are ideals; and in what follows, I will continue speaking about them. But I don't believe that idealistic thinking alone is enough to get you through. I think the ideals form the foundation, and then you create something meaningful by taking actions based on that foundation. So when I refer to "idealistic practical management," I am talking about actions based on ideas.
1. Management Stance
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Implement ISO-based approaches that share our values and accord with our management principles.
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The PDCA (Plan, Do, Check, Act) cycle is the essence of the ISO approach, and we work to apply it in a manner that complies with the values of our employees and with our basic management principles. In this way we can achieve an upward spiral of ever-improving management.
2. Management Principles
Management principles are the Constitution of management. The business managers must not deviate from principles, as these express the essence and purpose of management. A business manager who understands the importance of principles must take responsibility for creating principles, as needed. But it is not in a way that simply reflects the individual tastes and preferences of that person. Instead, the business manager should proceed as if they're writing a Constitution that will last at a century, and that will contribute to the continuation of company and its management. This is the approach I used when devising the management principles for Obun Printing.
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The company shall exist as a vital, continuously growing and developing group of persons working together for the purpose of contributing to the prosperity of our customers, our employees, the company itself, and society at large.
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The order in which I listed these beneficiaries is important. The customer comes first. Business begins with the customer. The company receives payment from the customer for the goods and services we provide—and so this is why we need to see our customers prosper. So we must think and think again about how we can serve the customer. We must come up with proposals about how we can help. And, of course, we must provide helpful goods and services. This is crucially important.
When it comes to employee prosperity, we refer to both material and spiritual well-being. The company must appropriately recycle our profits to our employees, in a way that helps them better their lives. Our business must be conducted in way that provides true gains to our employees. This is not just a matter of paying salaries. We must also manage in a way that enhances spiritual and psychological well-being. If we wish to practice sound management, we cannot push employees to work abnormally long hours, or make it difficult for them to take paid vacations, or otherwise apply improper pressure. We must work to deliver an environment that allows and encourages employees to maintain an appropriate work/life balance.
The third beneficiary on my list is the company itself. The company must earn an appropriate profit in order to pay dividends, to give raises, and to invest in further growth. A company that fails to prosper cannot do any of these things.
The fourth beneficiary on the list is society. Society uses taxes to build infrastructure. Without tax revenue, society cannot build or maintain infrastructure and cannot provide adequate public facilities. As a member of society, we must pay our fair share of tax.
And, as I said, the company must be a "vital, continuously growing and developing group." Growth and development are essential if we wish to continue providing high levels of satisfaction to all of our stakeholders. I've had some experience with tough times and business contraction, and these have taught me just how important growth really is. And if quantitative growth is temporarily blocked, then the answer is to grow qualitatively—so as to prepare ourselves for renewed quantitative growth as we move ahead.
When I say that the company must be "continuously growing," I mean that the company must be a going concern. It must be able to continually generate profits. Once the business starts, it must not stop.
When we speak of a "company" or a "business," we are ultimately just talking about a group of people. To continue to grow and thrive, we must never place limits on the growth and potential of our people.
3. Goals
My ultimate goal is to be the best company in Japan. This can be broken up into three specific goals, as follows.
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(1) Our customers say that we are the best company that they deal with.
(2) Our employees feel that they are working at the best company in Japan.
(3) Our company's financial conditions are the best in Japan.
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These are rather grandiose targets, and perhaps I should be embarrassed to speak them. But in fact, this is what we are aiming at. We can rephrase them, as follows. Goal 1 is to be the best in customer satisfaction. Goal 2 is to be the best in employee satisfaction. I think that if we can achieve both of these goals, success in the third goal would follow as a matter of course.
And if it didn't follow, this would imply that the management team is having a problem. To prevent this type of problem, we are working daily to improve the quality of our management team. And, as we proceed, we want to come up with specific management themes and methods aimed at achieving these goals, and incorporate these into a schedule that will carry us step-by-step closer to their achievement.
4. Values
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Communication; teamwork; trust & trust-based relationships;
professionalism; spirit of challenge; discovery and resolution of problems
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These values were determined about ten years ago by a vote of all employees. We began by assessing the beliefs of each of our employees. Then we use an Affinity Diagram (the KJ method) to narrow these beliefs down into keywords. We then went on two executive retreats where we narrowed down the keywords. Finally, we submitted the remaining keywords to our employees for a vote—resulting in selection of the six values enumerated above.
When we spoke among ourselves about deciding on shared values, one reaction was that it's not fair to try to impose values on people who in fact may not share them. Of course, if you carry this type of imposition too far you end up with totalitarianism—something I abhor. But here we are simply talking about six simple and very basic values that we want to share. The idea is that we should all share these values so that we can work together in a spirit of harmony and good will.
(1) Communication
It is not so easy for people to understand one another. That's precisely why we need to practice civil and courteous communication.
There are many reasons why we misunderstand:
- we don't share the same definition of words
- we are sometimes illogical in our explanations,
- we ignore background and peripheral issues, and so on.
