Konosuke Matsushita. The Founder of Panasonic
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When Konosuke Matsushita began working for himself, in 1918, he had almost nothing: no money, no real formal education, no connections. Yet, his small firm flourished under the guiding hand of a clever, wise, and inspired entrepreneur. Konosuke Matsushita began the Panasonic’s journey by inventing a two-socket light fixture. This very important, yet elegantly simple, breakthrough led to what is now one of the world's largest electronics companies. In the late 1980s, Matsushita’s revenues hit a whopping $42 billion.
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. Unlike his rival Akio Morita at Sony, he was neither charismatically handsome nor internationally recognised.
Unlike most well-known western politicians, he didn't excel at public speaking. He rarely displayed speed-of-light intellectual skills or warmed an audience with hilarious anecdotes. Nevertheless, he did what all great leaders do—carefully create a sharp and compelling vision that motivates large groups of individuals to improve the human condition. Konosuke Matsushita became known in Japan as the “god of management”.
One of the reasons Konosuke Matsushita is such an inspiration to Musubi is because of his humble beginnings and his belief that his time is precious on this planet, and that he needed to leave a mark in the annals of history.
Matsushita was the son of a landowner who lost all his money, forcing Konosuke to go out to work in Osaka well before he was 16. He started as an electrician at Osaka Electrical Light Company, but then he invented a new sort of light socket and, at the age of 23, set up a company in a shack, with no money and no contacts. He managed his companies with a considerable degree of paternalism and offered his workers employment for life.
Konosuke Matsushita had such enthusiasm for developing new products that he kept a pencil and paper at his bedside to write down ideas that came to him while asleep. His company became famous for one such creation-a bullet-shaped bicycle lamp.
Candle lamps and oil lamps were commonly used for bicycles at the time. Although battery-powered lamps were also available, they were unreliable and their batteries ran down in two or three hours. Matsushita was frustrated with his own bicycle's candle lamp, which frequently went out when he rode at night, and came up with a design for a battery-powered lamp.
He made many test models over a six-month period, ultimately arriving at a bullet-shaped design that ran for 30 to 40 hours on three batteries. He put the lamp into production, and demonstrated samples for wholesalers.
However, battery-powered lamps had such a poor image at the time that he couldn't convince them to purchase his new model.
The situation was desperate, but Matsushita was certain that a good product would sell, so he left samples at stores with the agreement that they would purchase the lamp once it proved its worth. He was so confident in the product that he was willing to risk the future of his company on this gamble. Dealers found that the lamp worked as promised, and orders began to trickle in.
The Great Kanto Earthquake hit in September 1923. The two employees stationed in Tokyo returned to Osaka unharmed, but the company's sales network had been demolished. However, in early 1924, Matsushita established a new Tokyo branch office and set about rebuilding the company's sales network.
In 1929 they experience the great depression halved. Cut production in half but don’t dismiss a single employee
Konosuke’s philosophy of business is simple; his principles of success are timeless. He adopts a people-oriented approach that gives new meaning to the word 'success.' An understanding of human nature that embraces new values of responsibility and generosity. A management ethic that relies on fairness, harmony that inspire a sense of interconnetion -- and that goes far beyond the quest for profit alone." Brand purpose = to exist for the benefit of society
Management through collective wisdom
Not yet fully recovered from the Great Kanto Earthquake, the country was hit by a financial panic in March 1927. Many companies failed due to a lack of financing. Matsushita felt that he needed to maintain strong connections with employees and sales outlets, so he established two periodicals (like a magazine) as a medium of communication.
The first issue of Matsushita Electric Monthly was published in November for distribution to retail stores. In the lead article, Matsushita wrote, "We would like you to understand our approach to sales. At the same time, we would also like to hear any comments or suggestions you may have about improvements that can be made." Matsushita and his team thought beyond engagement to relationship.
In December 1927, Matsushita established the HoichiKai Magazine, dedicated to improving understanding among his employees. In a later employee publication, the In-House Review, he stated, "It is for utmost concern to be aware of changes in the company's operations, policies and guideline, and we believe that a thorough knowledge of these matters will be a source of spiritual peace and enlightenment to our employees."
The economic situation in Japan worsened, but the company continued to grow, expanding its range of electrical fittings, heating elements and consumer appliances, and increasing its sales agents nationwide. In 1928, the company's monthly sales exceeded ¥100,000, and its employees numbered over 300. Many distributors, sensing future potential in the company, expressed the desire to deal primarily in National brand products. The company's responsibility to provide security to its distributors was now greater than ever before.
Matsushita, who had considered the company primarily a private endeavor, now needed to view it in terms of its relation to the society at large. Reflecting on the issue, he concluded, Society has entrusted to us the care of our company.
"We are therefore duty-bound to manage and develop the company in an upstanding manner, contributing to the development of society and to the improvement of people's lives. The profits of our business are a reward for contributing to society."
In March 1929, he renamed the company Matsushita Electric Manufacturing Works. At the same time, he formulated the Management Objective and Company Creed to guide the company's growth.
