Kindai Management Review Vol. 8, 2020 (ISSN: 2186-6961) An Examination of the Kazuo Inamori Management Philosophy Fangqi Xu Kindai University, Japan Henry Andersen TDA Associates, USA Abstract Several decades ago, Konosuke Matsushita, the founder of Panasonic, was praised as the “God of Business” for his unrivaled management skills and wonderful management philosophy. Today, does Japan have a top manager comparable to Konosuke Matsushita? The answer is “Yes”. He is Kazuo Inamori, the founder of Kyocera and KDDI. This paper first examines Kazuo Inamori the human being from the three viewpoints: as an engineer, a manager and a philosopher. Then it considers what the Inamori Management Philosophy is from the three viewpoints of management centered on human heart, management pursuing the essence of goods, and management raising the value of money. Finally, it describes the prospects for the Inamori Management Philosophy, focusing on new trends in academia and industry both in Japan and abroad. Keywords: Kazuo Inamori, management philosophy, Kyocera-philosophy, Amoeba Management interdependence relationship between func- 1. THE CONCEPT OF MANAGEMENT tion and value, the relationship to conflict, PHILOSOPHY that is, the entire relationship of tradeoffs.”1) Before starting this examination, we must first dis- “Management philosophy (in a broad cuss what management philosophy is. That is, its interpretation) is considered to be a manage- definition must be clarified. ment philosophy phenomenon based in In Japan, the Academy of Management Philoso- reality including the top manager’s philoso- phy has been continuously debating “what is man- phy and thoughts, as well as the culture, etc., agement philosophy” since 2000. The results are that the company has.”2) summarized in a book “What is the Management “I mentioned earlier that I would like to Philosophy?” However, there are only a few sen- define management philosophy as its corpo- tences that seem to be definitions. Moreover, they rate values and mission, or a system of norms are difficult to understand. For example: of action for achieving and realizing the purpose of an organization’s existence to “The management philosophy is to stakeholders.”3) elucidate the management system and its functions, the basic values that support Considering what was stated above, it appears them and their existence, and deal with the that defining management philosophy was quite 94 An Examination of the Kazuo Inamori Management Philosophy difficult, since the Academy of Management Phi- dumpling maker which had fallen into a manage- losophy did not have a clear definition. ment crisis in Kyoto, and was assigned to the However, if the definition of management phi- research division of the manufacturing department. losophy remains vague, we are unable to start this His main task was the development of high- thesis, so we have to think in another way to define frequency insulating porcelain for low-voltage it. The Japanese dictionary Daijisen has the follow- applications. Later, he succeeded in developing a ing definition of philosophy: “(1) science to pursue U-shaped insulating ceramic part used for the elec- fundamental principles such as the world and life; tron gun of cathode ray tubes for Matsushita Elec- (2) life and world views based on each person’s tronics Industrial TVs. As a result, he was trusted experience.”4) From the perspective of linguistics, by the newly rebuilding company’s management the key word of “management philosophy” is phi- and became the leader for the magnetic section losophy, and “management” is a modification of which was newly established in the next year. How- “philosophy.” Therefore, we can make two defini- ever, the following year when he was struggling tions of management philosophy. One is the science with the development of a ceramic vacuum tube, to pursue fundamental principles of the world, life, which was a special-order product for Hitachi, he etc., in connection with management. The other is was dismissed as the development manager by a the life and world views based on top manager’s newly appointed technical manager, which gave experience. him an opportunity to quit the company. If understood in the second way, it can be said After that, Inamori tried to become independent that management philosophy as discussed in this but had no funds. Fortunately, Seiji Aoyama, who paper is a view of life and the world based on the was his former technology manager, believed in the experience of Kazuo Inamori, the founder and ability of Inamori and got his friends to invest to Honorary Chairman of Kyocera. establish Kyoto Ceramic (currently Kyocera, here- Why did the author choose Kazuo Inamori? inafter referred to as Kyocera) with a capital of 3 Thirty years ago, when speaking of representa- million yen at the beginning of 1959. Inamori tive managers in Japan after the war, people like started his job as a director and technology man- Konosuke