And when I write "so on," I mean it literally—since the number of reasons we could enumerate is almost infinite. Nonetheless, good communication requires that we have a constant desire to understand others and to make them understand us.
If I sense that I am not being understood when speaking to an employee, I immediately stop and ask: "Do you understand? Please tell me what you have understood from my words." And, in the same way, I will interject to confirm my understanding of what someone has said to me: "So what you are saying is.......? Do I understand you correctly?"
(2) Teamwork
Companies are founded on teamwork. If you do all the work yourself, you don't need a company. And the essence of teamwork is "OK for me, OK for you." We need to apply teamwork not only in the work itself, but also in the decisions as to how to allocate work roles, and in a willingness to sometimes go beyond our roles, as we strive to maximum output.
(3) Trust & Trusting Relationships
These are easy to understand. Keep your promises; do your work correctly and in a timely manner; and keep doing this repeatedly—that's how you create trust. But notice that the key ingredient is time. You must do this again and again. Without repetition, you cannot build trust.
(4) Professionalism
Our customers look to us as professionals. When customers speak with us about the goals and significance of printed products, they expect to hear professional opinions and advice. At the most basic level, we must be able to provide valid advice about production issues, costs, and delivery times.
To be professional also means to continuing growing and developing without limit. You are not a professional unless you continue to develop. This is something we should always keep in mind.
We must not be satisfied without our current level, but must always work to move ahead in our jobs and in our station. While it is the company itself that works toward being a "vital, continuously growing and developing group," this can only be realized through the actions of each employee.
(5) Spirit of Challenge
As I've said, the company must strive to be a "vital, continuously growing and developing group." But notice that if you keep on doing the same things, you don't grow—in fact, you get weaker. So we need to cultivate a spirit of challenge, an eagerness to try new things. But when I explain this to people, they sometimes react as if I am burdening them with an onerous obligation, as if I am demanding: "You must do new things." And yet, the whole group of us at Obun Printing actually enjoys trying new things. Doing the same thing over and over again can become unbearable. Also, people like to stand out; they like to get the attention that comes when they do something new. We inherit this spirit right out of the DNA of the company's founder.
At the company level, the challenge is to provide new products and services, and to do what others are not doing. For each employee, the challenge is to move to a higher level and expand one's range. When employees take themselves to higher levels, they also take the company to a higher level.
Sometimes, the company itself may present a new challenge by pointing in a new direction. Employees can then take up this challenge and work toward its achievement.
(6) Discovering and Resolving Problems
When we identify a problem, we naturally begin to seek a solution. The search for a solution takes money and time; indeed, it takes considerable wisdom to be able to find solutions while keeping time and expense to a minimum. But the true difficulty is in finding the problems in the first place. Hidden problems are more dangerous than known ones, since they are more likely to explode into future crises. That's why it's important to find problems while they are still small. To develop our eye so that we can see problems that are still hiding. At Obun, we are using various case studies as a means of training our people in this area.
The basic approach is to look at each situation and think about how best to handle it. And, in particular, to think about whether there's a better way than the way we are currently doing it.
5. ISO Management plus "Spirit"
One of the essentials of ISO-based management is to "keep records." Indeed, keeping records is crucial when you want to look back at what you've done in order to decide what to do next. But I get the sense that there are some who view this as a chore: "we keep the records because we've been told to," or "we have to keep these records even though we'd rather not." I believe employees will keep records more willingly, and even with enjoyment, if, when looking at records, they get the sense that the records show the fruits of some very hard work, or they see that they have reached a point where just a little more effort will take them to the target.
Once a target is reached, we quickly get the urge to reach the next target. When we see that we have "just a little further to go to reach the target," we are spurred to put in the extra effort to get there. This spirit—"just a little further" and "on to the next"—is a very important thing. When we add this spiritual dimension to the rational methods of ISO-based management, we find that monitoring and recording are no longer rote practices. Instead, they can now help to motivate us and stimulate our human feelings. That's the approach to ISO that we take at Obun.
6. Declaration of the Obun Brand
At the April 2008 announcement of our business plan for the coming year, we declared that "our goal is to become a brand in the printing industry." Of course, you don't become a brand just by making an announcement; you do it by gaining recognition from the world. The declaration, therefore, is identical to saying "our goal is to become a company that is recognized by the public at large."
When we thought about what conditions we would have to fulfill to become a brand, we determined that in addition to fulfilling the usual requirements we would also need to have our own unique characteristics and products, and that these would have to gain recognition and respect from the world. In particular, we felt that we would need to do the following.
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(1) Communicate conscientiously with our stakeholders.
(2) Proudly deliver satisfaction and peace of mind to our customers.
(3) Deliver high-value-added products and services that are high in quality and that are backed up by original technologies.
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(1) Communicate conscientiously with our stakeholders.
To communicate means to get one's message across. All of us have had the experience of failing to get our message across—where the message is either lost or misunderstood. But we cannot do good work, and we can not build trust, when communication fails to get through.
In our case, our very business is the creation of communication tools. How embarrassing for us if we fail to communicate with our customers at the same time as we are designing communication tools for them. And if we are aiming to establish ourselves as a brand, then it's just obvious that we are expected to be "communication experts."
