Matsushita Leadership

John P. Kotter

• Publisher: Simon & Schuster UK
• Year: 2012
• eBook ISBN: 9781471109577
• Topic: Business
• Subtopic: Business General
• Index: Business

He was one of the most inspirational role models of all time. Thrown into poverty at age four, Konosuke Matsushita (Mat-SOSH-ta) struggled with the early deaths of family members, an apprenticeship which demanded sixteen-hour days at age nine, all the problems associated with starting a business with neither money nor connections, the death of his only son, the Great Depression, the horror of World War II in Japan, and more. Yet John P. Kotter shows in this fascinating and instructive book how, instead of being ground down by these hardships, Matsushita grew to be a fabulously successful entrepreneur and business leader, the founder of Japan's General Electric: the $65 billion a year Matsushita Electric Corporation. His accomplishments as a leader, author, educator, philanthropist, and management innovator are astonishing, and outshine even Soichiro Honda, J.C. Penney, Sam Walton, and Henry Ford. In this immensely readable book, Kotter relates how Matsushita created a large business, invented management practices that are increasingly being used today, helped lead his country's economic miracle after World War II wrote dozens of books in his latter years, founded a graduate school of leadership, created Japan's version of a Nobel Prize, and gave away hundreds of millions to good causes. The Matsushita story expands our notion of the possible, even for a sickly youngster who did not have the benefit of a privileged background, education, good looks, or a charismatic presence. It tells us much about leadership, entrepreneurship, a drive for lifelong learning, and their roots. It demonstrates the power of a longterm outlook, idealistic goals, and humility in the face of great success. Matsushita Leadershipis both a biography and a set of lessons for careers and corporations in the 21st century. An inspirational story and a business primer, the implications are powerful, for organizations and for living a meaningful life.

1
THE LEGACY

By many standards, he didn’t look like a great leader. Early pictures of Konosuke Matsushita show an unsmiling young man whose ears stick out like airplane wings. He never grew taller than five feet five inches nor weighed more than 135 pounds.¹ Unlike his rival Akio Morita at Sony, he was neither charismatically handsome nor internationally recognized. Unlike most well-known Western politicians, he didn’t excel at public speaking, and in his later years his voice grew increasingly frail. He rarely displayed speed-of-light intellectual skills or warmed an audience with hilarious anecdotes. Nevertheless, he did what all great leaders do—motivate large groups of individuals to improve the human condition.

When he died in the spring of 1989, his funeral services were swamped with a crowd of over twenty thousand. In a telegram of condolences to the family, the president of the United States called him “an inspiration to people around the world.”^*

His legacy is daunting. After World War II, Matsushita was one of the central figures who helped lead the Japanese economic miracle. Through Panasonic and other brands, the firm he founded supplied billions of people with household appliances and consumer electronics. By the time of his death, few organizations on earth had more customers.† Revenues hit a phenomenal $42 billion that year, more than the combined sales of Bethlehem Steel, Colgate-Palmolive, Gillette, Goodrich, Kellogg, Olivetti, Scott Paper, and Whirlpool.‡

On some dimensions, his economic achievements exceed those of much more famous entrepreneurs—including Henry Ford, J. C. Penney, and Ray Kroc (see the exhibit on page 5). Yet because his name is not on the products, like Honda or Ford, because he was not an American in the American century, and because he never aggressively sought media attention outside of Japan, he is still largely unknown beyond his native land.

His incredible successes generated billions of dollars in wealth which were used not for villas in France but for the creation of a Nobel Prize-like organization, the founding of a school of government to reform Japan’s political system, and a number of other civic projects. During his later years, he wrote dozens of books, studied human nature with a small group of research associates, and prodded his government to do more for the citizenry.

There are those who accumulated larger personal fortunes. There could be others who built even bigger enterprises or who made equally large contributions to their countries. But overall, it is difficult to find 20th-century entrepreneurs or executives with a longer list of accomplishments. And as an inspirational role model, he is without peer.

