What it takes to be a good company in Japan?

Ina Food Industry: To Make a Good Company

There is a company in Japan with the motto, “Let’s make a good company.”  It’s so simple a child can understand it, but what exactly comprises a “good company?”  The explanation continues thusly.

A good company is not found in performance related numbers, but in a company about which every one of the people around it say “this is a good company.”   When we say “good company” we imagine an honor student among companies, that boasts of high profits and uses advanced technology, but within the expression “good company” is contained the same fellow feeling that exists in “he’s a good person.”  And atop of the list of “every one of the people around it” is the employees of the company.  The employees themselves will reflect the happiness they feel at belonging to such a company.

Ina Food Industry located in Ina City in Nagano Prefecture has an 80% share of the market in Japan for agar, a traditional gelatin product derived from seaweed.  Growth in both revenue and profit has been continuous over 48 years, and it’s considered an ‘honor student’ among companies with ratio of profit to sales of over 10%.  But the company is more proud of the fact that Ina’s chairman has continued to give his employees raises in salary and bonus over the past 48 years, without resorting to restructuring. 

Under current economic conditions, a majority of companies are laying off hakken shain temporary employees, part-timers, and once that leads to a dead end, offering early retirement to full-fledged employees, or cutting wages.  This type of management is wrong.  Small businesses have not, and will not, engage in employee restructuring.  The reason is that for small businesses, labor expense is not a cost.  Labor expense is the cost of living that is required to realize employee happiness.  Who says this, but Ina Food chairman, Hiroshi Tsukakoshi.

A Park-Like Factory


The 99,000 square meter property where Ina Food headquarters is located is lined with Japanese red pine trees.  Blossoms flower and drop in a four-season cycle in the park-like setting.  There are no fences, gates or guard houses, so the property seems to stretch out forever, and just like a park, anyone can enter freely.  Local kindergarten teachers bring the children to eat their lunch outside on the grassy knolls.   There are benches where the flowers bloom and drop, occupied by resting grandmas and grandpas.  They say they “come to sit in the sun,” which means “when I’m here my heart is at rest.”  There is someone playing a flute. Children walk through Ina Food property on their way to school.  A road cuts across the property, and the recent increase in automobile traffic has made it a little dangerous for the children.  The company petitioned the local government for a pedestrian bridge, but nothing was getting done, so the company built one itself after asking permission to make such a donation.  In this spacious park, there are people raking up leaves with bamboo rakes in the early morning, and at lunchtime and on holidays, pruning the bushes.  It’s company employees, volunteering their time.  Even from the point of view of local residents, it’s a “good company.”

How To Stay a “Good Company”

Hiroshi Tsukakoshi
Hiroshi Tsukakoshi

In order to remain a good company like this, you need to grow as a business, and earn profits.  Chairman Tsukakoshi has come up with three key policies in order to accomplish these things.

First is “Don’t chase after unreasonable growth.”  At one time there was an agar diet craze.  Of course as top agar manufacturer, Ina Food was flooded with orders from around the country.  But the chairman said, “Refuse them all.  This is a passing fad.  It will inevitably die out, and after that something bad will inevitably happen.  I don’t want to have to sacrifice employees then.”  If a company were to make rapid plant and equipment investment and add to its workforce in reaction to such a boom, profits would drop once the boom was over and would probably be forced to cut staff.  The growth of Ina Food was slow, like a tree adding rings year after year.

Second is “Don’t make enemies.”  If a company engages in fevered price wars with its competitors, it may lose, and be driven into a state of decline in sales and profits.  If a company creates a product that has never been seen before, the only one of its kind, it will not have any enemies.  Ina Food developed Kanten Papa.  Mixing the powdered agar in hot water and then refrigerating it makes a gelatin substance.  There are hundreds of varieties from fruit flavored to green tea, to Bavarian cream.  Ina has developed and introduced these products to the world one at a time.  At one time a major supermarket chain that had seen Kanten Papa came asking for the right to sell this “amazing product,” but this request was refused also, because of the “don't chase unreasonable growth” policy.

Thirdly is “Don’t neglect to sow the seeds of growth.”  In order to come up with products that are brand new, research and development must continue unabated.  New product development is a world which is satisfied if out of a thousand seeds sown, just three sprout forth.  Not chasing short-term profits, always thinking ahead, not neglecting to sow the seeds of growth – these are the secrets of creating one and only type products.  Chairman Tsukakoshi says, “The purpose of growing and increasing profits is to keep the company alive.  Why do we need the company to stay alive?  It’s to make the employees happy.”

Nihon Rikagaku Industry: Experience What It Is To Work

This small business has about 50 employees, with about 70% made up of mentally disabled persons.  Nihon Rikagaku Industry in Kanagawa Prefecture’s Kawasaki City has a 30% share of the dustless chalk market.  Nihon Rikagaku began employing mentally disabled persons almost 50 years ago in 1959.  A teacher from a nearby school for the handicapped came to ask if the company could employ two students who were graduating soon, and that’s how it all started.

kanten papa
kanten papa

Yasuhiro Oyama, managing director at the time and chairman today, was beset by worry.  If he hired them, he would have to keep them happy for the rest of their lives, but he had no confidence that he could do it, seeing as the company only had ten or so employees at the time.  He refused, saying it was too much for his small company, but the teacher came back two and three more times.  The third time, unwilling to cause Mr. Oyama any more worries, the teacher said this:

“Mr Oyama, I won’t ask you to hire these two any more.  But if you think it’s too much to hire them, at least can you give these two children the chance to experience what it is to work?  If you don’t, these children may live till the end of their days in a home, without knowing the joy and happiness of work.  Their lives on average are shorter than we non-handicapped people.”  Oyama was touched by the sight of the teacher pleading for his students with lowered head, and promising to take them on “for one week only,” gave the two girls the experience of work.