The word "conscientiously" here is intended to stress the need to focus renewed awareness on the type of day-to-day communication that we sometimes neglect. We need to communicate conscientiously if we wish to fully understand, for example, what our customers are feeling and what they are trying to say (even when they don't actually say it). And when it is we who are doing the talking, we show conscientiousness by speaking with true feeling and in a way that is easily understood, and by confirming that our listener has in fact understood us.
(2) Proudly deliver satisfaction and peace of mind to our customers.
Our first management principle is to promote the "prosperity of our customers." We must work in every way we can to deliver satisfaction and peace of mind. If we go about this work with pride, the results will be outstanding. And when we take pride in our work, we sense more strongly the significance of our existence. Doing work we can be proud of us—this should be part of the identity of each one of us.
(3) Deliver high-value-added products and services that are high in quality and that are backed up by original technologies.
The printing industry is traditionally a business that relies on physical things—on printing machinery, software, and so on. In other words, technological capabilities play a significant role in whether you win or lose. But in cases where your competitors have the same technological capabilities as you do, you end up engaged in price competition. And yet, price competition saps our strength, and is exactly what we don't want. Probably everyone in the industry wants to avoid it—and yet few have taken concrete action to get away from it.
This was a problem for us, too. It is true that from early on we differentiated ourselves from our competitors by offering translation, design, foreign-language compositing, copywriting, and other services upstream of printing. But at first we did not take any concrete steps to develop our own distinctive technologies. And yet, 15 years ago we started our multimedia development office and became interested in paperless expressive technologies. This was a turning point for us, as we focused on automation and developed the idea of "automated compositing." This was our first true development action. We expanded the department, and this in turn led to our development of server-based compositing—and to web business cards, the new product that resulted. Sometime later, we partnered with companies to offer blog composting services through their websites—a service that can accept orders as small as a single copy. And now this year (2008) we are about to offer a third web service. We refer to this new business area as "online publishing," and we intend to develop this into one of our core competencies as we move ahead.
Another important development we have come up with is "varnished printing." Ten years back, we acquired a printing machine that happened to be capable of varnished printing, from company K. At that time people were not yet thinking that printing machines could be used for non-print processing, so a machine that could do both inline printing and varnishing was very unusual. Even the manufacturer didn't know how to set the machine up to do the varnishing. When we asked for technical assistance, they responded by repeatedly criticizing our ideas. But discouraging words can sometimes be a blessing in disguise; in this case, they motivated our own technicians, who did their own research and devised an entirely different technical approach to varnishing. Actually the technology had already been available for 20 years, but no one ever talked about it. And so we stumbled onto it just by groping around.
Where conventional printed material is designed only for the eye, varnished printing also appeals to the sense of touch. So we succeeded in introducing a product that communicates not only through the eyes but also through the hands. We refer to the technique as "emotional-value printing," and have registered the name as a trademark. And now that we have developed the production technology, we have expanded our development into the area of varnishes themselves.
As an aside, let me mention that we are now doing varnished printing using a printing machine from company M. One day a technical director from the company paid us a visit, and he asked us to explain to him how we were getting our results—as he apparently could not understand it. The lesson here is that capabilities do not come from the machine itself. It is not true that everyone will get the same results if they have the same machines. Knowledge and expertise are the key.
On July 8, 2008, we applied for a patent for "erasable paper"—a paper medium that behaves like a whiteboard. This is our first ready-made product, and we are now working on distributing it to retailers.
7. Action Guidelines
The action guidelines outlined bring together the basic actions that led to our three brand declarations so far. Action is crucial; great values and grand thoughts are useless unless you also execute. These guidelines may seem fairly obvious, it's true. But the key to developing a brand is to maintain an environment where these guidelines are put into practice as a matter of course.
Action Guidelines
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(1) Put values into practice.
(2) Work to increase profits and reduce costs.
(3) Always be striving to grow as a person.
(4) Understand the situation you are in, and act and speak accordingly.
(5) Once something is decided, execute it
(6) Make proposals.
(7) Greet people warmly.
(8) Maintain a clean workplace environment.
(9) Keep things in order.
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Let me explain each of these in turn.
(1) Put values into practice.
Idealism alone has no meaning, whether applied to business activities or to life in general. Idealism provides value only when put into practice. It's easy to speak about our company's six values—the words are very straightforward. But the important thing is to putting them into practice.
(2) Work to increase profits and reduce costs.
Sales revenues are the source of profit. Sales revenues that do not lead to profit are meaningless, no matter how high. Profit is the source of all growth. And while it is important to improve the rate of internal production at our production facilities, it is even more important to reduce our costs. This is because facilities contribute to the growth of profits by reining in their costs.
The most onerous cost is that which arises when we need to redo something. It is imperative to improve to the point where we never need to redo a job. Customers cannot accept defective product, and neither can we.
(3) Always be striving to grow as a person.