The small actions so defied stereotypes of rich and powerful industrialists that they became the subject of folklore. A typical story: in 1975, Morimasa Ogawa and five other division general managers were invited to have lunch with their firm’s founder.² At this point in Matsushita’s life, he had already been on the cover of Time magazine and was regularly being reported to pay more income taxes than anyone else in Japan. Because Ogawa had little contact with The Great One, he looked forward to the luncheon with both excitement and some trepidation.

The setting was a restaurant in Osaka. The six men met shortly past noon. After greetings and small talk, everyone ordered steak. Matsushita had two glasses of beer while telling stories about the business and the history of the company. When all six finished the main course, Matsushita leaned over to Ogawa and asked him to find the chef who cooked his steak. He was very clear on this point: “Not the manager, the chef.” Ogawa then noticed that Matsushita had only eaten half of his entree.

Preparing himself for what could be an extremely awkward scene, Ogawa found the chef and brought him to the table. The cook arrived looking distressed, for he knew that the customer who had summoned him was an exceptionally important person.

“Is there anything wrong?” asks a nervous chef.

“You’ve gone to all the trouble of broiling the steak,” says Matsushita, “but I could eat only half of it. It’s not because it’s not good. It’s quite delicious. But, you see, I’m eighty years old and my appetite isn’t what it once was.”

The chef and five other diners exchange confused expressions. It takes everyone a few seconds to realize what is happening.

“I asked to talk to you,” Matsushita continues, “because I was afraid you might feel bad if you saw the half-eaten steak back in the kitchen.”

Even the most rapacious businessmen occasionally show a kind side, usually as a manipulation. What is remarkable about Matsushita is the sheer volume of theses acts which, in combination with his many accomplishments, the public loved. Surveys showed that he was more admired than movie stars and professional athletes.

In an age when successful business executives throughout the world are sometimes looked upon with suspicion or even contempt, he died a national hero in Japan.

Konosuke Matsushita was born at the very end of the 19th century. During his youth, he experienced much hardship. When he began working for himself in 1917, he had 100 yen, less than four years of formal education, no connections to important people, and a history of family trauma. Yet his small and poorly financed firm flourished under the guiding hand of an increasingly clever merchant entrepreneur.

His counsel from that period was market oriented and very pragmatic. “Treat the people you do business with as if they were a part of your family. Prosperity depends on how much understanding one receives from the people with whom one conducts business…. After-sales service is more important than assistance before sales. It is through such service that one gets permanent customers…. Don’t sell customers goods that they are attracted to, sell them goods that will benefit them…. Any waste, even of a sheet of paper, will increase the price of a product by that much…. To be out of stock is due to carelessness.

Famous 20th-century Entrepreneurs*

Name	Company	Revenue Growth (Billions of 1994 Dollars)†
Konosuke Matsushita	Matsushita Electric	$49.5
Soichiro Honda	Honda Motor Co., Ltd.	$35.5
Sam Walton	Wal-Mart Stores, Inc.	$35.0
Akio Morita	Sony Corporation	$33.7
David Packard/William Hewlett	Hewlett-Packard Company	$20.6
James Cash Penney	J.C. Penney Company, Inc.	$17.4
Ken Olsen	Digital Equipment Corporation	$14.5
Henry Ford	Ford Motor Company	$10.3
Andy Grove ‡	Intel Corporation	$8.9
Ray Kroc	McDonald’s Corporation	$4.7
Bill Gates ‡	Microsoft Corporation	$3.8
* Not a complete list of the most successful entrepreneurs.
† Growth while the entrepreneur was associated with the firm in either operating or nonoperating roles. Figures go through mid-1994.
‡ Still running their firms.

If this happens, apologize to the customers, ask for their address, and tell them that you will deliver the goods immediately.”³

As both he and his firm grew, so did the scope and breadth of his ideas. By the early 1930s, pragmatic advice became increasingly intermixed with broad philosophical statements about the purpose of business enterprise, human nature, and more. “The mission of a manufacturer,” he told employees in 1932, “is to overcome poverty, to relieve society as a whole from the misery of poverty and bring it wealth. Business and production are not meant to enrich only the shops or the factories of the enterprise concerned, but all the rest of society as well.”⁴ He never talked narrowly about maximizing shareholder value as the proper goal of an enterprise. He did speak often about generating wealth, but for the benefit of everyone, not just owners, and even that idea was tempered by an emphasis on the psychological and the spiritual.

