Kazuo Inamori founded the Kyoto Ceramic Co., Ltd. in 1959 with $10,000 and 28 employees, and today the company (since renamed Kyocera Corp.) has more than 65,000 employees and sales of nearly $13 billion. Then in 1984, Inamori proved his success was not a fluke, by repeating it when he founded DDI to go up against telephony giant NTT, and today the wireless carrier (since renamed KDDI) has more than 14,000 employees and grosses more than $30 billion. Last year, Forbes magazine named Inamori the 28th richest man in Japan with a net worth of nearly $1 billion.
The key to his stunning business successes, according to Inamori, is what he calls the Kyocera Philosophy, which was adapted to become the KDDI Philosophy, and which Inamori, currently serving as CEO of Japan Airlines, is retreading to resurrect (JAL) after its bankruptcy last year.
"I strongly believe that corporations should have a philosophy on which to base their management...such philosophies affect the employees and the performance of the company," said Inamori in an exclusive interview. "Having the right mindset is very important, not only for research, but also for life."
Kazuo Inamori addresses the Kyoto Prize gala where three laureates are chosen each year for outstanding contributions in science, technology, philosophy and arts that have also contributed to humanity. (Source: Inamori Foundation)
Instead of recruiting employees with the most talent, Inamori encourages employee loyalty by pronouncing a formula by which hard work and a positive attitude can overcome lack of talent. Trained as a scientific researcher at Kagoshima University, Inamori later expressed this mathematically in a formula where ability and effort are measured on a scale of 0-to-100 percent, but attitude is measured on a scale of -100 to +100, thereby gating the product of ability and effort. In other words, a bad attitude can negate both effort and ability, but a positive attitude can multiple them: Success = Attitude x Effort x Ability.
Management's purpose, according to Inamori, is not to “chase” profits, but to provide opportunities for the material and intellectual growth of employees, and to inspire their joint efforts to create innovative products that fulfill the workers’ urge to creativity, which in turn please consumers, and which ultimately contribute to the advancement of society and humanity.
At Kyocera, Inamori's philosophy inspired an array of challenging new products that other ceramics makers had rejected as impossible. For instance, Kyocera perfected an innovative manufacturing process for ceramic packages for semiconductors that had previously required handcrafting, landing it early contracts for ceramic packages used at Intel, Texas Instrument, Motorola, Fairchild and many other semiconductor makers.
The Kyocera Philosophy was later adapted to KDDI, and now to JAL.
"When I started KDDI, and also when I got involved in the management of JAL, at first I urged the executives of those companies to read and study the Kyocera Philosophy. I then encouraged those executives to come up with their own philosophies which could be applied to their own companies," said Inamori. "So KDDI, and also JAL recently, came up with their own philosophies that are very similar."
Kazuo Inamori explains that the Kyocera philosophy makes employee happiness the primary job of corporate management, with profit-and-loss managed by independent interlocking business units.
The resulting KDDI Philosophy produced pioneering infrastructure advances using wireless microwaves for backhaul, instead of the old-school landlines used by NTT, as well as creative consumer products that bundled multimedia content before NTT, and at lower-price points even after NTT followed suit. As a result, KDDI enjoys a leading-edge image which has propelled the company into the No. 2 mobile carrier slot.