A company grows only if its people grow. It is not surprising that we become more proficient and capable as we gain experience with our work. But what is really important is to grow fully as a person. After all, we do our work mainly by interacting with other people. The essence of work is to do our tasks while being respectful toward all those who are working with us. One's work will be meaningful and good only if it incorporates consideration toward others, a sense of responsibility, and a desire to grow as a person. It is not enough to simply improve one's capabilities; it's essential that we all work together to grow as individuals.
(4) Understand the situation you are in, and act and speak accordingly
Understand the situation you are in, and act and speak accordingly. Don't act out of habit, out of impulse, or in thrall to your emotions. Before speaking or acting, think about the impact that your words or deeds will have. Control your emotions, and rely on your reason.
(5) Once something is decided, execute it.
Once you have reached a carefully thought-out decision, the only thing left is to execute it. Decisions are not armchair theories; if you don't act on them, you won't see any result. To put it another way: If you don't execute, it's the same as if you never reached a decision in the first place.
(6) Make proposals.
Another way of saying this is: "Think for yourself." It's always easy to do what you're told. What's important is to think things out ahead of time, before someone tells you do something. Problems are often hidden from view. We need to develop the ability to see them anyway, with our own eyes.
(7) Greet people warmly.
We immediately sense the importance of greetings on those occasions when we don't receive one in return for our own. It hurts. It produces a feeling of emptiness. Failure to greet people can have a huge impact. That's why greetings are so important.
(8) Maintain a clean workplace environment.
People respect clean places, and make an effort to keep them clean. But when people are amidst dirt and disorder, they see no reason to be clean themselves and have no compunction about throwing their own garbage on the floor. That's why it's so important to maintain a clean environment. A clean workplace will lead to a clean product.
(9) Keep things in order.
Carefully distinguish between things that should be thrown out and things that should be retained. And keep all things in their proper place—so that it's never necessary to waste time looking for them. Not only does this save time; it also saves space.
8. Obun's Business Lines
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(1) Servicing and production for the information processing products
(2) Development and dissemination of online publishing.
(3) Development and sales of original products based on emotional-value printing
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Ten years ago, we were engaged only in serving the information processing and in multimedia development. But our business range has evolved over time. Indeed, we cannot say today that our current business lines will not change again over the next five years. In fact, I look forward to seeing how things evolve. But there is a common core to all of our businesses: Everything we do is hard to imitate. We are always striving to be unique.
Fifteen years ago, the production and printing of manuals accounted for over half of our sales revenue. Our customers included top-ranking manufacturers, and we were recognized as a manual production company. We also had a 60% share of the market for printing of financial analysis reports; as the first Japanese company offer overnight printing, we were able to work closely with global financial firms. We felt proud to be a part of the infrastructure supporting Tokyo's role as an international city of finance.
As of June 2008, manuals account for 15% of our business, and foreign-language printing for 33%. (As our name implies [Obun means "western writing"], foreign-language printing accounted for over 98% of our business between the time of our founding and 1985). But our unique differentiation remains evident—for example, in the fact that 13 of our 50 largest customers, by revenue, are foreign-based firms.
9. Human Capital Management
The capacities and limitations of a machines or a software application are clearly spelled out in its specifications. If a machine has a maximum cycle of 12,000, it won't run at 15,000. But people are a different matter. From a certain perspective, we can say that people don't have any limits. Of course, there are clear limits to a person's physical strength. But the more you train the mind, the stronger and more capable it becomes. If you treat people correctly, you can have a huge impact on individuals and even on entire groups.
It is often said that business managers must manage three different types of resources—people, things, and money. But the most important resource, by far, is people. You may have excellent machines and software, but they will not run efficiently unless you have people who are skilled at using them. And it is people, too, who decide how to use the money. Money can do great things, or it can be wasted; it depends entirely on the people.
And people, of course, are all different. A person doing a job that suits his or her personality will produce far more than when stuck in a job that doesn't. Getting the right person in the right place—this is crucial not only for the happiness of the person, but for the success of the firm.
Every day we put our philosophy of respectful management into practice in various ways. Here are some of the specific things we do in this area.
(1) Shacho-Juku (Encounter with the CEO)
This is a place where I can interact closely with employees. We hold discussions aimed at deepening their understanding about our values, and about some of the things I have written about in My Essays (Thoughts on Management). The communication can be fairly intense, since there are only three or four people present in each session, and the session lasts for a full 90 minutes. I hold these classes more than 30 times each year, and I've been doing it for over 20 years—beginning back when I was a senior managing director. We have three sessions with each group, so we have a good opportunity to get to know each other—and it's quite enjoyable.
(2) Personal Success Plans (My Success Plan)
This is our company's original personal-goal management system for employees on annual salaries. For each employee we set up three targets for the fiscal year—and we record the difficulty of achieving each target, and a description of how to go about achieving it. Six months later we have an interview to review the progress toward the targets, as we continue encouraging the employee to reach their goals within the year. Of course, it is essential that we do not focus only on the degree to which the target is reached, but also look carefully at the methods and approaches that the employee uses to get there. We also need to note whether success is achieved entirely by the employee's own effort, or whether it is to some extent supported by the unanticipated prosperity of our customers—we have to look at this fairly if we want to judge correctly. Since the results of these efforts affect the salary determination for the coming year, our employees and directors take this very seriously.