“Possessing material comforts in no way guarantees happiness. Only spiritual wealth can bring true happiness. If that is correct, should business be concerned only with the material aspect of life and leave the care of the human spirit to religion or ethics? I do not think so. Businessmen too should be able to share in creating a society that is spiritually rich and materially affluent.”⁵

The horror of World War II increased greatly his concerns about government. One of his last big ideas was to try to help develop a new generation of Japanese politicians by means of education. The concept was simple and extremely idealistic. Create a small, independent graduate school of government. Stress vision, integrity, the broader view, and rational policy analysis. Encourage alumni to run for elected office with the hope that over a long period of time they would become successful and alter the very culture of politics.

He built the Matsushita Institute of Government and Management (MIGM) on five acres of land in Chigasaki City. The first class entered in April of 1980. As of mid-1993, 130 students had graduated. In the July 1993 national elections, twenty-three MIGM alumni ran for seats for the national Diet, the equivalent of the U.S. Congress. Most were members of new Japanese political parties and almost all were under forty years of age. They ran against incumbents from the LDP, the party that had been in power since shortly after World War II.* In the United States or nearly anywhere else, most of the young challengers would have been defeated easily. But in the summer 1993 elections, fifteen of the twenty-three MIGM graduates won seats in the national legislature.

Masahiro Mukasa worked with Matsushita for nearly twenty-five years. His comments are not unusual among those who knew the man well.

“In Japan there are various orders that are conferred upon individuals by the emperor. KM received some, yet he never developed airs. He always thanked other people in a very natural way. That’s what impressed me the most about him. He was always remarkably humble. He behaved as if he held everyone in high esteem. As a result, people who are usually reserved when talking to a powerful individual found it easy to speak with him. KM’s demeanor encouraged them to be frank and to tell him what was really on their minds.

“He studied very hard. I think partially because he had little educational background, he listened carefully to what other people told him. He was very skilled at using that knowledge to create his own ideas.

“Despite all the money he made, he never seemed to be impressed by riches. He didn’t spend his wealth in a luxurious way. He had a strong sense of morality, and seemed to focus on elevating his mind. He wanted to take a gradual step forward every day, little by little, toward greater knowledge.

“He believed that by improving other people, he could improve himself, that helping other people was like helping himself. These ideas were almost religious beliefs. He thought that without the cooperation of other people, he would not be able to achieve his goals. He always gave that impression to everyone he met. Without you, we would not be as successful.

“He was a very idealistic person, and I enjoyed working for him very much. He was more than an outstanding executive. He was a great man.”⁶

During his youth, few saw Matsushita as above average, much less great. He was a mediocre student. As a young adult in his early twenties, he was nervous and sickly. Yet by the time he was thirty, he was inventing business practices that would be highlighted in the late 1970s by Tom Peters and Bob Waterman.⁷ By age forty, he had become the kind of visionary leader that has been championed recently by Warren Bennis, Noel Tichy, and others.⁸ After World War II, he created an institution that adapted phenomenally well to rapid growth, increasing technological change, and globalization. In the 1970s and 1980s, he took on additional careers as author, philanthropist, educator, social philosopher, and statesman. Most of all, throughout his life he demonstrated a capacity for growth and renewal that is astonishing, a capability that virtually all experts agree will be more important in a faster-moving 21st century than it has been in a slower-moving past.

Most children learn easily and develop skills at a rapid pace. Many adults learn slowly if at all. On numerous occasions, Matsushita told others that his perspective on all this was well summar...

Table of contents

• Cover
• Title Page
• Copyright Page
• Contents
• Preface
• 1. The Legacy
• Student, Apprentice, Employee: 1894–1917
• Merchant Entrepreneur: 1917–1931
• Business Leader: 1931–1946
• Institutional Leader: 1946–1970
• Philosopher and Educator: 1970–1989
• Epilogue: With a Humble Heart and an Open Mind
• A Comment on Sources
• Notes
• Index
• About the Author