Keys to Success: Live Within Your Means

From 1986–1991 Japan went through an economic bubble.

Then in early 1992, the economy crashed.

Many companies lost fortunes by speculating on risky stocks and properties that were unrelated to their main line of business.

This lead to Japan’s “lost decade” of economic stagnation.

Many hard lessons were learned during this period.

A fundamental one is: Live Within Your Means.

While many companies floundered, many enduring companies—those with centuries of history behind them—did not make these sorts of speculative investments.

The reason is that they stuck to what they know.

This type of management is a common trait among Japan’s long-lasting firms.

Deciding to practice frugality because you are “X” type of company or taking on new challenges because you are “Y” type of company can be very powerful.

Operating simply and frugally, however, does not mean that long-lasting companies avoid taking risks.

For example, until sake manufacturer Ozeki (founded 1711) introduced its revolutionary “One Cup” single serving in 1964, sake had only been sold in 1.8-liter bottles.

By introducing a new product, they revolutionized the industry.

The first company to individually package katsuobushi (smoked skipjack tuna)—which had previously only been sold in large bags—was Ninben (founded 1699), also an enduring company.

These firms place utmost importance in gradual and continuous growth—growing 2 percent this year and 2 percent the next—rather than growing 20 percent next year, but not knowing what will happen after that.

Gradual and continuous growth is key.

Be Frugal In All Things

Our research found that many enduring companies remain firm in their commitment to practicing simplicity and frugality.

Higashimaru Shoyu, founded in Tatsuno City, Hyogo Prefecture in 1942 (with roots back to the 16th century), uses a company currency called the “Higashimaru Shoyu Yen.”

When somebody is called into a meeting, there is a cost associated with that.

By implementing a concept like this, they are instilling a very high awareness of costs in their employees.

When an investment is being considered at trading firm Okaya & Co., Ltd., no matter how small the investment amount is, the issue is discussed at a board meeting attended by the president.

Attention to detail and practicing frugality are simple ideas, yet they can have an enormous impact on a company’s performance.

Whatever industry you are in, that’s something all businesses should all keep in mind.

As Dean of the Japanese program at the Graduate School of Management, GLOBIS University, and as Managing Director at the GLOBIS Management School, Yoshihiko Takubo is involved in project planning, management, research, and development of study materials. he also serves as a lecturer for the Analytical Skill Courses and the Leadership Development Courses. In 2012 he served as Vice Chairman of the Committee on Educational Issues at the Japan Association of Corporate Executives. Mr. Takubo has written Communicating Through Numbers, Lay The Groundwork For Your Business and GLOBIS MBA Critical Communication (all published by Diamond, Inc.). He also co-translated Cultivate your Kokorozashi (Toyo Keizai Inc.), The Grand Design for the New Century (Nihon Keizai Shimbun Inc.) and The Environment and Business: A Complete Forecast (Nihon Keizai Shimbun Inc.). The Japanese publication of Mandela’s Way: Fifteen Lessons on Life, Love, and Courage (Eiji Press) was translated under his supervision.
Prior to joining GLOBIS, Mr. Takubo worked at the Mitsubishi Research Institute, engaged in investigation, research, and consulting services mainly for the energy industry and national government ministries.
Mr. Takubo received his undergraduate and graduate degrees in Science and Technology from Keio University. He subsequently enrolled in the PED (Program for Executive Development) course at IMD (International Institute for Management Development) in Switzerland.

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