(3) Awards System and "Please the Customer" Campaign
Each month our Awards Recommendation Committee meets to consider recommendations for award winners. We offer the following awards: "Thank You," "Best Work," "Team Sales," "Improvement Proposals," "Forestalling a Problem," and "Attainment of Qualifications."
For our "please the customer" campaign, we vote on winners every month, and also present annual prizes. Prizes include the "MVP Award," the "Customer Acquisition Award," the "Stable Quality Award," and the "Most Valuable Department Award." Departments not eligible for these awards—such as General Affairs, Accounting, System Support, New Technology Development, and Quality Assurance—receive 10% of the award money in recognition of their crucial role in providing backup and support.
(4) My essays (Thoughts on Management)
I started writing essays about management and people in February 2000. I post these every month on the company's website. These essays reveal who I am, and anyone reading them can get a good idea of the kind of person who is running the company. We post in Japanese first, but eventually an English translation comes along as well. It seems that people doing Internet searches on "thoughts on management" occasionally find themselves at my blog and read the English version of my essays.
(5) Morning, Afternoon, and Evening Assemblies
These assemblies are a venue where I can speak directly to our employees. We hold them at three different worksites. I speak about last month's sales and capital investment, we report relevant news, and we remind people about issues related to our annual business plan. It's true that this is a one-way talk only. But it's an important venue both for me and for our employees, and I haven't missed an assembly since I took over the role of President.
(6) "Good Morning Emails" and Weekly Messages
I used to send two email messages every day to all employees ranked at supervisor level and above: a "good morning" message when I arrived for the day, and a "going home" message when I left. Naturally, some of the recipients would take the time to respond with a return message of their own. My purpose in sending such frequent messages was to encourage people to feel that I was close by. I was particularly diligent about sending these messages during times when business was bad. Today, however, I send a weekly message instead—where I include memos about what I've written in my essays, and reminders related to our business plan. Of course I also talk about the business plan at our morning assembly, but I continue to send the emails out just the same.
(7) "Boxed Lunch" Meetings
I hold one-to-one lunch-box meetings in my office whenever it seems necessary—a one-hour lunch, beginning at noon. The two of us have the opportunity to speak frankly about our true feelings, both pleasant and otherwise. While the effectiveness of these lunches varies according to the person, face-to-face encounters remain the very best way to communicate with someone.
10. Meetings
I participate directly in four different meetings, which I describe below. In addition, our Executive Vice President holds a weekly meeting about business activity with the heads of our various customer-related departments. Meanwhile, our department heads also hold their own morning assemblies and meetings.
(1) Directors' Meeting
We generally hold these every week, in my office. The meeting lasts for two hours, and includes lunch. There are only three of us, talking for two hours together every week, so you might think that we'd run out of things to talk about. But we don't.
(2) Financing Conference
Here we refer to financing charts prepared by the accounting department head, and look at the current status of cash, notes, and loan repayments. We also look at the movement of cash flow for current month and next 2 months.
(3) Management Meeting
These meetings are held over lunch, from noon to 2 pm, on days when we have a morning assembly. The meeting is attended by 13 people. In general, we begin by reviewing our progress relative to the yearly plan, and we then proceed to look at the status of three different projects. These meetings also serve as training for our next generation of business managers.
(4) Managers' Conference
This conference, held every quarter, is attended by all managers ranked as team leaders or above—about 40 people in all. It's essentially a question-and-answer period where we compare actual results against our business plan. Before the meeting, participants prepare by reading reports submitted by each department—so that they will be ready to respond to questions in front of all those attending. After all departments have finished their presentations, our finance officer presents an explanation of our quarterly balances, and then I conclude with a few comments. We make appropriate changes to the conference each year to keep it interesting and meaningful.
At about the same time in the calendar, we also present our quarterly business report to the relevant financial institutions. We compare results against our plan, and against the previous year's performance, and we explain why the numbers are moving the way they are.
11. Training and Development
The year 1989 was also Year 1 of Japan's Heisei era. At Obun, we also defined it as Year 1 of our "training era," as we completed the construction of the training wing inside the Obun Retreat & Lodge facility in the Fujimi Kogen resort area in Nagano. This is lovely place for training—located two hours from Tokyo, at an altitude of 4260 feet—a place where we can revive ourselves, listen to lectures, engage in lively debate, and thereby educate and inspire one another. A portion of our training program continues to be held at this site.
Here is an overview of the training that we carried out in 2008.
(1) Shacho-Juku (Encounter with the CEO)
(2) Junior Board training camp
(3) Management finance (reading financial charts)
(4) Aoyagi coaching school (outside training)
(5) Training for department heads
(6) Departmental training
(7) Training about our personal-information protection management system
(8) ISO training
(9) Tomatsu seminar (outside training)
(10) Training sponsored by EPC-Japan
(11) Self-training, and earning of qualifications
Our basic approach is to provide "the necessary training to the necessary people." Our in-house training is implemented fairly, if not equally. And most of our training is designed by us, because we want it to meet our specific needs. We believe that personal growth leads to company growth, which in turn means that training should never stop.
