Matsushita Perspective on Business
Perspective on Business
Perspective on Life
Follow The Laws Of Nature

Obey the laws of nature: This is the very core of Matsushita Konosuke's business philosophy. Successful business is ordinary, normal business, selling at a price that allows a fair margin or profit, collecting payment on time, and so on. In setting the price of a product, for example, one has to seek a natural balance between the profit due to the manufacturer and the capacity of the customer to pay. If a product cost $1 to manufacturer; it ought to be sold for $1.10. Selling under cost as an advertising gimmick, for example, or at an excessively high price in hopes of making a quick profit, constitute bad business. Clever strategies and careful calculations may be important, but simple universal laws must always be observed. 


Put Up An Umbrella When It Rains

When asked the secret of successful management, Matsushita Konosuke would often reply with a question of his own: "What would you do if you got caught in the rain?" Invariably, the answer would be "Open an Umbrella." The point was that you do what commons sense dictates. You sell at a price that will make profit; you make sure you collect the proceeds of the sales; when your products don't try to force sales by manipulating prices or quality. If there is a formula for business success, he felt, it is operating in this straightforward, down-to-earth way, as simply and sensibly as opening an umbrella in the rain. When it comes to business, however, a surprising number of people let selfish motives override their commons sense and they wind up wandering around unprotected in the rain. 


A Leader Should Have Vision

Leaders in any field, Matsushita thought, should always have a clear vision of what they want to do, and only then approach others for support or opinions. "Simply acting on the advice of others without any ideas of your own," he said, "is not leadership." Seeking the input of others is very important, of course, but only if the leader maintains a firm sense of authority and ultimate control. A leader who serve as a firmly fixed axis can most effectively mobilize others and maximise the results of what they do. 


The Public Is Right

Because effective decision making is one of the most crucial aspects of business management, all managers worry about what yardstick to base their decisions on. For Matsushita Konosuke, the most secure foundation for decision making lay in prevailing public opinion. Of course, he knew that the majority was not always right, as history has repeatedly shown. But in the long run, he felt society has an almost transcendent sense of good judgement. As has been wisely observed, you can fool all of the people some of the time, and some of the people all of the time, but not all of the people all of the time. 


A Company Is A Public Institution

A few years after starting Matsushita Electric, a tax official came to investigate the accounts of the rapidly prospering company. The official presented his case to Matsushita Konosuke arguing that the company's profit were greater than what had been declared in its tax statement. After a couple of sleepless nights mulling over the matter, Matsushita concluded that, ultimately, the money did belong to the country. The next day, he promptly told the tax collector to collect whatever amount was outstanding, and the investigations came simply and smoothly to close. Later Matsushita realised that a company which pools massive amounts of capital, takes up great tracts of land, and employs many people is, though ostensibly a private enterprise, fundamentally a public institution. It was this line of thinking that led him to the further conviction that an enterprise is beholden to society, making it even a kind of crime to run a deficit. 


You Have To Like Your Job

The crucial difference between a successful businessman and a poor one is that the former loves the work of business management and the latter does not. It has long been said that "What you enjoy, you do well" and Matsushita Konosuke made this rule his guide. If you like your work to the point that you think it is your natural calling, you'll be innovative and flexible, confident in making decisions and acting on them, and successful as you move toward your goals. If, on the other hand, you think management is a worthwhile occupation but are only in the job for wanting something better to do, or inspire you, and it will be difficult for you even to become confident and successful in your work. 


Dreams Should Be Shared

As president of Matsushita Electric, Matsushita Konosuke took every opportunity to inform his employees of his plans and dreams for the company's future. These included the Five-Year Plan announced in 1956 aimed at quadrupling sales and the project begun in 1960 to institute the five-day workweek by 1965. Most companies at the time were afraid to publicise such plans-to show their cards, as it were-for fear of the information leaking out and being taken advantage of by competitors. Fully aware of what the consequences might be, Matsushita Konosuke chose to keep his employees well-informed, because he wanted them to share in his dreams for the company, and because he believed it was simply the proper thing for the proprietor of a business to do. Matsushita Konosuke became known as the "manager who talked about his dreams," and it was those dreams that directed and inspired the people who worked for him. 


