Long term companies

Akio Morita

Introduction

I’ve been reading Akio Morita’s biography ‘Made in Japan’. He co-founded Sony shortly after the end of the Second World War, and is well placed to explain some of the forces behind Japan’s ’economic miracle’.

A job for life

It’s widely know that Japanese employees expect a job for life, and I thought this was something deeply embedded in their culture, having its origins hundreds of years ago. But in reality it was something forced upon Japan by the Allies at the end of the war. Laws were introduced which made it almost impossible to fire an employee. This was seen as a major handicap to business at the time, but it came to be one of Japan’s greatest strengths.

How to make a build a company with longevity

The first challenge of providing a job for life is ensuring that the company lasts long enough to fulfill such a promise. The vast majority of companies don’t last the working life of a human being. Arie de Geus, in his book Living Company, studied the life span of businesses, and found that those that did survive exhibited certain qualities:

  1. Sensitivity to the environment - an ability to learn and adapt.
  2. Cohesion and identity - an ability to build a community and a persona for itself.
  3. Awareness of ecology - its ability to build constructive relationships with other entities, within and out-side itself.
  4. Conservative financing - the ability to govern its own growth and evolution effectively.

People centric

These are fundamentally people centric issues, and this is why Japanese firms had been so successful - they’d made these beliefs permeate throughout the organisation by having a shared sense of purpose with their employees. Arguably this is only possible with the promise of long term employment, which suggests that long term social security and economic prosperity are inextricably linked.

Conclusions

There is more and more short term thinking going on in business which shouldn’t be tolerated for the reasons outlined above. Otherwise companies will lead shorter and shorter lives, to the detriment of the business world, and society as a whole.