12. Affiliates: A Brief History
Our company established Obun Hawaii in 1970. For the first five years, Obun Hawaii was run as a joint venture that relied on imports from Japan. Upon acquiring printing facilities, it became our wholly owned American subsidiary. It subsequently grew into the third largest printing business in Hawaii. In 2002, the employees of the company bought the firm in a management buyout.
In 1971 we started our second affiliate, currently named Five Cs. We first called it Obun Inter-Europe, as our intention was to form a joint venture with the British firm Intereurope Ltd. for the purpose of developing an information service for automobile manufacturers. Although we started this effort, we did not progress to the joint management stage. The company's business focus eventually changed, and it is now a producer of IR tools, engaged in the creation of annual reports and disclosure tools for listed companies.
In the 1980s we established several additional affiliates. First, we started Obun London as a local subsidiary for the purpose of providing Japanese-language printing services to translation firms and local Japanese branches. We also established High Technology Communications to provide technical writing services, principally in the area of software documentation. And later we established Obun Singapore, a sales company, with the intention of entering into a joint venture with an Indonesian concern. Finally, we started up a San Francisco representative office, to gain a foothold on the American mainland.
In April 1999 we established Wincubic in Hawaii, for the purpose of publishing a free local paper and running a Hawaiian portal site.
We made several other efforts along these lines, as well. For example, we purchased land in Indonesia with the aim of building a production facility, a project we abandoned when we couldn't agree on investment shares. And for a while we were recognized by the government of Tahiti as an officially approved printing company in that country.
Today, only three of our affiliates remain: Five Cs, Wincubic, and High Technologies. Obun holds an 85% stake in the first two, and a 30% stake in High Technologies.
Looking to the future, we are open to developing new business alliances but we do not intend to establish our own overseas production bases. Even so, we recognize the advantages of having access to such bases. A distinctive feature of the printing business is that the compositing processes leading up to the final product are almost all digital, while the product itself is physical. Once you've finished processing the digital data you can instantly send it anywhere in the world for printing. And, of course, you can minimize transport costs and expedite delivery if you print the product in the location where it will be consumed. So I think the right way to go about this would be to build partnerships with companies that are based in the areas where the product is to be used.
13. Management Goals and Sales Targets
It is now almost 20 years since we began producing business plans, and yet our targets still seem to change rather markedly from year to year. Part of the reason is that the world around us is changing rapidly. But it is also because every year we have different things that we want to do, and different things that we feel we need to do.
How should we respond to the changes in the world around us?—this is an important topic that calls for much debate. But even with all the changes going on around us, there are still specific things that we want to do. This has always been our thinking. We have always worked to be ourselves, and to go where we want to go.
If you go with the flow for a year or two you may not notice any big changes, but within five or six years you most certainly will. I've been watching these changes for all of the 17 years that I have been president.
14. Risk Management
(1) Diversifying Sales
At one time our 10 top customers accounted for over half of our sales revenue; and then in a very short period of time several of these companies drastically reduced their purchases. This was a very difficult experience for us, and one that we do not wish to repeat. For that reason, we now give very high priority to risk management. After all, a customer may suddenly decide to reduce purchases at any time at all, through no fault or error of our own. You have to anticipate this type of eventuality and build it into your management.
(2) Strengthening our Compliance System
People are sometimes tempted to do things they shouldn't. So we need to have a system that makes it difficult for people to break rules, even when they are tempted to do so. We also carry out periodic in-house training to help people resist any temptations to stray from the path.
(3) Maintaining the Security of our Information Systems and Net Services
At present, we feel that the best way to ensure the safety of our internal information is through the use of server-based computing. Employees work at thin-client workstations (we have over 100 of these), while all data is stored in a central server. Since data is held by the server, employees cannot copy it out to external memory from their workstations. And since the workstations themselves have no memory, there is no risk of a security breach if the workstation computer is lost or stolen. We deployed this system in January 2006.
Of course, our business now includes the provision of net services, and these also must be operated securely. We are implementing a number of effective policies to ensure safe operation of these services.
(4) Disaster Prevention and Response
Obun has been conducting fire evacuation drills for over 20 years, but in recent years we have also become concerned about the possibility of a large earthquake. To minimize potential injury to our employees, in 2006 we completed structural enhancements to further strengthen our building's ability to resist an earthquake.
(5) Health Care
In 2007 our company began paying in full for influenza vaccines for our employees. We want to do everything we can to prevent outbreaks. Flu infection not only impacts those who become ill; it also leads to absences that reduce our productivity, and it causes concern, or worse, to our customers.
In 2008 we installed AEDs (automated electronic defibrillators) at our three worksites, enabling us to provide rapid assistance to anyone in the vicinity—employee or otherwise—who may need it.
We also provide health checks for all of our employees, but there is still room for improvement in the provision of counseling and other measures to monitor and support mental health.
15. The Workings of our Quality Assurance Department
Our QA Department has three main tasks. First, it implements 1S0 9000-series quality management. Second, it implements ISO 14000-series environmental management. And finally, it works to protect the security of personal information in a way that maintains our "Privacy Mark" accreditation.