Provide Direction and Moral Support

Looking back over his career later in life, Matsushita Konosuke recalled how he had been ill quite a bit of the time and had been forced to leave the actual running of the company to his staff, providing advice, encouragement, and support from his sick bed. After the end of World War II, the fundamental equality of a company president and his employees as human beings became established with the spread of democratic values. Matsushita changed his approach to personnel management to reflect that equality: when handling down an order, he did so in the spirit of a polite request rather than a command. The product of this approach was a feeling of respect and gratitude for the labors of the employees, that might be expressed by saying "That was a good job well done!" and offering a cup of tea or other refreshment after a successful accomplishment. A president could not just sit passively by while his staff toiled, moreover; he had to carefully guide the company according to sound business principles and with a strong sense of mission. Although Matsushita could hardly go around offering such personal gestures and words of thanks to each Login of his staff, the idea of a company president as the compass for the enterprise and the "server of tea" was at the root of Matsushita's view of the role of top management. 


Stick To Fair Prices

In the days when Matsushita Electric was just a small local workshop, Matsushita Konosuke would go out to sell its products himself. Some of his customers would press him to lower his prices, but in the face of their persistent requests, he would recall the faces of his young workers sweating in the factory in the summer heat, and he would hold his ground, zealously defending his prices by saying: "Our prices are based on normal calculations taking into account the products themselves and the efforts of the people who have toiled to produce them. Cutting these prices would be as painful as cutting my own flesh." Lowering prices under pressure from customers, he felt, was bad business practice. Matsushita Electric has always endeavored to set prices in accordance with what society at large considered fair and reasonable. 


Business Is Do-Or-Die

Matsushita Konosuke would not tolerate the notion that business was a matter of timing or good fortune. "Business," he would say, "is not a matter of the lick-of-the-draw; it is a sword fight. In a real sword fight, one slip-up and you've lost your head. It's the same in business. Certainly these are times when you win a little and times when you lose a little, but to think that you can succeed by persisting in a one-step-forward-one-step-back approach is fundamentally mistaken. Business does not go badly because of timing, luck or any other external factor. You must always see problems as arising from some fault within your own style of management." Like the samurai, who carried swords to be used when their life was on the line, Matsushita believed a businessman's total responsibility for his actions on the job. 


Products Are The Progeny of Labor

In addition to his extraordinary passion for manufacturing, Matsushita Konosuke kept track of the products his company made after they were sold. "The goods we make here every day," he would tell his employees, "are like children we raise with tender care. Selling them is like seeing those children grow up and go out into the world. It is only natural, then, that we should be concerned about how they are getting on in their lives, and so go and see for ourselves." He believed that maintaining this concern for what you produce is the first step toward building an ordinary supplier-client relationship into a stronger link based on mutual trust. 


Complaints Strengthen Bonds

Most of us would rather receive a compliment than a complaint or have merits rather than faults pointed out, but in business Matsushita Konosuke saw things differently. "Naturally I'm delighted when a buyer expresses compliments," he would say, "but I'm just as pleased to get a letter of complaint." His reasoning was that if customers didn't bother to complain, that meant they had already decided not to buy any more products from your company. If, on the other hand, they expressed their dissatisfaction, even to the point of seriously considering going elsewhere for their needs, they were still interested. As long as you are sincere, treat their complaint with respect, and root out the cause of the problem, in the end it is your good faith they will reLogin. The relationship will be that the stronger for it. Far from being an attack, therefore, a complaint should be treated as a valuable opportunity to strengthen ties. 


Transparent Management Fosters Growth

Managers, especially sole proprietors, all too often treat company assets like their own personal possessions. Matsushita Konosuke made a point of separating his personal accounts from those of the company even when he had no more than 10 employees working for him. As the company grew larger, he made it a regular monthly practice to announce the details of the company's accounts for all employees, from top executives to the lowest apprentice to see for themselves. "starting that practice", he reflected years later, "made the atmosphere in the workshop much brighter. Seeing their efforts directly reflected in figures before their eyes seemed to afford a sense of satisfaction and purpose in their work." Needless to say, this sense of satisfaction was directly linked to the company's subsequent growth. Matsushita, therefore, came to believe that openness in management practice is crucial to a business that seeks to grow. 