Matsushita, Akio Morita, Soichiro ager. As soon as Matsushita Electronics Industrial Honda, etc., were undoubtedly named. Especially found out about Inamori’s new position, they since Konosuke Matsushita was said to be “God of changed the large-scale ordering of the U-shaped Business,” his management philosophy has also ceramic part for insulation used in electron guns been studied by many scholars. However, if you ask from Shofu to Kyocera. Clearly, Matsushita Elec- about representative managers today, what name tronics Industries’ decision criterion was not the can you give? According to the authors, Kazuo size of the company, but the technical power of Inamori is the best example. Above all, from the Inamori. perspective of management philosophy, the authors Since Matsushita Electronic Industrial’s order think that there is no manager comparable to him, was a direct crossover for Kyocera, the company and decided to examine the management philoso- became profitable in the first year. However, phy of Kazuo Inamori. Kyocera, which only had 28 people, and had some difficulty in developing new business in Japan. Therefore, Inamori went to the United States and 2. WHO IS KAZUO INAMORI? began to try selling by himself. Because he did not speak English well and had no personal connec- 2.1 An engineer tions in the USA, sales in the USA were quite diffi- Kazuo Inamori majored in organic chemistry at the cult, but the enthusiasm for Inamori’s work and the Department of Applied Science, Faculty of Engi- high level of technology became the decisive fac- neering at Kagoshima University and also studied tors. In March 1965, Kyocera received a large order inorganic chemistry in connection with his job for ceramics beads from Microelectronic in Hong search. In 1955, he got a job at Shofu Industry, a Kong and then from Fairchild in the United States The Institute for Creative Management and Innovation, Kindai University 95 Fangqi Xu and Henry Andersen in July 1965. clothes and worked on the lines. All the locally In April of the following year, Kyocera was able hired employees were surprised because those only to receive orders for 25 million pieces of the highly familiar with the American approach of giving anticipated alumina substrates for IC (integrated instructions from the office would never expect to circuit substrates) from IBM. In addition, Kyocera see a manager working on the factory lines. exclusively supplied large-scale ceramic packages, At the time of the oil shock in 1973, orders were the first in the world and developed by themselves, halved, but in order to protect employment, Inamori to major semiconductor manufacturers such as reduced the number of workers on the site by half, Texas Instrument, Motorola, Intel and AMI in the cleaned up and weeded plants, developed the United States, finally becoming the world leader in Kyocera philosophy, and took measures patiently the manufacture of ceramic packages. This multi- with employees. In addition, when the crisis passed layer ceramic package was initially used as an IC for and orders increased, Inamori not only increased calculators, and later used as packages for CPUs everyone’s salary and paid a bonus, but also paid which were the heart of PC and communication the unpaid portion of the previous year. Since life- semiconductors. Due to this, Kyocera has become time employment is a symbol of Japanese-style widely known in the industry. Needless to say, management, representative Japanese companies Kazuo Inamori took the lead in the development of have left anecdotes to protect lifetime employment, all prototypes and custom products related to for example, Konosuke Matsushita, the founder of ceramics and played the role of a ceramics expert. Panasonic, Fujio Mitarai, the Chairman of Canon, In October 1971, Kyocera achieved simultane- and so on. ous listing on the Osaka Stock Exchange and Kyoto With the expansion of the company scale, Stock Exchange. The following year, in September, Inamori felt the risk of being influenced by the ups Kyocera was listed on the Second Section of the and downs of the industry if the business shifted to Tokyo Stock Exchange. In February 1974, it was the field of fine ceramics, so he started thinking further promoted to the First Section both in TSE about a second business to diversify. Inamori rec- and OSE. Fifteen years after the company’s estab- ognized that diversification cannot be avoided for lishment, Inamori gained the highest reward from the development of a company, and decided to business society as an engineer and businessman. advance to different industries and fields using ceramic technology and crystal technology that 2.2 A top manager had been cultivated so far. Inamori was the founder and de facto top manager The first step of Kyocera’s diversification was the of Kyocera from its beginning, but he became the development of “recrystallized gems” (artificial president officially seven years later.