In 1998, Obun became the first company in the printing industry to receive ISO 9000-series accreditation. In 2008, in accordance with the goal of delivering "satisfaction and confidence to next processes and to customers," we adapted a new "improvement rate" index for assessing progress in reducing defects and problems—setting our first target at 60% relative to the preceding year. In five months we had exceeded the target, achieving an improvement rate of 87%.
We have also made a true effort to carry out activities aimed at reducing environmental degradation in accordance with the ISO environmental standards, although my honest opinion is that the results have not been earthshaking. Still, our considerable success in reducing our defect rate, as I mentioned above, has resulted in less wasted energy and less use of paper and ink—and this, at least, is a recognizable contribution to the environment.
To maintain our Privacy Mark accreditation, we have put policies in place to ensure that our personal-information protection management system continues to meet the requirements. And we continuously train our employees so that they understand these policies, and are aware of their significance. Indeed, the most important activity we can carry out in this area is to raise the consciousness of our employees, so that they will always take due care.
16. Independent Management
(1) Partnerships and Coalitions
If it were possible for the company to do everything itself, that would be lovely—because then you could make all the decisions on your own. But this would also mean that you would need to assume all of the risks. And if you are handling all stages of an enterprise, you will also have to stand alone when defending it.
Consider our blog-printing web service, for example. Our company has expertise in server-based compositing, but we do not have experience in servicing web customers. So it makes sense for us to leave the customer servicing to our partners. By working with partners who offer their own special capabilities, we can reduce our investment and be more responsive to our customers.
If a partnership (investment partnership or working partnership) offers a true win-win, then I'm immediately interested in trying to do it.
(2) Membership in the EPC
The EPC was established about 30 years ago as a coalition of 16 printing companies in Japan. It operated as a non-incorporated affiliation until last January, when it registered as a corporation. But it was always more than a simple affiliation; EPC members have maintained a deep understanding of the each other's businesses and are strongly tied by trust and mutual interest.
The EPC is comprised of an Administrative Section, and Executive Sales Council, a Production Section, a General Affairs section, and numerous lower branches. It convenes more than 30 conferences each year, where members inspire one another by sharing information and technologies.
17. The Shape of Management to Come
(1) Self-Driven Management
Self-driven management rests on the idea that employees understand the management principles that are the core of all of our business activities, and that they share the values implicit in these principles. Self-driven management is realized when each employees understands his or her own role, and is able to act appropriately to achieve the agreed-upon targets without needing to be commanded by others.
(2) Three Crucial Capabilities
First, let me point out that, when talking about crucial capabilities, I am referring only to production work and only to Obun Printing. I do not mean to imply that these remarks have universal relevance; they apply only to my company.
Most people would think that the first crucial capability would be salesmanship. I used to think this myself. But one day I realized that attractive and appealing products practically sell themselves. Just put the product in a place where people can see it or touch it, and they will buy it without prompting. And where can we get such products from? We get them by having a good product plan. In other words, the important skill is the ability to come up with products that people find appealing. So the first capability on my list can be called product planning capability or product power.
Now, if a product you are selling can be made by your competitors just as easily as by yourself, then the battle comes down to pricing. But receiving orders for your product simply because it's the cheapest—this does not boost employee morale, and cannot be a source of pride. On the other hand, suppose the customer tells you that you are the only company capable of providing something that they want. Well, this is wonderful to hear, and it also means that you will be able to sell your product at a fair price. Being the only one that can do something—this to me is the crucial focus for advancing one's business. And so, the next capability on my list is development capability—the ability to develop technologies, and the ability to develop products and services.
Another important capability is capability in production technology—where "production technology" encompasses both manufacturing technology and mass-production technology. A production process that seems to perform well on the workbench is of limited value if it fails to perform in the same way when you start mass production. And a process that does not allow for product differentiation at the manufacturing stage will land you back in the world of price competition. The point is to employ the company's expertise to deliver performance that exceeds the client's requirement.
Yet another important capability is capability in production—the ability to consistently produce high-quality product. To achieve this, operators must take pride in their work. Only through pride and dedication can quality problems be averted. Capable production eliminates all wasted effort and consistently and economically delivers high-quality output.
When we look back at these various capabilities, we see that all of them involve people. That is, all of them are driven by employees. This points to the crucial need to raise both the latent and manifest skills and capacities of our employees. And this further implies that we also need to raise our organizational capability and cooperative capability, since employees can only realize and leverage their skills by working in mutual cooperation.
And so finally we need management capability so as to unleash and leverage all of these other capabilities and to lead these skilled, cooperating people and these leveraged capabilities in the right direction, and to provide management skills equal to the potentials of a growing and developing group.
In my heading above I mentioned "three capabilities," but it seems I have enumerated quite a few more: management capability, planning capability, development capability, production technology capability, production capability, and so on. If I have to give a list of only three, I would say: employees' capability, organizational capability, and management capability.