Dam Management

In theory, an enterprise has to be growing at a healthy, steady pace at all times; but in reality, various economic factors can inhibit such growth. Matsushita Konosuke believed, however, that continued progress is possible with the right approach, such as by employing what he called the "dam method" of management. 


Bad Times Had Their Bright Side

Most businessmen are happy as long as the economy is growing, but when recession sets in they grumble. Matsushita Konosuke had an idiosyncratic view of the meaning of good times. During prosperous times," he would say, "you move along at a gallop; in times of recession, you saunter at a leisurely pace. When you're galloping, you haven't got time to look around you, so you don't notice any problem. But when your pace slackens, you can see everything in all directions, and if you notice something wrong you have time to fit it." In other words, even a slump has its merits. When sales are down because of a sluggish market, you can attend to after-sales service more throughly than you could before, or perhaps put more effort into training personnel. If you are willing to make this kind of effort during the bad times, even a recession becomes a rare and welcome opportunity. 


People Are Diamonds in The Rough

Poor health prevented Matsushita Konosuke from playing the role of active executive leader of his business. He had little choice but to entrust the day-to-day operations to his subordinates. His company started out as a small, unknown workshop, hardly the kind of organisation to attract outstanding talent. So Matsushita put immense effort into personnel training and development. "However much you rub it," he reflected later, "you can't make a diamond from an ordinary stone. But if you have a diamond in the rough, you can draw out its gleam with careful polishing. And depending on how you polish it and cut it, you can make it sparkle and shine in various different ways. People are just like uncut diamonds; they each have the potential for various kinds of brilliance, qualities which, if polished right, will shine radiantly. It is very important for personnel managers to have a proper grasp of this concept, and to attempt to draw out the special strengths of each employee." Understanding the great potential of human nature us at the heart of successful development of human resources. 


People Before Products

Right from the very early days of the company, Matsushita Konosuke would often instruct his employees thus: "If someone asks you what Matsushita Electric produces, tell them we produce people, and only then mention that we also produce electrical goods." He always believed that the measure of a company was the people who worked for it, that no enterprise could succeed if its employees did not grow as human beings, and that business, first and foremost, was about cultivating human potential. No matter how much capital, technology or equipment an enterprise boasts, it is bound to fail if its human resources are not developed. And Matsushita did not mean merely improving employees' technical know-how or sales skills, though these are certainly part of the concept. For him, the true aim of personnel development was to cultivate individual self-reliance and responsibility, to guide employees to an understanding of the value and significance of their own work and of the obligation of the company to contribute to society. To make them, in other words, productive, conscientious Logins of their industry and their society. 


Trust Your Employee

One of Matsushita Konosuke's basic tenets was trust. The first products of Matsushita Electric were electric sockets molded from insulation material. At the time, the knowledge of ingredients of this insulation was an industrial secret. Lest competition grow intense by letting such crucial technology leak out, the owners of most factories kept the formula for insulation a closely guarded secret confided only to family Logins or trusted colleagues. Once he and his co-workers discovered the way to make insulation, however, Matsushita shared it with all the people in his employ, down to the newest shop-boy. He reasoned that keeping things secret meant extra unnecessary worry, was troublesome on the practical level, and above all inefficient. While some of his fellow manufacturers warned him the dangers of betrayal, he eventually discovered that, on the contrary, the morale and loyalty of his employees soared when they were entrusted with vital information and important tasks to perform. This experience convinced Matsushita that people rise to a task only if you trust them, and that even on the rare occasions when your trust is betrayed, it is best to just let it pass. Matsushita was widely known as one who completely trusted his employees, leaving them to carry out tasks with complete confidence in their abilities and judgement.  


Subordinates Can Be Your Superiors

Matsushita konosuke was often called the "God of Management" for his skill not only in business but also in handling people. Matsushita insisted there was no special secret to his success, that he simply did the obvious thing in the usual way. If something was peculiar to his approach, it could be revealed by his remark that "To me my subordinates have always seemed so much better than myself. In my eyes they are all quite impressive, without exception better educated and more talented than I am." As company president there were times when he had to reproach an employee, but he confident that he would be thinking as he did so how that person was superior to him in various ways. For Matsushita Konsosuke, who started out without adequate education and suffered chronic illness, this humility was one of the cornerstones of a successful philosophy of personnel management. 