Original Management objective:
While giving careful consideration to harmony between profit and social justice, we aim to devote ourselves to the development of national industry, to foster progress and to promote the general welfare of society.
Fighting the depression with a positive approach to business
This is the true test of an organisation and an organisational culture. How do you treat staff in tough time!?!
The New York Stock Exchange crashed on October 24, 1929, spreading panic among the world's financial markets. The already weakened Japanese economy was thrown into disarray. Prices plummeted, employee rolls were slashed throughout the country, and many factories were closed.
Panasonic's sales declined, and by the end of December its warehouses were overflowing with unsold stock. Company executives could see no solution other than staff cutbacks, but Matsushita told them, "Cut production by half starting now, but do not dismiss even a single employee. We'll halve production not by laying off workers, but having them work only half days. We will continue to pay the same wages they are getting now, but there will be no holidays. All employees should do their best to sell inventory."
Employees threw themselves into the sales effort with fierce determination. Within two months, the excess inventories were gone and demand had recovered, allowing full-scale production to resume.
At the beginning of January 1931, the company celebrated its first shipment of the year to throw off the despair of the depression-a tradition that lasted up until 1965.
By looking after the employees during bad time, that were instrumental in the growth of the company in the good time means that you have a competitive advantage of a motivated, loyal, and nimble workforce ready to take advantage of the economic upswing.
Matsushita knew that as the economy would inevitably improve, his competitors would spend an average of 2.5 years hiring, training, and developing a culture and productive workforce.
Love Your Job To Do It Well
During the economic downtime, Konosuke Matsushita improve communication and from the bottom up. He instilled the principle that management is there to help guide and support employees. Matsushita set out to avoid departmental silos, because silos create roadblocks that deter deep conversations and cross-disciplinary collaboration which in turn prevents idea generation and innovative solutions that can help achieve greatness.
Konosuke valued harmony amongst his staff. Harmony is respecting the person beyond the job title and understanding the potential and their growth journey. Konosuke Matsushita made the rule "What you enjoy, you do well" 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, it will be difficult for you to become successful in your work.
Do What Common Sense Dictates
If there is a formula for business success, Matsushita felt, it is operating in this straightforward, down-to-earth way, as simply and sensibly as opening an umbrella in the rain.
Follow the Laws of Nature
Spirituality in management is not new. Many tech CEOs today are espousing the benefits of meditation and spiritualism but in 1932 Matsushita saw it as being an obvious business relationship. "Human beings need both physical and spiritual prosperity. Understanding both can help guide people out of suffering toward happiness and peace of mind. Business, too, can be sacred in that it can provide the physical necessities required for human happiness. This should be the primary mission of business." He decided he had to run the company in accordance with this perception. On May 5, 1932, Matsushita assembled employees to announce the company's new mission. "The mission of a manufacturer is to overcome poverty by producing an abundant supply of goods. Even though water from a tap is a processed product with a price, no one objects if a passerby drinks from a roadside tap. That is because the supply of water is plentiful and its price is low. The mission of a manufacturer is to create material abundance by providing goods as plentiful and inexpensive as tap water. This is how we can banish poverty, bring happiness to people's lives and make this world into a paradise."
He then announced a 250-year plan for the company to fulfil its mission.
The mission sparked a product design revolution within Panasonic to be human centred. Telephone handsets were designed to fit in the radius of a hand and to last a longtime (no such thing as built in obsolescence) and to improve technological performance to make life easier for customers. Simple universal laws must always be observed.
A Leader Should Have a Vision
Leaders in any field should always have a clear vision of what they want to do, and only then approach others for support or opinions. A leader who serves as a firmly fixed axis can most effectively mobilize others and maximize the results of what they do.
Dreams Should Be Shared
Matsushita became known as the "manager who talked about his dreams," He took every opportunity to inform his employees of his plans and dreams for the company's future. It was those dreams that directed and inspired the people who worked for him.
Management Is Perpetual Creation
For Konosuke Matsushita, business was a creative activity; 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, manufacture 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 environment.
Don't Assume That Something Is “Impossible“
"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,” said Matsushita. “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."
Transparent Management Fosters Growth
Konosuke Matsushita believed that openness in management practice is crucial to a business that seeks to grow. As his small company grew larger, Matsushita 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. That practice "made the atmosphere in the workshop much brighter." Satisfaction of employees was directly linked to the company's growth as people felt their contribution was important.
Dam Management
Various economic factors can inhibit corporate growth. Konosuke Matsushita believed, however, that continued progress is possible with the right approach, such as by employing what he called the "dam method" of management. Matsushita's dam management offered a way to keep an enterprise on an even keel in times of unexpected changes in business conditions, and included useful techniques for achieving the goal of maintaining steady growth at all times. It is essential to create a strong internal structure capable of surviving the economic crises that might lie ahead. A business can maintain steady growth, and protect itself against changes in the external environment, by erecting a dam and reservoir in every part of its management, such as an "equipment dam" and a "capital dam" that provide insurance for stable growth.
Bad Times Have Their Bright Side
“When you're galloping, you have no 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.”
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