18. The Role of the President
The heading above sounds like a title you'd find in a bookstore. Many leaders are actively publishing books full of such wisdom. But here I will speak only about my own personal thoughts about my role as president. I have not done any investigation into what other president's have said or written; these are my own ideas. And I fear that they are probably not very earth-shattering ideas at that, so please don't expect too much as you read through them. I look at the president's role from three different angles, as follows.
Relating to the direction in which the company should move...
(1) Determine the direction of growth.
(2) Continuously seek "blue ocean market."
(3) Continuously seek to identify the type of work that best reflects who we are.
Motivating employees...
(1) Encourage employees to maintain the company, develop it, and build it into a brand.
(2) Stimulate the desire to grow.
(3) Develop employees into people who pursue the essentials.
(4) Develop employees to find joy in ingenious solutions.
(5) Develop employees into people who set an example by taking the initiative.
(6) Instill values.
(7) Maintain personnel system that makes the best use of people.
Personally...
(1) Gather meaningful information, and use it as the basis for decisions.
(2) Continue to develop sensitivity.
(3) Give support, and express gratitude.
(4) Groom successors.
19. President's Personality
What kind of personality makes for an effective president? I do not think I have an ideal personality for the job, but I will simply write a list of the traits that an effective president needs and that I would aspire to myself.
(1) Character
Bright, resolute, curious, positive.
(2) Abilities
Able to read relevant financial charts. Able to understand the strong points of the company's original technologies. Able to express himself or herself well both verbally and in writing. A skillful communicator.
(3) Traits
A desire to grow. Humble. Empathetic. Capable of enjoying life. (Ideally, should have some outside interests.)
20. The 1260 Plan
At our kickoff meeting in April 2008 we brought out our "1260 Plan", a plan that shall have a major impact on the company's future direction. I can't go into much detail about it yet, but what I can say is that the plan concerns the selection of new mainstays for our company's business. It concerns the ways in which we shall reach out to the market as we continue working to build our brand. In short, it's a business reform plan.
Our current business can be called "information processing." But our plan also calls for development of emotional-value printing and online publishing. The "12" in "1260" stands for the year 2012. As for the significance of the "60," I shall wait until a later time to explain it. But as you can guess from the "12," the plan concerns a company reform policy to be carried out by the year 2012.
Instead of just producing product in response to orders, we may also be selling ready-made goods. And we may be giving more attention to the development of internet-based businesses aimed at large numbers of general consumers. And we may be taking up the marketing of data in addition to our current mode of marketing a physical product. In general, we shall be thinking more flexibly about building new businesses that suit our specific capabilities, and that are not necessarily bound by our current business patterns. But in order for these efforts to become a reality, we will also need to develop our capabilities in numerous areas. And we are also hoping to become a leader, within our field, in design registrations and patent applications.
21. Preparing for Globalization
In the past Obun Printing had an International Department, and about 10% of our sales came from exports. For various reasons, however, we are now exporting only to our Hawaii subsidiary. Nevertheless, our current goal of expanding our online publishing business means that we must act on a global scale. But globalization, for us, does not mean that we will establish overseas facilities or that we will export printed materials that others could produce just as readily as we do.
In cases where printed material is to be the final product, our role will be to generate the print data. We will then send the data to a partner overseas, and the partner will do the printing and binding. That is, our overseas partners would handle manufacture and marketing, and our role would be to develop the systems and provide the technologies.
Let me just add a few words about "generate the print data." Actually, this is more complicated than it sounds. The source data will be input by an overseas user, which means that we will need to provide a suitable user interface. And of course, we must remain in communication with our overseas partners as we proceed to produce the product. And it's likely that we would have to give due consideration to the characteristics of the overseas language when we carry out this work. So we will need to be able to communicate effectively in the foreign language throughout the entire process.
In the past, the sales staff of our International Department needed to have some foreign language ability, at least in English. But in the scenario I just described, it will be our overseas partners who do the sales. So now it will be our engineering staff who will need foreign language ability. We cannot expect to find interpreters knowledgeable about the technologies we have developed ourselves, so we will need to handle the communication on our own. Our engineers will need to be capable in foreign languages if we are to successfully globalize our business. For this reason, we have already started in-house language training, with the aim of beginning operations some five years down the road.
AFTERWORD
I wrote the above reflections over a period of four months. I must say that the effort did not feel particularly difficult—probably because I was writing about things I regularly think about, and regularly talk to employees about. Although I have tried to write in way that is easy to understand, I am not confident that I have fully succeeded.
I also worry about whether the content lives up to the title. But please understand that I have earnestly recorded my true thoughts and feelings. Everyone has their own way of seeing the world, however, and I have no way of knowing to what extent the managers who succeed me will carry on with my ideas. But I do hope that they will continue to build on the company's appeal as an earnest, slightly impertinent enterprise that finds its own way without copying others. That's my request to our next generation of managers.
I wrote Version 1.0 during a brief time of respite, and now I write Version 2.0 after having gained some new maturity. My mental attitude is really quite different this time around. I doubt that I shall be writing a Version 3.0, but I wonder with some anticipation what would go into it if I did. In any case, I believe that "change is growth," and I hope you will accept these musings accordingly.