Focus On Strengths

There are two types of people: those who concentrate on other people's weaknesses and those who pay most attention to their strengths. Matsushita Konosuke used to say that, as a manager, focusing on people's shortcomings quickly gave him a headache. When you only look at weaknesses, every person you encounter appears inadequate in one way or another, and you end up vacillating about assigning anyone to the job or task you have at hand. Subordinates, too, are bound to be unhappy if all you ever notice is their failings. "I always tried," Matsushita said, "to notice people's strong points seven times out of 10 and their weaknesses the remaining three." By paying more attention to employees' strengths, he believed, he would be more likely to think of ways to put those strengths to good use. The important thing is to keep your assessment of others' strengths and weaknesses in proper proportion. 


Keep A Firm Grip On Loose Reins

When it came to assigning jobs, Matsushita Konosuke focused on his employees' strong points. Even if a person might not have much experience or distinguished record of performance, if he seemed to have the aptitude for the job, Matsushita was ready to entrust it fully to him. This approach fostered an abundance of experienced and reliable personnel at Matsushita Electric. One of the reasons behind this approach was Matsushita's own poor health, which, right from the start of his business, forced him to rely heavily on others in the day-to-day operation of the company. But though he easily delegated work and authority to others, he did not thereby abdicate responsibility for what was going on under him. He expected to receive reports about particular projects at appropriate intervals, and he would interject further orders or advice when he thought necessary. That was the duty of a person in a position of responsibility, he believed. Forced by chronic bronchial illness to rest for extended periods, Matsushita quite often summoned his subordinates to his bedside to report on the business, in response to which he would give new instructions or offer help in problems they were encountering. He called this keeping "a firm grip on loose reins"; it was Matsushita way of distributing authority and nurturing the talents of his staff. 


Be Realistic About People

When the staff of Matsushita Electric had grown to about 80, it came to Matsushita Konosuke's attention that one of his employees had committed a financial indiscretion. Being a person with a deep aversion to the corrupt or unclean, Matsushita worried considerably about how he should deal with the matter, to the point it kept him awake at night. Then he thought to himself: "I wonder how many people there are in Japan whom society calls criminals. If we include all those who have committed only minor misdemeanors, there must be about a million. If that's what it's like on the national scale, it's hardly surprising that a company of 80 people should have at least one dishonest employee. It's asking too much to expect that everyone we employ will be totally upright and virtuous. If I can't accept that some will succumb to temptation, I won't be able to use people to their full potential." With that realisation, his anxieties vanished and his personnel policies thereafter became more aggressive. 


An Employee Is A "Client"

With the wave of democracy that swept Japan after the war, labor unions were formed throughout industry, and at Matsushita Electric, too, there were union marches and rallies to press various worker demands. Watching these demonstrations, Matsushita Konosuke was reminded of the old saying that "to employ can be trying, but looked at from a different angle, all these people are like clients, I must treat them with the utmost care. Clients generally expect too much, but if you want to do business with them, you don't think of it as too much; you thank them for their patronage and do what you can to keep it." Reasoning in this way, he not only eased his anxiety over the difficulties of working with the labor union, but even decided to avoid thinking in terms of labor versus management. He preferred to deal with his staff and employees as co-workers, in fact, as people whom he served. In the end, it was the truth of another proverb that he fell back on: Soliciting the service of others is the same as serving them. 


Consulting Is Better Than Ordering

When as company president, Matsushita Konosuke had orders to give a subordinate, he was known for broaching the topic as if seeking advice or offering a suggestion. In other words, instead of simply saying "Would you do such-and-such," he would say something like "I've been thinking we could do such-and-such this way; what do you think?" or "Would you undertake this job?" thus making this subordinates feel free to present their own opinions and suggestions on the matter. The result of this approach was that his staff would undertake assignments as if on their own initiative. People display their best abilities, he found, when they are working on their own volition and responsibility. Matsushita's style of personnel management and training was grounded in his firm grasp of these subtleties of human nature. 