Please Make These Girls As Regular Employees

Yasuhiro Oyama
Yasuhiro Oyama

Once the work experience decision was made, not only the girls but the teachers and the parents of the girls were overjoyed.  They were at work by 7 am, even though the factory didn’t open till 8.  They were even accompanied by their mothers and fathers, as well as the teacher who was too worried to stay home.  By 3:00 in the afternoon, the parents were watching attentively from a distance, wondering if the girls were making a nuisance of themselves.  The day before the week of work experience was to an end, the ten or so regular employees surrounded Mr. Oyama, saying “We need to talk.  Those girls, their work experience is going to be over tomorrow.  How about it, Mr. Oyama, please hire these girls as regular employees starting April 1.  If there’s ever something they can’t do, any of us can cover for them.  Please hire them.”

This was the consensus of all Oyama’s employees.  The sight of these two girls’ dedication to their work was enough to move the regular employees’ hearts to this extent.  It was a simple job affixing labels, but the girls got so wrapped up in their work they wouldn’t notice it was lunchtime, or time to go home, until someone tapped them on the shoulder.  They looked so happy and absorbed in their work.

The Three Joys

In line with his employees’ unanimous wish, Oyama hired the two girls as full fledged employees.  Since then, the company has hired mentally disabled persons little by little, but there remains one thing Oyama still doesn’t understand.  That is why they would cry and protest whenever someone would tell them, “We’ll send you back to the home,” when they made a mistake.  Wasn’t it nicer to be living comfortably at the home instead of working every day at the company?

dustless chalk
dustless chalk

One day at a memorial service Oyama found himself sitting next to a Zen Buddhist monk.  He asked the monk about his puzzlement, and this was the response.  “That would be only natural.  Joy is (1) being loved by someone, (2) being appreciated by someone, (3) being useful to someone, and (4) being needed by someone.  Of these, they can’t attain (2) being appreciated by someone, (3) helping someone, or (4) being needed by someone, at the home.  These three joys they can attain by working.”

Oyama felt as if the scales had fallen from his eyes when he heard the monk’s words.  For humans, “living” means to be needed and to work, and to make enough to be independent.  If people needed a place to achieve “living,” then his company was certainly capable of providing that place.  Wasn’t that the meaning of the company’s existence, and its mission in society?  For 50 years since that day, Nihon Rikagaku Industry has continued to actively employ the mentally disabled.

The 65 Year Old Lady

Though he did go on to hire mentally disable persons, in the beginning Oyama struggled continually with how to teach them the job.  Normally you match the person’s job to the facility or equipment, but Oyama had to move tools and equipment around and change the machinery to match the mental condition of each worker, so that his new employees could do their job.  For example, for a worker that couldn’t read numbers and therefore could not use the scale, he made different colors for all the different weights, so that material in the blue container for example would be measured out with the blue weight.  He came to understand if he could optimize each person’s ability using these kind of tricks, they were capable of work that could match up to that of a normal worker.

Koji Sakamoto writes in his “Nihon de Ichiban Taisetsu Ni Shitai Kaisha (The Companies We Should Cherish Most In Japan)” from Asa Publishing about the elderly lady who brought him coffee when he visited Nihon Rikagaku.  “Welcome and thank you for coming.  Please have some coffee,” she said in a quiet voice before retiring with the tray.

“That’s her.  She’s my first employee that I’m sure I told you about,” said Oyama.  Hired at age 15 or 16, she was now 65.  Her back was rounded and her hair was white.  She had passed retirement age of 60, but was kept on as a contract employee.  Thinking about the import of those months and years for this woman, Sakamoto was unable to hold back tears.  When he went to observe the factory later, the woman was working hard, making chalk.

Happiness Is Being Useful to Someone

In the factory, the normally abled workers all had happy smiling faces.  When Sakamoto asked why, Oyama answered thusly.  “I think it’s because they feel that they are contributing to society too.  We are just a small business, but I think the sense of self-worth they feel in working here, being useful to people who are disadvantaged, being useful to society, tends to elevate their motivation.”

chalk factory
chalk factory

After visiting Nihon Rikagaku with his top staff, the mayor of a certain city had this to say on the bus home.  “Can we order this company’s chalk for all the chalk we use at city hall?  That’s about all we can do to contribute to this company.”  If happiness is being useful to others, then Nihon Rikagaku is sharing happiness with its customers in this manner.

There are many other heartwarming examples of good companies.  Among the points they have in common is that they all believe their most important mission is to make their employees and their families happy.  In the world of management one often hears of Customer First, but Sakamoto insists that the concept is mistaken.  “How can employees that harbor feelings of unfairness, dissatisfaction or distrust towards the company they belong to be expected to provide the kind of impressive customer service that seems to flow from the heart?  The company can already make the kind of product that will impress the customer, so the most important thing is the happiness of the employee.  The pursuit and realization of employee happiness and the happiness of the family that is his or her emotional support is the greatest responsibility and mission of a business.”

To make employees happy, a company must stay alive and make a profit.  Managers who have realized this fact cannot easily cut employees in bad economic times, and so face a real fight.  Employees do their utmost to keep the company alive and growing.  That is where they come up with the ideas and the strength that ordinary businesses don’t.  These good companies are here and there all over Japan, making their employees and their families, their customers and their communities happy, and supporting the nation.

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