Don't Imagine "Impossible"

Henry Ford once remarked that the smarter the engineer the more likely he was to say that something couldn't be done. Matsushita had a similar idea about the connection between knowledge and innovation: "We speak of the shortcomings of the purely intellectual approach, but this refers to our wariness of half-baked theories that can prevent us from proceeding to a practical solution. If necessity is the mother of invention, then simple, unaffected determination is its father. Even when everyone around you say it's impossible, if you step back and rethink your task in the simplest possible terms, free of the noise of over-erudite and preconceived notions, often the solutions will come to you, out of the blue, so to speak." For this reason, Matsushita's own lack of formal education was a blessing in disguise, allowing him to see to the heart of problems free of the constraints of academic or unsubstantiated ideas. 


Small Companies Have The Advantages

"The bigger the organisation," Matsushita Konosuke believed, "the harder to improve its efficiency. The organisation where efficiency is the most difficult to improve is the government. It's not that public servants don't work hard; it's that the environment they are part of prevents them from working hard. Surrounded by conditions that obstruct their efforts, the fall into an attitude of pessimism." Large companies, he felt, have the same problem. Small enterprises would soon be out of business if pessimism set in, and there is much more freedom of initiative and activity. Companies with 20 to 50 employees enjoy a responsive, personalised environment in which it is easy for each person to understand the personalities as well as the work being done by the others. Matsushita felt that such companies could attain 120 percent performance from their employees. 


Start On A Clean Slate

Sometime in the early 1960s, when Japan was being pressured to open up its markets, a certain Japanese auto manufacturer asked Matsushita Electric to lower its prices for car radios by 20 percent, saying it was necessary to cope with increased foreign competition. At first glance this seemed a thoroughly unreasonable request, but for the sake of the Japanese automotive industry, Matsushita Konosuke decided he must do his best to lower the price. The problem was that a 20-percent price cut on a product that until then had been making only a three-percent profit would put the company way in the red. At that point, Matsushita directed his engineers to go back to the drawing board and completely rethink the design until they came up with a product that satisfied the customer's needs and still cleared a reasonable profit for the company. In a few months, they filled his order. When circumstances call for changes, it is usually better to go back to the drawing board rather than trying to retouch something you have already produced. 


Management Is Perpetual Creation

For Matsushita Konosuke, business was a creative activity on a par with the fine arts; it was a process of producing something valuable out of nothing. You start with an idea for an enterprise. Then you hammer out a basic plan, raise the necessary capital, and put together the necessary facilities and equipment. Finally, you hire employees, develop a line of products (or services), manufacture (or provide) them, thereby making a contribution to society. Moreover, each area of management has its own mode of operation, and anyone hoping to succeed in business must be able to adapt those modes quickly to the constantly changing social and economic milieu. In this respect, management diverges from other creative endeavors, since while a painter can call a painting finished and put down his brush, the work of a person in business is never complete. In this sense, business management is an organic, living art form. 


Reward And Punishment

In his address at the management policy meeting in January 1946, only months after the war ended, Matsushita Konosuke called on his employees to let the long road of Japanese industrial reconstruction begin, as it were, right there at Matsushita Electric. As a first step, he wanted the management to set an example of diligence and industry for the rest of the employees. For his own part, he made a New Year resolution never to be late for work and not to take off one working day. But then, on the very first working day after the New Year holiday, the car that was to meet him at Osaka Station wasn't there when he arrived, and he was 10 minutes late for work. When Matsushita asked the driver why he was delayed, he said it was his own carelessness, rather than circumstances beyond his control. Matsushita ordered a reduction on one month's salary for the driver and the driver's supervisor, and a one month wage cut for himself, since he was responsible for both of these employees. He then promptly reported the matter to the entire staff at the morning staff meeting. Matsushita Konosuke firmly believed in rewarding those who performed meritorious service and punishing those who were negligent, beginning with himself. 


Attention To The Job

One piece of advice Matsushita Konosuke gave to his employees in the early days of the company was: You may be a well-educated, clever and virtuous person, but those qualities will not necessarily make you a successful businessman. In addition, you must acquire the knack for business. Asked how this is done, he would reply thus: "By giving your best to each and every task you take on, and by reflecting on your performance with an honest and unprejudiced eye. If you do this constantly, day after day, eventually you will be able to do your job unerringly." The point was that you cannot study how to be successful; you acquire the secret to business success gradually by applying yourself with conscious effort from day to day. 



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